MIDDLEFIELD, Ohio, April 24, 2023 (GLOBE NEWSWIRE) -- Middlefield Banc Corp. (NASDAQ: MBCN) today reported financial results for the 2023 first quarter ended March 31, 2023.
2023 First Quarter Financial Highlights Include (on a year-over-year basis unless noted):
- Net income increased 27.7% to a quarterly record of $4.9 million
- Earnings were $0.60 per diluted share compared to $0.65 per diluted share, reflecting a 38.4% increase in the average diluted shares outstanding related to the Liberty Bancshares, Inc. merger
- Adopted CECL accounting standards, which resulted in an after-tax retained earnings adjustment of $4.4 million
- Pre-tax, pre-provision net income increased 38.8% to $6.4 million
- Net interest margin improved by 46 basis points to 4.26%, compared to 3.80%
- Total loans were $1.38 billion, compared to $1.35 billion at December 31, 2022
- Loan growth funded by deposit growth and robust liquidity
- Total deposits were $1.43 billion, compared to $1.40 billion at December 31, 2022
- Uninsured deposits to total assets of approximately 19% at March 31, 2023
- Return on average assets was 1.16%, compared to 1.17%
- Return on average equity was 10.19%, compared to 10.75%
- Return on average tangible common equity(1) was 12.77%, compared to 12.13%
- Strong asset quality with nonperforming assets to total assets of 0.73%, compared to 0.89%
- Allowance for credit losses was 1.46% of total loans, compared to 1.48%
- Equity to assets increased to 11.30%, from 10.40%
"Middlefield's first-quarter results and record quarterly net income demonstrate our strong balance sheet, robust asset quality, and diverse core deposit base, as well as the benefits and added scale of the Liberty Bancshares, Inc. merger. Despite macro-level concerns related to the health of the banking system, higher interest rates, and a slowing economy, we remained focused on successfully integrating the Liberty Bancshares merger and serving our customers across our Central, Western, and Northeast Ohio communities. I am encouraged by the deposit, loan, and earnings growth we achieved over the past three months, all of which is a testament to the experience of our management team and the dedication of our team members," stated James R. Heslop, II, Chief Executive Officer.
"We expect higher rates and competition for deposits will continue to increase our cost of funds in the coming quarters, but we believe our compelling net interest margin and larger loan portfolio will support strong levels of interest income throughout the year. I am pleased to report that we achieved the highest quarterly net interest margin in over 20 years and the fourth consecutive quarter above 4%. As the year progresses, we remain focused on growth opportunities across our expanded Ohio markets, adding talented bankers to our platform, and maintaining strong asset quality," concluded Mr. Heslop.
Income Statement
Net interest income for the 2023 first quarter was $16.5 million, compared to $11.5 million for the 2022 first quarter. The net interest margin for the 2023 first quarter was 4.26%, compared to 3.80% for the same period of 2022. For the 2023 first quarter, noninterest income increased 19.6% to $1.7 million from $1.4 million for the same period of 2022.
Noninterest expense was $11.8 million for the 2023 first quarter compared to $8.3 million for the 2022 first quarter. During the first quarter of 2023, the Company incurred $245,000 of additional operating expenses associated with the Liberty Bancshares, Inc.
Pre-tax income during last year's first quarter benefited from $640,000 of accelerated net fees associated with the Paycheck Protection Program ("PPP").
Net income for the 2023 first quarter was a quarterly record of $4.9 million, or $0.60 per diluted share, compared to $3.8 million, or $0.65 per diluted share, for the same period last year.
Pre-tax, pre-provision net income was a quarterly record of $6.4 million, an increase of 38.8% from $4.6 million last year.
Balance Sheet
Total assets at March 31, 2023, increased 30.6% to $1.73 billion, compared to $1.32 billion at March 31, 2022. Net loans at March 31, 2023, increased 41.5% to $1.36 billion, compared to $963.2 million at March 31, 2022. Total assets increased 2.4% from December 31, 2022.
Total deposits at March 31, 2023, were $1.43 billion, compared to $1.17 billion at March 31, 2022. The 22.1% deposit increase was primarily due to the Liberty Bancshares, Inc. merger. Total deposits at March 31, 2023, increased 1.7% from December 31, 2022.
Donald L. Stacy, Chief Financial Officer, stated, "We ended the quarter with a net loan-to-deposit ratio of 95.6%, $66.7 million in cash and cash equivalents, and $169.6 million in investment securities. In addition, our unrealized losses on all securities at the end of the month were a modest 9.0% of total capital. Considering our strong capital levels, robust liquidity, and diverse loan and deposit portfolios, along with our maximum borrowing capacity of $560 million at the Federal Home Loan Bank, we decided not to use the Federal Reserve's Bank Term Funding Program. During the first quarter, we repurchased 164,221 shares at an average of $27.44 per share and have 293,910 shares remaining under our February 2023 repurchase program."
Middlefield's CRE portfolio included the following categories at March 31, 2023:
| CRE Category | Balance (in thousands) | Percent of CRE Portfolio | Percent of Loan Portfolio | ||||
| Office Space | 105,726 | 16.3% | 7.7% | ||||
| Shopping Plazas | $ | 84,995 | 13.1% | 6.1% | |||
| Multi-Family | $ | 63,892 | 9.8% | 4.6% | |||
| Self-Storage | $ | 56,347 | 8.7% | 4.1% | |||
| Senior Living | $ | 42,589 | 6.5% | 3.1% | |||
| Hospitality | $ | 34,869 | 5.4% | 2.5% | |||
| Other | $ | 261,449 | 40.2% | 18.9% | |||
| Total CRE | $ | 649,867 | 100.0% | 47.0% | |||
Stockholders' Equity and Dividends
At March 31, 2023, stockholders' equity was $195.2 million compared to $137.6 million at March 31, 2022. The 41.8% year-over-year increase in stockholders' equity is primarily due to the Liberty Bancshares, Inc. merger, partially offset by an increase in the unrealized loss on the available-for-sale investment portfolio and the Company's stock repurchase program. On a per-share basis, shareholders' equity at March 31, 2023, was $24.13 compared to $23.43, an increase of 3.0% over the same period last year.
At March 31, 2023, tangible stockholders' equity(1) was $156.0 million for the 2023 first quarter, compared to $121.2 million at March 31, 2022. On a per-share basis, tangible stockholders' equity(1) was $19.29 at March 31, 2023, compared to $20.64 at March 31, 2022.
For the 2023 first quarter, cash dividends declared per share increased 17.6% to $0.20 per share totaling $1.6 million, compared to $0.17 per share or $1.0 million, for the first quarter last year.
At March 31, 2023, the Company had an equity-to-assets leverage ratio of 11.30%, compared to 10.40% at March 31, 2022.
Asset Quality
The Company recorded a provision for loan losses of $507,000 for the 2023 first quarter versus no provision for loan losses for the same period last year.
On January 1, 2023, Middlefield adopted ASU 2016-13 - Measurement of Credit Losses on Financial Instruments and implemented the current expected credit losses ("CECL") accounting standards. Upon adoption, the reserve for credit losses on loans and leases increased by $5.3 million, the reserve for credit losses for unfunded commitments increased by $622,000. This resulted in an after-tax retained earnings adjustment of $4.4 million. During the quarter ended March 31, 2023, the Corporation recorded CECL related charges of $507,000, including a provision for credit losses on loans and leases of $334,000 and a reserve for unfunded commitments of $173,000.
Net recoveries were $8,000, or 0.00% of average loans, annualized, during the 2023 first quarter, compared to net recoveries of $150,000, or 0.06% of average loans, annualized, at March 31, 2022.
Nonperforming assets at March 31, 2023, were $12.7 million, compared to $11.7 million at March 31, 2022. Nonperforming loans at March 31, 2023, increased to $6.9 million, from $4.7 million at March 31, 2022 primarily due to the additional loans from the Liberty Bancshares, Inc. merger. The allowance for credit losses at March 31, 2023, stood at $20.2 million, or 1.46% of total loans, compared to $14.5 million, or 1.48% of total loans at March 31, 2022.
About Middlefield Banc Corp.
Middlefield Banc Corp., headquartered in Middlefield, Ohio, is the Bank holding Company of The Middlefield Banking Company, with total assets of $1.73 billion at March 31, 2023. The Bank operates 21 full-service banking centers and an LPL Financial® brokerage office serving Ada, Beachwood, Bellefontaine, Chardon, Cortland, Dublin, Garrettsville, Kenton, Mantua, Marysville, Middlefield, Newbury, Orwell, Plain City, Powell, Solon, Sunbury, Twinsburg, and Westerville. The Bank also operates a Loan Production Office in Mentor, Ohio.
Additional information is available at www.middlefieldbank.bank
(1) NON-GAAP FINANCIAL MEASURES
This press release includes disclosure of Middlefield Banc Corp.'s tangible book value per share, return on average tangible equity, and pre-tax, pre-provision for loan losses income, which are financial measures not prepared in accordance with generally accepted accounting principles in the United States (GAAP). A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed by GAAP. Middlefield Banc Corp. believes that these non-GAAP financial measures provide both management and investors a more complete understanding of the underlying operational results and trends and Middlefield Banc Corp.'s marketplace performance. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with GAAP. The reconciliations of non-GAAP financial measures are included in the tables following Consolidated Financial Highlights below.
FORWARD-LOOKING STATEMENTS
This press release of Middlefield Banc Corp. and the reports Middlefield Banc Corp. files with the Securities and Exchange Commission often contain "forward-looking statements" relating to present or future trends or factors affecting the banking industry and, specifically, the financial operations, markets and products of Middlefield Banc Corp. These forward-looking statements involve certain risks and uncertainties. There are a number of important factors that could cause Middlefield Banc Corp.'s future results to differ materially from historical performance or projected performance. These factors include, but are not limited to: (1) a significant increase in competitive pressures among financial institutions; (2) changes in the interest rate environment that may reduce interest margins; (3) changes in prepayment speeds, charge-offs and loan loss provisions; (4) less favorable than expected general economic conditions; (5) legislative or regulatory changes that may adversely affect businesses in which Middlefield Banc Corp. is engaged; (6) technological issues which may adversely affect Middlefield Banc Corp.'s financial operations or customers; (7) changes in the securities markets; or (8) risk factors mentioned in the reports and registration statements Middlefield Banc Corp. files with the Securities and Exchange Commission. Middlefield Banc Corp. undertakes no obligation to release revisions to these forward-looking statements or to reflect events or circumstances after the date of this press release.
| MIDDLEFIELD BANC CORP. | |||||||||||||||||||
| Consolidated Selected Financial Highlights | |||||||||||||||||||
| (Dollar amounts in thousands, unaudited) | |||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| Balance Sheets (period end) | 2023 | 2022 | 2022 | 2022 | 2022 | ||||||||||||||
| ASSETS | |||||||||||||||||||
| Cash and due from banks | $ | 59,609 | $ | 51,404 | $ | 119,777 | $ | 60,114 | $ | 78,804 | |||||||||
| Federal funds sold | 7,048 | 2,405 | 8,800 | 19,039 | 29,474 | ||||||||||||||
| Cash and cash equivalents | 66,657 | 53,809 | 128,577 | 79,153 | 108,278 | ||||||||||||||
| Equity securities, at fair value | 777 | 915 | 972 | 779 | 851 | ||||||||||||||
| Investment securities available for sale, at fair value | 169,605 | 164,967 | 162,064 | 171,958 | 175,216 | ||||||||||||||
| Loans held for sale | 104 | - | - | - | 9 | ||||||||||||||
| Loans: | |||||||||||||||||||
| Commercial real estate: | |||||||||||||||||||
| Owner occupied | 185,661 | 191,748 | 120,912 | 120,771 | 113,590 | ||||||||||||||
| Non-owner occupied | 400,314 | 380,580 | 285,419 | 288,334 | 293,745 | ||||||||||||||
| Multifamily | 63,892 | 58,251 | 38,063 | 29,152 | 29,385 | ||||||||||||||
| Residential real estate | 306,179 | 296,308 | 247,612 | 246,453 | 244,747 | ||||||||||||||
| Commercial and industrial | 195,024 | 195,602 | 146,987 | 137,398 | 131,683 | ||||||||||||||
| Home equity lines of credit | 126,555 | 128,065 | 114,344 | 111,730 | 106,300 | ||||||||||||||
| Construction and other | 97,406 | 94,199 | 33,748 | 35,988 | 50,152 | ||||||||||||||
| Consumer installment | 7,816 | 8,119 | 8,110 | 8,171 | 8,118 | ||||||||||||||
| Total loans | 1,382,847 | 1,352,872 | 995,195 | 977,997 | 977,720 | ||||||||||||||
| Less allowance for credit losses | 20,162 | 14,438 | 14,532 | 14,550 | 14,492 | ||||||||||||||
| Net loans | 1,362,685 | 1,338,434 | 980,663 | 963,447 | 963,228 | ||||||||||||||
| Premises and equipment, net | 21,775 | 21,961 | 16,215 | 17,030 | 17,142 | ||||||||||||||
| Goodwill | 31,735 | 31,735 | 15,071 | 15,071 | 15,071 | ||||||||||||||
| Core deposit intangibles | 7,436 | 7,701 | 1,171 | 1,249 | 1,326 | ||||||||||||||
| Bank-owned life insurance | 34,015 | 33,811 | 17,382 | 17,274 | 17,166 | ||||||||||||||
| Other real estate owned | 5,792 | 5,821 | 6,792 | 6,792 | 6,992 | ||||||||||||||
| Accrued interest receivable and other assets | 27,258 | 28,528 | 22,104 | 20,624 | 18,019 | ||||||||||||||
| TOTAL ASSETS | $ | 1,727,839 | $ | 1,687,682 | $ | 1,351,011 | $ | 1,293,377 | $ | 1,323,298 | |||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||||||
| LIABILITIES | |||||||||||||||||||
| Deposits: | |||||||||||||||||||
| Noninterest-bearing demand | $ | 474,977 | $ | 503,907 | $ | 383,675 | $ | 379,872 | $ | 361,251 | |||||||||
| Interest-bearing demand | 196,086 | 164,677 | 160,112 | 154,788 | 162,010 | ||||||||||||||
| Money market | 221,723 | 187,498 | 162,052 | 185,494 | 187,807 | ||||||||||||||
| Savings | 287,859 | 307,917 | 247,466 | 252,179 | 264,784 | ||||||||||||||
| Time | 244,962 | 238,020 | 177,182 | 174,833 | 191,320 | ||||||||||||||
| Total deposits | 1,425,607 | 1,402,019 | 1,130,487 | 1,147,166 | 1,167,172 | ||||||||||||||
| Short-term borrowings | 85,000 | 65,000 | 80,000 | - | - | ||||||||||||||
| Other borrowings | 12,010 | 12,059 | 12,107 | 12,910 | 12,975 | ||||||||||||||
| Accrued interest payable and other liabilities | 10,057 | 10,913 | 5,562 | 5,081 | 5,507 | ||||||||||||||
| TOTAL LIABILITIES | 1,532,674 | 1,489,991 | 1,228,156 | 1,165,157 | 1,185,654 | ||||||||||||||
| STOCKHOLDERS' EQUITY | |||||||||||||||||||
| Common stock, no par value; 10,000,000 shares authorized, 9,924,245 | |||||||||||||||||||
| shares issued, 8,088,793 shares outstanding as of March 31, 2023 | 161,248 | 161,029 | 87,640 | 87,562 | 87,562 | ||||||||||||||
| Retained earnings | 93,024 | 94,154 | 93,166 | 89,900 | 86,804 | ||||||||||||||
| Accumulated other comprehensive loss | (19,253 | ) | (22,144 | ) | (25,080 | ) | (17,591 | ) | (6,674 | ) | |||||||||
| Treasury stock, at cost; 1,835,452 shares as of March 31, 2023 | (39,854 | ) | (35,348 | ) | (32,871 | ) | (31,651 | ) | (30,048 | ) | |||||||||
| TOTAL STOCKHOLDERS' EQUITY | 195,165 | 197,691 | 122,855 | 128,220 | 137,644 | ||||||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 1,727,839 | $ | 1,687,682 | $ | 1,351,011 | $ | 1,293,377 | $ | 1,323,298 | |||||||||
| MIDDLEFIELD BANC CORP. | |||||||||||||||||||
| Consolidated Selected Financial Highlights | |||||||||||||||||||
| (Dollar amounts in thousands, unaudited) | |||||||||||||||||||
| For the Three Months Ended | |||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| Statements of Income | 2023 | 2022 | 2022 | 2022 | 2022 | ||||||||||||||
| INTEREST AND DIVIDEND INCOME | |||||||||||||||||||
| Interest and fees on loans | $ | 18,275 | $ | 14,368 | $ | 11,892 | $ | 11,268 | $ | 10,985 | |||||||||
| Interest-earning deposits in other institutions | 250 | 240 | 134 | 74 | 24 | ||||||||||||||
| Federal funds sold | 253 | 119 | 51 | 46 | 3 | ||||||||||||||
| Investment securities: | |||||||||||||||||||
| Taxable interest | 458 | 477 | 449 | 442 | 443 | ||||||||||||||
| Tax-exempt interest | 980 | 986 | 982 | 955 | 784 | ||||||||||||||
| Dividends on stock | 88 | 68 | 59 | 33 | 24 | ||||||||||||||
| Total interest and dividend income | 20,304 | 16,258 | 13,567 | 12,818 | 12,263 | ||||||||||||||
| INTEREST EXPENSE | |||||||||||||||||||
| Deposits | 2,990 | 1,771 | 812 | 709 | 726 | ||||||||||||||
| Short-term borrowings | 653 | 263 | 44 | - | - | ||||||||||||||
| Other borrowings | 155 | 142 | 112 | 81 | 69 | ||||||||||||||
| Total interest expense | 3,798 | 2,176 | 968 | 790 | 795 | ||||||||||||||
| NET INTEREST INCOME | 16,506 | 14,082 | 12,599 | 12,028 | 11,468 | ||||||||||||||
| Provision for credit losses | 507 | - | - | - | - | ||||||||||||||
| NET INTEREST INCOME AFTER PROVISION | |||||||||||||||||||
| FOR LOAN LOSSES | 15,999 | 14,082 | 12,599 | 12,028 | 11,468 | ||||||||||||||
| NONINTEREST INCOME | |||||||||||||||||||
| Service charges on deposit accounts | 987 | 976 | 1,004 | 956 | 914 | ||||||||||||||
| (Loss) gain on equity securities | (138 | ) | (77 | ) | (57 | ) | (72 | ) | 33 | ||||||||||
| Gain on other real estate owned | 2 | - | - | - | - | ||||||||||||||
| Earnings on bank-owned life insurance | 200 | 137 | 108 | 108 | 106 | ||||||||||||||
| Gains (losses) on sale of loans | 23 | (4 | ) | 7 | 18 | 3 | |||||||||||||
| Revenue from investment services | 186 | 147 | 233 | 153 | 141 | ||||||||||||||
| Gross rental income | 102 | 951 | - | - | - | ||||||||||||||
| Other income | 318 | 284 | 251 | 220 | 206 | ||||||||||||||
| Total noninterest income | 1,678 | 2,414 | 1,546 | 1,383 | 1,403 | ||||||||||||||
| NONINTEREST EXPENSE | |||||||||||||||||||
| Salaries and employee benefits | 5,852 | 4,886 | 4,491 | 3,785 | 4,386 | ||||||||||||||
| Occupancy expense | 696 | 487 | 458 | 583 | 505 | ||||||||||||||
| Equipment expense | 317 | 252 | 233 | 274 | 315 | ||||||||||||||
| Data processing costs | 1,070 | 1,050 | 985 | 822 | 844 | ||||||||||||||
| Ohio state franchise tax | 385 | 279 | 293 | 292 | 293 | ||||||||||||||
| Federal deposit insurance expense | 120 | 105 | 84 | 90 | 50 | ||||||||||||||
| Professional fees | 538 | 382 | 280 | 383 | 455 | ||||||||||||||
| Other real estate owned writedowns | - | 1,000 | - | 200 | - | ||||||||||||||
| Gain on other real estate owned | (2 | ) | - | - | - | - | |||||||||||||
| Advertising expense | 486 | 308 | 268 | 229 | 228 | ||||||||||||||
| Software amortization expense | 26 | 28 | 27 | 40 | 48 | ||||||||||||||
| Core deposit intangible amortization | 265 | 140 | 78 | 77 | 77 | ||||||||||||||
| Gross other real estate owned expenses | 132 | 692 | 1 | 6 | 8 | ||||||||||||||
| Merger-related costs | 245 | 1,413 | 390 | 579 | - | ||||||||||||||
| Other expense | 1,662 | 1,321 | 1,298 | 1,175 | 1,057 | ||||||||||||||
| Total noninterest expense | 11,792 | 12,343 | 8,886 | 8,535 | 8,266 | ||||||||||||||
| Income before income taxes | 5,885 | 4,153 | 5,259 | 4,876 | 4,605 | ||||||||||||||
| Income taxes | 989 | 651 | 1,010 | 787 | 772 | ||||||||||||||
| NET INCOME | $ | 4,896 | $ | 3,502 | $ | 4,249 | $ | 4,089 | $ | 3,833 | |||||||||
| PTPP (1) | $ | 6,392 | $ | 4,153 | $ | 5,259 | $ | 4,876 | $ | 4,605 | |||||||||
| (1) The pre-tax pre-provision (PTPP) is the income before income taxes before provision for credit losses considerations, for reconciliation of non-GAAP measures. | |||||||||||||||||||
| MIDDLEFIELD BANC CORP. | |||||||||||||||||||
| Consolidated Selected Financial Highlights | |||||||||||||||||||
| (Dollar amounts in thousands, except per share and share amounts, unaudited) | |||||||||||||||||||
| For the Three Months Ended | |||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||||||
| Per common share data | |||||||||||||||||||
| Net income per common share - basic | $ | 0.60 | $ | 0.53 | $ | 0.73 | $ | 0.70 | $ | 0.65 | |||||||||
| Net income per common share - diluted | $ | 0.60 | $ | 0.53 | $ | 0.73 | $ | 0.70 | $ | 0.65 | |||||||||
| Dividends declared per share | $ | 0.20 | $ | 0.30 | $ | 0.17 | $ | 0.17 | $ | 0.17 | |||||||||
| Book value per share (period end) | $ | 24.13 | $ | 23.98 | $ | 21.30 | $ | 22.07 | $ | 23.43 | |||||||||
| Tangible book value per share (period end) (2) (3) | $ | 19.29 | $ | 19.19 | $ | 18.48 | $ | 19.26 | $ | 20.64 | |||||||||
| Dividends declared | $ | 1,605 | $ | 2,514 | $ | 983 | $ | 993 | $ | 1,000 | |||||||||
| Dividend yield | 2.89 | % | 4.34 | % | 2.49 | % | 2.71 | % | 2.78 | % | |||||||||
| Dividend payout ratio | 32.78 | % | 71.79 | % | 23.13 | % | 24.28 | % | 26.09 | % | |||||||||
| Average shares outstanding - basic | 8,138,771 | 6,593,616 | 5,792,773 | 5,851,422 | 5,879,025 | ||||||||||||||
| Average shares outstanding - diluted | 8,152,629 | 6,610,907 | 5,805,799 | 5,860,098 | 5,889,836 | ||||||||||||||
| Period ending shares outstanding | 8,088,793 | 8,245,235 | 5,767,803 | 5,810,351 | 5,873,565 | ||||||||||||||
| Selected ratios | |||||||||||||||||||
| Return on average assets | 1.16 | % | 0.97 | % | 1.32 | % | 1.25 | % | 1.17 | % | |||||||||
| Return on average equity | 10.19 | % | 9.35 | % | 12.94 | % | 12.30 | % | 10.75 | % | |||||||||
| Return on average tangible common equity (2) (4) | 12.77 | % | 11.13 | % | 14.79 | % | 14.02 | % | 12.13 | % | |||||||||
| Efficiency (1) | 62.44 | % | 72.75 | % | 61.07 | % | 61.83 | % | 62.54 | % | |||||||||
| Equity to assets at period end | 11.30 | % | 11.71 | % | 9.09 | % | 9.91 | % | 10.40 | % | |||||||||
| Noninterest expense to average assets | 0.69 | % | 0.86 | % | 0.69 | % | 0.65 | % | 0.62 | % | |||||||||
| (1) The efficiency ratio is calculated by dividing noninterest expense less amortization of intangibles by the sum of net interest income on a fully taxable equivalent basis plus noninterest income | |||||||||||||||||||
| (2) See reconciliation of non-GAAP measures below | |||||||||||||||||||
| (3) Calculated by dividing tangible common equity by shares outstanding | |||||||||||||||||||
| (4) Calculated by dividing annualized net income for each period by average tangible common equity | |||||||||||||||||||
| MIDDLEFIELD BANC CORP. | |||||||||||||||||||
| Consolidated Selected Financial Highlights | |||||||||||||||||||
| (Unaudited) | |||||||||||||||||||
| For the Three Months Ended | |||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| Yields | 2023 | 2022 | 2022 | 2022 | 2022 | ||||||||||||||
| Interest-earning assets: | |||||||||||||||||||
| Loans receivable (2) | 5.45 | % | 5.11 | % | 4.78 | % | 4.66 | % | 4.53 | % | |||||||||
| Investment securities (2) | 4.11 | % | 3.83 | % | 3.90 | % | 3.76 | % | 3.41 | % | |||||||||
| Interest-earning deposits with other banks | 3.46 | % | 3.42 | % | 2.06 | % | 0.77 | % | 0.23 | % | |||||||||
| Total interest-earning assets | 5.22 | % | 4.88 | % | 4.55 | % | 4.28 | % | 4.06 | % | |||||||||
| Deposits: | |||||||||||||||||||
| Interest-bearing demand deposits | 0.83 | % | 0.83 | % | 0.22 | % | 0.15 | % | 0.14 | % | |||||||||
| Money market deposits | 1.52 | % | 1.00 | % | 0.46 | % | 0.49 | % | 0.47 | % | |||||||||
| Savings deposits | 1.03 | % | 0.49 | % | 0.19 | % | 0.06 | % | 0.06 | % | |||||||||
| Certificates of deposit | 1.71 | % | 1.30 | % | 0.96 | % | 0.83 | % | 0.87 | % | |||||||||
| Total interest-bearing deposits | 1.28 | % | 0.87 | % | 0.43 | % | 0.36 | % | 0.37 | % | |||||||||
| Non-Deposit Funding: | |||||||||||||||||||
| Borrowings | 4.78 | % | 4.25 | % | 2.94 | % | 2.51 | % | 2.16 | % | |||||||||
| Total interest-bearing liabilities | 1.52 | % | 1.02 | % | 0.50 | % | 0.39 | % | 0.39 | % | |||||||||
| Cost of deposits | 0.84 | % | 0.57 | % | 0.29 | % | 0.24 | % | 0.25 | % | |||||||||
| Cost of funds | 1.02 | % | 0.68 | % | 0.34 | % | 0.27 | % | 0.27 | % | |||||||||
| Net interest margin (1) | 4.26 | % | 4.23 | % | 4.23 | % | 4.02 | % | 3.80 | % | |||||||||
| (1) Net interest margin represents net interest income as a percentage of average interest-earning assets. | |||||||||||||||||||
| (2) Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were determined using an effective tax rate of 21%. | |||||||||||||||||||
| For the Three Months Ended | |||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| Asset quality data | 2023 | 2022 | 2022 | 2022 | 2022 | ||||||||||||||
| (Dollar amounts in thousands, unaudited) | |||||||||||||||||||
| Nonperforming loans (1) | $ | 6,882 | $ | 2,111 | $ | 3,692 | $ | 4,670 | $ | 4,728 | |||||||||
| Other real estate owned | 5,792 | 5,821 | 6,792 | 6,792 | 6,992 | ||||||||||||||
| Nonperforming assets | $ | 12,674 | $ | 7,932 | $ | 10,484 | $ | 11,462 | $ | 11,720 | |||||||||
| Allowance for credit losses | $ | 20,162 | $ | 14,438 | $ | 14,532 | $ | 14,550 | $ | 14,492 | |||||||||
| Allowance for credit losses/total loans | 1.46 | % | 1.07 | % | 1.46 | % | 1.49 | % | 1.48 | % | |||||||||
| Net (recoveries) charge-offs: | |||||||||||||||||||
| Quarter-to-date | $ | (8 | ) | $ | 94 | $ | 18 | $ | (58 | ) | $ | (150 | ) | ||||||
| Year-to-date | (8 | ) | (96 | ) | (190 | ) | (208 | ) | (150 | ) | |||||||||
| Net (recoveries) charge-offs to average loans, annualized: | |||||||||||||||||||
| Quarter-to-date | 0.00 | % | 0.03 | % | 0.01 | % | -0.02 | % | -0.06 | % | |||||||||
| Year-to-date | 0.00 | % | -0.01 | % | -0.02 | % | -0.04 | % | -0.06 | % | |||||||||
| Nonperforming loans/total loans | 0.50 | % | 0.16 | % | 0.37 | % | 0.48 | % | 0.48 | % | |||||||||
| Allowance for credit losses/nonperforming loans | 292.97 | % | 683.94 | % | 393.61 | % | 311.56 | % | 306.51 | % | |||||||||
| Nonperforming assets/total assets | 0.73 | % | 0.47 | % | 0.78 | % | 0.89 | % | 0.89 | % | |||||||||
| (1) Nonperforming loans exclude troubled debt restructurings that are performing in accordance with their terms over a prescribed period of time. | |||||||||||||||||||
| Reconciliation of Common Stockholders' Equity to Tangible Common Equity | |||||||||||||||||||
| For the Three Months Ended | |||||||||||||||||||
| (Dollar amounts in thousands, unaudited) | March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||||||
| Stockholders' Equity | $ | 195,165 | $ | 197,691 | $ | 122,855 | $ | 128,220 | $ | 137,644 | |||||||||
| Less Goodwill and other intangibles | 39,171 | 39,436 | 16,242 | 16,320 | 16,397 | ||||||||||||||
| Tangible Common Equity | $ | 155,994 | $ | 158,255 | $ | 106,613 | $ | 111,900 | $ | 121,247 | |||||||||
| Shares outstanding | 8,088,793 | 8,245,235 | 5,767,803 | 5,810,351 | 5,873,565 | ||||||||||||||
| Tangible book value per share | $ | 19.29 | $ | 19.19 | $ | 18.48 | $ | 19.26 | $ | 20.64 | |||||||||
| Reconciliation of Average Equity to Return on Average Tangible Common Equity | |||||||||||||||||||
| For the Three Months Ended | |||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||||||
| Average Stockholders' Equity | $ | 194,814 | $ | 148,616 | $ | 130,263 | $ | 133,377 | $ | 144,630 | |||||||||
| Less Average Goodwill and other intangibles | 39,300 | 23,731 | 16,280 | 16,357 | 16,435 | ||||||||||||||
| Average Tangible Common Equity | $ | 155,514 | $ | 124,885 | $ | 113,983 | $ | 117,020 | $ | 128,195 | |||||||||
| Net income | $ | 4,896 | $ | 3,502 | $ | 4,249 | $ | 4,089 | $ | 3,833 | |||||||||
| Return on average tangible common equity (annualized) | 12.77 | % | 11.13 | % | 14.79 | % | 14.02 | % | 12.13 | % | |||||||||
| Reconciliation of Pre-Tax Pre-Provision Income (PTPP) | |||||||||||||||||||
| For the Three Months Ended | |||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||||||
| Net income | $ | 4,896 | $ | 3,502 | $ | 4,249 | $ | 4,089 | $ | 3,833 | |||||||||
| Add Income Taxes | 989 | 651 | 1,010 | 787 | 772 | ||||||||||||||
| Add Provision for credit losses | 507 | - | - | - | - | ||||||||||||||
| PTPP | $ | 6,392 | $ | 4,153 | $ | 5,259 | $ | 4,876 | $ | 4,605 | |||||||||
| MIDDLEFIELD BANC CORP. | |||||||||||||||||
| Average Balance Sheets | |||||||||||||||||
| (Dollar amounts in thousands, unaudited) | |||||||||||||||||
| For the Three Months Ended | |||||||||||||||||
| March 31, | March 31, | ||||||||||||||||
| 2023 | 2022 | ||||||||||||||||
| Average | Average | Average | Average | ||||||||||||||
| Balance | Interest | Yield/Cost | Balance | Interest | Yield/Cost | ||||||||||||
| Interest-earning assets: | |||||||||||||||||
| Loans receivable (3) | $ | 1,360,866 | $ | 18,275 | 5.45 | % | $ | 983,853 | $ | 10,985 | 4.53 | % | |||||
| Investment securities (3) | 167,674 | 1,438 | 4.11 | % | 170,829 | 1,227 | 3.41 | % | |||||||||
| Interest-earning deposits with other banks (4) | 69,308 | 591 | 3.46 | % | 91,690 | 51 | 0.23 | % | |||||||||
| Total interest-earning assets | 1,597,848 | 20,304 | 5.22 | % | 1,246,372 | 12,263 | 4.06 | % | |||||||||
| Noninterest-earning assets | 115,515 | 85,667 | |||||||||||||||
| Total assets | $ | 1,713,363 | $ | 1,332,039 | |||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||
| Interest-bearing demand deposits | $ | 177,935 | $ | 364 | 0.83 | % | $ | 170,353 | $ | 60 | 0.14 | % | |||||
| Money market deposits | 208,408 | 783 | 1.52 | % | 184,265 | 212 | 0.47 | % | |||||||||
| Savings deposits | 315,049 | 804 | 1.03 | % | 260,162 | 38 | 0.06 | % | |||||||||
| Certificates of deposit | 246,151 | 1,039 | 1.71 | % | 193,657 | 416 | 0.87 | % | |||||||||
| Short-term borrowings | 56,459 | 653 | 4.69 | % | - | - | 0.00 | % | |||||||||
| Other borrowings | 12,038 | 155 | 5.22 | % | 12,943 | 69 | 2.16 | % | |||||||||
| Total interest-bearing liabilities | 1,016,040 | 3,798 | 1.52 | % | 821,380 | 795 | 0.39 | % | |||||||||
| Noninterest-bearing liabilities: | |||||||||||||||||
| Noninterest-bearing demand deposits | 491,649 | 359,656 | |||||||||||||||
| Other liabilities | 10,860 | 6,373 | |||||||||||||||
| Stockholders' equity | 194,814 | 144,630 | |||||||||||||||
| Total liabilities and stockholders' equity | $ | 1,713,363 | $ | 1,332,039 | |||||||||||||
| Net interest income | $ | 16,506 | $ | 11,468 | |||||||||||||
| Interest rate spread (1) | 3.70 | % | 3.67 | % | |||||||||||||
| Net interest margin (2) | 4.26 | % | 3.80 | % | |||||||||||||
| Ratio of average interest-earning assets to | |||||||||||||||||
| average interest-bearing liabilities | 157.26 | % | 151.74 | % | |||||||||||||
| (1) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities. | |||||||||||||||||
| (2) Net interest margin represents net interest income as a percentage of average interest-earning assets. | |||||||||||||||||
| (3) Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $278 and $223 for the three months ended March 31, 2023 and 2022, respectively. | |||||||||||||||||
| (4) Includes dividends received on restricted stock. | |||||||||||||||||
| For the Three Months Ended | |||||||||||||||||
| March 31, | December 31, | ||||||||||||||||
| 2023 | 2022 | ||||||||||||||||
| Average | Average | Average | Average | ||||||||||||||
| Balance | Interest | Yield/Cost | Balance | Interest | Yield/Cost | ||||||||||||
| Interest-earning assets: | |||||||||||||||||
| Loans receivable (3) | $ | 1,360,866 | $ | 18,275 | 5.45 | % | $ | 1,117,221 | $ | 14,368 | 5.11 | % | |||||
| Investment securities (3) | 167,674 | 1,438 | 4.11 | % | 178,772 | 1,463 | 3.83 | % | |||||||||
| Interest-earning deposits with other banks (4) | 69,308 | 591 | 3.46 | % | 49,569 | 427 | 3.42 | % | |||||||||
| Total interest-earning assets | 1,597,848 | 20,304 | 5.22 | % | 1,345,562 | 16,258 | 4.88 | % | |||||||||
| Noninterest-earning assets | 115,515 | 89,740 | |||||||||||||||
| Total assets | $ | 1,713,363 | $ | 1,435,302 | |||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||
| Interest-bearing demand deposits | $ | 177,935 | $ | 364 | 0.83 | % | $ | 165,267 | $ | 344 | 0.83 | % | |||||
| Money market deposits | 208,408 | 783 | 1.52 | % | 172,437 | 435 | 1.00 | % | |||||||||
| Savings deposits | 315,049 | 804 | 1.03 | % | 266,613 | 330 | 0.49 | % | |||||||||
| Certificates of deposit | 246,151 | 1,039 | 1.71 | % | 201,972 | 662 | 1.30 | % | |||||||||
| Short-term borrowings | 56,459 | 653 | 4.69 | % | 25,750 | 263 | 4.05 | % | |||||||||
| Other borrowings | 12,038 | 155 | 5.22 | % | 12,086 | 142 | 4.66 | % | |||||||||
| Total interest-bearing liabilities | 1,016,040 | 3,798 | 1.52 | % | 844,125 | 2,176 | 1.02 | % | |||||||||
| Noninterest-bearing liabilities: | |||||||||||||||||
| Noninterest-bearing demand deposits | 491,649 | 428,155 | |||||||||||||||
| Other liabilities | 10,860 | 14,406 | |||||||||||||||
| Stockholders' equity | 194,814 | 148,616 | |||||||||||||||
| Total liabilities and stockholders' equity | $ | 1,713,363 | $ | 1,435,302 | |||||||||||||
| Net interest income | $ | 16,506 | $ | 14,082 | |||||||||||||
| Interest rate spread (1) | 3.70 | % | 3.86 | % | |||||||||||||
| Net interest margin (2) | 4.26 | % | 4.23 | % | |||||||||||||
| Ratio of average interest-earning assets to | |||||||||||||||||
| average interest-bearing liabilities | 157.26 | % | 159.40 | % | |||||||||||||
| (1) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities. | |||||||||||||||||
| (2) Net interest margin represents net interest income as a percentage of average interest-earning assets. | |||||||||||||||||
| (3) Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $278 and $278 for the three months ended March 31, 2023, and December 31, 2022, respectively. | |||||||||||||||||
| (4) Includes dividends received on restricted stock. | |||||||||||||||||
| Company Contact: | Investor and Media Contact: |
| James R. Heslop, II Chief Executive Officer Middlefield Banc Corp. (440) 632-1666 Ext. 3219 JHeslop@middlefieldbank.com | Andrew M. Berger Managing Director SM Berger & Company, Inc. (216) 464-6400 andrew@smberger.com |
