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Middlefield Banc Corp. Reports 2022 Nine Month Financial Results
Source: Nasdaq GlobeNewswire / 18 Oct 2022 16:05:01 America/New_York
MIDDLEFIELD, Ohio, Oct. 18, 2022 (GLOBE NEWSWIRE) -- Middlefield Banc Corp. (NASDAQ: MBCN) today reported financial results for the three and nine months ended September 30, 2022.
2022 Nine Month Financial Highlights (on a year-over-year basis unless noted):
- Returned $6.6 million of capital to shareholders through dividends and the repurchase of 141,002 shares at an average price of $25.83 per share
- Net income was $12.2 million, or $2.08 per diluted share, compared to $13.8 million, or $2.19 per diluted share
- Nine-month pre-tax income benefited from $1.2 million of accelerated net fees associated with the Paycheck Protection Program (“PPP”), compared to $3.1 million in the 2021 nine-month period
- Year-to-date net income was negatively impacted by $969,000 of one-time expenses associated with the proposed Liberty Bancshares, Inc. merger
- Net interest margin improved by 24 basis points to 4.02%, compared to 3.78%
- Total loans were $995.2 million, compared to $981.7 million at December 31, 2021
- Total loans increased by $46.6 million, or 6.6% annualized from December 31, 2021, without the impact of PPP loan forgiveness
- Return on average assets was 1.24%, compared to 1.34%
- Return on average equity was 11.96%, compared to 12.58%
- Return on average tangible common equity(1) was 13.59%, compared to 14.20%
- Strong asset quality with nonperforming loans to total loans of 0.37%, compared to 0.67%
- Allowance for loan losses was 1.46% of total loans, compared to 1.41%
- Merger with Liberty Bancshares, Inc. on schedule to close during the 2022 fourth quarter
“2022 is shaping up to be a strong year of core earnings and asset growth. Total loans increased 1.7% from the second quarter and are up 4.0% on a year-over-year basis, without the impact of PPP loan forgiveness. In addition, year-to-date profitability has benefitted from robust asset quality and a higher net interest margin, partially offsetting a $1.9 million year-over-year reduction in PPP fees and nearly $1.0 million of one-time expenses associated with the proposed Liberty Bancshares, Inc. merger,” stated James R. Heslop, II, President and Chief Executive Officer.
“As we navigate a rising rate and more fluid economic environment, we are focused on supporting the financial needs of our Ohio communities, maintaining strong asset quality, and completing the merger with Liberty Bancshares, Inc. The merger is on track to close during the 2022 fourth quarter and we expect to benefit as a larger bank with total assets of approximately $1.80 billion, strong earnings accretion, and a robust footprint in two of Ohio’s largest and fastest-growing markets,” concluded Mr. Heslop.
Income Statement
Net interest income for the nine-month period ended September 30, 2022, was $36.1 million, compared to $36.2 million for the same period last year. Year-to-date, the net interest margin was 4.02%, compared to 3.78% for the same period last year. Net interest income for the 2022 third quarter was $12.6 million, compared to $12.5 million for the 2021 third quarter. The 1.1% increase in net interest income for the 2022 third quarter from the same period in 2021, was largely a result of higher interest income and lower interest expense. The net interest margin for the 2022 third quarter was 4.23%, compared to 3.90% for the same period of 2021.
For the 2022 nine-month period, noninterest income was $4.3 million, compared to $5.7 million for the same period last year. Noninterest income for the 2022 third quarter was $1.5 million, compared to $1.8 million for the same period last year.
For the 2022 nine-month period, noninterest expense increased 6.5% to $25.7 million, compared to $24.1 million for the same period last year. Operating costs in the 2022 third quarter increased 12.4% to $8.9 million from $7.9 million for the 2021 third quarter. The Company incurred $390,000 during the 2022 third quarter and $969,000 during the 2022 nine-month period of additional operating expenses associated with the proposed Liberty Bancshares, Inc. merger.
Net income for the 2022 nine-month period, was $12.2 million, or $2.08 per diluted share, compared to $13.8 million, or $2.19 per diluted share for the same period last year. Net income for the 2022 third quarter, was $4.2 million, or $0.73 per diluted share, compared to $5.2 million, or $0.85 per diluted share for the same period last year.
Balance Sheet
Total assets at September 30, 2022, decreased slightly to approximately $1.35 billion from $1.37 billion at September 30, 2021. Net loans at September 30, 2022, decreased 1.5% to $980.7 million, compared to $996.0 million at September 30, 2021. Since 2020, Middlefield has helped customers receive $211.6 million of forgiveness payments under the terms of the Paycheck Protection Program, including processing $0.4 million of forgiveness payments during the third quarter of 2022, and $33.1 million of forgiveness payments year-to-date. The balance of PPP loans outstanding at September 30, 2022, was $1.0 million.
Total deposits at September 30, 2022, were $1.13 billion, compared to $1.20 billion at September 30, 2021. The 5.8% decrease in deposits was primarily due to declines in interest-bearing, time-based, money market and savings accounts, partially offset by increased noninterest-bearing accounts. The investment portfolio was $162.1 million at September 30, 2022, compared with $163.1 million at September 30, 2021.
Donald L. Stacy, Chief Financial Officer, stated, “The growth we have experienced in our net interest margin throughout 2022 is encouraging, driven by an 18-basis point increase in our yield on earning assets, and a 6-basis point improvement in our cost of funds. As competition for deposits increases, we expect our cost of funds to increase in future periods. Asset quality remains strong across our portfolio, with only $3.7 million of nonperforming loans at September 30, 2022, which is a 45.8% reduction from September 30, 2021, and represents just 0.37% of total loans at the end of the 2022 third quarter. With a higher degree of economic uncertainty, we have maintained a robust allowance for loan losses, which was 1.46% of total loans at September 30, 2022. We believe our strong balance sheet and favorable capital position will allow us to navigate a more challenging economic cycle, while simultaneously allocating capital to support our long-term growth strategies, dividend payment, and share repurchase program.”
Mr. Stacy continued, “Year-to-date, we have repurchased 141,002 shares of our common stock at a total cost of $3.6 million. This includes 45,638 shares repurchased during the 2022 third quarter at an average price of $26.74 per share at September 30, 2022. We have 246,549 shares remaining under our repurchase program.”
Stockholders’ Equity and Dividends
At September 30, 2022, stockholders’ equity was $122.9 million compared to $146.1 million at September 30, 2021. The 15.9% year-over-year decline in stockholders’ equity was primarily due to an increase in the unrealized loss on the available-for-sale investment portfolio as well as the Company’s stock repurchase program. On a per-share basis, shareholders’ equity at September 30, 2022, was $21.30 compared to $24.13 at September 30, 2021.At September 30, 2022, tangible stockholders’ equity(1) was $106.6 million, compared to $129.5 million at September 30, 2021. On a per-share basis, tangible stockholders’ equity(1) was $18.48 at September 30, 2022, compared to $21.39 at September 30, 2021.
Through the 2022 nine-month period, the Company declared cash dividends of $0.51 per share, compared to $0.48 per share for the same period last year.
At September 30, 2022, the Company had an equity-to-assets ratio of 9.09%, compared to 10.69% at September 30, 2021.
Asset Quality
No provision for loan losses was recorded for both the 2022 and 2021 third quarters. There was no provision for loan losses for the 2022 nine-month period versus $900,000 for the same period last year.
Net charge-offs were $18,000, or 0.01% of average loans, annualized, during the 2022 third quarter, compared to net recoveries of $34,000, or 0.01% of average loans, annualized, at September 30, 2021. Year-to-date net recoveries were $190,000, or 0.02% of average loans, annualized, compared to net charge-offs of $125,000, or 0.02% of average loans, annualized for the nine-months ended September 30, 2021.
Nonperforming loans at September 30, 2022, were $3.7 million, compared to $6.8 million at September 30, 2021. Nonperforming assets at September 30, 2022, were $10.5 million, compared to $13.9 million at September 30, 2021. The allowance for loan losses at September 30, 2022, stood at $14.5 million, or 1.46% of total loans, compared to $14.2 million, or 1.41% of total loans at September 30, 2021.
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 $1.35 billion at September 30, 2022. The Bank operates 16 full-service banking centers and an LPL Financial® brokerage office serving Beachwood, Chardon, Cortland, Dublin, Garrettsville, Mantua, 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) the effect of the COVID-19 pandemic, including on our credit quality and business operations, as well as its impact on general economic and financial market conditions; (8) changes in the securities markets; (9) the Company’s failure to integrate Liberty Bancshares, Inc. and Liberty National Bank with Middlefield in accordance with expectations and deviations from performance expectations related to Liberty Bancshares, Inc. and Liberty National Bank; or (10) 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) Balance Sheets (period end) September 30, 2022 June 30,
2022March 31,
2022December 31,
2021September 30,
2021ASSETS Cash and due from banks $ 119,777 $ 60,114 $ 78,804 $ 97,172 $ 113,177 Federal funds sold 8,800 19,039 29,474 22,322 19,174 Cash and cash equivalents 128,577 79,153 108,278 119,494 132,351 Equity securities, at fair value 972 779 851 818 833 Investment securities available for sale, at fair value 162,064 171,958 175,216 170,199 163,057 Loans held for sale - - 9 1,051 676 Loans: Commercial real estate: Owner occupied 120,912 120,771 113,590 111,470 110,883 Non-owner occupied 285,419 288,334 293,745 283,618 310,222 Multifamily 38,063 29,152 29,385 31,189 30,762 Residential real estate 247,612 246,453 244,747 240,089 232,020 Commercial and industrial 146,987 137,398 131,683 148,812 163,052 Home equity lines of credit 114,344 111,730 106,300 104,355 105,450 Construction and other 33,748 35,988 50,152 54,148 49,378 Consumer installment 8,110 8,171 8,118 8,010 8,515 Total loans 995,195 977,997 977,720 981,691 1,010,282 Less allowance for loan and lease losses 14,532 14,550 14,492 14,342 14,234 Net loans 980,663 963,447 963,228 967,349 996,048 Premises and equipment, net 16,215 17,030 17,142 17,272 17,507 Goodwill 15,071 15,071 15,071 15,071 15,071 Core deposit intangibles 1,171 1,249 1,326 1,403 1,484 Bank-owned life insurance 17,382 17,274 17,166 17,060 16,954 Other real estate owned 6,792 6,792 6,992 6,992 7,090 Accrued interest receivable and other assets 22,104 20,624 18,019 14,297 14,794 TOTAL ASSETS $ 1,351,011 $ 1,293,377 $ 1,323,298 $ 1,331,006 $ 1,365,865 September 30, June 30, March 31, December 31, September 30, 2022 2022 2022 2021 2021 LIABILITIES Deposits: Noninterest-bearing demand $ 383,675 $ 379,872 $ 361,251 $ 334,171 $ 316,770 Interest-bearing demand 160,112 154,788 162,010 196,308 237,576 Money market 162,052 185,494 187,807 177,281 178,423 Savings 247,466 252,179 264,784 260,125 256,114 Time 177,182 174,833 191,320 198,725 211,674 Total deposits 1,130,487 1,147,166 1,167,172 1,166,610 1,200,557 Short-term borrowings 80,000 - - - - Other borrowings 12,107 12,910 12,975 12,901 12,966 Accrued interest payable and other liabilities 5,562 5,081 5,507 6,160 6,287 TOTAL LIABILITIES 1,228,156 1,165,157 1,185,654 1,185,671 1,219,810 STOCKHOLDERS' EQUITY Common stock, no par value; 10,000,000 shares authorized, 7,350,616 shares issued, 5,767,803 shares outstanding as of September 30, 2022 87,640 87,562 87,562 87,131 87,131 Retained earnings 93,166 89,900 86,804 83,971 80,376 Accumulated other comprehensive (loss) income (25,080 ) (17,591 ) (6,674 ) 3,462 3,610 Treasury stock, at cost; 1,582,813 shares as of September 30, 2022 (32,871 ) (31,651 ) (30,048 ) (29,229 ) (25,062 ) TOTAL STOCKHOLDERS' EQUITY 122,855 128,220 137,644 145,335 146,055 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,351,011 $ 1,293,377 $ 1,323,298 $ 1,331,006 $ 1,365,865 MIDDLEFIELD BANC CORP. Consolidated Selected Financial Highlights (Dollar amounts in thousands, unaudited) For the Three Months Ended For the Nine Months Ended September 30, June 30, March 31, December 31, September 30, September 30, September 30, Statements of Income 2022 2022 2022 2021 2021 2022 2021 INTEREST AND DIVIDEND INCOME Interest and fees on loans $ 11,892 $ 11,268 $ 10,985 $ 11,586 $ 12,258 $ 34,145 $ 36,310 Interest-earning deposits in other institutions 134 74 24 30 30 232 60 Federal funds sold 51 46 3 1 1 100 2 Investment securities: Taxable interest 449 442 443 438 461 1,334 1,241 Tax-exempt interest 982 955 784 732 673 2,721 1,833 Dividends on stock 59 33 24 23 24 116 79 Total interest and dividend income 13,567 12,818 12,263 12,810 13,447 38,648 39,525 INTEREST EXPENSE Deposits 812 709 726 783 915 2,247 3,130 Short-term borrowings 44 - - - - 44 - Other borrowings 112 81 69 67 68 262 214 Total interest expense 968 790 795 850 983 2,553 3,344 NET INTEREST INCOME 12,599 12,028 11,468 11,960 12,464 36,095 36,181 Provision for loan losses - - - (200 ) - - 900 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 12,599 12,028 11,468 12,160 12,464 36,095 35,281 NONINTEREST INCOME Service charges on deposit accounts 1,004 956 914 906 876 2,874 2,519 (Loss) gain on equity securities (57 ) (72 ) 33 (14 ) 102 (96 ) 223 Earnings on bank-owned life insurance 108 108 106 106 108 322 440 Gains on sale of loans 7 18 3 118 309 28 1,122 Revenue from investment services 233 153 141 198 190 527 529 Other income 251 220 206 221 236 677 838 Total noninterest income 1,546 1,383 1,403 1,535 1,821 4,332 5,671 NONINTEREST EXPENSE Salaries and employee benefits 4,491 3,785 4,386 4,088 4,488 12,662 13,063 Occupancy expense 458 583 505 542 426 1,546 1,506 Equipment expense 233 274 315 358 333 822 1,003 Data processing and information technology costs 985 822 844 851 845 2,650 2,447 Ohio state franchise tax 293 292 293 285 287 878 859 Federal deposit insurance expense 84 90 50 50 150 224 444 Professional fees 280 383 455 435 136 1,118 878 Net loss (gain) on other real estate owned 1 206 8 (66 ) 9 215 77 Advertising expense 268 229 228 221 222 725 664 Software amortization expense 27 40 48 119 88 115 242 Core deposit intangible amortization 78 77 77 80 81 232 241 Merger-related costs 390 579 - - - 969 - Other expense 1,298 1,175 1,057 868 842 3,531 2,694 Total noninterest expense 8,886 8,535 8,266 7,831 7,907 25,687 24,118 Income before income taxes 5,259 4,876 4,605 5,864 6,378 14,740 16,834 Income taxes 1,010 787 772 1,027 1,174 2,569 3,038 NET INCOME $ 4,249 $ 4,089 $ 3,833 $ 4,837 $ 5,204 $ 12,171 $ 13,796 PTPP (1) $ 5,259 $ 4,876 $ 4,605 $ 5,664 $ 6,378 $ 14,740 $ 17,734 (1) The pre-tax pre-provision (PTPP) is the income before income taxes before provision for loan 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 For the Nine Months Ended September 30, June 30, March 31, December 31, September 30, September 30, September 30, 2022 2022 2022 2021 2021 2022 2021 Per common share data Net income per common share - basic $ 0.73 $ 0.70 $ 0.65 $ 0.81 $ 0.85 $ 2.08 $ 2.20 Net income per common share - diluted $ 0.73 $ 0.70 $ 0.65 $ 0.81 $ 0.85 $ 2.08 $ 2.19 Dividends declared per share $ 0.17 $ 0.17 $ 0.17 $ 0.21 $ 0.16 $ 0.51 $ 0.48 Book value per share (period end) $ 21.30 $ 22.07 $ 23.43 $ 24.68 $ 24.13 $ 21.30 $ 24.13 Tangible book value per share (period end) (2) (3) $ 18.48 $ 19.26 $ 20.64 $ 21.88 $ 21.39 $ 18.48 $ 21.39 Dividends declared $ 983 $ 993 $ 1,000 $ 1,242 $ 978 $ 2,976 $ 2,998 Dividend yield 2.49 % 2.71 % 2.78 % 3.37 % 2.66 % 2.52 % 2.69 % Dividend payout ratio 23.13 % 24.28 % 26.09 % 25.68 % 18.79 % 24.45 % 21.73 % Average shares outstanding - basic 5,792,773 5,851,422 5,879,025 5,951,838 6,136,648 5,840,757 6,265,803 Average shares outstanding - diluted 5,805,799 5,860,098 5,889,836 5,975,333 6,157,181 5,853,783 6,287,556 Period ending shares outstanding 5,767,803 5,810,351 5,873,565 5,888,737 6,054,083 5,767,803 6,054,083 Selected ratios Return on average assets 1.32 % 1.25 % 1.17 % 1.41 % 1.51 % 1.24 % 1.34 % Return on average equity 12.94 % 12.30 % 10.75 % 13.17 % 13.95 % 11.96 % 12.58 % Return on average tangible common equity (2) (4) 14.79 % 14.02 % 12.13 % 14.85 % 15.71 % 13.59 % 14.20 % Efficiency (1) 61.07 % 61.83 % 62.54 % 56.56 % 54.05 % 61.79 % 56.42 % Equity to assets at period end 9.09 % 9.91 % 10.40 % 10.92 % 10.69 % 9.09 % 10.69 % Noninterest expense to average assets 0.69 % 0.65 % 0.62 % 0.58 % 0.58 % 1.96 % 1.75 % (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 For the Nine Months Ended September 30, June 30, March 31, December 31, September 30, September 30, September 30, Yields 2022 2022 2022 2021 2021 2022 2021 Interest-earning assets: Loans receivable (2) 4.78 % 4.66 % 4.53 % 4.61 % 4.74 % 4.66 % 4.54 % Investment securities (2) 3.90 % 3.76 % 3.41 % 3.30 % 3.37 % 3.69 % 3.51 % Interest-earning deposits with other banks 2.06 % 0.77 % 0.23 % 0.20 % 0.21 % 0.82 % 0.20 % Total interest-earning assets 4.55 % 4.28 % 4.06 % 4.07 % 4.20 % 4.30 % 4.12 % Deposits: Interest-bearing demand deposits 0.22 % 0.15 % 0.14 % 0.12 % 0.12 % 0.17 % 0.13 % Money market deposits 0.46 % 0.49 % 0.47 % 0.47 % 0.46 % 0.47 % 0.47 % Savings deposits 0.19 % 0.06 % 0.06 % 0.06 % 0.06 % 0.10 % 0.06 % Certificates of deposit 0.96 % 0.83 % 0.87 % 0.90 % 1.08 % 0.89 % 1.19 % Total interest-bearing deposits 0.43 % 0.36 % 0.37 % 0.36 % 0.41 % 0.39 % 0.47 % Non-Deposit Funding: Borrowings 2.94 % 2.51 % 2.16 % 2.09 % 2.08 % 2.61 % 1.14 % Total interest-bearing liabilities 0.50 % 0.39 % 0.39 % 0.37 % 0.44 % 0.43 % 0.48 % Cost of deposits 0.29 % 0.24 % 0.25 % 0.26 % 0.30 % 0.26 % 0.35 % Cost of funds 0.34 % 0.27 % 0.27 % 0.27 % 0.31 % 0.29 % 0.35 % Net interest margin (1) 4.23 % 4.02 % 3.80 % 3.82 % 3.90 % 4.02 % 3.78 % (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 September 30, June 30, March 31, December 31, September 30, Asset quality data 2022 2022 2022 2021 2021 (Dollar amounts in thousands, unaudited) Nonperforming loans (1) $ 3,692 $ 4,670 $ 4,728 $ 4,859 $ 6,806 Other real estate owned 6,792 6,792 6,992 6,992 7,090 Nonperforming assets $ 10,484 $ 11,462 $ 11,720 $ 11,851 $ 13,896 Allowance for loan losses $ 14,532 $ 14,550 $ 14,492 $ 14,342 $ 14,234 Allowance for loan losses/total loans 1.46 % 1.49 % 1.48 % 1.46 % 1.41 % Net charge-offs (recoveries): Quarter-to-date $ 18 $ (58 ) $ (150 ) $ (308 ) $ (34 ) Year-to-date (190 ) (208 ) (150 ) (183 ) 125 Net charge-offs (recoveries) to average loans, annualized: Quarter-to-date 0.01 % -0.02 % -0.06 % -0.12 % -0.01 % Year-to-date -0.02 % -0.04 % -0.06 % -0.02 % 0.02 % Nonperforming loans/total loans 0.37 % 0.48 % 0.48 % 0.49 % 0.67 % Allowance for loan losses/nonperforming loans 393.61 % 311.56 % 306.51 % 295.16 % 209.14 % Nonperforming assets/total assets 0.78 % 0.89 % 0.89 % 0.89 % 1.02 % (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) September 30, June 30, March 31, December 31, September 30, 2022 2022 2022 2021 2021 Stockholders' Equity $ 122,855 $ 128,220 $ 137,644 $ 145,335 $ 146,055 Less Goodwill and other intangibles 16,242 16,320 16,397 16,474 16,555 Tangible Common Equity $ 106,613 $ 111,900 $ 121,247 $ 128,861 $ 129,500 Shares outstanding 5,767,803 5,810,351 5,873,565 5,888,737 6,054,083 Tangible book value per share $ 18.48 $ 19.26 $ 20.64 $ 21.88 $ 21.39 Reconciliation of Average Equity to Return on Average Tangible Common Equity For the Three Months Ended For the Nine Months Ended September 30, June 30, March 31, December 31, September 30, September 30, September 30, 2022 2022 2022 2021 2021 2022 2021 Average Stockholders' Equity $ 130,263 $ 133,377 $ 144,630 $ 145,716 $ 148,048 $ 136,090 $ 146,611 Less Average Goodwill and other intangibles 16,280 16,357 16,435 16,513 16,594 16,357 16,674 Average Tangible Common Equity $ 113,983 $ 117,020 $ 128,195 $ 129,203 $ 131,454 $ 119,733 $ 129,937 Net income $ 4,249 $ 4,089 $ 3,833 $ 4,837 $ 5,204 $ 12,171 $ 13,796 Return on average tangible common equity (annualized) 14.79 % 14.02 % 12.13 % 14.85 % 15.71 % 13.59 % 14.20 % Reconciliation of Pre-Tax Pre-Provision Income (PTPP) For the Three Months Ended For the Nine Months Ended September 30, June 30, March 31, December 31, September 30, September 30, September 30, 2022 2022 2022 2021 2021 2022 2021 Net income $ 4,249 $ 4,089 $ 3,833 $ 4,837 $ 5,204 $ 12,171 $ 13,796 Add Income Taxes 1,010 787 772 1,027 1,174 2,569 3,038 Add Provision for loan losses - - - (200 ) - - 900 PTPP $ 5,259 $ 4,876 $ 4,605 $ 5,664 $ 6,378 $ 14,740 $ 17,734 MIDDLEFIELD BANC CORP. Average Balance Sheets (Dollar amounts in thousands, unaudited) For the Three Months Ended September 30, September 30, 2022 2021 Average Average Average Average Balance Interest Yield/Cost Balance Interest Yield/Cost Interest-earning assets: Loans receivable (3) $ 987,689 $ 11,892 4.78 % $ 1,027,935 $ 12,258 4.74 % Investment securities (3) 172,316 1,431 3.90 % 154,718 1,134 3.37 % Interest-earning deposits with other banks (4) 46,938 244 2.06 % 105,910 55 0.21 % Total interest-earning assets 1,206,943 13,567 4.55 % 1,288,563 13,447 4.20 % Noninterest-earning assets 73,753 82,952 Total assets $ 1,280,696 $ 1,371,515 Interest-bearing liabilities: Interest-bearing demand deposits $ 162,878 $ 91 0.22 % $ 225,264 $ 67 0.12 % Money market deposits 155,095 180 0.46 % 182,831 214 0.46 % Savings deposits 249,898 119 0.19 % 253,960 38 0.06 % Certificates of deposit 174,091 422 0.96 % 218,323 596 1.08 % Short-term borrowings 8,554 44 2.04 % - - 0.00 % Other borrowings 12,530 112 3.55 % 12,999 68 2.08 % Total interest-bearing liabilities 763,046 968 0.50 % 893,377 983 0.44 % Noninterest-bearing liabilities: Noninterest-bearing demand deposits 382,351 323,726 Other liabilities 5,036 6,364 Stockholders' equity 130,263 148,048 Total liabilities and stockholders' equity $ 1,280,696 $ 1,371,515 Net interest income $ 12,599 $ 12,464 Interest rate spread (1) 4.05 % 3.76 % Net interest margin (2) 4.23 % 3.90 % Ratio of average interest-earning assets to average interest-bearing liabilities 158.17 % 144.24 % (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 $277 and $195 for the three months ended September 30, 2022 and 2021, respectively (4) Includes dividends received on restricted stock. For the Three Months Ended September 30, June 30, 2022 2022 Average Average Average Average Balance Interest Yield/Cost Balance Interest Yield/Cost Interest-earning assets: Loans receivable (3) $ 987,689 $ 11,892 4.78 % $ 970,820 $ 11,268 4.66 % Investment securities (3) 172,316 1,431 3.90 % 176,138 1,397 3.76 % Interest-earning deposits with other banks (4) 46,938 244 2.06 % 79,924 153 0.77 % Total interest-earning assets 1,206,943 13,567 4.55 % 1,226,882 12,818 4.28 % Noninterest-earning assets 73,753 89,555 Total assets $ 1,280,696 $ 1,316,437 Interest-bearing liabilities: Interest-bearing demand deposits $ 162,878 $ 91 0.22 % $ 159,779 $ 59 0.15 % Money market deposits 155,095 180 0.46 % 185,711 228 0.49 % Savings deposits 249,898 119 0.19 % 260,226 40 0.06 % Certificates of deposit 174,091 422 0.96 % 184,748 382 0.83 % Short-term borrowings 8,554 44 2.04 % - - 0.00 % Other borrowings 12,530 112 3.55 % 12,945 81 2.51 % Total interest-bearing liabilities 763,046 968 0.50 % 803,409 790 0.39 % Noninterest-bearing liabilities: Noninterest-bearing demand deposits 382,351 375,013 Other liabilities 5,036 4,638 Stockholders' equity 130,263 133,377 Total liabilities and stockholders' equity $ 1,280,696 $ 1,316,437 Net interest income $ 12,599 $ 12,028 Interest rate spread (1) 4.05 % 3.89 % Net interest margin (2) 4.23 % 4.02 % Ratio of average interest-earning assets to average interest-bearing liabilities 158.17 % 152.71 % (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 $277 and $271 for the three months ended September 30, 2022, and June 30, 2022, respectively. (4) Includes dividends received on restricted stock. For the Nine Months Ended September 30, September 30, 2022 2021 Average Average Average Average Balance Interest Yield/Cost Balance Interest Yield/Cost Interest-earning assets: Loans receivable (3) $ 980,787 $ 34,145 4.66 % $ 1,070,058 $ 36,310 4.54 % Investment securities (3) 173,094 4,055 3.69 % 135,522 3,074 3.51 % Interest-earning deposits with other banks (4) 72,851 448 0.82 % 94,955 141 0.20 % Total interest-earning assets 1,226,732 38,648 4.30 % 1,300,535 39,525 4.12 % Noninterest-earning assets 82,733 74,883 Total assets $ 1,309,465 $ 1,375,418 Interest-bearing liabilities: Interest-bearing demand deposits $ 164,337 $ 210 0.17 % $ 211,797 $ 209 0.13 % Money market deposits 175,024 620 0.47 % 187,945 655 0.47 % Savings deposits 256,762 197 0.10 % 254,574 123 0.06 % Certificates of deposit 184,165 1,220 0.89 % 240,582 2,143 1.19 % Short-term borrowings 2,851 44 2.06 % 113 - 0.00 % Other borrowings 12,806 262 2.74 % 13,440 214 2.13 % Total interest-bearing liabilities 795,945 2,553 0.43 % 908,451 3,344 0.49 % Noninterest-bearing liabilities: Noninterest-bearing demand deposits 372,343 314,172 Other liabilities 5,087 6,184 Stockholders' equity 136,090 146,611 Total liabilities and stockholders' equity $ 1,309,465 $ 1,375,418 Net interest income $ 36,095 $ 36,181 Interest rate spread (1) 3.87 % 3.63 % Net interest margin (2) 4.02 % 3.78 % Ratio of average interest-earning assets to average interest-bearing liabilities 154.12 % 143.16 % (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 $768 and $542 for the nine months ended September 30, 2022 and 2021, respectively. (4) Includes dividends received on restricted stock. Quarterly Calculations Average shares outstanding - basic 5,792,773 5,851,422 5,879,025 5,951,838 6,136,648 Average shares outstanding -diluted 5,805,799 5,860,098 5,889,836 5,975,333 6,157,181 Period ending shares outstanding 5,767,803 5,810,351 5,873,565 5,888,737 6,054,083 Stock price at end of period $ 27.10 $ 25.20 $ 24.82 $ 24.82 $ 23.83 For the Three Months Ended September 30, June 30, March 31, December 31, September 30, 2022 2022 2022 2021 2021 Average Loans 987,689 970,820 983,853 999,229 1,027,935 Average Assets 1,280,696 1,316,437 1,332,039 1,358,843 1,371,515 Goodwill 15,071 15,071 15,071 15,071 15,071 Average Assets less goodwill 1,265,625 1,301,366 1,316,968 1,343,772 1,356,444 Average Equity 130,263 133,377 144,630 145,716 148,048 Average Goodwill 15,071 15,071 15,071 15,071 15,071 Average Core deposit intangible 1,209 1,286 1,364 1,442 1,523 Average MSR Reserves Average Tangible equity 113,983 117,020 128,195 129,203 131,454 Annualized Net Income 16,857 16,401 15,545 19,190 20,646 Net Interest Income (TE) 12,876 12,297 11,691 12,170 12,690 Non Interest Income 1,546 1,383 1,403 1,535 1,821 Total 14,422 13,680 13,094 13,705 14,511 Non Interest Expense 8,886 8,535 8,266 7,831 7,907 amort of intangibles 78 77 77 80 81 Non Interest Expense for Efficiency 8,808 8,458 8,189 7,751 7,826 Net Interest Income 12,599 12,028 11,468 11,960 12,464 Tax free income 277 269 223 210 195 Net Interest Income (TE) 12,876 12,297 11,691 12,170 12,659 Equity period end 122,855 128,220 137,644 145,335 146,055 Goodwill 15,071 15,071 15,071 15,071 15,071 Core deposit intangible 1,171 1,249 1,326 1,403 1,484 MSR Reserves Tangible equity 106,613 111,900 121,247 128,861 129,500 Tangible book value per share 18.48 19.26 20.64 21.88 21.39 Period ending shares outstanding 5,767,803 5,810,351 5,873,565 5,888,737 6,054,083 Equity to assets at period end 9.09 % 9.91 % 10.40 % 10.92 % 10.69 % Assets at period end 1,351,011 1,293,377 1,323,298 1,331,006 1,365,865 LLR Beginning of year 14,342 14,342 14,342 13,459 13,459 YTD Allocation - - - 700 900 14,342 14,342 14,342 14,159 14,359 Current LLR balance 14,532 14,550 14,492 14,342 14,234 Net (recoveries) chargeoffs YTD (190 ) (208 ) (150 ) (183 ) 125 LLR Beginning of Quarter 14,550 14,492 14,342 14,234 14,200 QTD Allocation - - - (200 ) - 14,550 14,492 14,342 14,034 14,200 Current LLR balance 14,532 14,550 14,492 14,342 14,234 Net (recoveries) chargeoffs QTD 18 (58 ) (150 ) (308 ) (34 ) Total Loans 995,195 977,997 977,720 981,691 1,010,282 OREO 6,792 6,792 6,992 6,992 7,090 Loans and OREO 1,001,987 984,789 984,712 988,683 1,017,372 Non performing assets 10,484 11,462 11,720 11,851 13,896 1.05 % 1.16 % 1.19 % 1.20 % 1.37 % Tier 1 capital 139,693 137,491 135,921 130,652 133,890 Average assets 1,280,696 1,316,437 1,332,039 1,358,843 1,371,515 Company Contact: Investor and Media Contact: James Heslop
President/Chief Executive Officer
Middlefield Banc Corp.
(440) 632-1666 Ext. 3219
JHeslop@middlefieldbank.comAndrew M. Berger
Managing Director
SM Berger & Company, Inc.
(216) 464-6400
andrew@smberger.com
