Middlefield Banc Corp. Reports 2020 First Half Financial Results

Rhea-AI Summary

Middlefield Banc Corp. (NASDAQ: MBCN) reported its 2020 first half results, highlighting a 1.3% increase in net interest income to $20.8 million and a 5.7% rise in noninterest income to $2.6 million. Net income for the period totaled $4.0 million, reflecting a $3.4 million increase in loan loss provisions due to the COVID-19 pandemic. Total loans grew 11.2% to $1.11 billion. Equity to assets increased slightly to 10.5%, with book value per share rising 6.7% to a record $22.09. The bank approved 1,343 PPP applications for $142.7 million, protecting over 12,000 jobs.

Positive

• Net interest income up 1.3% to $20.8 million for the first half of 2020.
• Total loans increased 11.2% year-over-year to $1.11 billion.
• Book value per share rose 6.7% to a record $22.09.
• Successfully secured $142.7 million for 1,343 small businesses through PPP, protecting over 12,000 jobs.

Negative

• Net income down to $4.0 million from $6.3 million YoY due to increased loan loss provisions.
• Second quarter net income decreased to $3.0 million from $3.3 million YoY.
• Year-to-date provision for loan losses increased by $3.4 million due to COVID-19 crisis.

MIDDLEFIELD, Ohio, July 22, 2020 (GLOBE NEWSWIRE) -- Middlefield Banc Corp. (NASDAQ: MBCN) today reported financial results for the 2020 first half and second quarter ended June 30, 2020.

2020 First Half Financial Highlights versus 2019 First Half (unless noted):

• Net interest income up 1.3% to $20.8 million
• Noninterest income increased 5.7% to $2.6 million
• Net income totaled $4.0 million and included a $3.4 million increase in the year-to-date provision for loan losses as a result of the COVID-19 crisis
• Book value per share was up 6.7% to a record $22.09 per share
• Tangible book value⁽¹⁾ per share was up 7.7% to $19.42 per share
• Total loans increased 11.2% to $1.11 billion
• Approved 1,343 PPP applications for $142.7 million during the second quarter
• Net charge-offs declined 37.1% to $0.3 million
• Second quarter provision was $1.0 million, compared to $2.7 million for the first quarter
• Allowance for loan losses to nonperforming loans was 104.2%, compared to 68.1% for the same period last year
• Equity to assets increased slightly to 10.5%

Thomas G. Caldwell, President and Chief Executive Officer, stated: “We continue to focus on protecting our customers and employees, while helping our communities respond to the unprecedented challenges created by the COVID-19 pandemic.  After temporarily restricting walk-in transactions in our bank lobbies in late March, all our branches reopened for lobby banking during the second quarter.  We have implemented safeguards to ensure we are doing our part to protect the health and well-being of our communities.  This includes requiring all employees to wear masks, limiting the number of customers allowed in our branches at one time, encouraging customers to social distance, installing partitions to limit exposure, offering special lobby hours for at-risk customers, and allowing employees to work from home.  I am extremely pleased with how our team and customers have responded to the operational adjustments we have made because of the pandemic.”

Mr. Caldwell continued, “At the same time we were adapting the Bank to operate safely throughout the COVID-19 pandemic, we quickly implemented our Paycheck Protection Program (“PPP”) process. During the second quarter, we successfully secured $142.7 million for 1,343 small businesses throughout Ohio and protected over 12,000 jobs.  The PPP process has driven significant loan and deposit growth during the quarter, and we are currently adjusting our focus to help customers qualify for forgiveness as permitted under the program.  I am encouraged that approximately 47% of PPP applicants booked were to small businesses without a prior banking relationship demonstrating our ability to serve our communities and the need for local and responsive financial relationships.” 

“For the second quarter, net interest income increased 4.4% reflecting the proactive adjustments we made to increase the yield on investment securities and reduce our cost of funds.  In addition, we were able to offset the operational and financial challenges caused by the COVID-19 crisis and the low rate environment.  Our book value increased 6.7% from the prior year period to a record of $22.09 per share, and noninterest income increased 15.1% to a quarterly record of $1.5 million. While the COVID-19 crisis continues to evolve, we remain dedicated to managing items under our control and maximizing shareholder value by profitably serving our Northeast and Central Ohio communities,” concluded Mr. Caldwell.  

Income Statement
For the 2020 first half, net interest income increased 1.3% to $20.8 million, compared to $20.5 million for the same period last year.  Year-to-date, the net interest margin was 3.56%, compared to 3.67% for the same period last year.  Net interest income for the 2020 second quarter was $10.7 million, compared to $10.3 million for the 2019 second quarter.  The 4.4% increase in net interest income for the 2020 second quarter was largely a result of a 29.6% reduction in interest expense.  The net interest margin for the 2020 second quarter was 3.49%, compared to 3.65% for the same period of 2019. 

For the 2020 first half, noninterest income was $2.6 million, compared to $2.4 million for the same period last year.  Noninterest income for the 2020 second quarter was $1.5 million, compared to $1.3 million for the same period last year. 

For the 2020 first half, noninterest expense decreased 0.3% to $14.9 million, compared to $15.0 million for the same period last year.  Operating costs in the 2020 second quarter increased 2.8% to $7.7 million from $7.5 million for the 2019 second quarter. 

Donald L. Stacy, Chief Financial Officer stated, “We continue to prudently increase our allowance for loan losses and took a $1.0 million provision in the quarter, in addition to the $2.7 million provision incurred during the first quarter.  As a result, our allowance for loan losses to nonperforming loans was 104.2% at June 30, 2020, compared to 68.1% at June 30, 2019.  We continue working on providing temporary relief to our customers and have modified 362 loans.  We continue to believe our asset quality was strong heading into the crisis, and nonperforming assets are down 3.0% from the prior year period, while year-to-date charge-offs have declined 37.1%.”

“As benchmark rates have declined, we have quickly reduced our funding costs and our cost of funds have improved from 1.29% at June 30, 2019 to 0.83% at June 30, 2020.  In addition, we continue to focus on proactively controlling expenses and second quarter noninterest expenses were up less than 3.0% and expenses are down slightly through the first six months of the year.  We believe our focus on asset quality, liquidity, and profitability provides us with the flexibility to navigate the current economic challenges associated with the COVID-19 crisis, while providing local, dedicated and responsive financial services to our communities.”

Net income for the 2020 first half ended June 30, 2020, was $4.0 million, or $0.62 per diluted share, compared to $6.3 million, or $0.97 per diluted share for the same period last year.  The decline in net income for the first half ended June 30, 2020 was primarily due to a $3.4 million increase in the year-to-date provision for loan losses as a result of the COVID-19 crisis.  Net income for the 2020 second quarter ended June 30, 2020, was $3.0 million, or $0.46 per diluted share, compared to $3.3 million, or $0.50 per diluted share for the same period last year.  The 2020 second quarter provision for loan losses increased $0.9 million, from the prior year period. 

Balance Sheet
Total assets at June 30, 2020, increased 4.3% to approximately $1.34 billion from $1.29 billion at June 30, 2019.  Net loans at June 30, 2020, were $1.10 billion, compared to $990.9 million at June 30, 2019, and $977.5 million at December 31, 2019.  The 11.0% year-over-year improvement in net loans was primarily a result of PPP loans originated during the quarter. 

Total deposits at June 30, 2020, were $1.16 billion, compared to $1.05 billion at June 30, 2019.  The 10.2% increase in deposits was driven by PPP deposits and pandemic uncertainty.  The investment portfolio, which is entirely classified as available for sale, was $112.5 million June 30, 2020, compared with $98.8 million at June 30, 2019. 

Stockholders’ Equity and Dividends
At the end of the 2020 second quarter, shareholders’ equity increased 4.8% to $140.7 million compared to $134.3 million at June 30, 2019.  On a per share basis, shareholders’ equity at June 30, 2020, was $22.09 compared to $20.70 at the same period last year. 

Tangible stockholders’ equity⁽¹⁾ increased 5.8% to $123.7 million for the 2020 second quarter, compared to $117.0 million at June 30, 2019.  On a per-share basis, tangible stockholders’ equity⁽¹⁾ was $19.42 at June 30, 2020, compared to $18.04 at June 30, 2019. 

Through the first six months of 2020, the company declared cash dividends of $0.30 per share, compared to $0.28 per share for the same period last year.

At June 30, 2020, the company had an equity to assets leverage ratio of 10.47%, compared to 10.42% at June 30, 2019. 

Asset Quality
The provision for loan losses for the 2020 second quarter was $1.0 million versus $110,000 for the same period last year.  Most of the increased provision is the result of increases to the economic conditions qualitative factors.  Nonperforming assets at June 30, 2020, were $10.5 million, compared to $10.8 million at June 30, 2019. 

Net charge-offs for the 2020 second quarter were $34,000, or 0.01% of average loans, annualized, compared to $12,000, or 0.00% of average loans, annualized at June 30, 2019.  Year-to-date net charge-offs were $298,000, or 0.06% of average loans, annualized compared to $474,000, or 0.10% of average loans, annualized for the same period last year. The allowance for loan losses at June 30, 2020, stood at $10.2 million, or 0.92% of total loans, compared to $7.3 million, or 0.73% of total loans at June 30, 2019. 

COVID-19 Update
The following table provides information with respect to our commercial loans by type at June 30, 2020.

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At Risk Loans at June 30, 2020
Loan Type		Number of Loans		Balance (in thousands)		% of Total Loans
50%; width:50%; min-width:50%;">Retail	2%; width:2%; min-width:2%;">	13%; width:13%; min-width:13%;">270	2%; width:2%; min-width:2%;">	3%; width:3%; min-width:3%;">$	13%; width:13%; min-width:13%;">  195,550	2%; width:2%; min-width:2%;">	13%; width:13%; min-width:13%;">17.6	2%; width:2%; min-width:2%;">%
Multifamily & Residential NOO		354			120,697		10.9	%
Ambulatory Care, Nursing/Rehabilitation and Social Assistance		218			81,491		7.3	%
Hospitality & tourism		58			44,923		4.0	%
Restaurant/food service/bar		136			24,938		2.3	%
Other		219			20,208		1.8	%
Total		1,255		$	487,807		43.9	%

The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was signed into law on March 27, 2020, and as a qualified SBA lender, we were automatically authorized to originate PPP loans.

As of June 30, 2020, we approved 1,343 applications for up to $142.7 million of loans under the PPP.

As of June 30, 2020, we modified 362 loans aggregating $214.8 million primarily consisting of the deferral of principal and interest payments and the extension of the maturity date.

Details with respect to actual loan modifications are as follows:

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Deferrals at June 30, 2020
Loan Type		Number of Loans		Balance (in thousands)		% of Total Loans
47%; width:47%; min-width:47%;">Retail	2%; width:2%; min-width:2%;">	15%; width:15%; min-width:15%;">58	2%; width:2%; min-width:2%;">	4%; width:4%; min-width:4%;">$	11%; width:11%; min-width:11%;">  89,438	2%; width:2%; min-width:2%;">	15%; width:15%; min-width:15%;">8.1	2%; width:2%; min-width:2%;">%
Multifamily & Residential NOO		16			7,628		0.7	%
Ambulatory Care, Nursing/Rehabilitation and Social Assistance		10			22,456		2.0	%
Hospitality & tourism		23			35,700		3.2	%
Restaurant/food service/bar		10			5,216		0.5	%
Other		245			54,379		4.9	%
Total		362		$	214,817		19.4	%

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 $1.34 billion at June 30, 2020.  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⁾ This press release includes disclosure of Middlefield Banc Corp.’s tangible book value per share and return on average tangible equity, 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.

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; or (9) 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.

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40%; width:40%; min-width:40%;">Company Contact:	60%; width:60%; min-width:60%;">Investor and Media Contact:
Thomas G. Caldwell President/Chief Executive Officer Middlefield Banc Corp. (440) 632-1666 Ext. 3200 tcaldwell@middlefieldbank.com	Andrew M. Berger Managing Director SM Berger & Company, Inc. (216) 464-6400 andrew@smberger.com

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MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
(Dollar amounts in thousands, unaudited)
36%; width:36%; min-width:36%;">	2%; width:2%; min-width:2%;">	10%; width:10%; min-width:10%;">June 30,	1%; width:1%; min-width:1%;">	2%; width:2%; min-width:2%;">	10%; width:10%; min-width:10%;">March 31,	1%; width:1%; min-width:1%;">	2%; width:2%; min-width:2%;">	10%; width:10%; min-width:10%;">December 31,	1%; width:1%; min-width:1%;">	2%; width:2%; min-width:2%;">	10%; width:10%; min-width:10%;">September 30,	1%; width:1%; min-width:1%;">	2%; width:2%; min-width:2%;">	10%; width:10%; min-width:10%;">June 30,
Balance Sheets (period end)		2020			2020			2019			2019			2019
ASSETS
Cash and due from banks	$	55,741		$	53,533		$	35,113		$	118,956		$	133,372
Federal funds sold		2,520			1,800			-			1,069			2,010
Cash and cash equivalents		58,261			55,333			35,113			120,025			135,382
Equity securities, at fair value		581			550			710			628			660
Investment securities available for sale, at fair value		112,529			102,959			105,733			105,041			98,809
Loans held for sale		4,151			513			1,220			791			431
Loans:
Commercial real estate:
Owner occupied		110,134			113,272			102,386			106,839			109,944
Non-owner occupied		300,577			292,775			302,180			312,049			307,562
Multifamily		37,604			52,276			62,028			70,633			75,252
Residential real estate		227,427			233,900			234,798			236,280			232,168
Commercial and industrial		240,096			106,797			89,527			85,861			85,520
Home equity lines of credit		117,196			114,933			112,248			111,459			113,662
Construction and other		66,015			71,186			66,680			60,957			58,161
Consumer installment		11,210			12,861			14,411			15,204			15,963
Total loans		1,110,259			998,000			984,258			999,282			998,232
Less allowance for loan and lease losses		10,210			9,244			6,768			7,001			7,304
Net loans		1,100,049			988,756			977,490			992,281			990,928
Premises and equipment, net		18,962			17,653			17,874			17,182			16,788
Goodwill		15,071			15,071			15,071			15,071			15,071
Core deposit intangibles		1,890			1,973			2,056			2,141			2,227
Bank-owned life insurance		16,723			16,618			16,511			16,403			16,294
Accrued interest receivable and other assets		15,078			14,513			10,697			11,015			11,832
TOTAL ASSETS	$	1,343,295		$	1,213,939		$	1,182,475		$	1,280,578		$	1,288,422

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36%; width:36%; min-width:36%;">	1%; width:1%; min-width:1%;">	10%; width:10%; min-width:10%;">June 30,	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	10%; width:10%; min-width:10%;">March 31,	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	10%; width:10%; min-width:10%;">December 31,	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	10%; width:10%; min-width:10%;">September 30,	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	10%; width:10%; min-width:10%;">June 30,	1%; width:1%; min-width:1%;">
		2020				2020				2019				2019				2019
LIABILITIES
Deposits:
Noninterest-bearing demand	$	270,738			$	206,372			$	191,370			$	199,235			$	198,817
Interest-bearing demand		136,722				125,184				107,844				107,033				94,266
Money market	168,842				156,556				160,826				155,419				152,885
Savings	218,545				175,468				192,003				182,005				194,505
Time		363,420				340,130				368,800				390,721				411,034
Total deposits	1,158,267				1,003,710				1,020,843				1,034,413				1,051,507
Short-term borrowings		20,417				60,000				5,075				92,000				85,000
Other borrowings	17,162				12,662				12,750				12,359				12,449
Accrued interest payable and other liabilities		6,779				4,880				6,032				5,893				5,206
TOTAL LIABILITIES		1,202,625				1,081,252				1,044,700				1,144,665				1,154,162
STOCKHOLDERS' EQUITY *
Common stock, no par value; 10,000,000 shares authorized, 7,298,829
shares issued, 6,369,467 shares outstanding as of June 30, 2020		86,722				86,722				86,617				86,617				86,590
Retained earnings		67,125				65,140				65,063				62,886				60,517
Accumulated other comprehensive income (loss)		3,761				(2,237	)			1,842				2,157				1,377
Treasury stock, at cost; 929,362 shares as of June 30, 2020		(16,938	)			(16,938	)			(15,747	)			(15,747	)			(14,224	)
TOTAL STOCKHOLDERS' EQUITY		140,670				132,687				137,775				135,913				134,260
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,343,295			$	1,213,939			$	1,182,475			$	1,280,578			$	1,288,422
* All share and per share information has been adjusted for a two-for-one stock split completed on November 8, 2019

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MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
(Dollar amounts in thousands, unaudited)
		For the Three Months Ended			For the Six Months Ended
		June 30,			March 31,		December 31,		September 30,		June 30,			June 30,			June 30,
Statements of Income		2020			2020		2019		2019		2019			2020			2019
INTEREST AND DIVIDEND INCOME
27%; width:27%; min-width:27%;">  Interest and fees on loans	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">12,281	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">12,078	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">12,392	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">12,804	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">12,706	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">24,359	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">25,194
Interest-earning deposits in other institutions		7			94				124			193				169				101				356
Federal funds sold		-			21				22			24				25				21				32
Investment securities:
Taxable interest		206			157				197			206				214				363				393
Tax-exempt interest		634			629				661			613				553				1,263				1,118
Dividends on stock		27			30				40			45				53				57				111
Total interest and dividend income		13,155			13,009				13,436			13,885				13,720				26,164				27,204
INTEREST EXPENSE
Deposits		2,336			2,865				3,014			3,173				3,277				5,201				6,222
Short-term borrowings		32			35				34			42				79				67				292
Other borrowings		62			76				80			92				95				138				191
Total interest expense		2,430			2,976				3,128			3,307				3,451				5,406				6,705
NET INTEREST INCOME		10,725			10,033				10,308			10,578				10,269				20,758				20,499
Provision for loan losses		1,000			2,740				460			80				110				3,740				350
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES		9,725			7,293				9,848			10,498				10,159				17,018				20,149
NONINTEREST INCOME
Service charges on deposit accounts		566			553				577			571				530				1,119				1,038
Investment securities gains on sale, net		-			-				-			4				190				-				190
Gain (loss) on equity securities		31			(160	)			82			(32	)			(14	)			(129	)			44
Earnings on bank-owned life insurance		105			107				108			109				109				212				214
Gains on sale of loans		381			114				148			128				98				495				157
Other income		412			460				390			325				386				872				788
Total noninterest income		1,495			1,074				1,305			1,105				1,299				2,569				2,431
NONINTEREST EXPENSE
Salaries and employee benefits		4,076			3,524				4,049			4,272				4,078				7,600				8,202
Occupancy expense		483			550				580			535				496				1,033				1,049
Equipment expense		307			273				270			244				291				580				526
Data processing costs		684			666				614			580				549				1,350				1,014
Ohio state franchise tax		281			268				262			262				261				549				520
Federal deposit insurance expense		74			123				-			-				100				197				230
Professional fees		369			349				448			401				403				718				834
Advertising expense		217			209				128			202				200				426				403
Software amortization expense		74			141				159			182				152				215				297
Core deposit intangible amortization		83			83				85			86				85				166				170
Other expense		1,041			1,066				783			909				867				2,107				1,737
Total noninterest expense		7,689			7,252				7,378			7,673				7,482				14,941				14,982
Income before income taxes		3,531			1,115				3,775			3,930				3,976				4,646				7,598
Income taxes		565			74				634			661				686				639				1,297
NET INCOME	$	2,966		$	1,041			$	3,141		$	3,269			$	3,290			$	4,007			$	6,301

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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 Six Months Ended
		June 30,			March 31,		December 31,			September 30,			June 30,			June 30,			June 30,
23%; min-width:23%;">	1%; min-width:1%;">	8%; min-width:8%;">2020	1%; min-width:1%;">	1%; min-width:1%;">	8%; min-width:8%;">2020	1%; min-width:1%;">	8%; min-width:8%;">2019	1%; min-width:1%;">	1%; min-width:1%;">	8%; min-width:8%;">2019	1%; min-width:1%;">	1%; min-width:1%;">	8%; min-width:8%;">2019	1%; min-width:1%;">	1%; min-width:1%;">	8%; min-width:8%;">2020	1%; min-width:1%;">	1%; min-width:1%;">	8%; min-width:8%;">2019
Per common share data (5)
31%; width:31%; min-width:31%;">Net income per common share - basic	1%; width:1%; min-width:1%;">$	7%; width:7%; min-width:7%;">0.47	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	7%; width:7%; min-width:7%;">0.16	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	7%; width:7%; min-width:7%;">0.48	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	7%; width:7%; min-width:7%;">0.51	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	7%; width:7%; min-width:7%;">0.51	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	7%; width:7%; min-width:7%;">0.63	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	7%; width:7%; min-width:7%;">0.97	1%; width:1%; min-width:1%;">
Net income per common share - diluted	$	0.46			$	0.16			$	0.48			$	0.50			$	0.50			$	0.62			$	0.97
Dividends declared per share	$	0.15			$	0.15			$	0.15			$	0.14			$	0.14			$	0.30			$	0.28
Book value per share (period end)	$	22.09			$	20.83			$	21.45			$	21.16			$	20.70			$	22.09			$	20.70
Tangible book value per share (period end) (2) (3)	$	19.42			$	18.16			$	18.78			$	18.48			$	18.04			$	19.42			$	18.04
Dividends declared	$	956			$	964			$	964			$	900			$	912			$	1,920			$	1,821
Dividend yield		2.91	%			3.82	%			2.28	%			2.37	%			2.74	%			2.91	%			2.75	%
Dividend payout ratio		32.23	%			92.60	%			30.69	%			27.53	%			27.72	%			47.92	%			28.90	%
Average shares outstanding - basic		6,369,467				6,417,109				6,423,543				6,458,258				6,502,508				6,393,288				6,500,406
Average shares outstanding - diluted		6,388,118				6,429,443				6,455,387				6,479,066				6,514,946				6,412,585				6,513,050
Period ending shares outstanding		6,369,467				6,369,467				6,423,630				6,423,130				6,485,170				6,369,467				6,485,170
Selected ratios
Return on average assets		0.90	%			0.35	%			1.04	%			1.07	%			1.09	%			0.78	%			1.05	%
Return on average equity		8.56	%			3.01	%			8.87	%			9.41	%			9.79	%			5.79	%			9.58	%
Return on average tangible common equity (2) (4)		9.76	%			3.43	%			10.11	%			10.76	%			11.23	%			6.59	%			11.02	%
Efficiency (1)		61.29	%			63.47	%			61.75	%			63.93	%			63.03	%			62.33	%			63.66	%
Equity to assets at period end		10.47	%			10.93	%			11.65	%			10.61	%			10.42	%			10.47	%			10.42	%
Noninterest expense to average assets		0.58	%			0.61	%			0.61	%			0.64	%			0.62	%			1.44	%			1.24	%
(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
(5) All share and per share information has been adjusted for the two-for-one stock split completed on November 8, 2019
MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
(unaudited)
		For the Three Months Ended			For the Six Months Ended
		June 30,			March 31,		December 31,		September 30,		June 30,			June 30,			June 30,
Yields		2020			2020		2019		2019		2019			2020			2019
Interest-earning assets:
Loans receivable (2)		4.53	%			4.95	%			4.97	%			5.09	%			5.09	%			4.73	%			5.08	%
Investment securities (2)		3.76	%			3.62	%			3.94	%			3.80	%			3.70	%			3.69	%			3.71	%
Interest-earning deposits with other banks		0.23	%			1.40	%			1.65	%			2.31	%			2.21	%			0.72	%			2.24	%
Total interest-earning assets		4.27	%			4.69	%			4.75	%			4.86	%			4.86	%			4.47	%			4.85	%
Deposits:
Interest-bearing demand deposits		0.35	%			0.42	%			0.41	%			0.39	%			0.36	%			0.38	%			0.33	%
Money market deposits		0.93	%			1.41	%			1.41	%			1.43	%			1.40	%			1.17	%			1.50	%
Savings deposits		0.21	%			0.50	%			0.62	%			0.68	%			0.69	%			0.35	%			0.75	%
Certificates of deposit		2.00	%			2.12	%			2.18	%			2.18	%			2.35	%			2.06	%			2.27	%
Total interest-bearing deposits		1.11	%			1.39	%			1.43	%			1.48	%			1.56	%			1.25	%			1.51	%
Non-Deposit Funding:
Borrowings		0.53	%			1.62	%			2.52	%			3.03	%			2.70	%			0.83	%			2.57	%
Total interest-bearing liabilities		1.07	%			1.40	%			1.46	%			1.51	%			1.59	%			1.23	%			1.56	%
Cost of deposits		0.85	%			1.13	%			1.15	%			1.20	%			1.26	%			0.98	%			1.22	%
Cost of funds		0.83	%			1.14	%			1.17	%			1.23	%			1.29	%			0.98	%			1.27	%
Net interest margin (1)		3.49	%			3.63	%			3.66	%			3.72	%			3.65	%			3.56	%			3.67	%
(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%.

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		For the Three Months Ended
		June 30,			March 31,		December 31,		September 30,		June 30,
Asset quality data		2020			2020		2019		2019		2019
(Dollar amounts in thousands)
46%; width:46%; min-width:46%;">Nonaccrual loans	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">9,803	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">8,405	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">8,879	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">10,053	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">10,671	1%; width:1%; min-width:1%;">
Troubled debt restructuring												-				-
90 day past due and accruing		-				-				-				-				58
Nonperforming loans (1)		9,803				8,405				8,879				10,053				10,729
Other real estate owned		687				456				155				89				89
Nonperforming assets	$	10,490			$	8,861			$	9,034			$	10,142			$	10,818
Allowance for loan losses	$	10,210			$	9,244			$	6,768			$	7,001			$	7,304
Allowance for loan losses/total loans		0.92	%			0.93	%			0.69	%			0.70	%			0.73	%
Net charge-offs:
Quarter-to-date	$	34			$	264			$	693			$	383			$	12
Year-to-date		298				264				1,550				857				474
Net charge-offs to average loans, annualized:
Quarter-to-date		0.01	%			0.11	%			0.28	%			0.15	%			0.00	%
Year-to-date		0.06	%			0.11	%			0.16	%			0.11	%			0.10	%
Nonperforming loans/total loans		0.88	%			0.84	%			0.90	%			1.01	%			1.07	%
Allowance for loan losses/nonperforming loans		104.15	%			109.98	%			76.22	%			69.64	%			68.08	%
Nonperforming assets/total assets		0.78	%			0.73	%			0.76	%			0.79	%			0.84	%
(1) Nonperforming loans exclude troubled debt restructurings that are performing in accordance with their terms over a prescribed period of time.

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Reconciliation of Common Stockholders' Equity to Tangible Common Equity *
For the Three Months Ended			For the Six Months Ended
(Dollar amounts in thousands)		June 30,			March 31,		December 31,		September 30,		June 30,			June 30,			June 30,
26%; min-width:26%;">	1%; min-width:1%;">	7%; min-width:7%;">2020	1%; min-width:1%;">	1%; min-width:1%;">	7%; min-width:7%;">2020	1%; min-width:1%;">	9%; min-width:9%;">2019	1%; min-width:1%;">	10%; min-width:10%;">2019	1%; min-width:1%;">	7%; min-width:7%;">2019	1%; min-width:1%;">	1%; min-width:1%;">	7%; min-width:7%;">2020	1%; min-width:1%;">	1%; min-width:1%;">	7%; min-width:7%;">2019
38%; width:38%; min-width:38%;">Stockholders' Equity	1%; width:1%; min-width:1%;">$	6%; width:6%; min-width:6%;">140,670	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	6%; width:6%; min-width:6%;">132,687	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	6%; width:6%; min-width:6%;">137,775	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	6%; width:6%; min-width:6%;">135,913	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	6%; width:6%; min-width:6%;">134,260	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	6%; width:6%; min-width:6%;">140,670	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	6%; width:6%; min-width:6%;">134,260	1%; width:1%; min-width:1%;">
Less Goodwill and other intangibles		16,961				17,044				17,127				17,212				17,298				16,961				17,298
Tangible Common Equity	$	123,709			$	115,643			$	120,648			$	118,701			$	116,962			$	123,709			$	116,962
Shares outstanding		6,369,467				6,369,467				6,423,630				6,423,130				6,485,170				6,369,467				6,485,170
Tangible book value per share	$	19.42			$	18.16			$	18.78			$	18.48			$	18.04			$	19.42			$	18.04
Reconciliation of Average Equity to Return on Average Tangible Common Equity
For the Three Months Ended			For the Six Months Ended
		June 30,			March 31,		December 31,		September 30,		June 30,			June 30,			June 30,
		2020			2020		2019		2019		2019			2020			2019
Average Stockholders' Equity	$	139,287			$	139,208			$	140,475			$	137,843			$	134,836			$	139,287			$	132,643
Less Average Goodwill and other intangibles		17,002				17,085				17,169				17,254				17,339				17,043				17,381
Average Tangible Common Equity	$	122,285			$	122,123			$	123,306			$	120,589			$	117,497			$	122,244			$	115,262
Net income	$	2,966			$	1,041			$	3,141			$	3,269			$	3,290			$	4,007			$	6,301
Return on average tangible common equity (annualized)		9.76	%			3.43	%			10.11	%			10.76	%			11.23	%			6.59	%			11.02	%
* All share and per share information has been adjusted for a two-for-one stock split completed on November 8, 2019

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MIDDLEFIELD BANC CORP.
Average Balance Sheets
(Dollar amounts in thousands, unaudited)
		For the Three Months Ended
		June 30,			June 30,
			2020					2019
		Average						Average			Average						Average
		Balance			Interest			Yield/Cost			Balance			Interest			Yield/Cost
Interest-earning assets:
30%; width:30%; min-width:30%;">Loans receivable (3)	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	9%; width:9%; min-width:9%;">1,092,095	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">12,281	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	9%; width:9%; min-width:9%;">4.53	1%; width:1%; min-width:1%;">%	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	9%; width:9%; min-width:9%;">1,002,346	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">12,706	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	10%; width:10%; min-width:10%;">5.09	1%; width:1%; min-width:1%;">%
Investment securities (3)			107,765				840			3.76	%				99,022				767			3.70	%
Interest-earning deposits with other banks (4)			58,541				34			0.23	%				44,747				247			2.21	%
Total interest-earning assets			1,258,401				13,155			4.27	%				1,146,115				13,720			4.86	%
Noninterest-earning assets			62,976										61,267
Total assets		$	1,321,377									$	1,207,382
Interest-bearing liabilities:
Interest-bearing demand deposits		$	129,917			$	112			0.35	%			$	98,929			$	88			0.36	%
Money market deposits			164,434				381			0.93	%				159,705				558			1.40	%
Savings deposits			198,967				104			0.21	%				195,451				336			0.69	%
Certificates of deposit			350,298				1,739			2.00	%				390,997				2,295			2.35	%
Short-term borrowings			55,973				32			0.23	%				13,354				79			2.37	%
Other borrowings			15,615				62			1.60	%				12,489				95			3.05	%
Total interest-bearing liabilities			915,204				2,430			1.07	%				870,925				3,451			1.59	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			262,575										198,234
Other liabilities			4,311										3,387
Stockholders' equity			139,287										134,836
Total liabilities and stockholders' equity		$	1,321,377									$	1,207,382
Net interest income					$	10,725									$	10,269
Interest rate spread (1)									3.20	%									3.27	%
Net interest margin (2)									3.49	%									3.65	%
Ratio of average interest-earning assets to
average interest-bearing liabilities									137.50	%									131.60	%
(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 $190 and $168 for the three months ended June 30, 2020 and 2019, respectively.
(4) Includes dividends received on restricted stock.
		For the Three Months Ended
		June 30,			March 31,
			2020					2020
		Average						Average			Average						Average
		Balance			Interest			Yield/Cost			Balance			Interest			Yield/Cost
Interest-earning assets:
Loans receivable (3)		$	1,092,095			$	12,281			4.53	%			$	984,034			$	12,078			4.95	%
Investment securities (3)			107,765				840			3.76	%				105,894				786			3.62	%
Interest-earning deposits with other banks (4)			58,541				34			0.23	%				41,717				145			1.40	%
Total interest-earning assets			1,258,401				13,155			4.27	%				1,131,645				13,009			4.69	%
Noninterest-earning assets			62,976										65,003
Total assets		$	1,321,377									$	1,196,648
Interest-bearing liabilities:
Interest-bearing demand deposits		$	129,917			$	112			0.35	%			$	113,691			$	119			0.42	%
Money market deposits			164,434				381			0.93	%				158,008				552			1.41	%
Savings deposits			198,967				104			0.21	%				183,137				226			0.50	%
Certificates of deposit			350,298				1,739			2.00	%				373,866				1,968			2.12	%
Short-term borrowings			55,973				32			0.23	%				14,808				35			0.95	%
Other borrowings			15,615				62			1.60	%				12,703				76			2.41	%
Total interest-bearing liabilities			915,204				2,430			1.07	%				856,213				2,976			1.40	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			262,575										195,411
Other liabilities			4,311										5,816
Stockholders' equity			139,287										139,208
Total liabilities and stockholders' equity		$	1,321,377									$	1,196,648
Net interest income					$	10,725									$	10,033
Interest rate spread (1)									3.20	%									3.29	%
Net interest margin (2)									3.49	%									3.63	%
Ratio of average interest-earning assets to
average interest-bearing liabilities									137.50	%									132.17	%
(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 $190 and $189 for the three months ended June 30, 2020 and March 31, 2020, respectively.
(4) Includes dividends received on restricted stock.
		For the Six Months Ended
		June 30,			June 30,
			2020					2019
		Average						Average			Average						Average
		Balance			Interest			Yield/Cost			Balance			Interest			Yield/Cost
Interest-earning assets:
Loans receivable (3)		$	1,038,064			$	24,359			4.73	%			$	1,001,344			$	25,194			5.08	%
Investment securities (3)			106,829				1,626			3.69	%				98,253				1,511			3.71	%
Interest-earning deposits with other banks (4)			50,129				179			0.72	%				45,015				499			2.24	%
Total interest-earning assets			1,195,022				26,164			4.47	%				1,144,612				27,204			4.85	%
Noninterest-earning assets			63,990										60,912
Total assets		$	1,259,012									$	1,205,524
Interest-bearing liabilities:
Interest-bearing demand deposits		$	121,804			$	229			0.38	%			$	96,594			$	160			0.33	%
Money market deposits			161,221				934			1.17	%				176,970				1,313			1.50	%
Savings deposits			191,052				331			0.35	%				201,650				753			0.75	%
Certificates of deposit			362,082				3,707			2.06	%				355,620				3,996			2.27	%
Short-term borrowings			35,390				67			0.38	%				24,372				292			2.42	%
Other borrowings			14,159				138			1.96	%				13,473				191			2.86	%
Total interest-bearing liabilities			885,708				5,406			1.23	%				868,679				6,705			1.56	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			228,993										199,332
Other liabilities			5,024										4,870
Stockholders' equity			139,287										132,643
Total liabilities and stockholders' equity		$	1,259,012									$	1,205,524
Net interest income					$	20,758									$	20,499
Interest rate spread (1)									3.24	%									3.29	%
Net interest margin (2)									3.56	%									3.67	%
Ratio of average interest-earning assets to
average interest-bearing liabilities									134.92	%									131.76	%
(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 $379 and $338 for the six months ended June 30, 2020 and 2019, respectively.
(4) Includes dividends received on restricted stock.

FAQ

What are the financial results of Middlefield Banc Corp. for Q2 2020?

Middlefield Banc Corp. reported net income of $3.0 million for Q2 2020, a decline from $3.3 million in Q2 2019.

How did COVID-19 impact Middlefield Banc Corp's financials?

The impact included a $3.4 million increase in provisions for loan losses, leading to reduced net income.

What is the status of loans and deposits for MBCN?

Total loans increased by 11.2% to $1.11 billion, and total deposits rose by 10.2% to $1.16 billion.

What is Middlefield Banc Corp's outlook on asset quality amid COVID-19?

The allowance for loan losses was 104.2% of nonperforming loans, indicating a proactive approach to potential defaults.

What was the book value per share for MBCN as of June 30, 2020?

The book value per share reached a record of $22.09, up 6.7% YoY.