Middlefield Banc Corp. Reports 2022 Full Year Financial Results

Rhea-AI Summary

Middlefield Banc Corp. (NASDAQ: MBCN) reported its financial results for 2022, highlighting a net income of $15.7 million, or $2.59 per diluted share, down from $18.6 million, or $3.00 per share in 2021.

Overall, the company returned $11.6 million to shareholders through dividends and share repurchases. It saw a 26.8% rise in total assets to $1.69 billion, primarily due to the Liberty Bancshares merger. The net interest margin improved to 4.08%, while total loans increased 9.6% organically. Stockholders' equity grew 36.0% to $197.7 million. However, noninterest income decreased by 6.4%, and overall expenses increased significantly by 19.0% due to merger costs.

Positive

• Net interest margin improved by 30 basis points to 4.08%.
• Organic loan growth of 9.6%, totaling $1.35 billion.
• Total assets increased by 26.8% to $1.69 billion, supported by the Liberty Bancshares merger.
• Stockholders' equity rose 36.0% year-over-year to $197.7 million.
• Cash dividends declared per share increased by 17.4% to $0.81.

Negative

• Net income decreased to $15.7 million from $18.6 million in 2021.
• Noninterest income dropped by 6.4% to $6.7 million.
• Total noninterest expenses increased by 19.0% to $38.0 million, influenced by merger costs.
• Net charge-offs increased slightly, affecting asset quality metrics.

MIDDLEFIELD, Ohio, Jan. 27, 2023 (GLOBE NEWSWIRE) -- Middlefield Banc Corp. (NASDAQ: MBCN) today reported financial results for the three and twelve-months ended December 31, 2022.

2022 Financial Highlights (on a year-over-year basis unless noted):

• Returned $11.6 million of capital to shareholders through cash dividends and the repurchase of 229,420 shares at an average price of $26.67 per share
• Net income was $15.7 million, or $2.59 per diluted share, compared to $18.6 million, or $3.00 per diluted share
• Non-GAAP⁽¹⁾ net income, adjusted for certain one-time items and expenses associated with the Liberty Bancshares, Inc. merger, was $18.3 million, or $3.03 per diluted share, compared to $18.5 million, or $2.98 per diluted share
• Non-GAAP⁽¹⁾ ROAE and ROATE, adjusted for certain one-time items and expenses associated with the Liberty Bancshares, Inc. merger, was 13.15% and 15.12%, respectively, compared to 12.65% and 14.27%, respectively
• Twelve-month pre-tax income benefited from $1.2 million of net fees associated with the Paycheck Protection Program (“PPP”), compared to $1.1 million in the 2021 full year
• Net interest margin improved by 30 basis points to 4.08%, compared to 3.78%
• Total loans were $1.35 billion, compared to $981.7 million at December 31, 2021
• Total loans increased organically by $91.4 million, or 9.6% from December 31, 2021, without the impact of PPP loan forgiveness and the Liberty Bancshares, Inc. merger
• Strong asset quality with nonperforming loans to total loans of 0.52%, compared to 0.49%
• Allowance for loan losses was 1.07% of total loans, compared to 1.46%

“Middlefield experienced another excellent year of core earnings driven by a 4.08% net interest margin, a 9.6% increase in organic loans, and robust asset quality. These results reflect the execution of our strategic plan, the dedication of our skilled team members, and the value we provide our local communities. In addition, we completed the Liberty Bancshares merger during the 2022 fourth quarter, which increased our scale and exposure in the Central and Northwest Ohio regions. We are delighted to bring our common philosophies to customers within these markets. Over the next several months, we will focus on integrating Liberty into Middlefield’s organization,” stated James R. Heslop, II, Chief Executive Officer.

“Our performance during 2022 was encouraging as we overcame the Federal Reserve’s rapid increase in interest rates, growing competition for deposits and increased economic uncertainty. While we expect these trends to continue throughout 2023, we are well-positioned to navigate a more challenging landscape due to our strong capital position, excellent asset quality and favorable net interest margin. Most importantly, our solid financial position allows us to support our local communities during an increasingly complex operating environment while continuing to focus on creating value and returning capital to our shareholders,” concluded Mr. Heslop.

Income Statement

Net interest income for the twelve-months ended December 31, 2022, was $50.2 million, an increase of $2.1 million or 4.2%, compared to $48.1 million last year. The net interest margin for the 2022 twelve-month period was 4.08%, compared to 3.78% for the same period the previous year. Net interest income for the 2022 fourth quarter was $14.1 million, compared to $12.0 million for the 2021 fourth quarter. The 17.7% increase in net interest income for the 2022 fourth quarter from the same period in 2021 was primarily a result of higher interest income. The net interest margin for the 2022 fourth quarter was 4.23%, compared to 3.81% for the same period of 2021.

For the 2022 twelve-month period, noninterest income was $6.7 million, compared to $7.2 million, a decrease of $460,000 or 6.4%, for the same period last year. Noninterest income for 2022 benefitted from $951,000 of gross rental income related to leasing other real estate owned, mostly offset by $686,000 of related gross rental expense. Noninterest income for the 2022 fourth quarter was $2.4 million, compared to $1.5 million for the same period last year.

For the 2022 twelve-month period, noninterest expense increased $6.1 million, or 19.0%, to $38.0 million, compared to $31.9 million for the same period last year. Operating costs in the 2022 fourth quarter increased 57.6% to $12.3 million from $7.8 million for the 2021 fourth quarter. The Company incurred $1.4 million of additional operating expenses associated with the Liberty Bancshares, Inc. merger during the 2022 fourth quarter and $2.4 million during the 2022 twelve-month period. In addition, the Company incurred a net loss on other real estate owned of $1.7 million during the 2022 fourth quarter mostly due to the write-down of an other real estate asset.

Net income for the 2022 twelve-month period was $15.7 million, or $2.59 per diluted share, compared to $18.6 million, or $3.00 per diluted share, for the same period last year. Non-GAAP⁽¹⁾ net income, adjusted for certain one-time items and expenses associated with the Liberty Bancshares, Inc. merger, was $18.3 million, or $3.03 per diluted share for the 2022 twelve-month period, compared to $18.5 million, or $2.98 per diluted share for the same period last year.

Net income for the 2022 fourth quarter was $3.5 million, or $0.53 per diluted share, compared to $4.8 million, or $0.81 per diluted share, for the same period last year. Non-GAAP⁽¹⁾ net income, adjusted for certain one-time items and expenses associated with the Liberty Bancshares, Inc. merger, was $5.2 million, or $0.79 per diluted share for the 2022 fourth quarter, compared to $4.8 million, or $0.80 per diluted share for the same period last year.

Balance Sheet

Total assets at December 31, 2022, increased to approximately $1.69 billion from $1.33 billion at December 31, 2021. The $356.6 million, or 26.8%, year-over-year increase in total assets was primarily due to the Liberty Bancshares, Inc. merger. Net loans at December 31, 2022, increased 38.4% to $1.34 billion, compared to $967.3 million at December 31, 2021. On an organic basis, without the impact of PPP loan forgiveness and the Liberty Bancshares, Inc. merger, total loans at December 31, 2022, increased 9.6%, compared to December 31, 2021.

Since 2020, Middlefield has helped customers receive $211.8 million of forgiveness payments under the terms of the Paycheck Protection Program, including processing $33.4 million of forgiveness payments for the 2022 full year. The balance of PPP loans outstanding at December 31, 2022, was $0.7 million.

Total deposits at December 31, 2022, were $1.40 billion, compared to $1.17 billion at December 31, 2021. The 20.2% increase in deposits was primarily due to the Liberty Bancshares, Inc. merger. On an organic basis, total deposits at December 31, 2022, decreased 7.8% compared to December 31, 2021. The investment portfolio was $165.0 million at December 31, 2022, compared with $170.2 million at December 31, 2021.

Donald L. Stacy, Chief Financial Officer, stated, “While we expect an increase in the cost of funds to pressure net interest margin in future quarters, we entered this period with the highest net interest margin since 2000. Asset quality remains strong across our portfolio, as nonperforming loans to total loans were just 0.52% at December 31, 2022, compared to 0.49% at December 31, 2021.”

Mr. Stacy continued, “With a net loan-to-deposit ratio of 95.5%, $53.8 million in cash and cash equivalents, and $165.0 million in investment securities at December 31, 2022, we believe we have ample liquidity and capital levels to support our long-term growth strategies, dividend payment, and share repurchase program. Since January 2019, we have repurchased 898,901 shares, representing 13.9% of the outstanding shares prior to our repurchase program. This includes 229,420 shares repurchased during 2022 at an average of $26.67 per share.”

Stockholders’ Equity and Dividends

At December 31, 2022, stockholders’ equity was $197.7 million compared to $145.3 million at December 31, 2021. The 36.0% year-over-year increase in stockholders’ equity was 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 December 31, 2022, was $23.98 compared to $24.68 at December 31, 2021.

Tangible stockholders’ equity⁽¹⁾ was $158.3 million for December 31, 2022, compared to $128.9 million at December 31, 2021. On a per-share basis, tangible stockholders’ equity⁽¹⁾ at December 31, 2022, was $19.19, compared to $21.88 at December 31, 2021.

For the 2022 full year, cash dividends declared per share increased 17.4% to $0.81 totaling $5.5 million, compared to $0.69 per share or $4.2 million for the same period last year. Dividends in 2022 included a $0.10 per share one-time dividend payment declared in the fourth quarter.

At December 31, 2022, the Company had an equity-to-assets leverage ratio of 11.71%, compared to 10.92% at December 31, 2021. The year-over-year increase in the Company’s equity-to-assets leverage ratio occurred even as Middlefield invested $6.1 million in its share repurchase program.

Asset Quality

No provision for loan losses was recorded for the 2022 fourth quarter, compared to a net loan loss recovery of $200,000 for the 2021 fourth quarter. There was no provision for loan losses for the 2022 full year period versus a $700,000 provision for loan losses for the same period last year.

Net charge-offs were $94,000, or 0.03% of average loans, annualized, during the 2022 fourth quarter, compared to net recoveries of $308,000 for the same quarter last year. For the 2022 full year, net recoveries were $96,000, or 0.01% of average loans, compared to net recoveries of $183,000, or 0.02% of average loans for the full year ended December 31, 2021.

Nonperforming assets at December 31, 2022, were $12.8 million, compared to $11.9 million at December 31, 2021. Nonperforming loans at December 31, 2022, were $7.0 million, compared to $4.9 million at December 31, 2021 primarily due to the Liberty Bancshares, Inc. merger. The allowance for loan losses at December 31, 2022, stood at $14.4 million, or 1.07% of total loans, compared to $14.3 million, or 1.46% of total loans at December 31, 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 $1.69 billion at December 31, 2022. The Bank operates 22 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)

		December 31,			September 30,			June 30,			March 31,			December 31,
Balance Sheets (period end)		2022			2022			2022			2022			2021
ASSETS
Cash and due from banks	$	51,404		$	119,777		$	60,114		$	78,804		$	97,172
Federal funds sold		2,405			8,800			19,039			29,474			22,322
Cash and cash equivalents		53,809			128,577			79,153			108,278			119,494
Equity securities, at fair value		915			972			779			851			818
Investment securities available for sale, at fair value		164,967			162,064			171,958			175,216			170,199
Loans held for sale		-			-			-			9			1,051
Loans:
Commercial real estate:
Owner occupied		191,748			120,912			120,771			113,590			111,470
Non-owner occupied		380,580			285,419			288,334			293,745			283,618
Multifamily		58,251			38,063			29,152			29,385			31,189
Residential real estate		296,308			247,612			246,453			244,747			240,089
Commercial and industrial		195,602			146,987			137,398			131,683			148,812
Home equity lines of credit		128,065			114,344			111,730			106,300			104,355
Construction and other		94,199			33,748			35,988			50,152			54,148
Consumer installment		8,119			8,110			8,171			8,118			8,010
Total loans		1,352,872			995,195			977,997			977,720			981,691
Less allowance for loan and lease losses		14,438			14,532			14,550			14,492			14,342
Net loans		1,338,434			980,663			963,447			963,228			967,349
Premises and equipment, net		21,961			16,215			17,030			17,142			17,272
Goodwill		31,735			15,071			15,071			15,071			15,071
Core deposit intangibles		7,701			1,171			1,249			1,326			1,403
Bank-owned life insurance		33,811			17,382			17,274			17,166			17,060
Other real estate owned		5,821			6,792			6,792			6,992			6,992
Accrued interest receivable and other assets		28,528			22,104			20,624			18,019			14,297
TOTAL ASSETS	$	1,687,682		$	1,351,011		$	1,293,377		$	1,323,298		$	1,331,006
		December 31,			September 30,			June 30,			March 31,			December 31,
		2022			2022			2022			2022			2021
LIABILITIES
Deposits:
Noninterest-bearing demand	$	503,907		$	383,675		$	379,872		$	361,251		$	334,171
Interest-bearing demand		164,677			160,112			154,788			162,010			196,308
Money market		187,498			162,052			185,494			187,807			177,281
Savings		307,917			247,466			252,179			264,784			260,125
Time		238,020			177,182			174,833			191,320			198,725
Total deposits		1,402,019			1,130,487			1,147,166			1,167,172			1,166,610
Short-term borrowings		65,000			80,000			-			-			-
Other borrowings		12,059			12,107			12,910			12,975			12,901
Accrued interest payable and other liabilities		10,913			5,562			5,081			5,507			6,160
TOTAL LIABILITIES		1,489,991			1,228,156			1,165,157			1,185,654			1,185,671
STOCKHOLDERS' EQUITY
Common stock, no par value; 10,000,000 shares authorized, 9,916,466
shares issued, 8,245,235 shares outstanding as of December 31, 2022		161,029			87,640			87,562			87,562			87,131
Retained earnings		94,154			93,166			89,900			86,804			83,971
Accumulated other comprehensive (loss) income		(22,144)			(25,080)			(17,591)			(6,674)			3,462
Treasury stock, at cost; 1,671,231 shares as of December 31, 2022		(35,348)			(32,871)			(31,651)			(30,048)			(29,229)
TOTAL STOCKHOLDERS' EQUITY		197,691			122,855			128,220			137,644			145,335
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,687,682		$	1,351,011		$	1,293,377		$	1,323,298		$	1,331,006

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 Twelve Months Ended
		December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
Statements of Income		2022			2022			2022			2022			2021			2022			2021
INTEREST AND DIVIDEND INCOME
Interest and fees on loans	$	14,368		$	11,892		$	11,268		$	10,985		$	11,586		$	48,513		$	47,896
Interest-earning deposits in other institutions		240			134			74			24			30			472			90
Federal funds sold		119			51			46			3			1			219			3
Investment securities:
Taxable interest		477			449			442			443			438			1,811			1,679
Tax-exempt interest		986			982			955			784			732			3,707			2,565
Dividends on stock		68			59			33			24			23			184			102
Total interest and dividend income		16,258			13,567			12,818			12,263			12,810			54,906			52,335
INTEREST EXPENSE
Deposits		1,771			812			709			726			783			4,018			3,913
Short-term borrowings		263			44			-			-			-			307			-
Other borrowings		142			112			81			69			67			404			282
Total interest expense		2,176			968			790			795			850			4,729			4,195
NET INTEREST INCOME		14,082			12,599			12,028			11,468			11,960			50,177			48,140
Provision for loan losses		-			-			-			-			(200)			-			700
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES		14,082			12,599			12,028			11,468			12,160			50,177			47,440
NONINTEREST INCOME
Service charges on deposit accounts		976			1,004			956			914			906			3,850			3,425
(Losses) gains on equity securities		(77)			(57)			(72)			33			(14)			(173)			209
Earnings on bank-owned life insurance		137			108			108			106			106			459			546
(Losses) gains on sale of loans		(4)			7			18			3			118			24			1,240
Revenue from investment services		147			233			153			141			198			674			727
Other income		1,235			251			220			206			221			1,912			1,059
Total noninterest income		2,414			1,546			1,383			1,403			1,535			6,746			7,206
NONINTEREST EXPENSE
Salaries and employee benefits		4,886			4,491			3,785			4,386			4,088			17,548			17,151
Occupancy expense		487			458			583			505			542			2,033			2,048
Equipment expense		252			233			274			315			358			1,074			1,361
Data processing costs		1,050			985			822			844			851			3,701			3,298
Ohio state franchise tax		279			293			292			293			285			1,157			1,144
Federal deposit insurance expense		105			84			90			50			50			329			494
Professional fees		382			280			383			455			435			1,500			1,313
Net loss (gain) on other real estate owned		1,692			1			206			8			(66)			1,907			11
Advertising expense		308			268			229			228			221			1,033			885
Software amortization expense		28			27			40			48			119			143			361
Core deposit intangible amortization		140			78			77			77			80			372			321
Merger-related costs		1,413			390			579			-			-			2,382			-
Other expense		1,321			1,298			1,175			1,057			868			4,851			3,561
Total noninterest expense		12,343			8,886			8,535			8,266			7,831			38,030			31,948
Income before income taxes		4,153			5,259			4,876			4,605			5,864			18,893			22,698
Income taxes		651			1,010			787			772			1,027			3,220			4,065
NET INCOME	$	3,502		$	4,249		$	4,089		$	3,833		$	4,837		$	15,673		$	18,633
PTPP (1)	$	4,153		$	5,259		$	4,876		$	4,605		$	5,664		$	18,893		$	23,398
(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 Twelve Months Ended
		December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
		2022			2022			2022			2022			2021			2022			2021
Per common share data
Net income per common share - basic	$	0.53		$	0.73		$	0.70		$	0.65		$	0.81		$	2.60		$	3.01
Net income per common share - diluted	$	0.53		$	0.73		$	0.70		$	0.65		$	0.81		$	2.59		$	3.00
Dividends declared per share	$	0.30		$	0.17		$	0.17		$	0.17		$	0.21		$	0.81		$	0.69
Book value per share (period end)	$	23.98		$	21.30		$	22.07		$	23.43		$	24.68		$	23.98		$	24.68
Tangible book value per share (period end) (2) (3)	$	19.19		$	18.48		$	19.26		$	20.64		$	21.88		$	19.19		$	21.88
Dividends declared	$	2,514		$	983		$	993		$	1,000		$	1,242		$	5,490		$	4,240
Dividend yield		4.34%			2.49%			2.71%			2.78%			3.37%			2.96%			2.79%
Dividend payout ratio		71.79%			23.13%			24.28%			26.09%			25.68%			35.03%			22.76%
Average shares outstanding - basic		6,593,616			5,792,773			5,851,422			5,879,025			5,951,838			6,027,091			6,186,666
Average shares outstanding - diluted		6,610,907			5,805,799			5,860,098			5,889,836			5,975,333			6,044,382			6,211,076
Period ending shares outstanding		8,245,235			5,767,803			5,810,351			5,873,565			5,888,737			8,245,235			5,888,737
Selected ratios
Return on average assets		0.97%			1.32%			1.25%			1.17%			1.41%			1.17%			1.36%
Return on average equity		9.35%			12.94%			12.30%			10.75%			13.17%			11.25%			12.74%
Return on average tangible common equity (2) (4)		11.13%			14.79%			14.02%			12.13%			14.85%			12.95%			14.38%
Efficiency (1)		72.75%			61.07%			61.83%			62.54%			56.56%			64.96%			56.38%
Equity to assets at period end		11.71%			9.09%			9.91%			10.40%			10.92%			11.71%			10.92%
Noninterest expense to average assets		0.86%			0.69%			0.65%			0.62%			0.58%			2.84%			2.33%
(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 Twelve Months Ended
		December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
Yields		2022			2022			2022			2022			2021			2022			2021
Interest-earning assets:
Loans receivable (2)		5.11%			4.78%			4.66%			4.53%			4.61%			4.79%			4.56%
Investment securities (2)		3.83%			3.90%			3.76%			3.41%			3.30%			3.73%			3.45%
Interest-earning deposits with other banks		3.42%			2.06%			0.77%			0.23%			0.20%			1.31%			0.20%
Total interest-earning assets		4.88%			4.55%			4.28%			4.06%			4.07%			4.45%			4.11%
Deposits:
Interest-bearing demand deposits		0.83%			0.22%			0.15%			0.14%			0.12%			0.34%			0.13%
Money market deposits		1.00%			0.46%			0.49%			0.47%			0.47%			0.61%			0.47%
Savings deposits		0.49%			0.19%			0.06%			0.06%			0.06%			0.20%			0.06%
Certificates of deposit		1.30%			0.96%			0.83%			0.87%			0.90%			1.00%			1.13%
Total interest-bearing deposits		0.87%			0.43%			0.36%			0.37%			0.36%			0.51%			0.44%
Non-Deposit Funding:
Borrowings		4.25%			2.94%			2.51%			2.16%			2.09%			3.35%			2.10%
Total interest-bearing liabilities		1.02%			0.50%			0.39%			0.39%			0.37%			0.59%			0.47%
Cost of deposits		0.57%			0.29%			0.24%			0.25%			0.26%			0.34%			0.32%
Cost of funds		0.68%			0.34%			0.27%			0.27%			0.27%			0.40%			0.34%
Net interest margin (1)		4.23%			4.23%			4.02%			3.80%			3.81%			4.08%			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
		December 31,			September 30,			June 30,			March 31,			December 31,
Asset quality data		2022			2022			2022			2022			2021
(Dollar amounts in thousands, unaudited)
Nonperforming loans (1)	$	7,013		$	3,692		$	4,670		$	4,728		$	4,859
Other real estate owned		5,821			6,792			6,792			6,992			6,992
Nonperforming assets	$	12,834		$	10,484		$	11,462		$	11,720		$	11,851
Allowance for loan losses	$	14,438		$	14,532		$	14,550		$	14,492		$	14,342
Allowance for loan losses/total loans		1.07%			1.46%			1.49%			1.48%			1.46%
Net charge-offs (recoveries):
Quarter-to-date	$	94		$	18		$	(58)		$	(150)		$	(308)
Year-to-date		(96)			(190)			(208)			(150)			(183)
Net charge-offs (recoveries) to average loans, annualized:
Quarter-to-date		0.03%			0.01%			-0.02%			-0.06%			-0.12%
Year-to-date		-0.01%			-0.02%			-0.04%			-0.06%			-0.02%
Nonperforming loans/total loans		0.52%			0.37%			0.48%			0.48%			0.49%
Allowance for loan losses/nonperforming loans		205.87%			393.61%			311.56%			306.51%			295.16%
Nonperforming assets/total assets		0.76%			0.78%			0.89%			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 Period Ended
(Dollar amounts in thousands, unaudited)		December 31,			September 30,			June 30,			March 31,			December 31,
		2022			2022			2022			2022			2021
Stockholders' Equity	$	197,691		$	122,855		$	128,220		$	137,644		$	145,335
Less Goodwill and other intangibles		39,436			16,242			16,320			16,397			16,474
Tangible Common Equity	$	158,255		$	106,613		$	111,900		$	121,247		$	128,861
Shares outstanding		8,245,235			5,767,803			5,810,351			5,873,565			5,888,737
Tangible book value per share	$	19.19		$	18.48		$	19.26		$	20.64		$	21.88

Reconciliation of Average Equity to Return on Average Tangible Common Equity
	For the Three Months Ended																For the Twelve Months Ended
		December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
		2022			2022			2022			2022			2021			2022			2021
Average Stockholders' Equity	$	148,616		$	130,263		$	133,377		$	144,630		$	145,716		$	139,270		$	146,237
Less Average Goodwill and other intangibles		23,731			16,280			16,357			16,435			16,513			18,200			16,634
Average Tangible Common Equity	$	124,885		$	113,983		$	117,020		$	128,195		$	129,203		$	121,070		$	129,603
Net income	$	3,502		$	4,249		$	4,089		$	3,833		$	4,837		$	15,673		$	18,633
Return on average tangible common equity (annualized)		11.13%			14.79%			14.02%			12.13%			14.85%			12.95%			14.38%

Reconciliation of Pre-Tax Pre-Provision Income (PTPP)
	For the Three Months Ended																For the Twelve Months Ended
		December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
		2022			2022			2022			2022			2021			2022			2021
Net income	$	3,502		$	4,249		$	4,089		$	3,833		$	4,837		$	15,673		$	18,633
Add Income Taxes		651			1,010			787			772			1,027			3,220			4,065
Add Provision for loan losses		-			-			-			-			(200)			-			700
PTPP	$	4,153		$	5,259		$	4,876		$	4,605		$	5,664		$	18,893		$	23,398

Reconciliation of Net Income, Less Merger and Certain Items
	For the Three Months Ended											For the Twelve Months Ended
		December 31,		September 30,		June 30,		March 31,		December 31,		December 31,		December 31,
		2022		2022		2022		2022		2021		2022		2021
Net Income	$	3,502	$	4,249	$	4,089	$	3,833	$	4,837	$	15,673	$	18,633
Acquisition related costs- after tax		1,116		308		457		-		-		1,882		-
Net loss (gain) on other real estate owned - after tax (1)		585		1		163		6		(52)		755		(134)
Net Income- Adjusted	$	5,203	$	4,558	$	4,709	$	3,839	$	4,785	$	18,310	$	18,499
Diluted EPS excluding merger and one-time items	$	0.79	$	0.79	$	0.80	$	0.65	$	0.80	$	3.03	$	2.98
Return on average assets excluding merger and one-time items (annualized)		1.44%		1.41%		1.43%		1.17%		1.40%		1.37%		1.35%
Return on average equity excluding merger and one-time items (annualized)		13.89%		13.88%		14.16%		10.77%		13.03%		13.15%		12.65%
Return on average tangible common equity excluding merger and one-time items (annualized)		16.53%		15.86%		16.14%		12.15%		14.69%		15.12%		14.27%
(1)   This includes net rental income earned on other real estate owned.

MIDDLEFIELD BANC CORP.
Average Balance Sheets
(Dollar amounts in thousands, unaudited)

	For the Three Months Ended
	December 31,											December 31,
	2022											2021
	Average								Average			Average								Average
	Balance				Interest				Yield/Cost			Balance				Interest				Yield/Cost
Interest-earning assets:
Loans receivable (3)	$	1,117,221			$	14,368			5.11%			$	999,229			$	11,586			4.61%
Investment securities (3)	178,772				1,463				3.83%			164,254				1,170				3.30%
Interest-earning deposits with other banks (4)	49,569				427				3.42%			104,804				54				0.20%
Total interest-earning assets	1,345,562				16,258				4.88%			1,268,287				12,810				4.07%
Noninterest-earning assets	89,740											90,556
Total assets	$	1,435,302										$	1,358,843
Interest-bearing liabilities:
Interest-bearing demand deposits	$	165,267			$	344			0.83%			$	212,861			$	66			0.12%
Money market deposits	172,437				435				1.00%			180,201				214				0.47%
Savings deposits	266,613				330				0.49%			257,344				39				0.06%
Certificates of deposit	201,972				662				1.30%			204,904				464				0.90%
Short-term borrowings	25,750				263				4.05%			-				-				0.00%
Other borrowings	12,086				142				4.66%			12,934				67				2.06%
Total interest-bearing liabilities	844,125				2,176				1.02%			868,244				850				0.39%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits	428,155											337,900
Other liabilities	14,406											6,983
Stockholders' equity	148,616											145,716
Total liabilities and stockholders' equity	$	1,435,302										$	1,358,843
Net interest income					$	14,082										$	11,960
Interest rate spread (1)									3.86%											3.68%
Net interest margin (2)									4.23%											3.81%
Ratio of average interest-earning assets to
average interest-bearing liabilities									159.40%											146.07%
(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 $210 for the three months ended December 31, 2022 and 2021, respectively
(4) Includes dividends received on restricted stock.

	For the Three Months Ended
	December 31,											September 30,
	2022											2022
	Average								Average			Average								Average
	Balance				Interest				Yield/Cost			Balance				Interest				Yield/Cost
Interest-earning assets:
Loans receivable (3)	$	1,117,221			$	14,368			5.11%			$	987,689			$	11,892			4.78%
Investment securities (3)	178,772				1,463				3.83%			172,316				1,431				3.90%
Interest-earning deposits with other banks (4)	49,569				427				3.42%			46,938				244				2.06%
Total interest-earning assets	1,345,562				16,258				4.88%			1,206,943				13,567				4.55%
Noninterest-earning assets	89,740											73,753
Total assets	$	1,435,302										$	1,280,696
Interest-bearing liabilities:
Interest-bearing demand deposits	$	165,267			$	344			0.83%			$	162,878			$	91			0.22%
Money market deposits	172,437				435				1.00%			155,095				180				0.46%
Savings deposits	266,613				330				0.49%			249,898				119				0.19%
Certificates of deposit	201,972				662				1.30%			174,091				422				0.96%
Short-term borrowings	25,750				263				4.05%			8,554				44				2.04%
Other borrowings	12,086				142				4.66%			12,530				112				3.55%
Total interest-bearing liabilities	844,125				2,176				1.02%			763,046				968				0.50%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits	428,155											382,351
Other liabilities	14,406											5,036
Stockholders' equity	148,616											130,263
Total liabilities and stockholders' equity	$	1,435,302										$	1,280,696
Net interest income					$	14,082										$	12,599
Interest rate spread (1)									3.86%											4.05%
Net interest margin (2)									4.23%											4.23%
Ratio of average interest-earning assets to
average interest-bearing liabilities									159.40%											158.17%
(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 $278 and $277 for the three months ended December 31, 2022 and September 30, 2022, respectively
(4) Includes dividends received on restricted stock.

	For the Twelve Months Ended
	December 31,											December 31,
	2022											2021
	Average								Average			Average								Average
	Balance				Interest				Yield/Cost			Balance				Interest				Yield/Cost
Interest-earning assets:
Loans receivable (3)	$	1,014,896			$	48,513			4.79%			$	1,052,351			$	47,896			4.56%
Investment securities (3)	174,514				5,518				3.73%			142,705				4,244				3.45%
Interest-earning deposits with other banks (4)	67,030				875				1.31%			97,417				195				0.20%
Total interest-earning assets	1,256,440				54,906				4.45%			1,292,473				52,335				4.11%
Noninterest-earning assets	84,484											78,802
Total assets	$	1,340,924										$	1,371,275
Interest-bearing liabilities:
Interest-bearing demand deposits	$	164,569			$	554			0.34%			$	212,063			$	274			0.13%
Money market deposits	174,377				1,055				0.61%			186,009				869				0.47%
Savings deposits	259,225				527				0.20%			255,267				162				0.06%
Certificates of deposit	188,617				1,882				1.00%			231,662				2,608				1.13%
Short-term borrowings	8,576				307				3.58%			85				-				0.00%
Other borrowings	12,626				404				3.20%			13,313				282				2.12%
Total interest-bearing liabilities	807,990				4,729				0.59%			898,399				4,065				0.47%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits	386,296											320,104
Other liabilities	7,368											6,535
Stockholders' equity	139,270											146,237
Total liabilities and stockholders' equity	$	1,340,924										$	1,371,275
Net interest income					$	50,177										$	48,270
Interest rate spread (1)									3.86%											3.64%
Net interest margin (2)									4.08%											3.78%
Ratio of average interest-earning assets to
average interest-bearing liabilities									155.50%											143.86%
(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 $1,046 and $752, for 2022 and 2021, 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

FAQ

What were Middlefield Banc Corp.'s financial results for 2022?

Middlefield Banc Corp. reported a net income of $15.7 million for 2022, down from $18.6 million in 2021.

How much capital did MBCN return to shareholders in 2022?

MBCN returned $11.6 million to shareholders through cash dividends and share repurchases in 2022.

What is the current net interest margin for MBCN?

The net interest margin for MBCN improved to 4.08% as of December 31, 2022.

How did the Liberty Bancshares merger affect MBCN's financials?

The Liberty Bancshares merger contributed to a 26.8% increase in total assets and a 36.0% rise in stockholders' equity.

What was the organic growth rate of loans for MBCN in 2022?

MBCN achieved an organic loan growth rate of 9.6%, totaling $1.35 billion.