Middlefield Banc Corp. Reports 2022 Nine Month Financial Results

Rhea-AI Summary

Middlefield Banc Corp. (NASDAQ: MBCN) reported its financial results for the three and nine months ending September 30, 2022. Net income decreased to $12.2 million, or $2.08 per diluted share, down from $13.8 million, or $2.19 per diluted share year-over-year. The company returned $6.6 million to shareholders through dividends and share repurchases. Total loans rose to $995.2 million, a 6.6% increase, while net interest margin improved to 4.02%. However, year-to-date profitability was impacted by $969,000 in one-time merger expenses. The merger with Liberty Bancshares, Inc. is on track for Q4 2022.

Positive

• Total loans increased by 6.6% on an annualized basis.
• Net interest margin improved by 24 basis points to 4.02%.
• Strong asset quality with nonperforming loans at just 0.37%.

Negative

• Net income decreased by $1.6 million compared to last year.
• One-time expenses related to the merger amounted to $969,000.
• Stockholders' equity declined by 15.9% year-over-year.

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, 2022					March 31,  2022				December 31, 2021					September 30, 2021
ASSETS
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.com	Andrew M. Berger Managing Director SM Berger & Company, Inc. (216) 464-6400 andrew@smberger.com

FAQ

What were Middlefield Banc Corp.'s earnings for Q3 2022?

Middlefield Banc Corp. reported net income of $4.2 million, or $0.73 per diluted share, for Q3 2022.

How did the merger with Liberty Bancshares, Inc. affect MBCN's financials?

The merger incurred $969,000 in one-time expenses for the nine-month period ending September 30, 2022.

What is Middlefield Banc Corp.'s total loan amount as of September 30, 2022?

As of September 30, 2022, total loans were reported at $995.2 million.

What is the outlook for Middlefield Banc Corp. after Q3 2022?

The company expects to benefit from increased size and strength post-merger with Liberty Bancshares in Q4 2022.