Middlefield Banc Corp. Reports 2023 Nine-Month Financial Results

Rhea-AI Summary

Middlefield Banc Corp. reports financial results for Q3 2023. Net income increased 13.6% to $13.8 million. Total loans and deposits reached record highs. Net interest income increased 38.0% to $49.8 million. Noninterest income increased 17.5% to $5.1 million. Return on average assets and equity decreased. Nonperforming assets improved.

Positive

• Net income increased 13.6% to a record $13.8 million
• Net interest income increased 38.0% to a record $49.8 million
• Noninterest income increased 17.5% to $5.1 million
• Total loans were a record $1.45 billion
• Total deposits were a record $1.46 billion
• Strong asset quality with nonperforming assets to total assets of 0.75%
• Equity to assets increased to 10.80% from 9.09%

Negative

• Earnings per diluted share decreased from $2.08 to $1.70
• Return on average assets decreased from 1.24% to 1.06%
• Return on average equity decreased from 11.96% to 9.43%
• Return on average tangible common equity decreased from 13.59% to 11.92%
• Higher funding costs and increased competition for deposits pressured net interest income

MIDDLEFIELD, OHIO, Oct. 23, 2023 (GLOBE NEWSWIRE) -- Middlefield Banc Corp. (NASDAQ: MBCN) today reported financial results for the three and nine months ended September 30, 2023.

2023 Nine-Month Financial Highlights (on a year-over-year basis unless noted):

• Net income increased 13.6% to a record $13.8 million
• Earnings were $1.70 per diluted share compared to $2.08 per diluted share, reflecting a 38.6% increase in the average diluted shares outstanding related to the Liberty Bancshares, Inc. merger
• Pre-tax, pre-provision net income increased 28.6% to a record $19.0 million⁽¹⁾
• Net interest income increased 38.0% to a record $49.8 million
• Net interest margin improved by 13 basis points to 4.15%, compared to 4.02%
• Noninterest income increased 17.5% to $5.1 million
• Total loans were a record $1.45 billion, compared to $1.35 billion at December 31, 2022
• Total deposits were a record $1.46 billion, compared to $1.40 billion at December 31, 2022
• Return on average assets was 1.06%, compared to 1.24%
• Return on average equity was 9.43%, compared to 11.96%
• Return on average tangible common equity⁽¹⁾ was 11.92%, compared to 13.59%
• Strong asset quality with nonperforming assets to total assets of 0.75%, compared to 0.78%
• Allowance for credit losses was 1.45% of total loans, compared to 1.46%
• Equity to assets increased to 10.80% from 9.09%

⁽¹⁾See non-GAAP reconciliation under the section “GAAP to Non-GAAP Reconciliations”

"Our third quarter performance reflects record loans, stable asset quality, and controlled operating expenses. Throughout the year, we have added proven executives to our leadership team to help support our growth. We have also added experienced lenders and treasury management professionals to grow Middlefield's brand and drive loan and deposit growth across our Northeast, Central, and Western Ohio markets. As a result of our team's efforts, we ended the third quarter with record total loans and assets and a 103-basis point year-over-year increase in our yield on earning assets. While this has produced strong levels of interest income, the higher rate environment and significant competition for deposits increased our funding costs at a faster rate and pressured net interest income during the quarter. We expect increased competition for deposits and higher funding costs to continue throughout 2023 and into 2024," stated James R. Heslop, II, Chief Executive Officer.

"We continue prudently managing our balance sheet and closely monitoring our loan portfolio. Despite the higher rate environment, economic activity remains stable across our Ohio markets, supported by low unemployment and large-scale, multi-year economic development projects. Our local presence in attractive Ohio markets, combined with $840 million in maximum borrowing capacity and a proven team of banking professionals, allows us to support the local needs of our communities while continuing to invest in our long-term growth initiatives," concluded Mr. Heslop.

Income Statement
Net interest income for the 2023 nine-month period increased 38.0% to $49.8 million, compared to $36.1 million for the same period last year. Year-to-date, the net interest margin was 4.15%, compared to 4.02% for the same period last year. Net interest income for the 2023 third quarter increased 26.7% to $16.0 million, compared to $12.6 million for the 2022 third quarter. The net interest margin for the 2023 third quarter was 3.88%, compared to 4.23% for the same period of 2022.

Pre-tax income for the 2022 nine-month period benefited from $1.2 million of accelerated net fees associated with the Paycheck Protection Program ("PPP").

For the 2023 nine-month period, noninterest income was $5.1 million, compared to $4.3 million for the same period last year. Noninterest income for the 2023 third quarter was $1.8 million, compared to $1.5 million for the same period the previous year.

For the 2023 nine-month period, noninterest expense was $36.0 million, compared to $25.7 million for the same period last year. Noninterest expense in the 2023 third quarter were $12.1 million, compared to $8.9 million for the 2022 third quarter. Higher 2023 third-quarter and year-to-date expenses were primarily associated with the Liberty Bancshares, Inc. merger.

Net income for the 2023 nine-month period ended September 30, 2023, was $13.8 million, or $1.70 per diluted share, compared to $12.2 million, or $2.08 per diluted share for the same period last year. Net income for the 2023 third quarter ended September 30, 2023, was $3.8 million, or $0.47 per diluted share, compared to $4.2 million, or $0.73 per diluted share, for the same period last year.

Pre-tax, pre-provision net income for the 2023 nine-months was $19.0 million, an increase of 28.6% from $14.7 million last year. For the 2023 third quarter, pre-tax, pre-provision net income was $5.7 million, an increase of 7.7% from $5.3 million last year. (See non-GAAP reconciliation under the section “GAAP to Non-GAAP Reconciliations”).

Balance Sheet
Total assets at September 30, 2023, increased 32.7% to $1.79 billion, compared to $1.35 billion at September 30, 2022. Total loans at September 30, 2023, increased 45.6% to $1.45 billion, compared to $995.2 million at September 30, 2022. The 45.6% year-over-year increase in total loans was due to the Liberty Bancshares, Inc. merger and organic loan growth. At September 30, 2023, total loans have increased organically by approximately 9.4% on an annualized basis.  

Total deposits at September 30, 2023, were $1.46 billion, compared to $1.13 billion at September 30, 2022. The 28.9% year-over-year increase in deposits was primarily due to the Liberty Bancshares, Inc. merger. Noninterest-bearing deposits were 29.1% of total deposits at September 30, 2023, compared to 33.9% at September 30, 2022. At September 30, 2023, the Company had brokered deposits of $53.5 million, compared to $5.0 million at September 30, 2022.

The investment securities portfolio was $159.4 million at September 30, 2023, compared with $162.1 million at September 30, 2022.

Michael Ranttila, Chief Financial Officer, stated, "Our balance sheet remains strong, and during the quarter, we continued to benefit from stable asset quality, ample capital levels, and limited exposure to unrealized losses within our investment portfolio. Reflecting the stability of our loan portfolio, at September 30, 2023, nonperforming assets to total assets were 0.75%, compared to 0.78% at September 30, 2022. In addition, we ended the quarter with $65.5 million in cash and cash equivalents, $159.4 million in available for sale investment securities, and $570.8 million of maximum borrowing capacity at the Federal Home Loan Bank, demonstrating ample liquidity levels. Finally, we maintained a modest level of unrealized losses on all securities, which was 13.6% of total capital at September 30, 2023, compared to 20.4% at September 30, 2022. We are confident we have sufficient liquidity to navigate a more complex economic environment while supporting our growth strategies and capital allocation priorities."

Middlefield's CRE portfolio included the following categories at September 30, 2023:

CRE Category		Balance (in thousands)			Percent of CRE Portfolio		Percent of Loan Portfolio
Office Space		$	76,048		11.7%		5.3%
Shopping Plazas		$	76,036		11.7%		5.3%
Multi-Family		$	82,578		12.7%		5.7%
Self-Storage		$	59,734		9.2%		4.1%
Hospitality		$	40,450		6.2%		2.8%
Senior Living		$	23,629		3.6%		1.6%
Other		$	292,372		44.9%		20.2%
Total CRE		$	650,847		100.0%		45.0%

Middlefield's commercial real estate office credit exposure represented 5.3% of the Company's total loan portfolio at September 30, 2023, with a weighted average loan-to-value of approximately 53%.

Stockholders' Equity and Dividends
At September 30, 2023, stockholders' equity was $193.7 million compared to $122.9 million at September 30, 2022. The 57.7% 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 acquisition of stock under the Company's stock repurchase program. On a per-share basis, shareholders' equity at September 30, 2023, was $23.94 compared to $21.30 at September 30, 2022.

At September 30, 2023, tangible stockholders' equity⁽¹⁾ was $150.6 million, compared to $106.6 million at September 30, 2022. On a per-share basis, tangible stockholders' equity⁽¹⁾ was $18.62 at September 30, 2023, compared to $18.48 at September 30, 2022. (See non-GAAP reconciliation under the section “GAAP to Non-GAAP Reconciliations”).

Through the 2023 nine-month period, the Company declared cash dividends of $0.60 per share, a 17.6% increase from $0.51 per share for the same period last year.

At September 30, 2023, the Company had an equity-to-assets ratio of 10.80%, compared to 9.09% at September 30, 2022.

Asset Quality
For the 2023 nine-month period and third quarter, the Company recorded provisions for credit losses of $2.4 million and $1.1 million, respectively, versus no provisions for credit losses for the same periods last year. The increase is largely due to growth in unfunded commitments.

Net recoveries were $16,000 or 0.00% of average loans, annualized, during the 2023 third quarter, compared to net charge-offs of $18,000, or 0.01% of average loans, annualized, at September 30, 2022. Year-to-date net charge-offs were $87,000, or 0.01% of average loans, annualized, compared to net recoveries of $190,000, or 0.02% of average loans, annualized, for the nine-months ended September 30, 2022.

Nonperforming loans at September 30, 2023, were $7.7 million, compared to $3.7 million at September 30, 2022. Nonperforming assets at September 30, 2023, were $13.5 million, compared to $10.5 million at September 30, 2022. The allowance for credit losses at September 30, 2023, stood at $21.0 million, or 1.45% of total loans, compared to $14.5 million, or 1.46% of total loans at September 30, 2022.

About Middlefield Banc Corp.
Middlefield Banc Corp., headquartered in Middlefield, Ohio, is the Bank holding Company of The Middlefield Banking Company, with total assets of $1.79 billion at September 30, 2023. The Bank operates 21 full-service banking centers and an LPL Financial® brokerage office serving Ada, Beachwood, Bellefontaine, Chardon, Cortland, Dublin, Garrettsville, Kenton, Mantua, Marysville, Middlefield, Newbury, Orwell, Plain City, Powell, Solon, Sunbury, Twinsburg, and Westerville. The Bank also operates a Loan Production Office in Mentor, Ohio.

Additional information is available at www.middlefieldbank.bank

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)
		September 30,					June 30,					March 31,				December 31,					September 30,
Balance Sheets (period end)			2023					2023				2023					2022					2022
ASSETS
Cash and due from banks	$		56,228			$		49,422			$	59,609			$		51,404			$		119,777
Federal funds sold			9,274					9,654				7,048					2,405					8,800
Cash and cash equivalents			65,502					59,076				66,657					53,809					128,577
Investment securities available for sale, at fair value			159,414					167,209				169,605					164,967					162,064
Other investments			958					711				777					915					972
Loans held for sale			632					171				104					-					-
Loans:
Commercial real estate:
Owner occupied			185,593					187,919				185,661					191,748					120,912
Non-owner occupied			382,676					385,846				400,314					380,580					285,419
Multifamily			82,578					58,579				63,892					58,251					38,063
Residential real estate			321,331					312,196				306,179					296,308					247,612
Commercial and industrial			214,334					209,349				195,024					195,602					146,987
Home equity lines of credit			127,494					126,894				126,555					128,065					114,344
Construction and other			127,106					118,851				97,406					94,199					33,748
Consumer installment			7,481					9,801				7,816					8,119					8,110
Total loans			1,448,593					1,409,435				1,382,847					1,352,872					995,195
Less allowance for credit losses			20,986					20,591				20,162					14,438					14,532
Net loans			1,427,607					1,388,844				1,362,685					1,338,434					980,663
Premises and equipment, net			21,708					21,629				21,775					21,961					16,215
Goodwill			36,197					36,197				31,735					31,735					15,071
Core deposit intangibles			6,906					7,171				7,436					7,701					1,171
Bank-owned life insurance			34,153					34,235				34,015					33,811					17,382
Other real estate owned			5,792					5,792				5,792					5,821					6,792
Accrued interest receivable and other assets			34,551					30,472				27,258					28,528					22,104
TOTAL ASSETS	$		1,793,420			$		1,751,507			$	1,727,839			$		1,687,682			$		1,351,011
		September 30,					June 30,					March 31,				December 31,					September 30,
			2023					2023				2023					2022					2022
LIABILITIES
Deposits:
Noninterest-bearing demand	$		424,055			$		441,102			$	474,977			$		503,907			$		383,675
Interest-bearing demand			243,973					229,633				196,086					164,677					160,112
Money market			275,766					241,537				221,723					187,498					162,052
Savings			216,453					231,508				287,859					307,917					247,466
Time			296,732					287,861				244,962					238,020					177,182
Total deposits			1,456,979					1,431,641				1,425,607					1,402,019					1,130,487
Short-term borrowings:
Federal Home Loan Bank advances			118,000					100,000				85,000					65,000					80,000
Other borrowings			11,912					11,961				12,010					12,059					12,107
Accrued interest payable and other liabilities			12,780					10,678				10,057					10,913					5,562
TOTAL LIABILITIES			1,599,671					1,554,280				1,532,674					1,489,991					1,228,156
STOCKHOLDERS' EQUITY
Common stock, no par value; 25,000,000 shares authorized, 9,928,028
shares issued, 8,092,576 shares outstanding as of September 30, 2023			161,312					161,211				161,248					161,029					87,640
Retained earnings			98,717					96,500				93,024					94,154					93,166
Accumulated other comprehensive loss			(26,426	)				(20,630	)			(19,253	)				(22,144	)				(25,080	)
Treasury stock, at cost; 1,835,452 shares as of September 30, 2023			(39,854	)				(39,854	)			(39,854	)				(35,348	)				(32,871	)
TOTAL STOCKHOLDERS' EQUITY			193,749					197,227				195,165					197,691					122,855
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$		1,793,420			$		1,751,507			$	1,727,839			$		1,687,682			$		1,351,011
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			2023					2023				2023					2022					2022				2023				2022
INTEREST AND DIVIDEND INCOME
Interest and fees on loans	$		20,899			$		20,762			$	18,275			$		14,368			$		11,892			$	59,935			$	34,145
Interest-earning deposits in other institutions			300					369				250					240					134				920				232
Federal funds sold			266					158				253					119					51				678				100
Investment securities:
Taxable interest			477					479				458					477					449				1,415				1,334
Tax-exempt interest			980					978				980					986					982				2,938				2,721
Dividends on stock			148					91				88					68					59				326				116
Total interest and dividend income			23,070					22,837				20,304					16,258					13,567				66,212				38,648
INTEREST EXPENSE
Deposits			5,632					3,851				2,990					1,771					812				12,472				2,247
Short-term borrowings			1,258					1,462				653					263					44				3,373				44
Other borrowings			213					170				155					142					112				539				262
Total interest expense			7,103					5,483				3,798					2,176					968				16,384				2,553
NET INTEREST INCOME			15,967					17,354				16,506					14,082					12,599				49,828				36,095
Provision for credit losses			1,127					814				507					-					-				2,449				-
NET INTEREST INCOME AFTER PROVISION
FOR CREDIT LOSSES			14,840					16,540				15,999					14,082					12,599				47,379				36,095
NONINTEREST INCOME
Service charges on deposit accounts			954					940				987					976					1,004				2,880				2,874
Gain (loss) on equity			48					(67	)			(138	)				(77	)				(57	)			(157	)			(96	)
Gain on other real estate owned			-					-				2					-					-				2				-
Earnings on bank-owned life insurance			207					220				200					137					108				627				322
Gain (loss) on sale of loans			45					6				23					(4	)				7				74				28
Revenue from investment services			190					174				186					147					233				550				527
Gross rental income			110					77				102					951					-				290				-
Other income			263					242				318					284					251				822				677
Total noninterest income			1,817					1,592				1,680					2,414					1,546				5,088				4,332
NONINTEREST EXPENSE
Salaries and employee benefits			5,994					6,019				5,852					4,886					4,491				17,865				12,662
Occupancy expense			699					659				696					487					458				2,054				1,546
Equipment expense			297					354				317					252					233				969				822
Data processing costs			1,209					1,137				1,070					1,050					985				3,587				2,650
Ohio state franchise tax			398					398				385					279					293				1,180				878
Federal deposit insurance expense			207					249				120					105					84				576				224
Professional fees			545					550				538					382					280				1,633				1,118
Other real estate owned writedowns			-					-				-					1,000					-				-				215
Advertising expense			414					415				486					308					268				1,315				725
Software amortization expense			24					23				26					28					27				73				115
Core deposit intangible amortization			265					265				265					140					78				794				232
Gross other real estate owned expenses			195					63				132					692					1				390				-
Merger-related costs			22					206				245					1,413					390				300				969
Other expense			1,849					1,716				1,661					1,321					1,298				5,228				3,531
Total noninterest expense			12,118					12,054				11,793					12,343					8,886				35,964				25,687
Income before income taxes			4,539					6,078				5,886					4,153					5,259				16,503				14,740
Income taxes			703					986				989					651					1,010				2,678				2,569
NET INCOME	$		3,836			$		5,092			$	4,897			$		3,502			$		4,249			$	13,825			$	12,171
PTPP (1)	$		5,666			$		6,892			$	6,393			$		4,153			$		5,259			$	18,952			$	14,740
(1) See section “GAAP to Non-GAAP Reconciliations” for the reconciliation of GAAP performance measures to 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,
			2023					2023				2023					2022					2022				2023				2022
Per common share data
Net income per common share - basic	$		0.47			$		0.63			$	0.60			$		0.53			$		0.73			$	1.71			$	2.08
Net income per common share - diluted	$		0.47			$		0.63			$	0.60			$		0.53			$		0.73			$	1.70			$	2.08
Dividends declared per share	$		0.20			$		0.20			$	0.20			$		0.30			$		0.17			$	0.60			$	0.51
Book value per share (period end)	$		23.94			$		24.38			$	24.13			$		23.98			$		21.30			$	23.94			$	21.30
Tangible book value per share (period end) (1) (2)	$		18.62			$		19.02			$	19.29			$		19.19			$		18.48			$	18.62			$	18.48
Dividends declared	$		1,619			$		1,616			$	1,605			$		2,514			$		983			$	4,841			$	2,976
Dividend yield			3.12	%				2.99	%			2.89	%				4.34	%				2.49	%			3.16	%			2.52	%
Dividend payout ratio			42.21	%				31.74	%			32.78	%				71.79	%				23.13	%			35.02	%			24.45	%
Average shares outstanding - basic			8,092,494					8,088,793				8,138,771					6,593,616					5,792,773				8,106,517				5,840,757
Average shares outstanding - diluted			8,101,306					8,101,984				8,152,629					6,610,907					5,805,799				8,115,329				5,853,783
Period ending shares outstanding			8,092,576					8,088,793				8,088,793					8,245,235					5,767,803				8,092,576				5,767,803
Selected ratios
Return on average assets (Annualized)			0.86	%				1.17	%			1.16	%				0.97	%				1.32	%			1.06	%			1.24	%
Return on average equity (Annualized)			7.73	%				10.41	%			10.19	%				9.35	%				12.94	%			9.43	%			11.96	%
Return on average tangible common equity (1) (3)			9.91	%				13.12	%			12.77	%				11.13	%				14.79	%			11.92	%			13.59	%
Efficiency (4)			65.65	%				61.27	%			62.44	%				72.75	%				61.07	%			63.10	%			61.79	%
Equity to assets at period end			10.80	%				11.26	%			11.30	%				11.71	%				9.09	%			10.80	%			9.09	%
Noninterest expense to average assets			0.68	%				0.69	%			0.69	%				0.86	%				0.69	%			2.06	%			1.96	%
(1) See section “GAAP to Non-GAAP Reconciliations” for the reconciliation of GAAP performance measures to non-GAAP measures.
(2) Calculated by dividing tangible common equity by shares outstanding.
(3) Calculated by dividing annualized net income for each period by average tangible common equity.
(4) 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.
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			2023					2023				2023					2022					2022				2023				2022
Interest-earning assets:
Loans receivable (1)			5.82	%				5.96	%			5.45	%				5.11	%				4.78	%			5.75	%			4.66	%
Investment securities (1)			4.09	%				4.08	%			4.11	%				3.83	%				3.90	%			4.08	%			3.69	%
Interest-earning deposits with other banks			4.13	%				3.98	%			3.46	%				3.42	%				2.06	%			3.85	%			0.82	%
Total interest-earning assets			5.58	%				5.69	%			5.22	%				4.88	%				4.55	%			5.50	%			4.30	%
Deposits:
Interest-bearing demand deposits			1.51	%				1.11	%			0.83	%				0.83	%				0.22	%			1.20	%			0.17	%
Money market deposits			2.94	%				2.21	%			1.52	%				1.00	%				0.46	%			2.29	%			0.47	%
Savings deposits			0.58	%				0.73	%			1.03	%				0.49	%				0.19	%			0.80	%			0.10	%
Certificates of deposit			3.27	%				2.35	%			1.71	%				1.30	%				0.96	%			2.50	%			0.89	%
Total interest-bearing deposits			2.16	%				1.60	%			1.28	%				0.87	%				0.43	%			1.70	%			0.39	%
Non-Deposit Funding:
Borrowings			5.66	%				5.26	%			4.78	%				4.25	%				2.94	%			5.30	%			2.61	%
Total interest-bearing liabilities			2.48	%				2.02	%			1.52	%				1.02	%				0.50	%			2.03	%			0.43	%
Cost of deposits			1.53	%				1.09	%			0.84	%				0.57	%				0.29	%			1.16	%			0.26	%
Cost of funds			1.80	%				1.43	%			1.02	%				0.68	%				0.34	%			1.42	%			0.29	%
Net interest margin (2)			3.88	%				4.34	%			4.26	%				4.23	%				4.23	%			4.15	%			4.02	%
(1) Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were determined using an effective tax rate of 21%.
(2) Net interest margin represents net interest income as a percentage of average interest-earning assets.
		For the Three Months Ended
		September 30,					June 30,					March 31,				December 31,					September 30,
Asset quality data			2023					2023				2023					2022					2022
(Dollar amounts in thousands, unaudited)
Nonperforming loans (1)	$		7,717			$		7,116			$	6,882			$		2,111			$		3,692
Other real estate owned			5,792					5,792				5,792					5,821					6,792
Nonperforming assets	$		13,509			$		12,908			$	12,674			$		7,932			$		10,484
Allowance for credit losses	$		20,986			$		20,591			$	20,162			$		14,438			$		14,532
Allowance for credit losses/total loans			1.45	%				1.46	%			1.46	%				1.07	%				1.46	%
Net charge-offs (recoveries):
Quarter-to-date	$		(16	)		$		111			$	(8	)		$		94			$		18
Year-to-date			87					103				(8	)				(96	)				(190	)
Net charge-offs (recoveries) to average loans, annualized:
Quarter-to-date			0.00	%				0.03	%			0.00	%				0.03	%				0.01	%
Year-to-date			0.01	%				0.01	%			0.00	%				(0.01	%)				(0.02	%)
Nonperforming loans/total loans			0.53	%				0.50	%			0.50	%				0.16	%				0.37	%
Allowance for credit losses/nonperforming loans			271.95	%				289.36	%			292.97	%				683.94	%				393.61	%
Nonperforming assets/total assets			0.75	%				0.74	%			0.73	%				0.47	%				0.78	%
(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,
			2023					2023				2023					2022					2022
Stockholders' equity	$		193,749			$		197,227			$	195,165			$		197,691			$		122,855
Less goodwill and other intangibles			43,103					43,368				39,171					39,436					16,242
Tangible common equity	$		150,646			$		153,859			$	155,994			$		158,255			$		106,613
Shares outstanding			8,092,576					8,088,793				8,088,793					8,245,235					5,767,803
Tangible book value per share	$		18.62			$		19.02			$	19.29			$		19.19			$		18.48
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,
			2023					2023				2023					2022					2022				2023				2022
Average stockholders' equity	$		196,795			$		196,183			$	194,814			$		148,616			$		130,263			$	196,074			$	136,090
Less average goodwill and other intangibles			43,232					40,522				39,300					23,731					16,280				41,018				16,357
Average tangible common equity	$		153,563			$		155,661			$	155,514			$		124,885			$		113,983			$	155,056			$	119,733
Net income	$		3,836			$		5,092			$	4,897			$		4,896			$		3,502			$	13,825			$	12,171
Return on average tangible common equity (annualized)			9.91	%				13.12	%			12.77	%				11.13	%				14.79	%			11.92	%			13.59	%
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,
			2023					2023				2023					2022					2022				2023				2022
Net income	$		3,836			$		5,092			$	4,897			$		3,502			$		4,249			$	13,825			$	12,171
Add income taxes			703					986				989					651					1,010				2,678				2,569
Add provision for credit losses			1,127					814				507					-					-				2,449				-
PTPP	$		5,666			$		6,892			$	6,393			$		4,153			$		5,259			$	18,952			$	14,740
MIDDLEFIELD BANC CORP.
Average Balance Sheets
(Dollar amounts in thousands, unaudited)
		For the Three Months Ended
		September 30,														September 30,
			2023														2022
		Average										Average				Average										Average
		Balance					Interest					Yield/Cost				Balance					Interest					Yield/Cost
Interest-earning assets:
Loans Receivable (1)		$	1,425,375				$	20,899				5.82	%			$	987,689				$	11,892				4.78	%
Investment securities (1)			166,671					1,457				4.09	%				172,316					1,431				3.90	%
Interest-earning deposits with other banks (2)			68,587					714				4.13	%				46,938					244				2.06	%
Total interest-earning assets			1,660,633					23,070				5.58	%				1,206,943					13,567				4.55	%
Noninterest-earning assets			115,353														73,753
Total assets		$	1,775,986													$	1,280,696
Interest-bearing liabilities:
Interest-bearing demand deposits		$	256,153				$	975				1.51	%			$	162,878				$	91				0.22	%
Money market deposits			259,802					1,928				2.94	%				155,095					180				0.46	%
Savings deposits			225,216					327				0.58	%				249,898					119				0.19	%
Certificates of deposit			291,409					2,402				3.27	%				174,091					422				0.96	%
Short-term borrowings			91,201					1,258				5.47	%				8,554					44				2.04	%
Other borrowings			11,940					213				7.08	%				12,530					112				3.55	%
Total interest-bearing liabilities			1,135,721					7,103				2.48	%				763,046					968				0.50	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			431,775														382,351
Other liabilities			11,695														5,036
Stockholders' equity			196,795														130,263
Total liabilities and stockholders' equity		$	1,775,986													$	1,280,696
Net interest income							$	15,967													$	12,599
Interest rate spread (3)												3.10	%													4.05	%
Net interest margin (4)												3.88	%													4.23	%
Ratio of average interest-earning assets to average interest-bearing liabilities												146.22	%													158.17	%
(1) Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $270 and $277 for the three months ended September 30, 2023 and 2022, respectively.
(2) Includes dividends received on restricted stock.
(3) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
(4) Includes dividends received on restricted stock.
		For the Three Months Ended
		September 30,														June 30,
			2023														2023
		Average										Average				Average										Average
		Balance					Interest					Yield/Cost				Balance					Interest					Yield/Cost
Interest-earning assets:
Loans Receivable (1)		$	1,425,375				$	20,899				5.82	%			$	1,400,074				$	20,762				5.96	%
Investment securities (1)			166,671					1,457				4.09	%				168,890					1,457				4.08	%
Interest-earning deposits with other banks (2)			68,587					714				4.13	%				62,296					618				3.98	%
Total interest-earning assets			1,660,633					23,070				5.58	%				1,631,260					22,837				5.69	%
Noninterest-earning assets			115,353														114,120
Total assets		$	1,775,986													$	1,745,380
Interest-bearing liabilities:
Interest-bearing demand deposits		$	256,153				$	975				1.51	%			$	214,045				$	595				1.11	%
Money market deposits			259,802					1,928				2.94	%				234,497					1,294				2.21	%
Savings deposits			225,216					327				0.58	%				263,587					478				0.73	%
Certificates of deposit			291,409					2,402				3.27	%				252,785					1,484				2.35	%
Short-term borrowings			91,201					1,258				5.47	%				112,349					1,462				5.22	%
Other borrowings			11,940					213				7.08	%				11,992					170				5.69	%
Total interest-bearing liabilities			1,135,721					7,103				2.48	%				1,089,255					5,483				2.02	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			431,775														450,835
Other liabilities			11,695														9,107
Stockholders' equity			196,795														196,183
Total liabilities and stockholders' equity		$	1,775,986													$	1,745,380
Net interest income							$	15,967													$	17,354
Interest rate spread (3)												3.10	%													3.67	%
Net interest margin (4)												3.88	%													4.34	%
Ratio of average interest-earning assets to average interest-bearing liabilities												146.22	%													149.76	%
(1) Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $270 and $294 for the three months ended September 30, 2023 and June 30, 2022, respectively.
(2) Includes dividends received on restricted stock.
(3) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
(4) Includes dividends received on restricted stock.
		For the Nine Months Ended
		September 30,														September 30,
			2023														2022
		Average										Average				Average										Average
		Balance					Interest					Yield/Cost				Balance					Interest					Yield/Cost
Interest-earning assets:
Loans Receivable (1)		$	1,395,438				$	59,935				5.75	%			$	980,787				$	34,145				4.66	%
Investment securities (1)			168,049					4,353				4.08	%				173,094					4,055				3.69	%
Interest-earning deposits with other banks (2)			66,730					1,924				3.85	%				72,851					448				0.82	%
Total interest-earning assets			1,630,217					66,212				5.50	%				1,226,732					38,648				4.30	%
Noninterest-earning assets			115,627														82,733
Total assets		$	1,745,844													$	1,309,465
Interest-bearing liabilities:
Interest-bearing demand deposits		$	216,044				$	1,934				1.20	%			$	164,337				$	210				0.17	%
Money market deposits			234,236					4,005				2.29	%				175,024					620				0.47	%
Savings deposits			267,951					1,608				0.80	%				256,762					197				0.10	%
Certificates of deposit			263,448					4,925				2.50	%				184,165					1,220				0.89	%
Short-term borrowings			86,670					3,373				5.20	%				2,851					44				2.06	%
Other borrowings			11,990					539				6.01	%				12,806					262				2.74	%
Total interest-bearing liabilities			1,080,339					16,384				2.03	%				795,945					2,553				0.43	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			458,086														372,343
Other liabilities			11,345														5,087
Stockholders' equity			196,074														136,090
Total liabilities and stockholders' equity		$	1,745,844													$	1,309,465
Net interest income							$	49,828													$	36,095
Interest rate spread (3)												3.47	%													3.87	%
Net interest margin (4)												4.15	%													4.02	%
Ratio of average interest-earning assets to average interest-bearing liabilities												150.90	%													154.12	%
(1) Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $824 and $768 for the nine months ended September 30, 2023 and 2022, respectively.
(2) Includes dividends received on restricted stock.
(3) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
(4) Net interest margin represents net interest income as a percentage of average interest-earning assets.

 

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 was the net income for Middlefield Banc Corp. in Q3 2023?

The net income for Middlefield Banc Corp. in Q3 2023 was $13.8 million.

What was the increase in net interest income for Middlefield Banc Corp.?

Net interest income increased by 38.0% to a record $49.8 million.

What were the total loans and deposits for Middlefield Banc Corp. in Q3 2023?

Total loans reached a record $1.45 billion, and total deposits reached a record $1.46 billion.

What was the return on average assets for Middlefield Banc Corp. in Q3 2023?

The return on average assets for Middlefield Banc Corp. in Q3 2023 was 1.06%.

What was the nonperforming assets to total assets ratio for Middlefield Banc Corp.?

The nonperforming assets to total assets ratio for Middlefield Banc Corp. was 0.75%.