Middlefield Banc Corp. Reports 2024 Nine-Month Financial Results

Rhea-AI Summary

Middlefield Banc Corp. (NASDAQ: MBCN) reported financial results for the nine months ended September 30, 2024. Key highlights include:

• Net income of $10.7 million, down from $13.8 million year-over-year
• Earnings of $1.32 per diluted share, compared to $1.70 per diluted share
• Total loans increased 3.9% to a record $1.50 billion
• Total deposits increased 3.8% to a record $1.51 billion
• Nonperforming assets to total assets increased to 1.62% from 0.75%
• Book value increased 9.1% to $26.11 per share

The company reported record total assets and deposits, as well as a record book value per share. However, higher charge-offs and non-performing loans associated with one customer impacted earnings. The provision for credit losses increased during the third quarter, reducing after-tax earnings by $0.12 per diluted share.

Positive

• Record total loans of $1.50 billion, up 3.9% year-over-year
• Record total deposits of $1.51 billion, up 3.8% year-over-year
• Book value per share increased 9.1% to $26.11
• Tangible book value per share increased 12.1% to $20.87
• Noninterest income increased 4.1% to $5.3 million
• Equity to assets strengthened to 11.34% from 10.80%

Negative

• Net income decreased to $10.7 million from $13.8 million year-over-year
• Earnings per diluted share decreased to $1.32 from $1.70
• Net interest income after provision for credit losses decreased to $42.9 million from $47.4 million
• Return on average assets annualized decreased to 0.77% from 1.06%
• Return on average equity annualized decreased to 6.90% from 9.43%
• Nonperforming assets to total assets increased to 1.62% from 0.75%

Insights

Financial Analyst

Middlefield Banc Corp.'s Q3 2024 results show mixed performance with some concerning trends. Net income decreased to $10.7 million from $13.8 million year-over-year, while earnings per diluted share fell to $1.32 from $1.70. The net interest margin contracted to 3.50% from 4.09%, indicating pressure on profitability.

On the positive side, the bank achieved record total assets of $1.86 billion and deposits of $1.51 billion. Loan growth was modest at 3.9% year-over-year. However, nonperforming assets increased significantly to 1.62% of total assets from 0.75%, primarily due to a $13.5 million loan moved to nonaccrual.

The bank's capital position remains strong with equity-to-assets ratio improving to 11.34%. The allowance for credit losses increased to 1.50% of total loans, providing some cushion against potential losses. Overall, while core operations show resilience, the increase in nonperforming assets and compressed margins warrant close monitoring by investors.

Risk Management Expert

The significant increase in nonperforming assets is a red flag for Middlefield Banc Corp.'s risk profile. The jump to $30.1 million from $13.5 million year-over-year is concerning, especially given that three customer relationships account for $20.2 million of this total. While management asserts this doesn't indicate a broader trend, it highlights potential weaknesses in underwriting or concentration risks.

The bank's provision for credit losses of $2.2 million for Q3 2024 and net charge-offs of $1.4 million reflect deteriorating credit quality. However, the increase in allowance for credit losses to 1.50% of total loans demonstrates proactive risk management.

Positively, the bank has diversified its funding sources by gaining approval to use the Federal Reserve's discount window. This, combined with reduced FHLB advances, enhances liquidity management. The strong equity-to-assets ratio of 11.34% provides a buffer against potential losses. Investors should closely monitor the resolution of the large nonperforming loans and any signs of broader credit deterioration in the coming quarters.

MIDDLEFIELD, Ohio, Oct. 17, 2024 (GLOBE NEWSWIRE) -- Middlefield Banc Corp. (NASDAQ: MBCN) today reported financial results for the nine months ended September 30, 2024.

2024 Nine-Month Financial Highlights (on a year-over-year basis):

• Net income was $10.7 million, compared to $13.8 million
• Pre-tax, pre-provision net income⁽¹⁾ was $14.7 million, compared to $19.0 million
• Earnings were $1.32 per diluted share, compared to $1.70 per diluted share
• Net interest income after the provision for credit losses was $42.9 million, compared to $47.4 million
• Noninterest income increased 4.1% to $5.3 million, compared to $5.1 million
• Total loans increased 3.9% to a record  $1.50 billion, compared to $1.45 billion
• Total deposits increased 3.8% to a record $1.51 billion, compared to $1.46 billion
• Return on average assets annualized was 0.77%, compared to 1.06%
• Return on average equity annualized was 6.90%, compared to 9.43%
• Return on average tangible common equity⁽¹⁾ was 8.68%, compared to 11.92%
• Nonperforming assets to total assets increased to 1.62% from 0.75%
• Allowance for credit losses was 1.50% of total loans, compared to 1.45%
• Equity to assets strengthened to 11.34%, compared to 10.80%
• Book value increased 9.1% to $26.11 from $23.94 per share
• Tangible book value⁽¹⁾ increased 12.1% to $20.87 from $18.62 per share

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

Ronald L. Zimmerly, Jr., President and Chief Executive Officer, stated, “We ended the third quarter of 2024 with record total assets and deposits, as well as a record book value per share. These results reflect our team’s dedication and commitment to serve customers throughout our Central, Western and Northeast Ohio markets. We ended the quarter with higher charge-offs and non-performing loans, associated with one customer. As a result, the provision for credit losses increased during the third quarter and reduced after tax earnings by $0.12 per diluted share. Despite these one-time impacts, we produced strong levels of core profitability, including the highest level of pre-tax pre-provision income in the past four quarters.”

“I am pleased with the progress we are making maintaining appropriate funding costs and controlling noninterest expense, as our quarterly cost of funds declined sequentially for the first time in ten quarters, and noninterest expense was at the lowest level in six quarters. We expect the economic environment will remain fluid over the near-term, and as we look to 2025, we will continue to focus on supporting our communities, strategically allocating capital, maintaining disciplined underwriting standards, and prudently managing expenses,” concluded Mr. Zimmerly.

Income Statement
Net interest income for the nine months ended September 30, 2024, decreased $4.7 million to $45.1 million, compared to $49.8 million for the same period last year. The net interest margin for the nine months ended September 30, 2024, was 3.50%, compared to 4.09% last year. Net interest income for the 2024 third quarter decreased $894,000 to $15.1 million, compared to $16.0 million for the 2023 third quarter. The net interest margin for the 2024 third quarter was 3.46%, compared to 3.82% for the same period of 2023.

For the nine months ended September 30, 2024, noninterest income increased $211,000 to $5.3 million, compared to $5.1 million for the same period in 2023. Noninterest income for the 2024 third quarter was $1.7 million, compared to $1.8 million for the same period the previous year.

Noninterest expense for the nine months ended September 30, 2024, was $35.7 million, compared to $36.0 million for the same period in 2023. For the 2024 third quarter, noninterest expense was $11.9 million, compared to $12.1 million for the 2023 third quarter.

Net income for the nine months ended September 30, 2024, was $10.7 million, or $1.32 per diluted share, compared to $13.8 million, or $1.70 per diluted share, for the same period last year. Net income for the 2024 third quarter was $2.3 million, or $0.29 per diluted share, compared to $3.8 million, or $0.47 per diluted share, for the same period last year.

For the nine months ended September 30, 2024, pre-tax, pre-provision net income was $14.7 million, compared to $19.0 million last year. For the 2024 third quarter, pre-tax, pre-provision net income was $4.9 million, compared to $5.7 million for the same period of 2023. (See non-GAAP reconciliation under the section “GAAP to Non-GAAP Reconciliations”.)

Balance Sheet
Total assets at September 30, 2024, increased 3.6% to $1.86 billion, compared to $1.79 billion at September 30, 2023. Total loans at September 30, 2024, were $1.50 billion, compared to $1.45 billion at September 30, 2023. The 3.9% year-over-year increase in total loans was primarily due to higher non-owner occupied and residential real estate loans.

Total liabilities at September 30, 2024, increased 3.0% to $1.65 billion, compared to $1.60 billion at September 30, 2023. Total deposits at September 30, 2024, were $1.51 billion, compared to $1.46 billion at September 30, 2023. The 3.8% year-over-year increase in deposits was primarily due to growth in money market and time deposits, partially offset by declines in noninterest-bearing and interest-bearing demand and savings accounts. Noninterest-bearing demand deposits were 25.8% of total deposits at September 30, 2024, compared to 29.1% at September 30, 2023. At September 30, 2024, the Company had brokered deposits of $86.5 million, compared to $53.5 million at September 30, 2023.

The investment securities available-for-sale portfolio was $169.9 million at September 30, 2024, compared with $159.4 million at September 30, 2023.

Mr. Ranttila, Chief Financial Officer, stated, “We continue to look at opportunities to proactively strengthen our balance sheet and improve our cost of funds. In addition, since December 31, 2023, deposits have increased 6.0%, while our Federal Home Loan Bank (“FHLB”) advances have decreased by 35.0%. This is the lowest level of FHLB advances in over a year. In addition, during the quarter, we received approval to use the Federal Reserve Board’s discount window, adding a new and efficient liquidity provider. The combination of high levels of potentially liquid assets, cash flows from operations, and additional borrowing capacity continues to provide us with excellent liquidity levels to support our long-term growth strategies and our legacy of returning excess capital to shareholders.”

Middlefield's CRE portfolio included the following categories at September 30, 2024:

		Balance				Percent of				Percent of
CRE Category		(in thousands)				CRE Portfolio				Loan Portfolio
Multi-Family		$	94,798				13.8	%			6.3	%
Office Space			75,149				10.9	%			5.0	%
Shopping Plazas			69,762				10.1	%			4.6	%
Self-Storage			56,041				8.1	%			3.7	%
Hospitality			39,840				5.8	%			2.6	%
Senior Living			23,069				3.3	%			1.5	%
Other			330,611				48.0	%			22.0	%
Total CRE		$	689,270				100.0	%			45.7	%

Stockholders' Equity and Dividends
At September 30, 2024, stockholders' equity was $210.7 million, compared to $193.7 million at September 30, 2023. The 8.8% year-over-year increase in stockholders' equity was primarily from higher retained earnings and an improvement in the unrealized losses on the available-for-sale investment portfolio, partially offset by stock acquired under the Company's stock repurchase program. On a per-share basis, shareholders' equity at September 30, 2024, was $26.11, compared to $23.94 at September 30, 2023.

At September 30, 2024, tangible stockholders' equity⁽¹⁾ was $168.5 million, compared to $150.6 million at September 30, 2023. On a per-share basis, tangible stockholders' equity⁽¹⁾ was $20.87 at September 30, 2024, compared to $18.62 at September 30, 2023. ⁽¹⁾See non-GAAP reconciliation under the section “GAAP to Non-GAAP Reconciliations”.

For the nine months ended September 30, 2024, the Company declared cash dividends of $0.60 per share, totaling $4.8 million. 

For the nine months ended September 30, 2024, the Company repurchased 43,858 shares of its common stock, at an average price of $24.00 per share. There were no repurchases during the third quarter of 2024.

At September 30, 2024, the Company's equity-to-assets ratio was 11.34%, compared to 10.80% at September 30, 2023.

Asset Quality

For the nine months ended September 30, 2024, the Company recorded a provision for credit losses of $2.2 million, versus a provision for credit losses of $2.4 million for the same period last year. For the 2024 third quarter, the Company recorded a provision for credit losses of $2.2 million, compared to a provision for credit losses of $1.1 million for the same period of 2023.

Net charge-offs were $1.3 million, or 0.11% of average loans, annualized, for the nine months ended September 30, 2024, compared to net charge-offs of $87,000, or 0.01% of average loans, annualized, for the same period last year. Net charge-offs were $1.4 million, or 0.36% of average loans, annualized, for the 2024 third quarter, compared to net recoveries of $16,000, or 0.00% of average loans, annualized, for the same period of 2023.  The higher net charge-offs were due to the partial charge-off of one loan during the 2024 third quarter.    

Nonperforming loans at September 30, 2024, were $30.1 million, compared to $7.7 million at September 30, 2023. Nonperforming assets at September 30, 2024, were $30.1 million, compared to $13.5 million at September 30, 2023. The increase in nonperforming assets is primarily the result of a $13.5 million loan moved to nonaccrual in the 2024 third quarter, subsequent to the partial charge-off noted in the previous paragraph. The allowance for credit losses at September 30, 2024, stood at $22.5 million, or 1.50% of total loans, compared to $21.0 million, or 1.45% of total loans at September 30, 2023. The increase in the allowance for credit losses was mainly from changes in projected loss drivers, prepayment assumptions, curtailment expectations over the reasonable and supportable forecast period, and geographic footprint of unemployment data, as well as an overall increase in total loans.

Michael Ranttila stated, “Nonperforming assets during the third quarter were impacted by a $13.5 million loan. Combined with the two previously disclosed relationships that moved to nonaccrual in the second quarter of 2024, these three customers accounted for $20.2 million of nonperforming assets at September 30, 2024. We believe these relationships do not indicate a trend in the markets we serve, our portfolio, or underwriting standards. Despite this increase, we remain well reserved for potential credit losses with an allowance for credit losses to total loans of 1.50% at September 30, 2024, which was up slightly from both the same period a year ago, and the quarter ended June 30, 2024.”

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 $1.86 billion at September 30, 2024. 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 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 following Consolidated Financial Highlights tables 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 several 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.

Company Contact:	Investor and Media Contact:
Ronald L. Zimmerly, Jr. President and Chief Executive Officer Middlefield Banc Corp. (419) 673-1217 rzimmerly@middlefieldbank.com	Andrew M. Berger Managing Director SM Berger & Company, Inc. (216) 464-6400 andrew@smberger.com

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)		2024				2024				2024				2023				2023
ASSETS
Cash and due from banks		$	61,851			$	50,496			$	44,816			$	56,397			$	56,228
Federal funds sold			12,022				1,762				1,438				4,439				9,274
Cash and cash equivalents			73,873				52,258				46,254				60,836				65,502
Investment securities available for sale, at fair value			169,895				166,424				167,890				170,779				159,414
Other investments			895				881				907				955				958
Loans held for sale			249				-				-				-				632
Loans:
Commercial real estate:
Owner occupied			187,313				182,809				178,543				183,545				185,593
Non-owner occupied			407,159				385,648				398,845				401,580				382,676
Multifamily			94,798				86,951				81,691				82,506				82,578
Residential real estate			345,748				337,121				331,480				328,854				321,331
Commercial and industrial			213,172				234,702				227,433				221,508				214,334
Home equity lines of credit			137,761				131,047				129,287				127,818				127,494
Construction and other			111,550				132,530				135,716				125,105				127,106
Consumer installment			7,030				6,896				7,131				7,214				7,481
Total loans			1,504,531				1,497,704				1,490,126				1,478,130				1,448,593
Less allowance for credit losses			22,526				21,795				21,069				21,693				20,986
Net loans			1,482,005				1,475,909				1,469,057				1,456,437				1,427,607
Premises and equipment, net			20,528				20,744				21,035				21,339				21,708
Goodwill			36,356				36,356				36,356				36,356				36,197
Core deposit intangibles			5,869				6,126				6,384				6,642				6,906
Bank-owned life insurance			35,049				34,802				34,575				34,349				34,153
Other real estate owned			-				-				-				-				5,792
Accrued interest receivable and other assets			32,916				34,686				34,210				35,190				34,551
TOTAL ASSETS		$	1,857,635			$	1,828,186			$	1,816,668			$	1,822,883			$	1,793,420

		September 30,				June 30,				March 31,				December 31,				September 30,
		2024				2024				2024				2023				2023
LIABILITIES
Deposits:
Noninterest-bearing demand		$	390,933			$	387,024			$	390,185			$	401,384			$	424,055
Interest-bearing demand			218,002				206,542				209,015				205,582				243,973
Money market			376,619				355,630				318,823				274,682				275,766
Savings			199,984				192,472				196,721				210,639				216,453
Time			327,231				327,876				332,165				334,315				296,732
Total deposits			1,512,769				1,469,544				1,446,909				1,426,602				1,456,979
Federal Home Loan Bank advances			106,000				125,000				137,000				163,000				118,000
Other borrowings			11,711				11,762				11,812				11,862				11,912
Accrued interest payable and other liabilities			16,450				15,092				15,372				15,738				12,780
TOTAL LIABILITIES			1,646,930				1,621,398				1,611,093				1,617,202				1,599,671
STOCKHOLDERS' EQUITY
Common stock, no par value; 25,000,000 shares authorized, 9,950,342
shares issued, 8,071,032 shares outstanding as of September 30, 2024			161,916				161,823				161,823				161,388				161,312
Additional paid-in capital			108				-				-				-				-
Retained earnings			106,067				105,342				102,791				100,237				98,717
Accumulated other comprehensive loss			(16,477	)			(19,468	)			(18,130	)			(16,090	)			(26,426	)
Treasury stock, at cost; 1,879,310 shares as of September 30, 2024			(40,909	)			(40,909	)			(40,909	)			(39,854	)			(39,854	)
TOTAL STOCKHOLDERS' EQUITY			210,705				206,788				205,575				205,681				193,749
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	1,857,635			$	1,828,186			$	1,816,668			$	1,822,883			$	1,793,420

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		2024				2024				2024				2023				2023				2024				2023
INTEREST AND DIVIDEND INCOME
Interest and fees on loans		$	23,441			$	23,422			$	22,395			$	22,027			$	20,899			$	69,258			$	59,935
Interest-earning deposits in other institutions			348				386				437				370				300				1,171				920
Federal funds sold			143				122				152				94				266				417				678
Investment securities:
Taxable interest			528				505				467				479				477				1,500				1,415
Tax-exempt interest			962				966				972				976				980				2,900				2,938
Dividends on stock			191				198				189				144				148				578				326
Total interest and dividend income			25,613				25,599				24,612				24,090				23,070				75,824				66,212
INTEREST EXPENSE
Deposits			8,792				8,423				7,466				6,522				5,632				24,681				12,472
Short-term borrowings			1,575				1,920				1,993				2,013				1,258				5,488				3,373
Other borrowings			173				173				184				179				213				530				539
Total interest expense			10,540				10,516				9,643				8,714				7,103				30,699				16,384
NET INTEREST INCOME			15,073				15,083				14,969				15,376				15,967				45,125				49,828
Provision (Recovery of) for credit losses			2,234				87				(136	)			554				1,127				2,185				2,449
NET INTEREST INCOME AFTER PROVISION
(RECOVERY OF) FOR CREDIT LOSSES			12,839				14,996				15,105				14,822				14,840				42,940				47,379
NONINTEREST INCOME
Service charges on deposit accounts			959				971				909				997				954				2,839				2,880
Gain (loss) on equity securities			14				(27	)			(52	)			(4	)			48				(65	)			(157	)
(Loss) gain on other real estate owned			-				-				-				(172	)			-				-				2
Earnings on bank-owned life insurance			246				227				227				196				207				700				627
Gain on sale of loans			56				69				10				23				45				135				74
Revenue from investment services			206				269				204				193				190				679				550
Gross rental income			3				-				67				132				110				70				290
Other income			259				251				431				237				263				941				822
Total noninterest income			1,743				1,760				1,796				1,602				1,817				5,299				5,088
NONINTEREST EXPENSE
Salaries and employee benefits			6,201				6,111				6,333				6,646				5,994				18,645				17,865
Occupancy expense			627				601				552				512				699				1,780				2,054
Equipment expense			203				261				240				273				297				704				969
Data processing costs			1,248				1,168				1,249				1,348				1,209				3,665				3,415
Ohio state franchise tax			399				397				397				397				398				1,193				1,180
Federal deposit insurance expense			255				256				251				285				207				762				576
Professional fees			539				557				558				660				545				1,654				1,633
Advertising expense			283				508				419				162				414				1,210				1,315
Software amortization expense			74				21				22				22				24				117				73
Core deposit intangible amortization			257				258				258				264				265				773				794
Gross other real estate owned expenses			-				-				99				120				195				99				390
Merger-related costs			-				-				-				-				22				-				472
Other expense			1,785				1,764				1,587				1,483				1,849				5,136				5,228
Total noninterest expense			11,871				11,902				11,965				12,172				12,118				35,738				35,964
Income before income taxes			2,711				4,854				4,936				4,252				4,539				12,501				16,503
Income taxes			371				690				769				709				703				1,830				2,678
NET INCOME		$	2,340			$	4,164			$	4,167			$	3,543			$	3,836			$	10,671			$	13,825
PTPP (1)		$	4,945			$	4,941			$	4,800			$	4,806			$	5,666			$	14,686			$	18,952

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,
		2024				2024				2024				2023				2023				2024				2023
Per common share data
Net income per common share - basic		$	0.29			$	0.52			$	0.52			$	0.44			$	0.47			$	1.32			$	1.71
Net income per common share - diluted		$	0.29			$	0.52			$	0.51			$	0.44			$	0.47			$	1.32			$	1.70
Dividends declared per share		$	0.20			$	0.20			$	0.20			$	0.25			$	0.20			$	0.60			$	0.60
Book value per share (period end)		$	26.11			$	25.63			$	25.48			$	25.41			$	23.94			$	26.11			$	23.94
Tangible book value per share (period end) (1) (2)		$	20.87			$	20.37			$	20.18			$	20.10			$	18.62			$	20.87			$	18.62
Dividends declared		$	1,615			$	1,613			$	1,613			$	2,023			$	1,619			$	4,841			$	4,841
Dividend yield			2.76	%			3.34	%			3.37	%			3.06	%			3.12	%			2.78	%			3.16	%
Dividend payout ratio			69.02	%			38.74	%			38.71	%			57.10	%			42.21	%			45.37	%			35.02	%
Average shares outstanding - basic			8,071,032				8,067,144				8,091,203				8,093,478				8,092,494				8,076,440				8,106,517
Average shares outstanding - diluted			8,105,131				8,072,499				8,096,317				8,116,261				8,101,306				8,110,539				8,115,329
Period ending shares outstanding			8,071,032				8,067,144				8,067,144				8,095,252				8,092,576				8,071,032				8,092,576
Selected ratios
Return on average assets (Annualized)			0.50	%			0.91	%			0.92	%			0.78	%			0.86	%			0.77	%			1.06	%
Return on average equity (Annualized)			4.45	%			8.15	%			8.16	%			7.13	%			7.73	%			6.90	%			9.43	%
Return on average tangible common equity (1) (3)			5.58	%			10.29	%			10.30	%			9.11	%			9.91	%			8.68	%			11.92	%
Efficiency (4)			67.93	%			67.97	%			68.68	%			68.99	%			65.65	%			68.19	%			63.10	%
Equity to assets at period end			11.34	%			11.31	%			11.32	%			11.28	%			10.80	%			11.34	%			10.80	%
Noninterest expense to average assets			0.66	%			0.64	%			0.66	%			0.68	%			0.68	%			1.94	%			2.06	%

(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.

		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		2024				2024				2024				2023				2023				2024				2023
Interest-earning assets:
Loans receivable (1)			6.19	%			6.27	%			6.11	%			6.01	%			5.82	%			6.19	%			5.75	%
Investment securities (1) (2)			3.59	%			3.59	%			3.52	%			3.52	%			3.51	%			3.57	%			3.54	%
Interest-earning deposits with other banks			4.27	%			4.59	%			4.88	%			3.71	%			4.13	%			4.58	%			3.85	%
Total interest-earning assets			5.84	%			5.92	%			5.77	%			5.64	%			5.49	%			5.84	%			5.41	%
Deposits:
Interest-bearing demand deposits			2.16	%			1.93	%			1.86	%			1.67	%			1.51	%			1.99	%			1.20	%
Money market deposits			3.93	%			3.95	%			3.81	%			3.58	%			2.94	%			3.90	%			2.29	%
Savings deposits			0.71	%			0.64	%			0.58	%			0.59	%			0.58	%			0.64	%			0.80	%
Certificates of deposit			4.49	%			4.57	%			4.06	%			3.68	%			3.27	%			4.37	%			2.50	%
Total interest-bearing deposits			3.17	%			3.15	%			2.88	%			2.56	%			2.16	%			3.07	%			1.70	%
Non-Deposit Funding:
Borrowings			5.54	%			5.60	%			5.61	%			5.57	%			5.66	%			5.58	%			5.30	%
Total interest-bearing liabilities			3.41	%			3.45	%			3.23	%			2.96	%			2.48	%			3.37	%			2.03	%
Cost of deposits			2.33	%			2.30	%			2.08	%			1.81	%			1.53	%			2.24	%			1.16	%
Cost of funds			2.58	%			2.61	%			2.42	%			2.18	%			1.80	%			2.54	%			1.42	%
Net interest margin (3)			3.46	%			3.51	%			3.54	%			3.63	%			3.82	%			3.50	%			4.09	%

(1)  Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were determined using an effective tax rate of 21%.

(2)  Yield is calculated on the basis of amortized cost.

(3)  Net interest margin represents net interest income as a percentage of average interest-earning assets.

MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
(unaudited)

		For the Three Months Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
Asset quality data		2024				2024				2024				2023				2023
(Dollar amounts in thousands, unaudited)
Nonperforming loans		$	30,078			$	15,961			$	10,831			$	10,877			$	7,717
Other real estate owned			-				-				-				-				5,792
Nonperforming assets		$	30,078			$	15,961			$	10,831			$	10,877			$	13,509
Allowance for credit losses		$	22,526			$	21,795			$	21,069			$	21,693			$	20,986
Allowance for credit losses/total loans			1.50	%			1.46	%			1.41	%			1.47	%			1.45	%
Net charge-offs (recoveries):
Quarter-to-date		$	1,377			$	(29	)		$	(68	)		$	(117	)		$	(16	)
Year-to-date			1,285				(97	)			(68	)			(31	)			87
Net charge-offs (recoveries) to average loans, annualized:
Quarter-to-date			0.36	%			(0.01	%)			(0.02	%)			(0.03	%)			0.00	%
Year-to-date			0.11	%			(0.01	%)			(0.02	%)			0.00	%			0.01	%
Nonperforming loans/total loans			2.00	%			1.07	%			0.73	%			0.74	%			0.53	%
Allowance for credit losses/nonperforming loans			74.89	%			136.55	%			194.52	%			199.44	%			271.95	%
Nonperforming assets/total assets			1.62	%			0.87	%			0.60	%			0.60	%			0.75	%

MIDDLEFIELD BANC CORP.
GAAP to Non-GAAP Reconciliations

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,
		2024				2024				2024				2023				2023
Stockholders' equity		$	210,705			$	206,788			$	205,575			$	205,681			$	193,749
Less goodwill and other intangibles			42,225				42,482				42,740				42,998				43,103
Tangible common equity		$	168,480			$	164,306			$	162,835			$	162,683			$	150,646
Shares outstanding			8,071,032				8,067,144				8,067,144				8,095,252				8,092,576
Tangible book value per share		$	20.87			$	20.37			$	20.18			$	20.10			$	18.62

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,
		2024				2024				2024				2023				2023				2024				2023
Average stockholders' equity		$	209,096			$	205,379			$	205,342			$	197,208			$	196,795			$	206,691			$	196,074
Less average goodwill and other intangibles			42,350				42,607				42,654				42,972				43,232				42,512				41,018
Average tangible common equity		$	166,746			$	162,772			$	162,688			$	154,236			$	153,563			$	164,179			$	155,056
Net income		$	2,340			$	4,164			$	4,167			$	3,543			$	3,836			$	10,671			$	13,825
Return on average tangible common equity (annualized)			5.58	%			10.29	%			10.30	%			9.11	%			9.91	%			8.68	%			11.92	%

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,
		2024				2024				2024				2023				2023				2024				2023
Net income		$	2,340			$	4,164			$	4,167			$	3,543			$	3,836			$	10,671			$	13,825
Add income taxes			371				690				769				709				703				1,830				2,678
Add provision (recovery of) for credit losses			2,234				87				(136	)			554				1,127				2,185				2,449
PTPP		$	4,945			$	4,941			$	4,800			$	4,806			$	5,666			$	14,686			$	18,952

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

		For the Three Months Ended
		September 30,												September 30,
		2024												2023
		Average								Average				Average								Average
		Balance				Interest				Yield/Cost				Balance				Interest				Yield/Cost
Interest-earning assets:
Loans receivable ⁽¹⁾		$	1,507,518			$	23,441				6.19	%		$	1,425,375			$	20,899				5.82	%
Investment securities (1) (2)			193,659				1,490				3.59	%			193,966				1,457				3.51	%
Interest-earning deposits with other banks (3)			63,580				682				4.27	%			68,587				714				4.13	%
Total interest-earning assets			1,764,757				25,613				5.84	%			1,687,928				23,070				5.49	%
Noninterest-earning assets			86,733												88,058
Total assets		$	1,851,490											$	1,775,986
Interest-bearing liabilities:
Interest-bearing demand deposits		$	217,124			$	1,181				2.16	%		$	256,153			$	975				1.51	%
Money market deposits			362,545				3,583				3.93	%			259,802				1,928				2.94	%
Savings deposits			198,775				357				0.71	%			225,216				327				0.58	%
Certificates of deposit			325,240				3,671				4.49	%			291,409				2,402				3.27	%
Short-term borrowings			113,812				1,575				5.51	%			91,201				1,258				5.47	%
Other borrowings			11,739				173				5.86	%			11,940				213				7.08	%
Total interest-bearing liabilities			1,229,235				10,540				3.41	%			1,135,721				7,103				2.48	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			396,456												431,775
Other liabilities			16,703												11,695
Stockholders' equity			209,096												196,795
Total liabilities and stockholders' equity		$	1,851,490											$	1,775,986
Net interest income						$	15,073											$	15,967
Interest rate spread (4)											2.43	%											3.01	%
Net interest margin (5)											3.46	%											3.82	%
Ratio of average interest-earning assets to average interest-bearing liabilities											143.57	%											148.62	%

⁽¹⁾ Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $281 and  $270 for the three months ended September 30, 2024 and 2023, respectively.

(2) Yield is calculated on the basis of amortized cost.

(3) Includes dividends received on restricted stock.

(4) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

(5) Net interest margin represents net interest income as a percentage of average interest-earning assets.

		For the Three Months Ended
		September 30,												June 30,
		2024												2024
		Average								Average				Average								Average
		Balance				Interest				Yield/Cost				Balance				Interest				Yield/Cost
Interest-earning assets:
Loans receivable ⁽¹⁾		$	1,507,518			$	23,441				6.19	%		$	1,503,440			$	23,422				6.27	%
Investment securities (1) (2)			193,659				1,490				3.59	%			193,688				1,471				3.59	%
Interest-earning deposits with other banks (3)			63,580				682				4.27	%			61,891				706				4.59	%
Total interest-earning assets			1,764,757				25,613				5.84	%			1,759,019				25,599				5.92	%
Noninterest-earning assets			86,733												84,495
Total assets		$	1,851,490											$	1,843,514
Interest-bearing liabilities:
Interest-bearing demand deposits		$	217,124			$	1,181				2.16	%		$	209,965			$	1,009				1.93	%
Money market deposits			362,545				3,583				3.93	%			337,937				3,320				3.95	%
Savings deposits			198,775				357				0.71	%			192,577				305				0.64	%
Certificates of deposit			325,240				3,671				4.49	%			333,542				3,789				4.57	%
Short-term borrowings			113,812				1,575				5.51	%			138,656				1,920				5.57	%
Other borrowings			11,739				173				5.86	%			11,791				173				5.90	%
Total interest-bearing liabilities			1,229,235				10,540				3.41	%			1,224,468				10,516				3.45	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			396,456												396,626
Other liabilities			16,703												17,041
Stockholders' equity			209,096												205,379
Total liabilities and stockholders' equity		$	1,851,490											$	1,843,514
Net interest income						$	15,073											$	15,083
Interest rate spread (4)											2.43	%											2.47	%
Net interest margin (5)											3.46	%											3.51	%
Ratio of average interest-earning assets to average interest-bearing liabilities											143.57	%											143.66	%

(1)  Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $281 and $289 for the three months ended September 30, 2024 and June 30, 2024, respectively.

(2) Yield is calculated on the basis of amortized cost.

(3) Includes dividends received on restricted stock.

(4) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

(5) Net interest margin represents net interest income as a percentage of average interest-earning assets.

		For the Nine Months Ended
		September 30,												September 30,
		2024												2023
		Average								Average				Average								Average
		Balance				Interest				Yield/Cost				Balance				Interest				Yield/Cost
Interest-earning assets:
Loans receivable ⁽¹⁾		$	1,495,834			$	69,258				6.19	%		$	1,395,438			$	59,935				5.75	%
Investment securities (1) (2)			193,719				4,400				3.57	%			194,109				4,353				3.54	%
Interest-earning deposits with other banks (3)			63,203				2,166				4.58	%			66,730				1,924				3.85	%
Total interest-earning assets			1,752,756				75,824				5.84	%			1,656,277				66,212				5.41	%
Noninterest-earning assets			86,473												89,567
Total assets		$	1,839,229											$	1,745,844
Interest-bearing liabilities:
Interest-bearing demand deposits		$	212,699			$	3,167				1.99	%		$	216,044			$	1,934				1.20	%
Money market deposits			332,987				9,730				3.90	%			234,236				4,005				2.29	%
Savings deposits			197,477				951				0.64	%			267,951				1,608				0.80	%
Certificates of deposit			330,884				10,833				4.37	%			263,448				4,925				2.50	%
Short-term borrowings			132,275				5,488				5.54	%			86,670				3,373				5.20	%
Other borrowings			11,790				530				6.00	%			11,990				539				6.01	%
Total interest-bearing liabilities			1,218,112				30,699				3.37	%			1,080,339				16,384				2.03	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			397,764												458,086
Other liabilities			16,662												11,345
Stockholders' equity			206,691												196,074
Total liabilities and stockholders' equity		$	1,839,229											$	1,745,844
Net interest income						$	45,125											$	49,828
Interest rate spread (4)											2.47	%											3.38	%
Net interest margin (5)											3.50	%											4.09	%
Ratio of average interest-earning assets to average interest-bearing liabilities											143.89	%											153.31	%

(1)  Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $851 and $824 for the nine months ended September 30, 2024 and September 30, 2023, respectively.

(2) Yield is calculated on the basis of amortized cost.

(3) Includes dividends received on restricted stock.

(4) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

(5) Net interest margin represents net interest income as a percentage of average interest-earning assets.

FAQ

What was Middlefield Banc Corp's (MBCN) net income for the nine months ended September 30, 2024?

Middlefield Banc Corp's (MBCN) net income for the nine months ended September 30, 2024, was $10.7 million, compared to $13.8 million for the same period last year.

How much did Middlefield Banc Corp's (MBCN) total loans increase in the nine months ended September 30, 2024?

Middlefield Banc Corp's (MBCN) total loans increased 3.9% to a record $1.50 billion, compared to $1.45 billion at September 30, 2023.

What was the impact of increased charge-offs on Middlefield Banc Corp's (MBCN) earnings in Q3 2024?

Higher charge-offs and non-performing loans associated with one customer increased the provision for credit losses during the third quarter, reducing after-tax earnings by $0.12 per diluted share.

How did Middlefield Banc Corp's (MBCN) book value per share change in the nine months ended September 30, 2024?

Middlefield Banc Corp's (MBCN) book value per share increased 9.1% to $26.11 from $23.94 in the nine months ended September 30, 2024.