Middlefield Banc Corp. Reports 2024 Six-Month Financial Results

Rhea-AI Summary

Middlefield Banc Corp. (NASDAQ: MBCN) reported financial results for the six months ended June 30, 2024. Net income was $8.3 million, or $1.03 per diluted share, compared to $10.0 million, or $1.23 per diluted share, for the same period last year. Total loans increased 6.3% to a record $1.50 billion, while total deposits grew 2.6% to a record $1.47 billion. The company's asset quality remained stable with nonperforming assets to total assets at 0.87%. The allowance for credit losses was 1.46% of total loans. Middlefield's focus remains on supporting local communities, managing expenses, and maintaining a strong balance sheet amid economic uncertainties.

Positive

• Total loans increased 6.3% year-over-year to a record $1.50 billion
• Total deposits grew 2.6% to a record $1.47 billion
• Noninterest income increased 8.7% to $3.6 million
• Tangible book value per share increased 7.1% to $20.37
• Asset quality remains stable with four consecutive quarters of net recoveries

Negative

• Net income decreased to $8.3 million from $10.0 million year-over-year
• Earnings per diluted share declined to $1.03 from $1.23
• Net interest income after provision for credit losses decreased to $30.1 million from $32.5 million
• Return on average assets annualized decreased to 0.91% from 1.16%
• Return on average equity annualized declined to 8.16% from 9.64%

Insights

Financial Analyst

The reported financial results for Middlefield Banc Corp. show a mixed bag of metrics, with some positive developments counterbalanced by concerning figures. Notably, net income has decreased from $10.0 million to $8.3 million and pre-tax, pre-provision net income also declined from $13.3 million to $9.7 million. This downward trend is even more evident when looking at the earnings per share (EPS), which fell from $1.23 per diluted share to $1.03.

Net interest income also dropped by $2.4 million, largely due to a decrease in the net interest margin from 4.23% to 3.53%. While the noninterest income increased by 8.7%, this is not enough to offset the decline in other areas.

On the balance sheet front, total loans and total deposits both saw modest increases, suggesting some growth and stability. However, the return on average assets and return on average equity have both declined, indicating reduced efficiency in generating profit from assets and shareholder equity.

For retail investors, the increase in book value and tangible book value per share are positive signs, as these metrics suggest that the underlying value of the company is growing. Yet, the rise in nonperforming assets to total assets from 0.74% to 0.87% could be a red flag, implying increased risk of loan defaults.

In the short term, investors should be cautious of the downward trends in earnings and net interest margin, but the long-term outlook may be more favorable if the company can capitalize on its increasing total loans and deposits while managing nonperforming assets effectively.

Market Research Analyst

From a market positioning perspective, Middlefield Banc Corp's emphasis on community-oriented services and its strategic goals to diversify revenue and increase market share are noteworthy. The 6.3% increase in total loans to $1.50 billion shows that the bank is successfully expanding its lending activities. Additionally, the 2.6% increase in total deposits to $1.47 billion confirms that the bank is attracting and retaining more customers.

The growth in noninterest income by 8.7% mirrors a shift towards fee-based services, which can provide a more stable revenue stream than interest-based income. This aligns with the bank's goal to diversify revenue sources and improve financial stability amid changing economic conditions.

However, the slight uptick in nonperforming assets due to issues in the freight and industrial segments should be monitored closely. While the management asserts that these cases do not indicate a broader trend, any increase in nonperforming assets can potentially impact the bank's reputation and customer trust.

Retail investors might find the bank’s approach to managing expenses and maintaining a strong balance sheet reassuring. The stability in asset quality and the absence of significant impacts from comprehensive income issues also add some confidence. Looking forward, if the bank can continue to execute its strategic goals effectively, it could achieve sustainable growth, making it an interesting stock to keep an eye on.

MIDDLEFIELD, OHIO, July 18, 2024 (GLOBE NEWSWIRE) -- Middlefield Banc Corp. (NASDAQ: MBCN) today reported financial results for the six months ended June 30, 2024.

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

• Net income was $8.3 million, compared to $10.0 million
• Pre-tax, pre-provision net income⁽¹⁾ was $9.7 million, compared to $13.3 million  
• Earnings were $1.03 per diluted share, compared to $1.23 per diluted share
• Net interest income after the provision for credit losses was $30.1 million, compared to $32.5 million
• Noninterest income increased 8.7% to $3.6 million, compared to $3.3 million
• Total loans increased 6.3% to a record  $1.50 billion, compared to $1.41 billion
• Total deposits increased 2.6% to a record $1.47 billion, compared to $1.43 billion
  
• Return on average assets annualized was 0.91%, compared to 1.16%
• Return on average equity annualized was 8.16%, compared to 9.64%
• Return on average tangible common equity⁽¹⁾ was 10.30%, compared to 11.92%
• Asset quality remains at historically low levels with nonperforming assets to total assets of 0.87%, compared to 0.74%
• Allowance for credit losses was 1.46% of total loans, compared to 1.46%
• Equity to assets remained strong at 11.31%, compared to 11.26%
• Book value increased 5.1% to $25.63 from $24.38 per share  
• Tangible book value⁽¹⁾ increased 7.1% to $20.37 from $19.02 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, “Throughout our Central, Western and Northeast Ohio markets, Middlefield’s team members are dedicated to providing leading community-oriented financial services to our customers. This long-standing commitment supports the financial success of our local communities, which is especially important as uncertainty about FOMC monetary policies and economic conditions has increased. Despite these macro trends, we remain focused on supporting our communities, managing expenses, and maintaining a strong balance sheet. I am pleased with the progress we are making as total loans at June 30, 2024, increased 6.3% year-over-year to a record $1.50 billion, year-to-date noninterest expense is in line with the prior year period, and we remain extremely ‘well-capitalized’ under applicable banking requirements.”

“We also continue to pursue our multi-year strategic growth goals, which are focused on increasing revenue opportunities, improving our customer experience, and advancing operational performance to create lasting value for our shareholders.  For the 2024 second quarter, noninterest income increased 10.6% over the same period a year ago, and total deposits were up 2.6% over the past year to a record $1.47 billion, as we successfully diversify our revenue and increase our market share.  In addition, our tangible book value⁽¹⁾ has grown 7.1% to $20.37 per share, reflecting stable profitability, limited accumulated other comprehensive income (AOCI) impacts, and asset quality in line with historical performance. While we expect the near-term banking environment to remain challenging, we continue to focus on supporting our communities, strategically allocating capital, maintaining disciplined underwriting standards, and prudently managing expenses,” concluded Mr. Zimmerly. ⁽¹⁾See non-GAAP reconciliation under the section "GAAP to Non-GAAP Reconciliations".

Income Statement
Net interest income for the 2024 first half decreased $3.8 million to $30.1 million, compared to $33.9 million for the same period last year. The net interest margin for the 2024 first half was 3.53%, compared to 4.23% last year.

For the 2024 first half, noninterest income increased $0.3 million to $3.6 million, compared to $3.3 million for the same period in 2023.

Noninterest expense for the 2024 first half was $23.9 million, compared to $23.8 million for the 2023 first half.

Net income for the six months ended June 30, 2024, was $8.3 million, or $1.03 per diluted share, compared to $10.0 million, or $1.23 per diluted share, for the same period last year.

For the 2024 first half, pre-tax, pre-provision net income was $9.7 million, compared to $13.3 million last year. (See non-GAAP reconciliation under the section “GAAP to Non-GAAP Reconciliations”.)

Balance Sheet
Total assets at June 30, 2024, increased 4.4% to $1.83 billion, compared to $1.75 billion at June 30, 2023. Total loans at June 30, 2024, were $1.50 billion, compared to $1.41 billion at June 30, 2023. The 6.3% year-over-year increase in total loans was primarily due to higher commercial and industrial, residential real estate, and multifamily loans.

Total liabilities at June 30, 2024, increased 4.3% to $1.62 billion, compared to $1.55 billion at June 30, 2023. Total deposits at June 30, 2024, were $1.47 billion, compared to $1.43 billion at June 30, 2023. The 2.6% 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 26.3% of total deposits at June 30, 2024, compared to 30.8% at June 30, 2023. At June 30, 2024, the Company had brokered deposits of $90.4 million, compared to $90.3 million at June 30, 2023.

The investment securities available for sale portfolio was $166.4 million at June 30, 2024, compared with $167.2 million at June 30, 2023.

Michael Ranttila, Chief Financial Officer, stated, “Asset quality remains stable.  We have achieved four consecutive quarters with net quarter-to-date recoveries, and nonperforming assets to total assets at June 30, 2024, were 0.87%, compared to 0.74% at June 30, 2023.  The slight uptick in nonperforming assets to total assets was due primarily to two relationships in the freight and industrial segments that moved to nonaccrual in the second quarter. 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 1.46% at June 30, 2024, which was in line with the same period a year ago, and up slightly from the quarter ended March 31, 2024.”

Mr. Ranttila continued, “We also remain focused on identifying opportunities to improve our cost of funds, pay down higher-cost capital, and grow core deposits to support loan demand. Year-to-date, total deposits increased 3.0%, while our Federal Home Loan Bank (FHLB) advances decreased by 23.3%. At June 30, 2024, additional borrowing capacity at the FHLB was $440.3 million, with the potential to acquire additional brokered deposits of approximately $187.8 million. The combination of high levels of potentially liquid assets, cash flows from operations, and additional borrowing capacity provides 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 June 30, 2024:

		Balance				Percent of				Percent of
CRE Category		(in thousands)				CRE Portfolio				Loan Portfolio
Multi-Family		$	86,951				13.3	%			5.8	%
Office Space			76,341				11.6	%			5.1	%
Shopping Plazas			70,556				10.9	%			4.7	%
Self-Storage			55,267				8.4	%			3.7	%
Hospitality			39,540				6.0	%			2.6	%
Senior Living			28,911				4.4	%			1.9	%
Other			297,842				45.4	%			19.9	%
Total CRE		$	655,408				100.0	%			43.7	%

Stockholders' Equity and Dividends
At June 30, 2024, stockholders' equity was $206.8 million compared to $197.2 million at June 30, 2023. The 4.8% year-over-year increase in stockholders' equity was primarily due to 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 June 30, 2024, was $25.63 compared to $24.38 at June 30, 2023.

At June 30, 2024, tangible stockholders' equity⁽¹⁾ was $164.3 million, compared to $153.9 million at June 30, 2023. On a per-share basis, tangible stockholders' equity⁽¹⁾ was $20.37 at June 30, 2024, compared to $19.02 at June 30, 2023. ⁽¹⁾See non-GAAP reconciliation under the section “GAAP to Non-GAAP Reconciliations”.

For the 2024 first half, the Company declared cash dividends of $0.40 per share, totaling $3.2 million. 

For the 2024 first half, 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 second quarter of 2024.

At June 30, 2024, the Company's equity-to-assets ratio was 11.31%, compared to 11.26% at June 30, 2023.

Asset Quality
For the 2024 first half, the Company recorded a recovery of credit losses of $49,000 versus a provision for credit losses of $1.3 million for the same period last year.

Net recoveries were $97,000, or (0.01%) of average loans, annualized, during the first half of 2024, compared to net charge-offs of $103,000, or 0.01% of average loans, annualized, at June 30, 2023.

Nonperforming loans at June 30, 2024, were $16.0 million, compared to $7.1 million at June 30, 2023. Nonperforming assets at June 30, 2024, were $16.0 million, compared to $12.9 million at June 30, 2023. The allowance for credit losses at June 30, 2024, stood at $21.8 million, or 1.46% of total loans, compared to $20.6 million, or 1.46% of total loans at June 30, 2023. The increase in the allowance for credit losses was mainly due to changes in projected loss drivers, prepayment assumptions, and curtailment expectations over the reasonable and supportable forecast period as well as an overall increase in total loans.

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 $1.83 billion at June 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.

MIDDLEFIELD BANC CORP. Consolidated Selected Financial Highlights (Dollar amounts in thousands, unaudited)
		June 30,				March 31,				December 31,				September 30,				June 30,
Balance Sheets (period end)		2024				2024				2023				2023				2023
ASSETS
Cash and due from banks		$	50,496			$	44,816			$	56,397			$	56,228			$	49,422
Federal funds sold			1,762				1,438				4,439				9,274				9,654
Cash and cash equivalents			52,258				46,254				60,836				65,502				59,076
Investment securities available for sale, at fair value			166,424				167,890				170,779				159,414				167,209
Other investments			881				907				955				958				711
Loans held for sale			-				-				-				632				171
Loans:
Commercial real estate:
Owner occupied			182,809				178,543				183,545				185,593				187,919
Non-owner occupied			385,648				398,845				401,580				382,676				385,846
Multifamily			86,951				81,691				82,506				82,578				58,579
Residential real estate			337,121				331,480				328,854				321,331				312,196
Commercial and industrial			234,702				227,433				221,508				214,334				209,349
Home equity lines of credit			131,047				129,287				127,818				127,494				126,894
Construction and other			132,530				135,716				125,105				127,106				118,851
Consumer installment			6,896				7,131				7,214				7,481				9,801
Total loans			1,497,704				1,490,126				1,478,130				1,448,593				1,409,435
Less allowance for credit losses			21,795				21,069				21,693				20,986				20,591
Net loans			1,475,909				1,469,057				1,456,437				1,427,607				1,388,844
Premises and equipment, net			20,744				21,035				21,339				21,708				21,629
Goodwill			36,356				36,356				36,356				36,197				36,197
Core deposit intangibles			6,126				6,384				6,642				6,906				7,171
Bank-owned life insurance			34,802				34,575				34,349				34,153				34,235
Other real estate owned			-				-				-				5,792				5,792
Accrued interest receivable and other assets			34,686				34,210				35,190				34,551				30,472
TOTAL ASSETS		$	1,828,186			$	1,816,668			$	1,822,883			$	1,793,420			$	1,751,507

		June 30,				March 31,				December 31,				September 30,				June 30,
		2024				2024				2023				2023				2023
LIABILITIES
Deposits:
Noninterest-bearing demand		$	387,024			$	390,185			$	401,384			$	424,055			$	441,102
Interest-bearing demand			206,542				209,015				205,582				243,973				229,633
Money market			355,630				318,823				274,682				275,766				241,537
Savings			192,472				196,721				210,639				216,453				231,508
Time			327,876				332,165				334,315				296,732				287,861
Total deposits			1,469,544				1,446,909				1,426,602				1,456,979				1,431,641
Federal Home Loan Bank advances			125,000				137,000				163,000				118,000				100,000
Other borrowings			11,762				11,812				11,862				11,912				11,961
Accrued interest payable and other liabilities			15,092				15,372				15,738				12,780				10,678
TOTAL LIABILITIES			1,621,398				1,611,093				1,617,202				1,599,671				1,554,280
STOCKHOLDERS' EQUITY
Common stock, no par value; 25,000,000 shares authorized, 9,946,454
shares issued, 8,067,144 shares outstanding as of June 30, 2024			161,823				161,823				161,388				161,312				161,211
Retained earnings			105,342				102,791				100,237				98,717				96,500
Accumulated other comprehensive loss			(19,468	)			(18,130	)			(16,090	)			(26,426	)			(20,630	)
Treasury stock, at cost; 1,879,310 shares as of June 30, 2024			(40,909	)			(40,909	)			(39,854	)			(39,854	)			(39,854	)
TOTAL STOCKHOLDERS' EQUITY			206,788				205,575				205,681				193,749				197,227
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	1,828,186			$	1,816,668			$	1,822,883			$	1,793,420			$	1,751,507

MIDDLEFIELD BANC CORP. Consolidated Selected Financial Highlights (Dollar amounts in thousands, unaudited)
		For the Three Months Ended																				For the Six Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,				June 30,				June 30,
Statements of Income		2024				2024				2023				2023				2023				2024				2023
INTEREST AND DIVIDEND INCOME
Interest and fees on loans		$	23,422			$	22,395			$	22,027			$	20,899			$	20,762			$	45,817			$	39,037
Interest-earning deposits in other institutions			386				437				370				300				369				823				620
Federal funds sold			122				152				94				266				158				274				411
Investment securities:
Taxable interest			505				467				479				477				479				972				937
Tax-exempt interest			966				972				976				980				978				1,938				1,958
Dividends on stock			198				189				144				148				91				387				179
Total interest and dividend income			25,599				24,612				24,090				23,070				22,837				50,211				43,142
INTEREST EXPENSE
Deposits			8,423				7,466				6,522				5,632				3,851				15,889				6,841
Short-term borrowings			1,920				1,993				2,013				1,258				1,462				3,913				2,114
Other borrowings			173				184				179				213				170				357				326
Total interest expense			10,516				9,643				8,714				7,103				5,483				20,159				9,281
NET INTEREST INCOME			15,083				14,969				15,376				15,967				17,354				30,052				33,861
Provision (Recovery of) for credit losses			87				(136	)			554				1,127				814				(49	)			1,321
NET INTEREST INCOME AFTER PROVISION
(RECOVERY OF) FOR CREDIT LOSSES			14,996				15,105				14,822				14,840				16,540				30,101				32,540
NONINTEREST INCOME
Service charges on deposit accounts			971				909				997				954				940				1,880				1,926
(Loss) gain on equity securities			(27	)			(52	)			(4	)			48				(67	)			(79	)			(205	)
(Loss) gain on other real estate owned			-				-				(172	)			-				-				-				2
Earnings on bank-owned life insurance			227				227				196				207				220				454				420
Gain on sale of loans			69				10				23				45				6				79				29
Revenue from investment services			269				204				193				190				174				473				359
Gross rental income			-				67				132				110				77				67				179
Other income			251				431				237				263				242				682				560
Total noninterest income			1,760				1,796				1,602				1,817				1,592				3,556				3,270
NONINTEREST EXPENSE
Salaries and employee benefits			6,111				6,333				6,646				5,994				6,019				12,444				11,871
Occupancy expense			601				552				512				699				659				1,153				1,355
Equipment expense			261				240				273				297				354				501				672
Data processing costs			1,168				1,249				1,348				1,209				1,137				2,417				2,207
Ohio state franchise tax			397				397				397				398				398				794				783
Federal deposit insurance expense			256				251				285				207				249				507				369
Professional fees			557				558				660				545				550				1,115				1,088
Advertising expense			508				419				162				414				415				927				901
Software amortization expense			21				22				22				24				23				43				49
Core deposit intangible amortization			258				258				264				265				265				516				529
Gross other real estate owned expenses			-				99				120				195				63				99				195
Merger-related costs			-				-				-				22				206				-				449
Other expense			1,764				1,587				1,483				1,849				1,716				3,351				3,378
Total noninterest expense			11,902				11,965				12,172				12,118				12,054				23,867				23,846
Income before income taxes			4,854				4,936				4,252				4,539				6,078				9,790				11,964
Income taxes			690				769				709				703				986				1,459				1,975
NET INCOME		$	4,164			$	4,167			$	3,543			$	3,836			$	5,092			$	8,331			$	9,989
PTPP (1)		$	4,941			$	4,800			$	4,806			$	5,666			$	6,892			$	9,741			$	13,285

MIDDLEFIELD BANC CORP. Consolidated Selected Financial Highlights (Dollar amounts in thousands, except per share and share amounts, unaudited)
		For the Three Months Ended																				For the Six Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,				June 30,				June 30,
		2024				2024				2023				2023				2023				2024				2023
Per common share data
Net income per common share - basic		$	0.52			$	0.52			$	0.44			$	0.47			$	0.63			$	1.04			$	1.23
Net income per common share - diluted		$	0.52			$	0.51			$	0.44			$	0.47			$	0.63			$	1.03			$	1.23
Dividends declared per share		$	0.20			$	0.20			$	0.25			$	0.20			$	0.20			$	0.40			$	0.40
Book value per share (period end)		$	25.63			$	25.48			$	25.41			$	23.94			$	24.38			$	25.63			$	24.38
Tangible book value per share (period end) (1) (2)		$	20.37			$	20.18			$	20.10			$	18.62			$	19.02			$	20.37			$	19.02
Dividends declared		$	1,613			$	1,613			$	2,023			$	1,619			$	1,616			$	3,226			$	3,223
Dividend yield			3.34	%			3.37	%			3.06	%			3.12	%			2.99	%			3.34	%			3.01	%
Dividend payout ratio			38.74	%			38.71	%			57.10	%			42.21	%			31.74	%			38.72	%			32.27	%
Average shares outstanding - basic			8,067,144				8,091,203				8,093,478				8,092,494				8,088,793				8,079,174				8,113,645
Average shares outstanding - diluted			8,072,499				8,096,317				8,116,261				8,101,306				8,101,984				8,084,529				8,126,836
Period ending shares outstanding			8,067,144				8,067,144				8,095,252				8,092,576				8,088,793				8,067,144				8,088,793
Selected ratios
Return on average assets (Annualized)			0.91	%			0.92	%			0.78	%			0.86	%			1.17	%			0.91	%			1.16	%
Return on average equity (Annualized)			8.15	%			8.16	%			7.13	%			7.73	%			10.41	%			8.16	%			9.64	%
Return on average tangible common equity (1) (3)			10.29	%			10.30	%			9.11	%			9.91	%			13.12	%			10.30	%			11.92	%
Efficiency (4)			67.97	%			68.68	%			68.99	%			65.65	%			61.27	%			68.32	%			62.73	%
Equity to assets at period end			11.31	%			11.32	%			11.28	%			10.80	%			11.26	%			11.31	%			11.26	%
Noninterest expense to average assets			0.64	%			0.66	%			0.68	%			0.68	%			0.69	%			1.30	%			1.38	%

(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 Six Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,				June 30,				June 30,
Yields		2024				2024				2023				2023				2023				2024				2023
Interest-earning assets:
Loans receivable (1)			6.27	%			6.11	%			6.01	%			5.82	%			5.96	%			6.19	%			5.71	%
Investment securities (1) (2)			3.59	%			3.52	%			3.52	%			3.51	%			3.54	%			3.56	%			3.55	%
Interest-earning deposits with other banks			4.59	%			4.88	%			3.71	%			4.13	%			3.98	%			4.74	%			3.71	%
Total interest-earning assets			5.92	%			5.77	%			5.64	%			5.49	%			5.60	%			5.85	%			5.37	%
Deposits:
Interest-bearing demand deposits			1.93	%			1.86	%			1.67	%			1.51	%			1.11	%			1.90	%			0.99	%
Money market deposits			3.95	%			3.81	%			3.58	%			2.94	%			2.21	%			3.88	%			1.89	%
Savings deposits			0.64	%			0.58	%			0.59	%			0.58	%			0.73	%			0.61	%			0.89	%
Certificates of deposit			4.57	%			4.06	%			3.68	%			3.27	%			2.35	%			4.32	%			2.04	%
Total interest-bearing deposits			3.15	%			2.88	%			2.56	%			2.16	%			1.60	%			3.02	%			1.44	%
Non-Deposit Funding:
Borrowings			5.60	%			5.61	%			5.57	%			5.66	%			5.26	%			5.60	%			5.10	%
Total interest-bearing liabilities			3.45	%			3.23	%			2.96	%			2.48	%			2.02	%			3.34	%			1.78	%
Cost of deposits			2.30	%			2.08	%			1.81	%			1.53	%			1.09	%			2.19	%			0.97	%
Cost of funds			2.61	%			2.42	%			2.18	%			1.80	%			1.43	%			2.52	%			1.23	%
Net interest margin (3)			3.51	%			3.54	%			3.63	%			3.82	%			4.27	%			3.53	%			4.23	%

(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
		June 30,				March 31,				December 31,				September 30,				June 30,
Asset quality data		2024				2024				2023				2023				2023
(Dollar amounts in thousands, unaudited)
Nonperforming loans		$	15,961			$	10,831			$	10,877			$	7,717			$	7,116
Other real estate owned			-				-				-				5,792				5,792
Nonperforming assets		$	15,961			$	10,831			$	10,877			$	13,509			$	12,908
Allowance for credit losses		$	21,795			$	21,069			$	21,693			$	20,986			$	20,591
Allowance for credit losses/total loans			1.46	%			1.41	%			1.47	%			1.45	%			1.46	%
Net charge-offs (recoveries):
Quarter-to-date		$	(29	)		$	(68	)		$	(117	)		$	(16	)		$	111
Year-to-date			(97	)			(68	)			(31	)			87				103
Net charge-offs (recoveries) to average loans, annualized:
Quarter-to-date			(0.01	%)			(0.02	%)			(0.03	%)			0.00	%			0.03	%
Year-to-date			(0.01	%)			(0.02	%)			0.00	%			0.01	%			0.01	%
Nonperforming loans/total loans			1.07	%			0.73	%			0.74	%			0.53	%			0.50	%
Allowance for credit losses/nonperforming loans			136.55	%			194.52	%			199.44	%			271.95	%			289.36	%
Nonperforming assets/total assets			0.87	%			0.60	%			0.60	%			0.75	%			0.74	%

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)		June 30,				March 31,				December 31,				September 30,				June 30,
		2024				2024				2023				2023				2023
Stockholders' equity		$	206,788			$	205,575			$	205,681			$	193,749			$	197,227
Less goodwill and other intangibles			42,482				42,740				42,998				43,103				43,368
Tangible common equity		$	164,306			$	162,835			$	162,683			$	150,646			$	153,859
Shares outstanding			8,067,144				8,067,144				8,095,252				8,092,576				8,088,793
Tangible book value per share		$	20.37			$	20.18			$	20.10			$	18.62			$	19.02

Reconciliation of Average Equity to Return on Average Tangible Common Equity		For the Three Months Ended																				For the Six Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,				June 30,				June 30,
		2024				2024				2023				2023				2023				2024				2023
Average stockholders' equity		$	205,379			$	205,342			$	197,208			$	196,795			$	196,183			$	205,330			$	195,826
Less average goodwill and other intangibles			42,607				42,654				42,972				43,232				40,522				42,609				39,911
Average tangible common equity		$	162,772			$	162,688			$	154,236			$	153,563			$	155,661			$	162,721			$	155,915
Net income		$	4,164			$	4,167			$	3,543			$	3,836			$	5,092			$	8,331			$	9,989
Return on average tangible common equity (annualized)			10.29	%			10.30	%			9.11	%			9.91	%			13.12	%			10.30	%			12.92	%

Reconciliation of Pre-Tax Pre-Provision Income (PTPP)		For the Three Months Ended																				For the Six Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,				June 30,				June 30,
		2024				2024				2023				2023				2023				2024				2023
Net income		$	4,164			$	4,167			$	3,543			$	3,836			$	5,092			$	8,331			$	9,989
Add income taxes			690				769				709				703				986				1,459				1,975
Add provision (recovery of) for credit losses			87				(136	)			554				1,127				814				(49	)			1,321
PTPP		$	4,941			$	4,800			$	4,806			$	5,666			$	6,892			$	9,741			$	13,285

MIDDLEFIELD BANC CORP. Average Balance Sheets (Dollar amounts in thousands, unaudited)
		For the Three Months Ended
		June 30,												June 30,
		2024												2023
		Average								Average				Average								Average
		Balance				Interest				Yield/Cost				Balance				Interest				Yield/Cost
Interest-earning assets:
Loans receivable (1)		$	1,503,440			$	23,422				6.27	%		$	1,400,074			$	20,762				5.96	%
Investment securities (1) (2)			193,688				1,471				3.59	%			194,331				1,457				3.54	%
Interest-earning deposits with other banks (3)			61,891				706				4.59	%			62,296				618				3.98	%
Total interest-earning assets			1,759,019				25,599				5.92	%			1,656,701				22,837				5.60	%
Noninterest-earning assets			84,495												88,679
Total assets		$	1,843,514											$	1,745,380
Interest-bearing liabilities:
Interest-bearing demand deposits		$	209,965			$	1,009				1.93	%		$	214,045			$	595				1.11	%
Money market deposits			337,937				3,320				3.95	%			234,497				1,294				2.21	%
Savings deposits			192,577				305				0.64	%			263,587				478				0.73	%
Certificates of deposit			333,542				3,789				4.57	%			252,785				1,484				2.35	%
Short-term borrowings			138,656				1,920				5.57	%			112,349				1,462				5.22	%
Other borrowings			11,791				173				5.90	%			11,992				170				5.69	%
Total interest-bearing liabilities			1,224,468				10,516				3.45	%			1,089,255				5,483				2.02	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			396,626												450,835
Other liabilities			17,042												9,107
Stockholders' equity			205,379												196,183
Total liabilities and stockholders' equity		$	1,843,514											$	1,745,380
Net interest income						$	15,083											$	17,354
Interest rate spread (4)											2.47	%											3.58	%
Net interest margin (5)											3.51	%											4.27	%
Ratio of average interest-earning assets to average interest-bearing liabilities											143.66	%											152.09	%

(1) Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $289 and  $294 for the three months ended June 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
		June 30,												March 31,
		2024												2024
		Average								Average				Average								Average
		Balance				Interest				Yield/Cost				Balance				Interest				Yield/Cost
Interest-earning assets:
Loans receivable (1)		$	1,503,440			$	23,422				6.27	%		$	1,476,543			$	22,395				6.11	%
Investment securities (1) (2)			193,688				1,471				3.59	%			193,810				1,439				3.52	%
Interest-earning deposits with other banks (3)			61,891				706				4.59	%			64,139				778				4.88	%
Total interest-earning assets			1,759,019				25,599				5.92	%			1,734,492				24,612				5.77	%
Noninterest-earning assets			84,495												88,192
Total assets		$	1,843,514											$	1,822,684
Interest-bearing liabilities:
Interest-bearing demand deposits		$	209,965			$	1,009				1.93	%		$	211,009			$	978				1.86	%
Money market deposits			337,937				3,320				3.95	%			298,479				2,827				3.81	%
Savings deposits			192,577				305				0.64	%			201,080				290				0.58	%
Certificates of deposit			333,542				3,789				4.57	%			333,871				3,371				4.06	%
Short-term borrowings			138,656				1,920				5.57	%			144,357				1,993				5.55	%
Other borrowings			11,791				173				5.90	%			11,840				184				6.25	%
Total interest-bearing liabilities			1,224,468				10,516				3.45	%			1,200,636				9,643				3.23	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			396,626												400,209
Other liabilities			17,042												16,497
Stockholders' equity			205,379												205,342
Total liabilities and stockholders' equity		$	1,843,514											$	1,822,684
Net interest income						$	15,083											$	14,969
Interest rate spread (4)											2.47	%											2.54	%
Net interest margin (5)											3.51	%											3.54	%
Ratio of average interest-earning assets to average interest-bearing liabilities											143.66	%											144.46	%

(1)  Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $289 and $282 for the three months ended June 30, 2024 and March 31, 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 Six Months Ended
		June 30,												June 30,
		2024												2023
		Average								Average				Average								Average
		Balance				Interest				Yield/Cost				Balance				Interest				Yield/Cost
Interest-earning assets:
Loans receivable (1)		$	1,489,992			$	45,817				6.19	%		$	1,380,470			$	39,037				5.71	%
Investment securities (1) (2)			193,749				2,910				3.56	%			194,181				2,895				3.55	%
Interest-earning deposits with other banks (3)			63,015				1,484				4.74	%			65,802				1,210				3.71	%
Total interest-earning assets			1,746,756				50,211				5.85	%			1,640,453				43,142				5.37	%
Noninterest-earning assets			86,343												89,508
Total assets		$	1,833,099											$	1,729,961
Interest-bearing liabilities:
Interest-bearing demand deposits		$	210,487			$	1,986				1.90	%		$	195,990			$	960				0.99	%
Money market deposits			318,208				6,147				3.88	%			221,452				2,077				1.89	%
Savings deposits			196,828				594				0.61	%			289,318				1,281				0.89	%
Certificates of deposit			333,706				7,162				4.32	%			249,468				2,523				2.04	%
Short-term borrowings			141,507				3,913				5.56	%			84,404				2,114				5.05	%
Other borrowings			11,815				357				6.08	%			12,015				326				5.47	%
Total interest-bearing liabilities			1,212,551				20,159				3.34	%			1,052,647				9,281				1.78	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			398,417												471,242
Other liabilities			16,801												10,246
Stockholders' equity			205,330												195,826
Total liabilities and stockholders' equity		$	1,833,099											$	1,729,961
Net interest income						$	30,052											$	33,861
Interest rate spread (4)											2.51	%											3.59	%
Net interest margin (5)											3.53	%											4.23	%
Ratio of average interest-earning assets to average interest-bearing liabilities											144.06	%											155.84	%

(1)  Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $570 and $572 for the six months ended June 30, 2024 and June 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.

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

FAQ

What was Middlefield Banc Corp's (MBCN) net income for the first half of 2024?

Middlefield Banc Corp's (MBCN) net income for the first half of 2024 was $8.3 million, compared to $10.0 million for the same period last year.

How much did Middlefield Banc Corp's (MBCN) total loans increase in the first half of 2024?

Middlefield Banc Corp's (MBCN) total loans increased 6.3% year-over-year to a record $1.50 billion in the first half of 2024.

What was Middlefield Banc Corp's (MBCN) earnings per diluted share for the first half of 2024?

Middlefield Banc Corp's (MBCN) earnings per diluted share for the first half of 2024 were $1.03, compared to $1.23 for the same period last year.

How did Middlefield Banc Corp's (MBCN) noninterest income perform in the first half of 2024?

Middlefield Banc Corp's (MBCN) noninterest income increased 8.7% to $3.6 million in the first half of 2024, compared to $3.3 million for the same period in 2023.

What was Middlefield Banc Corp's (MBCN) allowance for credit losses as of June 30, 2024?

Middlefield Banc Corp's (MBCN) allowance for credit losses was 1.46% of total loans as of June 30, 2024, unchanged from the same period a year ago.