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MIDDLEFIELD BANC CORP false 0000836147 0000836147 2023-01-27 2023-01-27

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

January 27, 2023

(Date of Report: Date of earliest event reported)

 

 

Middlefield Banc Corp.

(Exact name of registrant as specified in its charter)

 

 

Ohio

(State or other jurisdiction of incorporation)

001-36613

(Commission File Number)

34-1585111

(I.R.S. Employer Identification Number)

15985 East High Street

Middlefield, Ohio 44062

(Address of principal executive offices, including zip code)

(440) 632-1666

(Registrant’s telephone number, including area code)

(not applicable)

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Stock, no par value   MBCN  

The NASDAQ Stock Market, LLC

(NASDAQ Capital Market)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


ITEM 2.02

RESULTS OF OPERATIONS AND FINANCIAL CONDITION

The following information is furnished under Item 2.02. On January 27, 2023, Middlefield Banc Corp. issued a press release announcing financial results for the three month and twelve month period ended December 31, 2022. A copy of the press release is attached hereto as Exhibit 99 and is incorporated herein by this reference.

The information contained or incorporated by reference in this current report on Form 8-K may contain forward-looking statements, including certain plans, expectations, goals, and projections, which are subject to numerous assumptions, risks, and uncertainties. Actual results could differ materially from those contained or implied by such statements for a variety of factors, including: changes in economic conditions; movements in interest rates; competitive pressures on product pricing and services; success and timing of business strategies; the nature, extent, and timing of governmental actions and reforms; and extended disruption of vital infrastructure. All forward-looking statements included in this current report on Form 8-K are based on information available at the time of the report. Middlefield Banc Corp. assumes no obligation to update any forward-looking statement.

 

ITEM 9.01

FINANCIAL STATEMENTS AND EXHIBITS

 

  (c)

Exhibits.

The following exhibits are furnished herewith:

 

EXHIBITS     
99    January 27, 2023 press release of Middlefield Banc Corp.
104    Cover Page Interactive File (embedded within the Inline XBRL document)


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

      MIDDLEFIELD BANC CORP.
Date: January 27, 2023      

/s/ James R. Heslop, II

      CEO
EX-99 2 d369482dex99.htm EX-99 EX-99

Exhibit 99

 

LOGO

15985 East High Street

P. O. Box 35

Middlefield, Ohio 44062

Phone: 440/632-1666    FAX: 440/632-1700

www.middlefieldbank.bank

PRESS RELEASE

 

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

  

Middlefield Banc Corp. Reports 2022 Full Year Financial Results

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

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

 

   

Returned $11.6 million of capital to shareholders through cash dividends and the repurchase of 229,420 shares at an average price of $26.67 per share

 

   

Net income was $15.7 million, or $2.59 per diluted share, compared to $18.6 million, or $3.00 per diluted share

 

   

Non-GAAP(1) net income, adjusted for certain one-time items and expenses associated with the Liberty Bancshares, Inc. merger, was $18.3 million, or $3.03 per diluted share, compared to $18.5 million, or $2.98 per diluted share

 

   

Non-GAAP(1) ROAE and ROATE, adjusted for certain one-time items and expenses associated with the Liberty Bancshares, Inc. merger, was 13.15% and 15.12%, respectively, compared to 12.65% and 14.27%, respectively

 

   

Twelve-month pre-tax income benefited from $1.2 million of net fees associated with the Paycheck Protection Program (“PPP”), compared to $1.1 million in the 2021 full year

 

   

Net interest margin improved by 30 basis points to 4.08%, compared to 3.78%

 

   

Total loans were $1.35 billion, compared to $981.7 million at December 31, 2021

 

   

Total loans increased organically by $91.4 million, or 9.6% from December 31, 2021, without the impact of PPP loan forgiveness and the Liberty Bancshares, Inc. merger

 

   

Strong asset quality with nonperforming loans to total loans of 0.52%, compared to 0.49%

 

   

Allowance for loan losses was 1.07% of total loans, compared to 1.46%

“Middlefield experienced another excellent year of core earnings driven by a 4.08% net interest margin, a 9.6% increase in organic loans, and robust asset quality. These results reflect the execution of our strategic plan, the dedication of our skilled team members, and the value we provide our local communities. In addition, we completed the Liberty Bancshares merger during the 2022 fourth quarter, which increased our scale and exposure in the Central and Northwest Ohio regions.


We are delighted to bring our common philosophies to customers within these markets. Over the next several months, we will focus on integrating Liberty into Middlefield’s organization,” stated James R. Heslop, II, Chief Executive Officer.

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

Income Statement

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

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

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

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

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

Balance Sheet

Total assets at December 31, 2022, increased to approximately $1.69 billion from $1.33 billion at December 31, 2021. The $356.6 million, or 26.8%, year-over-year increase in total assets was primarily due to the Liberty Bancshares, Inc. merger. Net loans at December 31, 2022, increased 38.4% to $1.34 billion, compared to $967.3 million at December 31, 2021.


On an organic basis, without the impact of PPP loan forgiveness and the Liberty Bancshares, Inc. merger, total loans at December 31, 2022, increased 9.6%, compared to December 31, 2021.

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

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

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

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

Stockholders’ Equity and Dividends

At December 31, 2022, stockholders’ equity was $197.7 million compared to $145.3 million at December 31, 2021. The 36.0% year-over-year increase in stockholders’ equity was primarily due to the Liberty Bancshares, Inc. merger, partially offset by an increase in the unrealized loss on the available-for-sale investment portfolio and the Company’s stock repurchase program. On a per-share basis, shareholders’ equity at December 31, 2022, was $23.98 compared to $24.68 at December 31, 2021.

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

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

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

Asset Quality

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

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


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

About Middlefield Banc Corp.

Middlefield Banc Corp., headquartered in Middlefield, Ohio, is the bank holding company of The Middlefield Banking Company with total assets of $1.69 billion at December 31, 2022. The Bank operates 22 full-service banking centers and an LPL Financial® brokerage office serving Ada, Beachwood, Bellefontaine, Chardon, Cortland, Dublin, Garrettsville, Kenton, Mantua, Marysville, Middlefield, Newbury, Orwell, Plain City, Powell, Solon, Sunbury, Twinsburg, and Westerville. The Bank also operates a Loan Production Office in Mentor, Ohio.

Additional information is available at www.middlefieldbank.bank

(1)NON-GAAP FINANCIAL MEASURES

This press release includes disclosure of Middlefield Banc Corp.’s tangible book value per share, return on average tangible equity, and pre-tax, pre-provision for loan losses income, which are financial measures not prepared in accordance with generally accepted accounting principles in the United States (GAAP). A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed by GAAP. Middlefield Banc Corp. believes that these non-GAAP financial measures provide both management and investors a more complete understanding of the underlying operational results and trends and Middlefield Banc Corp.’s marketplace performance. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with GAAP. The reconciliations of non-GAAP financial measures are included in the tables following Consolidated Financial Highlights below.

FORWARD-LOOKING STATEMENTS

This press release of Middlefield Banc Corp. and the reports Middlefield Banc Corp. files with the Securities and Exchange Commission often contain “forward-looking statements” relating to present or future trends or factors affecting the banking industry and, specifically, the financial operations, markets and products of Middlefield Banc Corp. These forward-looking statements involve certain risks and uncertainties. There are a number of important factors that could cause Middlefield Banc Corp.’s future results to differ materially from historical performance or projected performance. These factors include, but are not limited to: (1) a significant increase in competitive pressures among financial institutions; (2) changes in the interest rate environment that may reduce interest margins; (3) changes in prepayment speeds, charge-offs and loan loss provisions; (4) less favorable than expected general economic conditions; (5) legislative or regulatory changes that may adversely affect businesses in which Middlefield Banc Corp. is engaged; (6) technological issues which may adversely affect Middlefield Banc Corp.’s financial operations or customers; (7) changes in the securities markets; or (8) risk factors mentioned in the reports and registration statements Middlefield Banc Corp. files with the Securities and Exchange Commission. Middlefield Banc Corp. undertakes no obligation to release revisions to these forward-looking statements or to reflect events or circumstances after the date of this press release.


MIDDLEFIELD BANC CORP.

Consolidated Selected Financial Highlights

(Dollar amounts in thousands, unaudited)

 

Balance Sheets (period end)

   December 31,
2022
    September 30,
2022
    June 30,
2022
    March 31,
2022
    December 31,
2021
 

ASSETS

          

Cash and due from banks

   $ 51,404     $ 119,777     $ 60,114     $ 78,804     $ 97,172  

Federal funds sold

     2,405       8,800       19,039       29,474       22,322  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents

     53,809       128,577       79,153       108,278       119,494  

Equity securities, at fair value

     915       972       779       851       818  

Investment securities available for sale, at fair value

     164,967       162,064       171,958       175,216       170,199  

Loans held for sale

     —         —         —         9       1,051  

Loans:

          

Commercial real estate:

          

Owner occupied

     191,748       120,912       120,771       113,590       111,470  

Non-owner occupied

     380,580       285,419       288,334       293,745       283,618  

Multifamily

     58,251       38,063       29,152       29,385       31,189  

Residential real estate

     296,308       247,612       246,453       244,747       240,089  

Commercial and industrial

     195,602       146,987       137,398       131,683       148,812  

Home equity lines of credit

     128,065       114,344       111,730       106,300       104,355  

Construction and other

     94,199       33,748       35,988       50,152       54,148  

Consumer installment

     8,119       8,110       8,171       8,118       8,010  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans

     1,352,872       995,195       977,997       977,720       981,691  

Less allowance for loan and lease losses

     14,438       14,532       14,550       14,492       14,342  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loans

     1,338,434       980,663       963,447       963,228       967,349  

Premises and equipment, net

     21,961       16,215       17,030       17,142       17,272  

Goodwill

     31,735       15,071       15,071       15,071       15,071  

Core deposit intangibles

     7,701       1,171       1,249       1,326       1,403  

Bank-owned life insurance

     33,811       17,382       17,274       17,166       17,060  

Other real estate owned

     5,821       6,792       6,792       6,992       6,992  

Accrued interest receivable and other assets

     28,528       22,104       20,624       18,019       14,297  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL ASSETS

   $ 1,687,682     $ 1,351,011     $ 1,293,377     $ 1,323,298     $ 1,331,006  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     December 31,
2022
    September 30,
2022
    June 30,
2022
    March 31,
2022
    December 31,
2021
 

LIABILITIES

          

Deposits:

          

Noninterest-bearing demand

   $ 503,907     $ 383,675     $ 379,872     $ 361,251     $ 334,171  

Interest-bearing demand

     164,677       160,112       154,788       162,010       196,308  

Money market

     187,498       162,052       185,494       187,807       177,281  

Savings

     307,917       247,466       252,179       264,784       260,125  

Time

     238,020       177,182       174,833       191,320       198,725  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

     1,402,019       1,130,487       1,147,166       1,167,172       1,166,610  

Short-term borrowings

     65,000       80,000       —         —         —    

Other borrowings

     12,059       12,107       12,910       12,975       12,901  

Accrued interest payable and other liabilities

     10,913       5,562       5,081       5,507       6,160  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL LIABILITIES

     1,489,991       1,228,156       1,165,157       1,185,654       1,185,671  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

STOCKHOLDERS’ EQUITY

          

Common stock, no par value; 10,000,000 shares authorized, 9,916,466 shares issued, 8,245,235 shares outstanding as of December 31, 2022

     161,029       87,640       87,562       87,562       87,131  

Retained earnings

     94,154       93,166       89,900       86,804       83,971  

Accumulated other comprehensive (loss) income

     (22,144     (25,080     (17,591     (6,674     3,462  

Treasury stock, at cost; 1,671,231 shares as of December 31, 2022

     (35,348     (32,871     (31,651     (30,048     (29,229
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL STOCKHOLDERS’ EQUITY

     197,691       122,855       128,220       137,644       145,335  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 1,687,682     $ 1,351,011     $ 1,293,377     $ 1,323,298     $ 1,331,006  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


MIDDLEFIELD BANC CORP.

Consolidated Selected Financial Highlights

(Dollar amounts in thousands, except per share and share amounts, unaudited)

 

     For the Three Months Ended     For the Twelve Months Ended  

Statements of Income

   December 31,
2022
    September 30,
2022
    June 30,
2022
    March 31,
2022
     December 31,
2021
    December 31,
2022
    December 31,
2021
 

INTEREST AND DIVIDEND INCOME

               

Interest and fees on loans

   $ 14,368     $ 11,892     $ 11,268     $ 10,985      $ 11,586     $ 48,513     $ 47,896  

Interest-earning deposits in other institutions

     240       134       74       24        30       472       90  

Federal funds sold

     119       51       46       3        1       219       3  

Investment securities:

               

Taxable interest

     477       449       442       443        438       1,811       1,679  

Tax-exempt interest

     986       982       955       784        732       3,707       2,565  

Dividends on stock

     68       59       33       24        23       184       102  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total interest and dividend income

     16,258       13,567       12,818       12,263        12,810       54,906       52,335  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

INTEREST EXPENSE

               

Deposits

     1,771       812       709       726        783       4,018       3,913  

Short-term borrowings

     263       44       —         —          —         307       —    

Other borrowings

     142       112       81       69        67       404       282  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total interest expense

     2,176       968       790       795        850       4,729       4,195  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

NET INTEREST INCOME

     14,082       12,599       12,028       11,468        11,960       50,177       48,140  

Provision for loan losses

     —         —         —         —          (200     —         700  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

NET INTEREST INCOME AFTER PROVISION

               

FOR LOAN LOSSES

     14,082       12,599       12,028       11,468        12,160       50,177       47,440  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

NONINTEREST INCOME

               

Service charges on deposit accounts

     976       1,004       956       914        906       3,850       3,425  

(Losses) gains on equity securities

     (77     (57     (72     33        (14     (173     209  

Earnings on bank-owned life insurance

     137       108       108       106        106       459       546  

(Losses) gains on sale of loans

     (4     7       18       3        118       24       1,240  

Revenue from investment services

     147       233       153       141        198       674       727  

Other income

     1,235       251       220       206        221       1,912       1,059  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total noninterest income

     2,414       1,546       1,383       1,403        1,535       6,746       7,206  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

NONINTEREST EXPENSE

               

Salaries and employee benefits

     4,886       4,491       3,785       4,386        4,088       17,548       17,151  

Occupancy expense

     487       458       583       505        542       2,033       2,048  

Equipment expense

     252       233       274       315        358       1,074       1,361  

Data processing costs

     1,050       985       822       844        851       3,701       3,298  

Ohio state franchise tax

     279       293       292       293        285       1,157       1,144  

Federal deposit insurance expense

     105       84       90       50        50       329       494  

Professional fees

     382       280       383       455        435       1,500       1,313  

Net loss (gain) on other real estate owned

     1,692       1       206       8        (66     1,907       11  

Advertising expense

     308       268       229       228        221       1,033       885  

Software amortization expense

     28       27       40       48        119       143       361  

Core deposit intangible amortization

     140       78       77       77        80       372       321  

Merger-related costs

     1,413       390       579       —          —         2,382       —    

Other expense

     1,321       1,298       1,175       1,057        868       4,851       3,561  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total noninterest expense

     12,343       8,886       8,535       8,266        7,831       38,030       31,948  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Income before income taxes

     4,153       5,259       4,876       4,605        5,864       18,893       22,698  

Income taxes

     651       1,010       787       772        1,027       3,220       4,065  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

NET INCOME

   $ 3,502     $ 4,249     $ 4,089     $ 3,833      $ 4,837     $ 15,673     $ 18,633  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

PTPP (1)

   $ 4,153     $ 5,259     $ 4,876     $ 4,605      $ 5,664     $ 18,893     $ 23,398  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

 

(1)

The pre-tax pre-provision (PTPP) is the income before income taxes before provision for loan losses considerations, for reconciliation of non-GAAP measures.


MIDDLEFIELD BANC CORP.

Consolidated Selected Financial Highlights

(Dollar amounts in thousands, except per share and share amounts, unaudited)

 

     For the Three Months Ended     For the Twelve Months Ended  
     December 31,
2022
    September 30,
2022
    June 30,
2022
    March 31,
2022
    December 31,
2021
    December 31,
2022
    December 31,
2021
 

Per common share data

              

Net income per common share - basic

   $ 0.53     $ 0.73     $ 0.70     $ 0.65     $ 0.81     $ 2.60     $ 3.01  

Net income per common share - diluted

   $ 0.53     $ 0.73     $ 0.70     $ 0.65     $ 0.81     $ 2.59     $ 3.00  

Dividends declared per share

   $ 0.30     $ 0.17     $ 0.17     $ 0.17     $ 0.21     $ 0.81     $ 0.69  

Book value per share (period end)

   $ 23.98     $ 21.30     $ 22.07     $ 23.43     $ 24.68     $ 23.98     $ 24.68  

Tangible book value per share (period end) (2) (3)

   $ 19.19     $ 18.48     $ 19.26     $ 20.64     $ 21.88     $ 19.19     $ 21.88  

Dividends declared

   $ 2,514     $ 983     $ 993     $ 1,000     $ 1,242     $ 5,490     $ 4,240  

Dividend yield

     4.34     2.49     2.71     2.78     3.37     2.96     2.79

Dividend payout ratio

     71.79     23.13     24.28     26.09     25.68     35.03     22.76

Average shares outstanding - basic

     6,593,616       5,792,773       5,851,422       5,879,025       5,951,838       6,027,091       6,186,666  

Average shares outstanding - diluted

     6,610,907       5,805,799       5,860,098       5,889,836       5,975,333       6,044,382       6,211,076  

Period ending shares outstanding

     8,245,235       5,767,803       5,810,351       5,873,565       5,888,737       8,245,235       5,888,737  

Selected ratios

              

Return on average assets

     0.97     1.32     1.25     1.17     1.41     1.17     1.36

Return on average equity

     9.35     12.94     12.30     10.75     13.17     11.25     12.74

Return on average tangible common equity (2) (4)

     11.13     14.79     14.02     12.13     14.85     12.95     14.38

Efficiency (1)

     72.75     61.07     61.83     62.54     56.56     64.96     56.38

Equity to assets at period end

     11.71     9.09     9.91     10.40     10.92     11.71     10.92

Noninterest expense to average assets

     0.86     0.69     0.65     0.62     0.58     2.84     2.33

 

(1)

The efficiency ratio is calculated by dividing noninterest expense less amortization of intangibles by the sum of net interest income on a fully taxable equivalent basis plus noninterest income

(2)

See reconciliation of non-GAAP measures below

(3)

Calculated by dividing tangible common equity by shares outstanding

(4)

Calculated by dividing annualized net income for each period by average tangible common equity

MIDDLEFIELD BANC CORP.

Consolidated Selected Financial Highlights

(unaudited)

 

     For the Three Months Ended     For the Twelve Months Ended  

Yields

   December 31,
2022
    September 30,
2022
    June 30,
2022
    March 31,
2022
    December 31,
2021
    December 31,
2022
    December 31,
2021
 

Interest-earning assets:

              

Loans receivable (2)

     5.11     4.78     4.66     4.53     4.61     4.79     4.56

Investment securities (2)

     3.83     3.90     3.76     3.41     3.30     3.73     3.45

Interest-earning deposits with other banks

     3.42     2.06     0.77     0.23     0.20     1.31     0.20

Total interest-earning assets

     4.88     4.55     4.28     4.06     4.07     4.45     4.11

Deposits:

              

Interest-bearing demand deposits

     0.83     0.22     0.15     0.14     0.12     0.34     0.13

Money market deposits

     1.00     0.46     0.49     0.47     0.47     0.61     0.47

Savings deposits

     0.49     0.19     0.06     0.06     0.06     0.20     0.06

Certificates of deposit

     1.30     0.96     0.83     0.87     0.90     1.00     1.13

Total interest-bearing deposits

     0.87     0.43     0.36     0.37     0.36     0.51     0.44

Non-Deposit Funding:

              

Borrowings

     4.25     2.94     2.51     2.16     2.09     3.35     2.10

Total interest-bearing liabilities

     1.02     0.50     0.39     0.39     0.37     0.59     0.47

Cost of deposits

     0.57     0.29     0.24     0.25     0.26     0.34     0.32

Cost of funds

     0.68     0.34     0.27     0.27     0.27     0.40     0.34

Net interest margin (1)

     4.23     4.23     4.02     3.80     3.81     4.08     3.78

 

(1)

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

(2)

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

 

     For the Three Months Ended  

Asset quality data

   December 31,
2022
    September 30,
2022
    June 30,
2022
    March 31,
2022
    December 31,
2021
 

(Dollar amounts in thousands, unaudited)

          

Nonperforming loans (1)

   $ 7,013     $ 3,692     $ 4,670     $ 4,728     $ 4,859  

Other real estate owned

     5,821       6,792       6,792       6,992       6,992  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Nonperforming assets

   $ 12,834     $ 10,484     $ 11,462     $ 11,720     $ 11,851  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for loan losses

   $ 14,438     $ 14,532     $ 14,550     $ 14,492     $ 14,342  

Allowance for loan losses/total loans

     1.07     1.46     1.49     1.48     1.46

Net charge-offs (recoveries):

          

Quarter-to-date

   $ 94     $ 18     $ (58   $ (150   $ (308

Year-to-date

     (96     (190     (208     (150     (183

Net charge-offs (recoveries) to average loans, annualized:

          

Quarter-to-date

     0.03     0.01     -0.02     -0.06     -0.12

Year-to-date

     -0.01     -0.02     -0.04     -0.06     -0.02

Nonperforming loans/total loans

     0.52     0.37     0.48     0.48     0.49

Allowance for loan losses/nonperforming loans

     205.87     393.61     311.56     306.51     295.16

Nonperforming assets/total assets

     0.76     0.78     0.89     0.89     0.89

 

(1)

Nonperforming loans exclude troubled debt restructurings that are performing in accordance with their terms over a prescribed period of time.


Reconciliation of Common Stockholders’ Equity to Tangible Common  

Equity

   For the Period Ended  
(Dollar amounts in thousands, unaudited)    December 31,
2022
     September 30,
2022
     June 30,
2022
     March 31,
2022
     December 31,
2021
 

Stockholders’ Equity

   $ 197,691      $ 122,855      $ 128,220      $ 137,644      $ 145,335  

Less Goodwill and other intangibles

     39,436        16,242        16,320        16,397        16,474  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Tangible Common Equity

   $ 158,255      $ 106,613      $ 111,900      $ 121,247      $ 128,861  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Shares outstanding

     8,245,235        5,767,803        5,810,351        5,873,565        5,888,737  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Tangible book value per share

   $ 19.19      $ 18.48      $ 19.26      $ 20.64      $ 21.88  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

Reconciliation of Average Equity to Return

on Average Tangible Common Equity

   For the Three Months Ended     For the Twelve Months Ended  
     December 31,
2022
    September 30,
2022
    June 30,
2022
    March 31,
2022
    December 31,
2021
    December 31,
2022
    December 31,
2021
 

Average Stockholders’ Equity

   $ 148,616     $ 130,263     $ 133,377     $ 144,630     $ 145,716     $ 139,270     $ 146,237  

Less Average Goodwill and other intangibles

     23,731       16,280       16,357       16,435       16,513       18,200       16,634  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average Tangible Common Equity

   $ 124,885     $ 113,983     $ 117,020     $ 128,195     $ 129,203     $ 121,070     $ 129,603  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 3,502     $ 4,249     $ 4,089     $ 3,833     $ 4,837     $ 15,673     $ 18,633  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Return on average tangible common equity (annualized)

     11.13     14.79     14.02     12.13     14.85     12.95     14.38
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Reconciliation of Pre-Tax Pre-Provision Income

(PTPP)

   For the Three Months Ended     For the Twelve Months Ended  
     December 31,
2022
     September 30,
2022
     June 30,
2022
     March 31,
2022
     December 31,
2021
    December 31,
2022
     December 31,
2021
 

Net income

   $ 3,502      $ 4,249      $ 4,089      $ 3,833      $ 4,837     $ 15,673      $ 18,633  

Add Income Taxes

     651        1,010        787        772        1,027       3,220        4,065  

Add Provision for loan losses

     —          —          —          —          (200     —          700  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

PTPP

   $ 4,153      $ 5,259      $ 4,876      $ 4,605      $ 5,664     $ 18,893      $ 23,398  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

 

Reconciliation of Net Income,
Less Merger and Certain Items

  

For the Three Months Ended

     For the Twelve Months Ended  
    

December 31,
2022

   September 30,
2022
     June 30,
2022
     March 31,
2022
     December 31,
2021
     December 31,
2022
     December 31,
2021
 

Net Income

   $ 3,502    $ 4,249      $ 4,089      $ 3,833      $ 4,837      $ 15,673      $ 18,633  

Acquisition related costs-after tax

   1,116      308        457        —          —          1,882        —    

Net loss (gain) on other real estate owned - after tax(1)

   585      1        163        6        (52      755        (134
  

 

  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net Income- Adjusted

   $ 5,203    $ 4,558      $ 4,709      $ 3,839      $ 4,785      $ 18,310      $ 18,499  
  

 

  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Diluted EPS excluding merger and one-time items

   $0.79    $ 0.79      $ 0.80      $ 0.65      $ 0.80      $ 3.03      $ 2.98  

Return on average assets excluding merger and one-time items (annualized)

   1.44%      1.41      1.43      1.17      1.40      1.37      1.35

Return on average equity excluding merger and one-time items (annualized)

   13.89%      13.88      14.16      10.77      13.03      13.15      12.65

Return on average tangible common equity excluding merger and one-time items (annualized)

   16.53%      15.86      16.14      12.15      14.69      15.12      14.27

 

(1) 

This includes net rental income earned on other real estate owned.


MIDDLEFIELD BANC CORP.

Average Balance Sheets

(Dollar amounts in thousands, unaudited)

 

     For the Three Months Ended  
     December 31,
2022
    December 31,
2021
 
     Average
Balance
     Interest      Average
Yield/Cost
    Average
Balance
     Interest      Average
Yield/Cost
 

Interest-earning assets:

                

Loans receivable (3)

   $ 1,117,221      $ 14,368        5.11   $ 999,229      $ 11,586        4.61

Investment securities (3)

     178,772        1,463        3.83     164,254        1,170        3.30

Interest-earning deposits with other banks (4)

     49,569        427        3.42     104,804        54        0.20
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total interest-earning assets

     1,345,562        16,258        4.88     1,268,287        12,810        4.07
     

 

 

         

 

 

    

Noninterest-earning assets

     89,740             90,556        
  

 

 

         

 

 

       

Total assets

   $ 1,435,302           $ 1,358,843        
  

 

 

         

 

 

       

Interest-bearing liabilities:

                

Interest-bearing demand deposits

   $ 165,267      $ 344        0.83   $ 212,861      $ 66        0.12

Money market deposits

     172,437        435        1.00     180,201        214        0.47

Savings deposits

     266,613        330        0.49     257,344        39        0.06

Certificates of deposit

     201,972        662        1.30     204,904        464        0.90

Short-term borrowings

     25,750        263        4.05     —          —          0.00

Other borrowings

     12,086        142        4.66     12,934        67        2.06
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total interest-bearing liabilities

     844,125        2,176        1.02     868,244        850        0.39
     

 

 

         

 

 

    

Noninterest-bearing liabilities:

                

Noninterest-bearing demand deposits

     428,155             337,900        

Other liabilities

     14,406             6,983        

Stockholders’ equity

     148,616             145,716        
  

 

 

         

 

 

       

Total liabilities and stockholders’ equity

   $ 1,435,302           $ 1,358,843        
  

 

 

         

 

 

       

Net interest income

      $ 14,082           $ 11,960     
     

 

 

         

 

 

    

Interest rate spread (1)

           3.86           3.68

Net interest margin (2)

           4.23           3.81

Ratio of average interest-earning assets to average interest-bearing liabilities

           159.40           146.07

 

(1)

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

(2)

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

(3)

Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $278 and $210 for the three months ended December 31, 2022 and 2021, respectively

(4)

Includes dividends received on restricted stock.

 

     For the Three Months Ended  
     December 31,
2022
    September 30,
2022
 
     Average
Balance
     Interest      Average
Yield/Cost
    Average
Balance
     Interest      Average
Yield/Cost
 

Interest-earning assets:

                

Loans receivable (3)

   $ 1,117,221      $ 14,368        5.11   $ 987,689      $ 11,892        4.78

Investment securities (3)

     178,772        1,463        3.83     172,316        1,431        3.90

Interest-earning deposits with other banks (4)

     49,569        427        3.42     46,938        244        2.06
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total interest-earning assets

     1,345,562        16,258        4.88     1,206,943        13,567        4.55
     

 

 

         

 

 

    

Noninterest-earning assets

     89,740             73,753        
  

 

 

         

 

 

       

Total assets

   $ 1,435,302           $ 1,280,696        
  

 

 

         

 

 

       

Interest-bearing liabilities:

                

Interest-bearing demand deposits

   $ 165,267      $ 344        0.83   $ 162,878      $ 91        0.22

Money market deposits

     172,437        435        1.00     155,095        180        0.46

Savings deposits

     266,613        330        0.49     249,898        119        0.19

Certificates of deposit

     201,972        662        1.30     174,091        422        0.96

Short-term borrowings

     25,750        263        4.05     8,554        44        2.04

Other borrowings

     12,086        142        4.66     12,530        112        3.55
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total interest-bearing liabilities

     844,125        2,176        1.02     763,046        968        0.50
     

 

 

         

 

 

    

Noninterest-bearing liabilities:

                

Noninterest-bearing demand deposits

     428,155             382,351        

Other liabilities

     14,406             5,036        

Stockholders’ equity

     148,616             130,263        
  

 

 

         

 

 

       

Total liabilities and stockholders’ equity

   $ 1,435,302           $ 1,280,696        
  

 

 

         

 

 

       

Net interest income

      $ 14,082           $ 12,599     
     

 

 

         

 

 

    

Interest rate spread (1)

           3.86           4.05

Net interest margin (2)

           4.23           4.23

Ratio of average interest-earning assets to average interest-bearing liabilities

           159.40           158.17

 

(1)

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

(2)

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

(3)

Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $278 and $277 for the three months ended December 31, 2022 and September 30, 2022, respectively

(4)

Includes dividends received on restricted stock.


     For the Twelve Months Ended  
     December 31,
2022
    December 31,
2021
 
     Average
Balance
     Interest      Average
Yield/Cost
    Average
Balance
     Interest      Average
Yield/Cost
 

Interest-earning assets:

                

Loans receivable (3)

   $ 1,014,896      $ 48,513        4.79   $ 1,052,351      $ 47,896        4.56

Investment securities (3)

     174,514        5,518        3.73     142,705        4,244        3.45

Interest-earning deposits with other banks (4)

     67,030        875        1.31     97,417        195        0.20
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total interest-earning assets

     1,256,440        54,906        4.45     1,292,473        52,335        4.11
     

 

 

         

 

 

    

Noninterest-earning assets

     84,484             78,802        
  

 

 

         

 

 

       

Total assets

   $ 1,340,924           $ 1,371,275        
  

 

 

         

 

 

       

Interest-bearing liabilities:

                

Interest-bearing demand deposits

   $ 164,569      $ 554        0.34   $ 212,063      $ 274        0.13

Money market deposits

     174,377        1,055        0.61     186,009        869        0.47

Savings deposits

     259,225        527        0.20     255,267        162        0.06

Certificates of deposit

     188,617        1,882        1.00     231,662        2,608        1.13

Short-term borrowings

     8,576        307        3.58     85        —          0.00

Other borrowings

     12,626        404        3.20     13,313        282        2.12
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total interest-bearing liabilities

     807,990        4,729        0.59     898,399        4,065        0.47
     

 

 

         

 

 

    

Noninterest-bearing liabilities:

                

Noninterest-bearing demand deposits

     386,296             320,104        

Other liabilities

     7,368             6,535        

Stockholders’ equity

     139,270             146,237        
  

 

 

               

Total liabilities and stockholders’ equity

   $ 1,340,924           $ 1,371,275        
  

 

 

         

 

 

    

 

 

    

Net interest income

      $ 50,177           $ 48,270     
     

 

 

         

 

 

    

Interest rate spread (1)

           3.86           3.64

Net interest margin (2)

           4.08           3.78

Ratio of average interest-earning assets to average interest-bearing liabilities

           155.50           143.86

 

(1)

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

(2)

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

(3)

Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $1,046 and $752, for 2022 and 2021, respectively.

(4)

Includes dividends received on restricted stock.