Middlefield Banc Corp. Reports 2023 Full-Year Financial Results
MIDDLEFIELD, Ohio, Jan. 26, 2024 (GLOBE NEWSWIRE) -- Middlefield Banc Corp. (NASDAQ: MBCN) today reported financial results for the three and twelve-months ended December 31, 2023.*2023 Financial Highlights* (on a year-over-year basis unless noted):
· Net income increased 10.8% to a record $17.4 million
· Earnings were $2.14 per diluted share compared to $2.59 per diluted share, reflecting a 34.5% increase in the average diluted shares outstanding related to the Liberty Bancshares, Inc. merger
· Pre-tax, pre-provision net income increased 25.7% to a record $23.8 million^(1)
· Net interest income increased 29.9% to a record $65.2 million, supported by a strong net interest margin of 4.04%
· Total loans were a record $1.48 billion, compared to $1.35 billion at December 31, 2022
· Total deposits were $1.43 billion, compared to $1.40 billion at December 31, 2022
· Return on average assets was 0.99%, compared to 1.17%
· Return on average equity was 8.83%, compared to 11.25%
· Return on average tangible common equity^(1) was 11.20%, compared to 12.95%
· Strong asset quality continues with nonperforming assets to total assets of 0.60% at year end
· Allowance for credit losses was 1.47% of total loans, compared to 1.07%
· Equity to assets remained strong at 11.28%
· Book value increased 6.0% to $25.41 per share
· Declared $0.85 per share in dividends, a 4.9% increase
^*(1)* See non-GAAP reconciliation under the section “GAAP to Non-GAAP Reconciliations”
Ronald L. Zimmerly, Jr., President and Chief Executive Officer, stated, "By many accounts, 2023 was a historic year for Middlefield as we successfully integrated the Liberty Bancshares, Inc. (“Liberty”) merger and ended the year with record total assets, stockholders’ equity, and annual net income. Through the Liberty merger, we expanded Middlefield’s footprint into Western Ohio and deepened our exposure in Central Ohio – creating one of the leading independent community banks in the state. In addition, we enhanced our management team and added seasoned Ohio bankers with deep expertise across Commercial, Business, and Consumer Banking as we remain focused on developing talent from within the Company and attracting leading bankers from outside our organization. Finally, we added new resources to drive deposit growth in a more competitive environment, enhanced our small business lending capabilities, and made strategic adjustments to our operating structure to provide more value to our retail customers. These actions have significantly enhanced our infrastructure, which we believe will allow us to serve our communities better, provide our team members more opportunities, and support Middlefield’s growth."
"As we look to 2024, we are focused on executing against our long-term strategic plan, benefiting from the synergies of the Liberty merger, and realizing the value from the investments we have made across our business this past year. While we expect uncertainty about FOMC monetary policies and their impact on national economic conditions in 2024, economic activity and employment within our Ohio markets remain stable. We believe 2024 will be another good year of balance sheet growth and profitability, and we remain committed to creating long-term value for our customers, communities, team members, and shareholders," concluded Mr. Zimmerly.
*Income Statement*
Net interest income for the 2023 twelve-month period increased 29.9% to $65.2 million, compared to $50.2 million for the same period last year. For the full year, the net interest margin was 4.04%, compared to 4.08% last year. Net interest income for the 2023 fourth quarter increased 9.2% to $15.4 million, compared to $14.1 million for the 2022 fourth quarter. The net interest margin for the 2023 fourth quarter was 3.70%, compared to 4.23% for the same period of 2022.
Pre-tax income for the 2022 twelve-month period benefited from $1.2 million of accelerated net fees associated with the Paycheck Protection Program ("PPP").
For the 2023 twelve-month period, noninterest income was $6.7 million, compared to $6.7 million for the same period last year. Noninterest income for the 2023 fourth quarter was $1.6 million, compared to $2.4 million for the same period the previous year.
For the 2023 twelve-month period, noninterest expense was $48.1 million, compared to $38.0 million for the same period last year. Higher year-over-year expenses for the year ended December 31, 2023, were primarily associated with the Liberty merger and higher personnel expenses, partially offset by a decrease in merger-related costs. Noninterest expense in the 2023 fourth quarter was $12.2 million, compared to $12.3 million for the 2022 fourth quarter.
Net income for the 2023 twelve-month period ended December 31, 2023, was $17.4 million, or $2.14 per diluted share, compared to $15.7 million, or $2.59 per diluted share for the same period last year. Net income for the 2023 fourth quarter ended December 31, 2023, was $3.5 million, or $0.44 per diluted share, compared to $3.5 million, or $0.53 per diluted share, for the same period last year.
Pre-tax, pre-provision net income for the 2023 twelve-months was $23.8 million, an increase of 25.7% from $18.9 million last year. For the 2023 fourth quarter, pre-tax, pre-provision net income was $4.8 million, an increase of 15.7% from $4.2 million last year. (See non-GAAP reconciliation under the section “GAAP to Non-GAAP Reconciliations”).
*Balance Sheet*
Total assets at December 31, 2023, increased 8.0% to $1.82 billion, compared to $1.69 billion at December 31, 2022. Total loans at December 31, 2023, were $1.48 billion, compared to $1.35 billion at December 31, 2022. The 9.3% year-over-year increase in total loans was primarily due to higher commercial and industrial, residential real estate, commercial real estate, and construction and other loans.
Total liabilities at December 31, 2023, increased 8.5% to $1.62 billion, compared to $1.49 billion at December 31, 2022. Total deposits at December 31, 2023, were $1.43 billion, compared to $1.40 billion at December 31, 2022. The 1.8% year-over-year increase in deposits was primarily due to growth in money market, interest-bearing demand, and time deposits, partially offset by declines in noninterest-bearing demand and savings accounts. Noninterest-bearing demand deposits were 28.1% of total deposits at December 31, 2023, compared to 35.9% at December 31, 2022. At December 31, 2023, the Company had brokered deposits of $90.3 million, compared to $5.0 million at December 31, 2022.
The investment securities available for sale portfolio was $170.8 million at December 31, 2023, compared with $165.0 million at December 31, 2022.
Michael Ranttila, Chief Financial Officer, stated, “Asset quality remains historically strong due to our conservative underwriting standards and balanced portfolio composition, as well as steady economic trends across our Central, Western, and Northeast Ohio markets. During the fourth quarter, we sold an other real estate owned property that was on our balance sheet for $5.8 million for a loss of $173,000. In addition, during the fourth quarter, we downgraded one self-storage loan in the Southwest Ohio market, which resulted in an approximately $3.2 million increase in nonperforming loans since the 2023 third quarter. The issue is isolated to this borrower and does not indicate a trend in the market, our portfolio, or an issue in underwriting.”
Mr. Ranttila continued, "We ended the quarter with $60.8 million in cash and cash equivalents, $170.8 million in available for sale investment securities, and $618.1 million of maximum borrowing capacity at the Federal Home Loan Bank, demonstrating ample liquidity. In addition, market values associated with our securities available for sale improved during 2023, resulting in a lower level of unrealized losses, which were 7.8% of total stockholders’ equity at December 31, 2023, compared to 11.2% at December 31, 2022. We remain confident that we have sufficient liquidity to navigate a more complex economic environment while continuing to support our growth strategies and capital allocation priorities and maintain the available for sale investment portfolio."
Middlefield's CRE portfolio included the following categories at December 31, 2023:
*CRE Category* *Balance*
(in thousands) *Percent of CRE Portfolio* *Percent of Loan Portfolio*
Multi-Family $ 82,506 12.4 % 5.6 %
Office Space $ 81,032 12.1 % 5.5 %
Shopping Plazas $ 75,024 11.3 % 5.1 %
Self-Storage $ 60,233 9.0 % 4.1 %
Hospitality $ 40,155 6.0 % 2.7 %
Senior Living $ 37,543 5.6 % 2.5 %
Other $ 291,138 43.6 % 19.7 %
Total CRE $ 667,631 100.0 % 45.2 %
*
*
*Stockholders' Equity and Dividends*
At December 31, 2023, stockholders' equity was $205.7 million compared to $197.7 million at December 31, 2022. The 4.0% 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 acquisition of stock under the Company's stock repurchase program. On a per-share basis, shareholders' equity at December 31, 2023, was $25.41 compared to $23.98 at December 31, 2022.
At December 31, 2023, tangible stockholders' equity^(1) was $162.7 million, compared to $158.3 million at December 31, 2022. On a per-share basis, tangible stockholders' equity^(1) was $20.10 at December 31, 2023, compared to $19.19 at December 31, 2022. ^(1)See non-GAAP reconciliation under the section “GAAP to Non-GAAP Reconciliations”.
For the 2023 full year, the Company declared cash dividends of $0.85 per share, a 4.9% increase from $0.81 per share for the same period last year. In the 2023 fourth quarter, the Company declared a $0.05 special cash dividend in addition to its regular cash dividend payment of $0.20. The Company declared a $0.10 special cash dividend in the 2022 fourth quarter.
At December 31, 2023, the Company had an equity-to-assets ratio of 11.28%, compared to 11.71% at December 31, 2022.
*Asset Quality*
For the 2023 twelve-month period and fourth quarter, the Company recorded provisions for credit losses of $3.0 million and $0.6 million, respectively, versus no provisions for credit losses for the same periods last year. The increase is due to the January 1, 2023 adoption of ASU 2016-13, Financial Instruments – Credit Losses – Topic (326): Measurement of Credit Losses on Financial Instruments. Upon adoption, the reserve for credit losses increased by $5.4 million.
For the year ended December 31, 2023, the Company had net recoveries of $31,000, or 0.00% of average loans, annualized, compared to net recoveries of $96,000, or 0.01% of average loans, annualized, for the year ended December 31, 2022. Net recoveries were $117,000 or 0.03% of average loans, annualized, during the 2023 fourth quarter, compared to net charge-offs of $94,000, or 0.03% of average loans, annualized, at December 31, 2022.
Nonperforming loans at December 31, 2023, were $10.9 million, compared to $2.1 million at December 31, 2022. Nonperforming assets at December 31, 2023, were $10.9 million, compared to $7.9 million at December 31, 2022. The allowance for credit losses at December 31, 2023, stood at $21.7 million, or 1.47% of total loans, compared to $14.4 million, or 1.07% of total loans at December 31, 2022.
*About Middlefield Banc Corp.*
Middlefield Banc Corp., headquartered in Middlefield, Ohio, is the Bank holding Company of The Middlefield Banking Company, with total assets of $1.82 billion at December 31, 2023. The Bank operates 21 full-service banking centers and an LPL Financial® brokerage office serving Ada, Beachwood, Bellefontaine, Chardon, Cortland, Dublin, Garrettsville, Kenton, Mantua, Marysville, Middlefield, Newbury, Orwell, Plain City, Powell, Solon, Sunbury, Twinsburg, and Westerville. The Bank also operates a Loan Production Office in Mentor, Ohio.
Additional information is available at www.middlefieldbank.bank
*NON-GAAP FINANCIAL MEASURES*
*This press release includes disclosure of Middlefield Banc Corp.'s tangible book value per share, return on average tangible equity, and pre-tax, pre-provision for loan losses income, which are financial measures not prepared in accordance with generally accepted accounting principles in the United States (GAAP). A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed by GAAP. Middlefield Banc Corp. believes that these non-GAAP financial measures provide both management and investors a more complete understanding of the underlying operational results and trends and Middlefield Banc Corp.'s marketplace performance. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with GAAP. The reconciliations of non-GAAP financial measures are included in the tables following Consolidated Financial Highlights below.*
*FORWARD-LOOKING STATEMENTS*
This press release of Middlefield Banc Corp. and the reports Middlefield Banc Corp. files with the Securities and Exchange Commission often contain "forward-looking statements" relating to present or future trends or factors affecting the banking industry and, specifically, the financial operations, markets and products of Middlefield Banc Corp. These forward-looking statements involve certain risks and uncertainties. There are a number of important factors that could cause Middlefield Banc Corp.'s future results to differ materially from historical performance or projected performance. These factors include, but are not limited to: (1) a significant increase in competitive pressures among financial institutions; (2) changes in the interest rate environment that may reduce interest margins; (3) changes in prepayment speeds, charge-offs and loan loss provisions; (4) less favorable than expected general economic conditions; (5) legislative or regulatory changes that may adversely affect businesses in which Middlefield Banc Corp. is engaged; (6) technological issues which may adversely affect Middlefield Banc Corp.'s financial operations or customers; (7) changes in the securities markets; or (8) risk factors mentioned in the reports and registration statements Middlefield Banc Corp. files with the Securities and Exchange Commission. Middlefield Banc Corp. undertakes no obligation to release revisions to these forward-looking statements or to reflect events or circumstances after the date of this press release.*MIDDLEFIELD BANC CORP.*
*Consolidated Selected Financial Highlights*
(Dollar amounts in thousands, unaudited) *December 31,* *September 30,* *June 30,* *March 31,* *December 31,*
*Balance Sheets (period end)* *2023* *2023* *2023* *2023* *2022*
ASSETS
Cash and due from banks $ 56,397 $ 56,228 $ 49,422 $ 59,609 $ 51,404
Federal funds sold 4,439 9,274 9,654 7,048 2,405
Cash and cash equivalents 60,836 65,502 59,076 66,657 53,809
Investment securities available for sale, at fair value 170,779 159,414 167,209 169,605 164,967
Other investments 955 958 711 777 915
Loans held for sale - 632 171 104 -
Loans:
Commercial real estate:
Owner occupied 183,545 185,593 187,919 185,661 191,748
Non-owner occupied 401,580 382,676 385,846 400,314 380,580
Multifamily 82,506 82,578 58,579 63,892 58,251
Residential real estate 328,854 321,331 312,196 306,179 296,308
Commercial and industrial 221,508 214,334 209,349 195,024 195,602
Home equity lines of credit 127,818 127,494 126,894 126,555 128,065
Construction and other 125,105 127,106 118,851 97,406 94,199
Consumer installment 7,214 7,481 9,801 7,816 8,119
Total loans 1,478,130 1,448,593 1,409,435 1,382,847 1,352,872
Less allowance for credit losses 21,693 20,986 20,591 20,162 14,438
Net loans 1,456,437 1,427,607 1,388,844 1,362,685 1,338,434
Premises and equipment, net 21,339 21,708 21,629 21,775 21,961
Goodwill 36,356 36,197 36,197 31,735 31,735
Core deposit intangibles 6,642 6,906 7,171 7,436 7,701
Bank-owned life insurance 34,349 34,153 34,235 34,015 33,811
Other real estate owned - 5,792 5,792 5,792 5,821
Accrued interest receivable and other assets 35,190 34,551 30,472 27,258 28,528
TOTAL ASSETS $ 1,822,883 $ 1,793,420 $ 1,751,507 $ 1,727,839 $ 1,687,682 *December 31,* *September 30,* *June 30,* *March 31,* *December 31,* *2023* *2023* *2023* *2023* *2022*
LIABILITIES
Deposits:
Noninterest-bearing demand $ 401,384 $ 424,055 $ 441,102 $ 474,977 $ 503,907
Interest-bearing demand 205,582 243,973 229,633 196,086 164,677
Money market 274,682 275,766 241,537 221,723 187,498
Savings 210,639 216,453 231,508 287,859 307,917
Time 334,315 296,732 287,861 244,962 238,020
Total deposits 1,426,602 1,456,979 1,431,641 1,425,607 1,402,019
Federal Home Loan Bank advances 163,000 118,000 100,000 85,000 65,000
Other borrowings 11,862 11,912 11,961 12,010 12,059
Accrued interest payable and other liabilities 15,738 12,780 10,678 10,057 10,913
TOTAL LIABILITIES 1,617,202 1,599,671 1,554,280 1,532,674 1,489,991
STOCKHOLDERS' EQUITY
Common stock, no par value; 25,000,000 shares authorized, 9,930,704
shares issued, 8,095,252 shares outstanding as of December 31, 2023 161,388 161,312 161,211 161,248 161,029
Retained earnings 100,237 98,717 96,500 93,024 94,154
Accumulated other comprehensive loss (16,090 ) (26,426 ) (20,630 ) (19,253 ) (22,144 )
Treasury stock, at cost; 1,835,452 shares as of December 31, 2023 (39,854 ) (39,854 ) (39,854 ) (39,854 ) (35,348 )
TOTAL STOCKHOLDERS' EQUITY 205,681 193,749 197,227 195,165 197,691
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,822,883 $ 1,793,420 $ 1,751,507 $ 1,727,839 $ 1,687,682
*MIDDLEFIELD BANC CORP.*
*Consolidated Selected Financial Highlights*
(Dollar amounts in thousands, unaudited) *For the Three Months Ended* *For the Twelve Months Ended* *December 31,* *September 30,* *June 30,* *March 31,* *December 31,* *December 31,* *December 31,*
*Statements of Income* *2023* *2023* *2023* *2023* *2022* *2023* *2022*
INTEREST AND DIVIDEND INCOME
Interest and fees on loans $ 22,027 $ 20,899 $ 20,762 $ 18,275 $ 14,368 $ 81,963 $ 48,513
Interest-earning deposits in other institutions 370 300 369 250 240 1,289 472
Federal funds sold 94 266 158 253 119 771 219
Investment securities:
Taxable interest 479 477 479 458 477 1,893 1,811
Tax-exempt interest 976 980 978 980 986 3,914 3,707
Dividends on stock 144 148 91 88 68 471 184
Total interest and dividend income 24,090 23,070 22,837 20,304 16,258 90,301 54,906
INTEREST EXPENSE
Deposits 6,522 5,632 3,851 2,990 1,771 18,995 4,018
Short-term borrowings 2,013 1,258 1,462 653 263 5,386 307
Other borrowings 179 213 170 155 142 717 404
Total interest expense 8,714 7,103 5,483 3,798 2,176 25,098 4,729
NET INTEREST INCOME 15,376 15,967 17,354 16,506 14,082 65,203 50,177
Provision for credit losses 554 1,127 814 507 - 3,002 -
NET INTEREST INCOME AFTER PROVISION
FOR CREDIT LOSSES 14,822 14,840 16,540 15,999 14,082 62,201 50,177
NONINTEREST INCOME
Service charges on deposit accounts 997 954 940 987 976 3,878 3,850
Loss on equity securities (4 ) 48 (67 ) (138 ) (77 ) (161 ) (173 )
(Loss) gain on other real estate owned (172 ) - - 2 - (170 ) -
Earnings on bank-owned life insurance 196 207 220 200 137 823 459
Gain (loss) on sale of loans 23 45 6 23 (4 ) 97 24
Revenue from investment services 193 190 174 186 147 743 674
Gross rental income 132 110 77 102 951 421 951
Other income 237 263 242 318 284 1,060 961
Total noninterest income 1,602 1,817 1,592 1,680 2,414 6,691 6,746
NONINTEREST EXPENSE
Salaries and employee benefits 6,646 5,994 6,019 5,852 4,886 24,511 17,548
Occupancy expense 512 699 659 696 487 2,566 2,033
Equipment expense 273 297 354 317 252 1,241 1,074
Data processing costs 1,348 1,209 1,137 1,070 1,050 4,764 3,701
Ohio state franchise tax 397 398 398 385 279 1,578 1,157
Federal deposit insurance expense 285 207 249 120 105 861 329
Professional fees 660 545 550 538 382 2,293 1,500
Other real estate owned writedowns - - - - 1,000 - 1,200
Advertising expense 162 414 415 486 308 1,477 1,033
Software amortization expense 22 24 23 26 28 95 143
Core deposit intangible amortization 264 265 265 265 140 1,059 372
Gross other real estate owned expenses 120 195 63 132 692 510 707
Merger-related costs - 22 206 245 1,413 473 2,382
Other expense 1,483 1,849 1,716 1,661 1,321 6,709 4,851
Total noninterest expense 12,172 12,118 12,054 11,793 12,343 48,137 38,030
Income before income taxes 4,252 4,539 6,078 5,886 4,153 20,755 18,893
Income taxes 709 703 986 989 651 3,387 3,220
NET INCOME $ 3,543 $ 3,836 $ 5,092 $ 4,897 $ 3,502 $ 17,368 $ 15,673
PTPP^(1) $ 4,806 $ 5,666 $ 6,892 $ 6,393 $ 4,153 $ 23,757 $ 18,893
^(1)See section “GAAP to Non-GAAP Reconciliations” for the reconciliation of GAAP performance measures to non-GAAP measures.
*MIDDLEFIELD BANC CORP.*
*Consolidated Selected Financial Highlights*
(Dollar amounts in thousands, except per share and share amounts, unaudited) *For the Three Months Ended* *For the Twelve Months Ended* *December 31,* *September 30,* *June 30,* *March 31,* *December 31,* *December 31,* *December 31,* *2023* *2023* *2023* *2023* *2022* *2023* *2022*
*Per common share data*
Net income per common share - basic $ 0.44 $ 0.47 $ 0.63 $ 0.60 $ 0.53 $ 2.14 $ 2.60
Net income per common share - diluted $ 0.44 $ 0.47 $ 0.63 $ 0.60 $ 0.53 $ 2.14 $ 2.59
Dividends declared per share $ 0.25 $ 0.20 $ 0.20 $ 0.20 $ 0.30 $ 0.85 $ 0.81
Book value per share (period end) $ 25.41 $ 23.94 $ 24.38 $ 24.13 $ 23.98 $ 25.41 $ 23.98
Tangible book value per share (period end)^(1) (2) $ 20.10 $ 18.62 $ 19.02 $ 19.29 $ 19.19 $ 20.10 $ 19.19
Dividends declared $ 2,023 $ 1,619 $ 1,616 $ 1,605 $ 2,514 $ 6,864 $ 5,490
Dividend yield 3.06 % 3.12 % 2.99 % 2.89 % 4.34 % 2.63 % 2.96 %
Dividend payout ratio 57.10 % 42.21 % 31.74 % 32.78 % 71.79 % 39.52 % 37.23 %
Average shares outstanding - basic 8,093,478 8,092,494 8,088,793 8,138,771 6,593,616 8,103,230 6,027,091
Average shares outstanding - diluted 8,116,609 8,101,306 8,101,984 8,152,629 6,610,907 8,126,361 6,044,382
Period ending shares outstanding 8,095,252 8,092,576 8,088,793 8,088,793 8,245,235 8,095,252 8,245,235
*Selected ratios*
Return on average assets (Annualized) 0.78 % 0.86 % 1.17 % 1.16 % 0.97 % 0.99 % 1.17 %
Return on average equity (Annualized) 7.13 % 7.73 % 10.41 % 10.19 % 9.35 % 8.83 % 11.25 %
Return on average tangible common equity^(1) (3) 9.11 % 9.91 % 13.12 % 12.77 % 11.13 % 11.20 % 12.95 %
Efficiency^(4) 68.99 % 65.65 % 61.27 % 62.44 % 72.75 % 64.49 % 64.96 %
Equity to assets at period end 11.28 % 10.80 % 11.26 % 11.30 % 11.71 % 11.28 % 11.71 %
Noninterest expense to average assets 0.68 % 0.68 % 0.69 % 0.69 % 0.86 % 2.74 % 2.84 %
^(1)See section “GAAP to Non-GAAP Reconciliations” for the reconciliation of GAAP performance measures to non-GAAP measures.
^(2)Calculated by dividing tangible common equity by shares outstanding.
^(3)Calculated by dividing annualized net income for each period by average tangible common equity.
^(4)The efficiency ratio is calculated by dividing noninterest expense less amortization of intangibles by the sum of net interest income on a fully taxable equivalent basis plus noninterest income.
*MIDDLEFIELD BANC CORP.*
*Consolidated Selected Financial Highlights*
(Unaudited) *For the Three Months Ended* *For the Twelve Months Ended* *December 31,* *September 30,* *June 30,* *March 31,* *December 31,* *December 31,* *December 31,*
*Yields* *2023* *2023* *2023* *2023* *2022* *2023* *2022*
*Interest-earning assets:*
Loans receivable^(1) 6.01 % 5.82 % 5.96 % 5.45 % 5.11 % 5.82 % 4.79 %
Investment securities^(1) 4.26 % 4.09 % 4.08 % 4.11 % 3.83 % 4.13 % 3.73 %
Interest-earning deposits with other banks 3.71 % 4.13 % 3.98 % 3.46 % 3.42 % 3.82 % 1.31 %
Total interest-earning assets 5.76 % 5.58 % 5.69 % 5.22 % 4.88 % 5.57 % 4.45 %
*Deposits:*
Interest-bearing demand deposits 1.67 % 1.51 % 1.11 % 0.83 % 0.83 % 1.32 % 0.34 %
Money market deposits 3.58 % 2.94 % 2.21 % 1.52 % 1.00 % 2.65 % 0.61 %
Savings deposits 0.59 % 0.58 % 0.73 % 1.03 % 0.49 % 0.76 % 0.20 %
Certificates of deposit 3.68 % 3.27 % 2.35 % 1.71 % 1.30 % 2.83 % 1.00 %
Total interest-bearing deposits 2.56 % 2.16 % 1.60 % 1.28 % 0.87 % 1.92 % 0.51 %
*Non-Deposit Funding:*
Borrowings 5.57 % 5.66 % 5.26 % 4.78 % 4.25 % 5.40 % 3.35 %
Total interest-bearing liabilities 2.96 % 2.48 % 2.02 % 1.52 % 1.02 % 2.28 % 0.59 %
Cost of deposits 1.81 % 1.53 % 1.09 % 0.84 % 0.57 % 1.32 % 0.34 %
Cost of funds 2.18 % 1.80 % 1.43 % 1.02 % 0.68 % 1.62 % 0.40 %
Net interest margin^(2) 3.70 % 3.88 % 4.34 % 4.26 % 4.23 % 4.04 % 4.08 %
^(1)Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were determined using an effective tax rate of 21%.
^(2)Net interest margin represents net interest income as a percentage of average interest-earning assets. *For the Three Months Ended* *December 31,* *September 30,* *June 30,* *March 31,* *December 31,*
*Asset quality data* *2023* *2023* *2023* *2023* *2022*
(Dollar amounts in thousands, unaudited)
Nonperforming loans^(1) $ 10,877 $ 7,717 $ 7,116 $ 6,882 $ 2,111
Other real estate owned - 5,792 5,792 5,792 5,821
Nonperforming assets $ 10,877 $ 13,509 $ 12,908 $ 12,674 $ 7,932
Allowance for credit losses $ 21,693 $ 20,986 $ 20,591 $ 20,162 $ 14,438
Allowance for credit losses/total loans 1.47 % 1.45 % 1.46 % 1.46 % 1.07 %
Net charge-offs (recoveries):
Quarter-to-date $ (117 ) $ (16 ) $ 111 $ (8 ) $ 94
Year-to-date (31 ) 87 103 (8 ) (96 )
Net charge-offs (recoveries) to average loans, annualized:
Quarter-to-date (0.03 %) 0.00 % 0.03 % 0.00 % 0.03 %
Year-to-date 0.00 % 0.01 % 0.01 % 0.00 % (0.01 %)
Nonperforming loans/total loans 0.74 % 0.53 % 0.50 % 0.50 % 0.16 %
Allowance for credit losses/nonperforming loans 199.44 % 271.95 % 289.36 % 292.97 % 683.94 %
Nonperforming assets/total assets 0.60 % 0.75 % 0.74 % 0.73 % 0.47 %
^(1)On January 1, 2023, the Company adopted ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. As a result, nonperforming loans for the periods after January 1, 2023, include certain loans which were modified to borrowers experiencing financial difficulty. Amounts prior to January 1, 2023, exclude nonperforming troubled debt restructurings that were performing in according with their terms over a prescribed period of time, for which accounting guidance was eliminated upon adoption of ASU 2022-02.
*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) *December 31,* *September 30,* *June 30,* *March 31,* *December 31,* *2023* *2023* *2023* *2023* *2022*
Stockholders' equity $ 205,681 $ 193,749 $ 197,227 $ 195,165 $ 197,691
Less goodwill and other intangibles 42,998 43,103 43,368 39,171 39,436
Tangible common equity $ 162,683 $ 150,646 $ 153,859 $ 155,994 $ 158,255
Shares outstanding 8,095,252 8,092,576 8,088,793 8,088,793 8,245,235
Tangible book value per share $ 20.10 $ 18.62 $ 19.02 $ 19.29 $ 19.19
*Reconciliation of Average Equity to Return on Average Tangible Common Equity*
*For the Three Months Ended* *For the Twelve Months Ended* *December 31,* *September 30,* *June 30,* *March 31,* *December 31,* *December 31,* *December 31,* *2023* *2023* *2023* *2023* *2022* *2023* *2022*
Average stockholders' equity $ 197,208 $ 196,795 $ 196,183 $ 194,814 $ 148,616 $ 196,602 $ 139,270
Less average goodwill and other intangibles 42,972 43,232 40,522 39,300 23,731 41,507 18,200
Average tangible common equity $ 154,236 $ 153,563 $ 155,661 $ 155,514 $ 124,885 $ 155,095 $ 121,070
Net income $ 3,543 $ 3,836 $ 5,092 $ 4,897 $ 3,502 $ 17,368 $ 15,673
Return on average tangible common equity (annualized) 9.11 % 9.91 % 13.12 % 12.77 % 11.13 % 11.20 % 12.95 %
*Reconciliation of Pre-Tax Pre-Provision Income (PTPP)*
*For the Three Months Ended* *For the Twelve Months Ended* *December 31,* *September 30,**
* *June 30,* *March 31,* *December 31,* *December 31,* *December 31,* *2023* *2023* *2023* *2023* *2022* *2023* *2022*
Net income $ 3,543 $ 3,836 $ 5,092 $ 4,897 $ 3,502 $ 17,368 $ 15,673
Add income taxes 709 703 986 989 651 3,387 3,220
Add provision for credit losses 554 1,127 814 507 - 3,002 -
PTPP $ 4,806 $ 5,666 $ 6,892 $ 6,393 $ 4,153 $ 23,757 $ 18,893
*MIDDLEFIELD BANC CORP.*
*Average Balance Sheets*
(Dollar amounts in thousands, unaudited) *For the Three Months Ended* *December 31,* *December 31,* *2023* *2022* Average Average Average Average Balance Interest Yield/Cost Balance Interest Yield/Cost
Interest-earning assets:
Loans receivable ⁽¹⁾ $ 1,454,688 $ 22,027 6.01 % $ 1,117,221 $ 14,368 5.11 %
Investment securities ⁽¹⁾ 159,493 1,455 4.26 % 178,772 1,463 3.83 %
Interest-earning deposits with other banks ⁽²⁾ 64,989 608 3.71 % 49,569 427 3.42 %
Total interest-earning assets 1,679,170 24,090 5.76 % 1,345,562 16,258 4.88 %
Noninterest-earning assets 116,160 89,740
Total assets $ 1,795,330 $ 1,435,302
Interest-bearing liabilities:
Interest-bearing demand deposits $ 222,517 $ 935 1.67 % $ 165,267 $ 344 0.83 %
Money market deposits 276,354 2,493 3.58 % 172,437 435 1.00 %
Savings deposits 211,997 317 0.59 % 266,613 330 0.49 %
Certificates of deposit 299,427 2,777 3.68 % 201,972 662 1.30 %
Short-term borrowings 144,344 2,013 5.53 % 25,750 263 4.05 %
Other borrowings 11,890 179 5.97 % 12,086 142 4.66 %
Total interest-bearing liabilities 1,166,529 8,714 2.96 % 844,125 2,176 1.02 %
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits 422,151 428,155
Other liabilities 9,442 14,406
Stockholders' equity 197,208 148,616
Total liabilities and stockholders' equity $ 1,795,330 $ 1,435,302
Net interest income $ 15,376 $ 14,082
Interest rate spread ⁽³⁾ 2.80 % 3.86 %
Net interest margin ⁽⁴⁾ 3.70 % 4.23 %
Ratio of average interest-earning assets to average interest-bearing liabilities 143.95 % 159.40 %
^(1)Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $282 and $278 for the three months ended December 31, 2023 and 2022, respectively.
^(2)Includes dividends received on restricted stock.
^(3)Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
^(4)Net interest margin represents net interest income as a percentage of average interest-earning assets. *For the Three Months Ended* *December 31,* *September 30,* *2023* *2023* Average Average Average Average Balance Interest Yield/Cost Balance Interest Yield/Cost
Interest-earning assets:
Loans receivable ⁽¹⁾ $ 1,454,688 $ 22,027 6.01 % $ 1,425,375 $ 20,899 5.82 %
Investment securities ⁽¹⁾ 159,493 1,455 4.26 % 166,671 1,457 4.09 %
Interest-earning deposits with other banks ⁽²⁾ 64,989 608 3.71 % 68,587 714 4.13 %
Total interest-earning assets 1,679,170 24,090 5.76 % 1,660,633 23,070 5.58 %
Noninterest-earning assets 116,160 115,353
Total assets $ 1,795,330 $ 1,775,986
Interest-bearing liabilities:
Interest-bearing demand deposits $ 222,517 $ 935 1.67 % $ 256,153 $ 975 1.51 %
Money market deposits 276,354 2,493 3.58 % 259,802 1,928 2.94 %
Savings deposits 211,997 317 0.59 % 225,216 327 0.58 %
Certificates of deposit 299,427 2,777 3.68 % 291,409 2,402 3.27 %
Short-term borrowings 144,344 2,013 5.53 % 91,201 1,258 5.47 %
Other borrowings 11,890 179 5.97 % 11,940 213 7.08 %
Total interest-bearing liabilities 1,166,529 8,714 2.96 % 1,135,721 7,103 2.48 %
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits 422,151 431,775
Other liabilities 9,442 11,695
Stockholders' equity 197,208 196,795
Total liabilities and stockholders' equity $ 1,795,330 $ 1,775,986
Net interest income $ 15,376 $ 15,967
Interest rate spread ⁽³⁾ 2.80 % 3.10 %
Net interest margin ⁽⁴⁾ 3.70 % 3.88 %
Ratio of average interest-earning assets to average interest-bearing liabilities 143.95 % 146.22 %
^(1)Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $282 and $270 for the three months ended December 31, 2023 and September 30, 2023, respectively.
^(2)Includes dividends received on restricted stock.
^(3)Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
^(4)Net interest margin represents net interest income as a percentage of average interest-earning assets. *For the Twelve Months Ended* *December 31,* *December 31,* *2023* *2022* Average Average Average Average Balance Interest Yield/Cost Balance Interest Yield/Cost
Interest-earning assets:
Loans receivable ⁽¹⁾ $ 1,410,251 $ 81,963 5.82 % $ 1,014,896 $ 48,513 4.79 %
Investment securities ⁽¹⁾ 165,910 5,807 4.13 % 174,514 5,518 3.73 %
Interest-earning deposits with other banks ⁽²⁾ 66,295 2,531 3.82 % 67,030 875 1.31 %
Total interest-earning assets 1,642,456 90,301 5.57 % 1,256,440 54,906 4.45 %
Noninterest-earning assets 116,459 84,484
Total assets $ 1,758,915 $ 1,340,924
Interest-bearing liabilities:
Interest-bearing demand deposits $ 217,662 $ 2,870 1.32 % $ 164,569 $ 554 0.34 %
Money market deposits 244,765 6,498 2.65 % 174,377 1,055 0.61 %
Savings deposits 253,962 1,925 0.76 % 259,225 527 0.20 %
Certificates of deposit 272,443 7,702 2.83 % 188,617 1,882 1.00 %
Short-term borrowings 101,088 5,386 5.33 % 8,576 307 3.58 %
Other borrowings 11,965 717 5.99 % 12,626 404 3.20 %
Total interest-bearing liabilities 1,101,885 25,098 2.28 % 807,990 4,729 0.59 %
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits 449,102 386,296
Other liabilities 11,326 7,368
Stockholders' equity 196,602 139,270
Total liabilities and stockholders' equity $ 1,758,915 $ 1,340,924
Net interest income $ 65,203 $ 50,177
Interest rate spread ⁽³⁾ 3.29 % 3.86 %
Net interest margin ⁽⁴⁾ 4.04 % 4.08 %
Ratio of average interest-earning assets to average interest-bearing liabilities 149.06 % 155.50 %
^(1)Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $1,106 and $1,046 for the twelve months ended December 31, 2023 and 2022, respectively.
^(2)Includes dividends received on restricted stock.
^(3)Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
^(4)Net interest margin represents net interest income as a percentage of average interest-earning assets.
*Company Contact:* *Investor and Media Contact:*
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