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8-K - FORM 8-K - MIDDLEFIELD BANC CORPd717061d8k.htm

Exhibit 99

 

LOGO

15985 East High Street

P. O. Box 35

Middlefield, Ohio 44062

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

www.middlefieldbank.com

PRESS RELEASE

 

Contact: James R. Heslop, 2nd

Executive Vice President/Chief Operating Officer

(440) 632-1666 Ext. 3219

jheslop@middlefieldbank.com

Middlefield Banc Corp. Reports Net Income of $1.76 million for the First Quarter of 2014

MIDDLEFIELD, OHIO, April 25, 2014 ¿¿¿¿ Middlefield Banc Corp. (OTCQB: MBCN), parent of The Middlefield Banking Company, today reported net income for the first quarter of 2014 of $1.76 million, or $0.86 per diluted share. This compares to net income of $1.66 million, or $0.82 per diluted share, for the first quarter of 2013.

“Our capability to produce consistent financial results clearly demonstrates the strength of our company,” stated Thomas G. Caldwell, President and Chief Executive Officer. “Our performance in the first quarter was driven by an improved net interest margin, improved credit quality, and expansion of our loan portfolio.”

“Moving forward into 2014,” Caldwell continued, “we believe that we are well positioned to address the continued environment of historically low interest rates and the increased burden of regulatory costs. We remain focused on delivering excellence in customer service, increasing value to our shareholders, and operating our company in accordance with safe and sound banking practices.”

First quarter highlights include:

 

    Total net loans increased 9.4% from the first quarter of 2013 and 1.9% compared to the fourth quarter of 2013.

 

    The net interest margin was 4.20% for the first quarter of 2014, compared to 3.92% for the same period of 2013. The yield on earning assets increased 2 basis points, while the cost of interest-bearing liabilities decreased 28 basis points from the year ago period.

 

    The provision for loan and leases losses for the first quarter of 2014 was $0.2 million compared to $0.3 million for the 2013 comparable period. The current quarter’s charge was the result of lower historical charge-offs and improved credit metrics over the preceding 12 months.

 

    Nonperforming assets totaled $13.4 million at March 31, 2014. At the same point of 2013 nonperforming assets equaled $16.1 million.


Annualized return on average equity (“ROE”) and average assets (“ROA”) for the 2014 quarter were 13.10% and 1.08%, respectively. For the first quarter of 2013, ROE was 12.18%, with the ROA being 1.01%.

Income Statement

Net interest income for the first quarter of 2014 increased 6.6%, or $0.4 million, compared to the first quarter of 2013. This increase was driven by the increase in average net loans and a reduction in funding costs, primarily time deposits. This activity resulted in a net interest margin of 4.20% for the first quarter of 2014 compared to 3.92% for the first quarter of 2013.

Noninterest income decreased 17.6% to $0.7 million for the first quarter of 2014. This decrease was driven by a reduction in gains on investment securities transactions of $0.2 million.

Noninterest expense was up $0.2 million, or 5.7%, from the year ago quarter. Salaries and benefits, the company’s largest noninterest expense, was the leading factor in the increase and was directly related to the growth of the company. Higher levels of occupancy and equipment expense were, in part, offset by decreases in franchise tax, FDIC insurance premiums, and expenses related to other real estate owned. The non-GAAP efficiency ratio was 59.90% for the first quarter of 2014 compared to 58.57% for the first quarter of 2013.

“We have taken the opportunity to reposition our balance sheet by permitting a reduction in higher cost funding sources. This effort afforded us the ability to maintain our levels of net interest margin. Moving forward into 2014, we do anticipate continued pressure on margin levels,” stated Donald L. Stacy, Chief Financial Officer. “We are committed to executing our plan of growing our base of quality client relationships. We fully expect that this focus will continue to add value for our shareholders.”

Balance Sheet

The company’s total assets ended the first quarter of 2014 at $670.0 million, an increase of 0.5% from the $667.0 million in total assets reported at March 31, 2013. Net loans at March 31, 2014, were $436.7 million, up $37.4 million, or 9.4%, over the $399.3 million reported at March 31, 2013. Total deposits at the end of the first quarter of 2014 were $594.8 million, or 0.6% above the deposit level of $591.5 million at March 31, 2013. The investment portfolio, which is entirely classified as available for sale, stood at $155.9 million at March 31, 2014. This figure represented a reduction in the portfolio of $34.7 million from the year ago quarter end.

The company experienced growth in all loan categories. Residential real estate loans increased $16.7 million year-over-year, with commercial real estate loans experiencing growth of $14.7 million. Noninterest-bearing deposits grew $15.6 million when compared to the end of the first quarter of 2013. During the same 12 month period, time deposits increased $1.8 million. These gains were offset by a decrease of $14.2 million, year-over-year, in all other interest-bearing deposit categories.

Shareholders’ Equity

Tangible book value per share increased from $25.35 per share at March 31, 2013 to $25.52 per share at March 31, 2014. The increase is the result of a higher level of retained earnings offset by cash dividends paid to shareholders. During the 2014 first quarter, the company paid cash dividends of $0.26 per share, which equaled the amount paid in first quarter 2013. At March 31, 2014, the company had a Tier 1 leverage ratio of 9.15%. At the same point of 2013, the ratio stood at 8.22%.


Asset Quality

The provision for loan losses for the 2014 first quarter was $0.2 million, compared to the $0.3 million posted for the 2013 period. Net charge-offs for the first quarter of 2014 were $0.2 million, or an annualized 0.19% of average loans. For the first three months of 2013, net charge-offs totaled $0.4 million, which equaled an annualized 0.36% of average loans. At March 31, 2014, the allowance for loan losses was $7.0 million, representing 1.58% of total loans.

The following table provides a summary of asset quality and reserve coverage ratios.

 

     Asset Quality History  
     (dollars in thousands)  
     3/31/2014     12/31/2013     3/31/2013     12/31/2012     12/31/2011  

Nonperforming loans

   $ 10,741      $ 12,290      $ 13,899      $ 14,194      $ 24,546   

Real estate owned

     2,656        2,698        2,155        1,846        2,196   

Nonperforming assets

   $ 13,397      $ 14,988      $ 16,054      $ 16,040      $ 26,742   

Allowance for loan losses

   $ 7,015      $ 7,046      $ 7,732      $ 7,779      $ 6,819   

Ratios:

          

Nonperforming loans to total loans

     2.42     2.82     3.41     3.48     6.12

Nonperforming assets to total assets

     2.00     2.32     2.41     2.39     4.09

Allowance for loan losses to total loans

     1.58     1.62     1.90     1.90     1.70

Allowance for loan losses to nonperforming loans

     65.31     57.33     55.63     54.80     27.78

Middlefield Banc Corp., headquartered in Middlefield, Ohio, is a bank holding company with total assets of $670.0 million. On January 20, 2014, the company consolidated its Emerald Bank subsidiary into the company’s lead bank, The Middlefield Banking Company. The bank operates 10 full service banking centers and a LPL Financial® brokerage office serving Chardon, Cortland, Dublin, Garrettsville, Mantua, Middlefield, Newbury, Orwell, and Westerville. Additional information is available at www.middlefieldbank.com.

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

March 31, 2014 and 2013 and December 31, 2013

 

Balance Sheet (period end)

   March 31,     December 31,     March 31,  
(Dollar amounts in thousands)    2014     2013     2013  
(unaudited)                   

Assets

      

Cash and due from banks

   $ 28,663      $ 20,926      $ 32,426   

Federal funds sold

     14,147        5,267        13,204   
  

 

 

   

 

 

   

 

 

 

Cash and cash equivalents

     42,810        26,193        45,630   

Investment securities available for sale

     155,940        157,143        190,687   

Loans:

     443,729        435,725        407,054   

Less: reserve for loan losses

     7,015        7,046        7,732   
  

 

 

   

 

 

   

 

 

 

Net loans

     436,714        428,679        399,322   

Premises and equipment

     9,797        9,828        8,694   

Goodwill

     4,559        4,559        4,559   

Core deposit intangible

     146        156        184   

Bank-owned life insurance

     8,883        8,816        8,604   

Accrued interest receivable and other assets

     11,173        11,716        9,294   
  

 

 

   

 

 

   

 

 

 

Total Assets

   $ 670,022        647,090        666,974   
  

 

 

   

 

 

   

 

 

 
     March 31,     December 31,     March 31,  
     2014     2013     2013  

Liabilities and Stockholders’ Equity

      

Noninterest-bearing demand deposits

   $ 88,988      $ 85,905      $ 73,354   

Interest bearing demand deposits

     60,673        53,741        68,060   

Money market accounts

     75,296        77,473        80,051   

Savings deposits

     179,805        177,303        181,872   

Time deposits

     190,004        174,414        188,160   
  

 

 

   

 

 

   

 

 

 

Total Deposits

     594,766        568,836        591,497   

Short-term borrowings

     5,320        10,809        5,240   

Other borrowings

     11,468        11,609        12,779   

Other liabilities

     1,774        2,363        1,608   
  

 

 

   

 

 

   

 

 

 

Total Liabilities

     613,328        593,617        611,124   
  

 

 

   

 

 

   

 

 

 

Common equity

     35,115        34,979        34,697   

Retained earnings

     28,699        27,465        23,622   

Accumulated other comprehensive (loss) income

     (386     (2,237     4,265   

Treasury stock

     (6,734     (6,734     (6,734
  

 

 

   

 

 

   

 

 

 

Total Stockholders’ Equity

     56,694        53,473        55,850   
  

 

 

   

 

 

   

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 670,022      $ 647,090      $ 666,974   
  

 

 

   

 

 

   

 

 

 


MIDDLEFIELD BANC CORP.

Consolidated Selected Financial Highlights

March 31, 2014 and 2013

(Dollar amounts in thousands)

(unaudited)

 

     For the Three Months Ended  
     March 31,  
     2014     2013  

INTEREST INCOME

    

Interest and fees on loans

   $ 5,694      $ 5,572   

Interest-bearing deposits in other institutions

     5        8   

Federal funds sold

     3        4   

Investment securities

    

Taxable interest

     509        674   

Tax-exempt interest

     755        733   

Dividends on stock

     23        23   
  

 

 

   

 

 

 

Total interest income

     6,989        7,014   
  

 

 

   

 

 

 

INTEREST EXPENSE

    

Deposits

     940        1,297   

Short-term borrowings

     35        52   

Other borrowings

     32        46   

Trust preferred securities

     26        34   
  

 

 

   

 

 

 

Total interest expense

     1,033        1,429   
  

 

 

   

 

 

 

NET INTEREST INCOME

     5,956        5,585   

Provision for loan losses

     180        313   
  

 

 

   

 

 

 

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES

     5,776        5,272   
  

 

 

   

 

 

 

NONINTEREST INCOME

    

Service charges on deposits

     441        447   

Investment securities (losses) gains, net

     (6     185   

Earnings on bank-owned life insurance

     67        68   

Other income

     213        168   
  

 

 

   

 

 

 

Total noninterest income

     715        868   
  

 

 

   

 

 

 

NONINTEREST EXPENSE

    

Salaries and employee benefits

     2,016        1,871   

Occupancy expense

     321        274   

Equipment expense

     220        189   

Data processing costs

     214        213   

Ohio state franchise tax

     83        154   

Federal deposit insurance expense

     132        154   

Professional fees

     287        276   

(Gain) loss on sale of other real estate owned

     (5     8   

Advertising expense

     123        112   

Other real estate expense

     63        106   

Directors Fees

     86        105   

Other operating expense

     689        539   
  

 

 

   

 

 

 

Total noninterest expense

     4,229        4,001   
  

 

 

   

 

 

 

Income before income taxes

     2,262        2,139   

Provision for income taxes

     499        482   
  

 

 

   

 

 

 

NET INCOME

   $ 1,763      $ 1,657   
  

 

 

   

 

 

 


     For the Three Months Ended  
     March 31,  
     2014     2013  

Per common share data

    

Net income per common share - basic

   $ 0.87      $ 0.83   

Net income per common share - diluted

   $ 0.86      $ 0.82   

Dividends declared

   $ 0.26      $ 0.26   

Book value per share(period end)

   $ 27.83      $ 27.70   

Tangible book value per share (period end)

   $ 25.52      $ 25.35   

Dividend payout ratio

     30.01     31.38

Average shares outstanding - basic

     2,033,480        1,999,645   

Average shares outstanding - diluted

     2,039,515        2,010,292   

Period ending shares outstanding

     2,037,359        2,016,284   

Selected ratios

    

Return on average assets

     1.08     1.01

Return on average equity

     13.10     12.18

Yield on earning assets

     4.88     4.86

Cost of interest-bearing liabilities

     0.81     1.09

Net interest spread

     4.07     3.78

Net interest margin

     4.20     3.92

Efficiency (1)

     59.90     58.57

Tier 1 capital ratio

     9.15     8.22

 

(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.

 

     March 31,     March 31,  
     2014     2013  

Commercial and industrial

   $ 56,855      $ 55,401   

Real estate - construction

     25,241        22,817   

Real estate - mortgage:

    

Residential

     215,809        199,063   

Commercial

     140,543        125,799   

Consumer installment

     5,281        3,974   
  

 

 

   

 

 

 
     443,729        407,054   
     March 31,     March 31,  

Asset quality data

   2014     2013  
(Dollar amounts in thousands)             

Non-accrual loans

   $ 7,463      $ 9,730   

Troubled debt restructuring

     2,035        3,808   

90 day past due and accruing

     1,243        361   
  

 

 

   

 

 

 

Nonperforming loans

     10,741        13,899   

Other real estate owned

     2,656        2,155   
  

 

 

   

 

 

 

Nonperforming assets

   $ 13,397      $ 16,054   
  

 

 

   

 

 

 

Allowance for loan and lease losses

   $ 7,015      $ 7,732   

Allowance for loan and lease losses/total loans

     1.58     1.90

Net charge-offs:

    

Year-to-date

     211        360   

Net charge-offs to average loans, annualized

    

Year-to-date

     0.19     0.36

Nonperforming loans/total loans

     2.42     3.41

Allowance for loan and lease losses/nonperforming loans

     65.31     55.63