MIDDLEFIELD BANC CORP - FORM 8-K - EX-99

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8-K - 8-K - MIDDLEFIELD BANC CORP	d82549d8k.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.bank

PRESS RELEASE

Company Contact:

Investor and Media Contact:

Thomas G. Caldwell

President/Chief Executive Officer

Middlefield Banc Corp.

(440) 632-1666 Ext. 3200

tcaldwell@middlefieldbank.com

Andrew M. Berger

Managing Director

SM Berger & Company, Inc.

(216) 464-6400

andrew@smberger.com

Middlefield Banc Corp. Reports 2020 Nine Month Financial Results

MIDDLEFIELD, OHIO, October 21, 2020 ◆◆◆◆ Middlefield Banc Corp. (NASDAQ: MBCN) today reported financial results for the three and nine months ended September 30, 2020.

2020 Nine Month Financial Highlights (on a year-over-year basis unless noted):

•

Net interest income up 3.3% to $32.1 million

•

Third quarter net interest income up 7.4% to $11.4 million

•

Noninterest income increased 23.9% to $4.4 million

•

Net income totaled $5.9 million, as the year-to-date provision for loan losses increased from $0.4 million to $7.7 million primarily due to the COVID-19 crisis and the resolution of an isolated commercial loan

•

Book value per share was up 5.3% to a record $22.27 per share

•

Tangible book value⁽¹⁾ per share was up 6.2% to $19.63 per share

•

Total loans increased 1.3% to $1.12 billion during the quarter, from $1.11 billion at June 30, 2020

•

Allowance for loan losses to nonperforming loans was 169.8%, compared to 69.6%

•

Middlefield remains well capitalized with an equity to assets ratio of 10.4% at September 30, 2020

Thomas G. Caldwell, President and Chief Executive Officer, stated: “Middlefield continues to achieve favorable financial results and strong operating performance despite the continued economic impacts of the COVID-19 pandemic. Third quarter financial results benefitted from a 35.0% year-over-year improvement in our cost of funds, a 63.9% year-over-year increase in noninterest income, and an 8.5% year-over-year reduction in noninterest expense. In addition, our third quarter net interest margin increased eight basis points from June 30, 2020.”

“As you can see, we remain focused on managing items under our control, however, Middlefield is not immune from the economic challenges the COVID-19 crisis has had on our customers and communities. During the third quarter, profitability was impacted by a $4.0 million provision for loan losses as we continue increasing our allowance for loan losses primarily due to the COVID-19 pandemic and its effect on the economy, as well as the resolution of an isolated commercial loan.”

“We remain committed to pursuing strategies that support our long-term growth plan, prudently manage risk, and create sustainable value for our shareholders. The growth in loans and deposits over the past three months is encouraging and demonstrates our ability to provide compelling and community-oriented financial services throughout our Northeast Ohio and Central Ohio markets. We are also working to enhance our relationships with new commercial customers that we obtained through the PPP process and we are helping customers through loan forgiveness. In addition, we believe we have additional opportunities to grow noninterest income, further reduce our cost of funds, and manage noninterest expenses in the coming quarters. Our customers have demonstrated their resolve throughout this uncertain economic period, and I want to thank our employees for their dedication serving our local communities,” concluded Mr. Caldwell.

Income Statement

For the 2020 nine months, net interest income increased 3.3% to $32.1 million, compared to $31.1 million for the same period last year. Year-to-date, the net interest margin was 3.56%, compared to 3.69% for the same period last year. Net interest income for the 2020 third quarter was $11.4 million, compared to $10.6 million for the 2019 third quarter. The 7.4% increase in net interest income for the 2020 third quarter was largely a result of a 35.0% decrease in total interest expense. The net interest margin for the 2020 third quarter was 3.57%, compared to 3.72% for the same period of 2019, and 3.49% at June 30, 2020.

For the 2020 nine months, noninterest income increased 23.9% to $4.4 million, compared to $3.5 million for the same period last year primarily due to increased gains on sale of loans. Noninterest income for the 2020 third quarter increased 63.9% to $1.8 million, compared to $1.1 million for the same period last year.

For the 2020 nine months, noninterest expense decreased 3.1% to $22.0 million, compared to $22.7 million for the same period last year. Noninterest expense in the 2020 third quarter decreased 8.5% to $7.0 million from $7.7 million for the 2019 third quarter.

Net income for the 2020 nine months ended September 30, 2020, was $5.9 million, or $0.92 per diluted share, compared to $9.6 million, or $1.47 per diluted share for the same period last year. The decline in net income for the nine months ended September 30, 2020, was primarily due to a $7.3 million increase in the year-to-date provision for loan losses as a result of the COVID-19 crisis and the resolution of an isolated commercial loan. Net income for the 2020 third quarter ended September 30, 2020, was $1.9 million, or $0.29 per diluted share, compared to $3.3 million, or $0.50 per diluted share for the same period last year. The 2020 third quarter provision for loan losses increased $3.9 million, from the prior year period.

Balance Sheet

Total assets at September 30, 2020, increased 6.6% to approximately $1.36 billion from $1.28 billion at September 30, 2019. Net loans at September 30, 2020, were $1.11 billion, compared to $992.3 million at September 30, 2019, and $977.5 million at December 31, 2019. The 12.2% year-over-year improvement in net loans was primarily a result of PPP loans originated during the second and third quarters, as well as organic loan growth.

Total deposits at September 30, 2020, were $1.19 billion, compared to $1.03 billion at September 30, 2019. The 15.4% increase in deposits was driven by PPP deposits and pandemic uncertainty. The investment portfolio, which is entirely classified as available for sale, was $113.0 million at September 30, 2020, compared with $105.0 million at September 30, 2019.

Donald L. Stacy, Chief Financial Officer stated, “Our allowance for loan losses to total loans was 1.01% at September 30, 2020, compared to 0.70% at September 30, 2019. During the quarter, asset quality was negatively affected by one large legacy credit of $2.7 million in the Central Ohio market, which was charged-off during the quarter. The issue is isolated to this borrower and was previously disclosed in early 2019. It is not indicative of a trend in the market, portfolio or an issue in underwriting.”

“Overall asset quality remains positive especially given the economic challenges and uncertainty facing many of our communities. Loans in deferral status declined 70% from $214.8 million at June 30, 2020, to $63.5 million at September 30, 2020. We are closely monitoring our loan portfolio, especially loans within at-risk categories. At September 30, 2020, no restaurant customers were seeking additional deferrals, while only half of the loans in second deferral status were within the hospitality segment. All hotel customers are long-standing customers, operate brand name properties in compelling markets, and our hotel portfolio has an average loan-to-value of 53%. Overall, the quality of our retail portfolio remains solid and appears to not be significantly impacted by the current difficult economic environment. While our exposure to the hotel and retail sectors will impact near-term asset quality, we are comfortable with our current hotel and retail performance. We are doing everything we can to support all our customers and communities impacted by the COVID-19 crisis.”

Stockholders’ Equity and Dividends

At the end of the 2020 third quarter, shareholders’ equity increased 4.5% to $142.1 million compared to $135.9 million at September 30, 2019. On a per share basis, shareholders’ equity at September 30, 2020, was $22.27 compared to $21.16 at the same period last year.

Tangible stockholders’ equity⁽¹⁾ increased 5.5% to $125.2 million for the 2020 third quarter, compared to $118.7 million at September 30, 2019. On a per-share basis, tangible stockholders’ equity⁽¹⁾ was $19.63 at September 30, 2020, compared to $18.48 at September 30, 2019.

For the nine-month period ended September 30, 2020, the Company declared cash dividends of $0.45 per share, compared to $0.42 per share for the same period last year.

At September 30, 2020, the Company had an equity to assets leverage ratio of 10.41%, compared to 10.61% at September 30, 2019.

Asset Quality

The provision for loan losses for the 2020 third quarter was $4.0 million versus $80,000 for the same period last year. Most of the increased provision is the result of increases to the economic conditions qualitative factors and higher charge-off during the quarter. Nonperforming assets at September 30, 2020, were $14.1 million, compared to $10.1 million at September 30, 2019.

Net charge-offs for the 2020 third quarter were $2.9 million, or 1.01% of average loans, annualized, compared to $0.4 million, or 0.15% of average loans, annualized at September 30, 2019. This was primarily the result of resolving a large problem commercial loan that was transferred to other real estate during the quarter. Year-to-date net charge-offs were $3.1 million, or 0.39% of average loans, annualized compared to $0.9 million, or 0.11% of average loans, annualized for the same period last year.

The allowance for loan losses at September 30, 2020, stood at $11.4 million, or 1.01% of total loans, compared to $7.0 million, or 0.70% of total loans at September 30, 2019.

COVID-19 Update

The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was signed into law on March 27, 2020, and as a qualified SBA lender, we were automatically authorized to originate PPP loans. As of September 30, 2020, we approved 1,414 applications for up to $143.8 million of loans under the PPP.

As of September 30, 2020, we modified 41 loans aggregating $63.5 million primarily consisting of the deferral of principal and interest payments and the extension of the maturity date, compared to 362 loans aggregating $214.8 million at June 30, 2020.

Details with respect to second deferral loan modifications are as follows:


Second Deferrals
Loan Type	Number of Loans		Balance (in thousands)		% of Total Loans
Retail		10	$	18,638		1.65	%
Multifamily & Residential NOO		—		—		—
Ambulatory Care, Nursing/ Rehabilitation and Social Assistance		1		9,672		0.86	%
Hospitality & tourism		15		31,707		2.81	%
Restaurant/food service/bar		—		—		—
Other		4	$	499		0.04	%

Total		30	$	60,516		5.37	%

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 $1.36 billion at September 30, 2020. The bank operates 16 full-service banking centers and an LPL Financial^® brokerage office serving Beachwood, Chardon, Cortland, Dublin, Garrettsville, Mantua, 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⁾

This press release includes disclosure of Middlefield Banc Corp.’s tangible book value per share and return on average tangible equity, 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.

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) the effect of the COVID-19 pandemic, including on our credit quality and business operations, as well as its impact on general economic and financial market conditions; (8) changes in the securities markets; or (9) 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)


	September 30,			June 30,			March 31,			December 31,			September 30,
Balance Sheets (period end)	2020			2020			2020			2019			2019
ASSETS
Cash and due from banks	$	46,097		$	55,766		$	53,533		$	35,113		$	118,956
Federal funds sold		6,884			2,520			1,800			—			1,069

Cash and cash equivalents		52,981			58,286			55,333			35,113			120,025
Equity securities, at fair value		553			581			550			710			628
Investment securities available for sale, at fair value		112,968			112,529			102,959			105,733			105,041
Loans held for sale		10,457			4,151			513			1,220			791
Loans:
Commercial real estate:
Owner occupied		107,342			110,134			113,272			102,386			106,839
Non-owner occupied		310,512			300,577			292,775			302,180			312,049
Multifamily		39,622			37,604			52,276			62,028			70,633
Residential real estate		222,237			227,427			233,900			234,798			236,280
Commercial and industrial		258,313			240,096			106,797			89,527			85,861
Home equity lines of credit		115,223			117,196			114,933			112,248			111,459
Construction and other		60,613			66,015			71,186			66,680			60,957
Consumer installment		10,534			11,210			12,861			14,411			15,204

Total loans		1,124,396			1,110,259			998,000			984,258			999,282
Less allowance for loan and lease losses		11,359			10,210			9,244			6,768			7,001

Net loans		1,113,037			1,100,049			988,756			977,490			992,281
Premises and equipment, net		18,633			18,962			17,653			17,874			17,182
Goodwill		15,071			15,071			15,071			15,071			15,071
Core deposit intangibles		1,807			1,890			1,973			2,056			2,141
Bank-owned life insurance		16,832			16,723			16,618			16,511			16,403
Accrued interest receivable and other assets		22,470			15,078			14,513			10,697			11,015

TOTAL ASSETS	$	1,364,809		$	1,343,320		$	1,213,939		$	1,182,475		$	1,280,578


	September 30, 2020			June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019
LIABILITIES
Deposits:
Noninterest-bearing demand	$	268,838		$	270,738		$	206,372		$	191,370		$	199,235
Interest-bearing demand		179,080			136,722			125,184			107,844			107,033
Money market		184,936			168,842			156,556			160,826			155,419
Savings		231,696			218,545			175,468			192,003			182,005
Time		329,413			363,420			340,130			368,800			390,721

Total deposits		1,193,963			1,158,267			1,003,710			1,020,843			1,034,413
Short-term borrowings		—			20,417			60,000			5,075			92,000
Other borrowings		17,100			17,162			12,662			12,750			12,359
Accrued interest payable and other liabilities		11,690			6,779			4,880			6,032			5,893

TOTAL LIABILITIES		1,222,753			1,202,625			1,081,252			1,044,700			1,144,665

STOCKHOLDERS’ EQUITY *
Common stock, no par value; 10,000,000 shares authorized, 7,307,472 shares issued, 6,378,110 shares outstanding as of September 30, 2020		86,871			86,722			86,722			86,617			86,617
Retained earnings		68,046			67,150			65,140			65,063			62,886
Accumulated other comprehensive income (loss)		4,077			3,761			(2,237	)		1,842			2,157
Treasury stock, at cost; 929,362 shares as of September 30, 2020		(16,938	)		(16,938	)		(16,938	)		(15,747	)		(15,747	)

TOTAL STOCKHOLDERS’ EQUITY		142,056			140,695			132,687			137,775			135,913

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,364,809		$	1,343,320		$	1,213,939		$	1,182,475		$	1,280,578

*	All share and per share information has been adjusted for a two-for-one stock split completed on November 8, 2019

MIDDLEFIELD BANC CORP.

Consolidated Selected Financial Highlights

(Dollar amounts in thousands, unaudited)


	For the Three Months Ended													For the Nine Months Ended
	September 30,			June 30,		March 31,			December 31,		September 30,			September 30,			September 30,
Statements of Income	2020			2020		2020			2019		2019			2020			2019
INTEREST AND DIVIDEND INCOME
Interest and fees on loans	$	12,603		$	12,281	$	12,078		$	12,392	$	12,804		$	36,962		$	37,998
Interest-earning deposits in other institutions		8			7		94			124		193			109			549
Federal funds sold		—			—		21			22		24			21			56
Investment securities:
Taxable interest		249			206		157			197		206			612			599
Tax-exempt interest		618			634		629			661		613			1,881			1,731
Dividends on stock		29			27		30			40		45			86			156

Total interest and dividend income		13,507			13,155		13,009			13,436		13,885			39,671			41,089

INTEREST EXPENSE
Deposits		2,106			2,336		2,865			3,014		3,173			7,307			9,395
Short-term borrowings		14			32		35			34		42			81			334
Other borrowings		28			62		76			80		92			166			283

Total interest expense		2,148			2,430		2,976			3,128		3,307			7,554			10,012

NET INTEREST INCOME		11,359			10,725		10,033			10,308		10,578			32,117			31,077
Provision for loan losses		4,000			1,000		2,740			460		80			7,740			430

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		7,359			9,725		7,293			9,848		10,498			24,377			30,647

NONINTEREST INCOME
Service charges on deposit accounts		691			566		553			577		571			1,810			1,609
Investment securities gains on sale, net		—			—		—			—		4			—			194
(Loss) gain on equity securities		(28	)		31		(160	)		82		(32	)		(157	)		12
Earnings on bank-owned life insurance		109			105		107			108		109			321			323
Gains on sale of loans		660			381		114			148		128			1,155			285
Other income		379			412		460			390		325			1,251			1,113

Total noninterest income		1,811			1,495		1,074			1,305		1,105			4,380			3,536

NONINTEREST EXPENSE
Salaries and employee benefits		3,597			4,076		3,524			4,049		4,272			11,197			12,474
Occupancy expense		497			483		550			580		535			1,530			1,584
Equipment expense		363			307		273			270		244			943			770
Data processing costs		683			684		666			614		580			2,033			1,594
Ohio state franchise tax		282			281		268			262		262			831			782
Federal deposit insurance expense		123			74		123			—		—			320			230
Professional fees		289			369		349			448		401			1,007			1,235
Advertising expense		217			217		209			128		202			643			605
Software amortization expense		70			74		141			159		182			285			206
Core deposit intangible amortization		83			83		83			85		86			249			256
Other expense		818			1,041		1,066			783		909			2,925			2,919

Total noninterest expense		7,022			7,689		7,252			7,378		7,673			21,963			22,655

Income before income taxes		2,148			3,531		1,115			3,775		3,930			6,794			11,528
Income taxes		295			565		74			634		661			934			1,958

NET INCOME	$	1,853		$	2,966	$	1,041		$	3,141	$	3,269		$	5,860		$	9,570

MIDDLEFIELD BANC CORP.

Consolidated Selected Financial Highlights

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


	For the Three Months Ended															For the Nine Months Ended
	September 30, 2020			June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			September 30, 2020			September 30, 2019
Per common share data ⁽⁵⁾
Net income per common share - basic	$	0.29		$	0.47		$	0.16		$	0.48		$	0.51		$	0.92		$	1.48
Net income per common share - diluted	$	0.29		$	0.46		$	0.16		$	0.48		$	0.50		$	0.92		$	1.47
Dividends declared per share	$	0.15		$	0.15		$	0.15		$	0.15		$	0.14		$	0.45		$	0.42
Book value per share (period end)	$	22.27		$	22.09		$	20.83		$	21.45		$	21.16		$	22.27		$	21.16
Tangible book value per share (period end) ^{(2) (3)}	$	19.63		$	19.43		$	18.16		$	18.78		$	18.48		$	19.63		$	18.48
Dividends declared	$	957		$	956		$	964		$	964		$	900		$	2,877		$	2,721
Dividend yield		3.09	%		2.91	%		3.82	%		2.28	%		2.37	%		3.11	%		2.40	%
Dividend payout ratio		51.65	%		32.23	%		92.60	%		30.69	%		27.53	%		49.10	%		28.43	%
Average shares outstanding - basic		6,376,291			6,369,467			6,417,109			6,423,543			6,458,258			6,387,581			6,486,202
Average shares outstanding - diluted		6,385,765			6,388,118			6,429,443			6,455,387			6,479,066			6,397,674			6,506,838
Period ending shares outstanding		6,378,110			6,369,467			6,369,467			6,423,630			6,423,130			6,378,110			6,423,130

Selected ratios
Return on average assets		0.54	%		0.90	%		0.35	%		1.04	%		1.07	%		0.61	%		1.06	%
Return on average equity		5.04	%		8.56	%		3.01	%		8.87	%		9.41	%		5.48	%		9.52	%
Return on average tangible common equity ^{(2) (4)}		5.70	%		9.76	%		3.43	%		10.11	%		10.76	%		6.22	%		10.93	%
Efficiency ⁽¹⁾		51.96	%		61.29	%		63.47	%		61.75	%		63.93	%		58.59	%		63.75	%
Equity to assets at period end		10.41	%		10.47	%		10.93	%		11.65	%		10.61	%		10.41	%		10.61	%
Noninterest expense to average assets		0.52	%		0.58	%		0.61	%		0.61	%		0.64	%		1.70	%		1.88	%

(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

(5)	All share and per share information has been adjusted for the two-for-one stock split completed on November 8, 2019

MIDDLEFIELD BANC CORP.

Consolidated Selected Financial Highlights

(unaudited)


	For the Three Months Ended															For the Nine Months Ended
Yields	September 30, 2020			June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			September 30, 2020			September 30, 2019
Interest-earning assets:
Loans receivable ⁽²⁾		4.48	%		4.53	%		4.95	%		4.97	%		5.10	%		4.64	%		5.09	%
Investment securities ⁽²⁾		3.66	%		3.76	%		3.62	%		3.94	%		3.71	%		3.68	%		3.71	%
Interest-earning deposits with other banks		0.27	%		0.23	%		1.40	%		1.65	%		2.31	%		0.56	%		2.26	%
Total interest-earning assets		4.23	%		4.27	%		4.69	%		4.75	%		4.86	%		4.38	%		4.86	%
Deposits:
Interest-bearing demand deposits		0.32	%		0.35	%		0.42	%		0.41	%		0.39	%		0.36	%		0.35	%
Money market deposits		0.70	%		0.93	%		1.41	%		1.41	%		1.43	%		1.00	%		1.47	%
Savings deposits		0.20	%		0.21	%		0.50	%		0.62	%		0.68	%		0.29	%		0.73	%
Certificates of deposit		1.77	%		2.00	%		2.12	%		2.18	%		2.18	%		1.97	%		2.24	%
Total interest-bearing deposits		0.93	%		1.11	%		1.39	%		1.43	%		1.48	%		1.14	%		1.50	%
Non-Deposit Funding:
Borrowings		0.45	%		0.53	%		1.62	%		2.52	%		3.03	%		0.73	%		2.65	%
Total interest-bearing liabilities		0.91	%		1.07	%		1.40	%		1.46	%		1.51	%		1.12	%		1.54	%
Cost of deposits		0.72	%		0.85	%		1.13	%		1.15	%		1.20	%		0.89	%		1.21	%
Cost of funds		0.71	%		0.83	%		1.14	%		1.17	%		1.23	%		0.88	%		1.25	%
Net interest margin ⁽¹⁾		3.57	%		3.49	%		3.63	%		3.66	%		3.72	%		3.56	%		3.69	%

(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	September 30, 2020			June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019
(Dollar amounts in thousands, unaudited)
Nonperforming loans ⁽¹⁾	$	6,690		$	9,803		$	8,405		$	8,879		$	10,053
Other real estate owned		7,391			687			456			155			89

Nonperforming assets	$	14,081		$	10,490		$	8,861		$	9,034		$	10,142

Allowance for loan losses	$	11,359		$	10,210		$	9,244		$	6,768		$	7,001
Allowance for loan losses/total loans		1.01	%		0.92	%		0.93	%		0.69	%		0.70	%
Net charge-offs:
Quarter-to-date	$	2,851		$	34		$	264		$	693		$	383
Year-to-date		3,149			298			264			1,550			857
Net charge-offs to average loans, annualized:
Quarter-to-date		1.01	%		0.01	%		0.11	%		0.28	%		0.15	%
Year-to-date		0.39	%		0.06	%		0.11	%		0.16	%		0.11	%
Nonperforming loans/total loans		0.59	%		0.88	%		0.84	%		0.90	%		1.01	%
Allowance for loan losses/nonperforming loans		169.79	%		104.15	%		109.98	%		76.22	%		69.64	%
Nonperforming assets/total assets		1.03	%		0.78	%		0.73	%		0.76	%		0.79	%

(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 Three Months Ended															For the Nine Months Ended
(Dollar amounts in thousands, unaudited)	September 30, 2020			June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			September 30, 2020			September 30, 2019
Stockholders’ Equity	$	142,056		$	140,695		$	132,687		$	137,775		$	135,913		$	142,056		$	135,913
Less Goodwill and other intangibles		16,878			16,961			17,044			17,127			17,212			16,878			17,212

Tangible Common Equity	$	125,178		$	123,734		$	115,643		$	120,648		$	118,701		$	125,178		$	118,701

Shares outstanding		6,378,110			6,369,467			6,369,467			6,423,630			6,423,130			6,378,110			6,423,130

Tangible book value per share	$	19.63		$	19.43		$	18.16		$	18.78		$	18.48		$	19.63		$	18.48


Reconciliation of Average Equity to Return on Average Tangible Common Equity	For the Three Months Ended															For the Nine Months Ended
	September 30, 2020			June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			September 30, 2020			September 30, 2019
Average Stockholders’ Equity	$	146,253		$	139,287		$	139,208		$	140,475		$	137,843		$	142,949		$	134,376
Less Average Goodwill and other intangibles		16,919			17,002			17,085			17,169			17,254			17,002			17,338

Average Tangible Common Equity	$	129,334		$	122,285		$	122,123		$	123,306		$	120,589		$	125,947		$	117,038

Net income	$	1,853		$	2,966		$	1,041		$	3,141		$	3,269		$	5,860		$	9,570

Return on average tangible common equity (annualized)		5.70	%		9.76	%		3.43	%		10.11	%		10.76	%		6.22	%		10.93	%

*	All share and per share information has been adjusted for a two-for-one stock split completed on November 8, 2019

MIDDLEFIELD BANC CORP.

Average Balance Sheets

(Dollar amounts in thousands, unaudited)


	For the Three Months Ended
	September 30,							September 30,
	2020							2019
	Average				Average			Average				Average
	Balance		Interest		Yield/Cost			Balance		Interest		Yield/Cost
Interest-earning assets:
Loans receivable ⁽³⁾	$	1,121,763	$	12,603		4.48	%	$	998,183	$	12,804		5.10	%
Investment securities ⁽³⁾		111,994		867		3.66	%		104,878		819		3.71	%
Interest-earning deposits with other banks ⁽⁴⁾		53,826		37		0.27	%		44,925		262		2.31	%

Total interest-earning assets		1,287,583		13,507		4.23	%		1,147,986		13,885		4.86	%

Noninterest-earning assets		66,836							60,261

Total assets	$	1,354,419						$	1,208,247

Interest-bearing liabilities:
Interest-bearing demand deposits	$	149,048	$	120		0.32	%	$	104,212	$	103		0.39	%
Money market deposits		176,136		312		0.70	%		157,691		568		1.43	%
Savings deposits		223,507		113		0.20	%		196,187		337		0.68	%
Certificates of deposit		349,981		1,561		1.77	%		394,381		2,165		2.18	%
Short-term borrowings		19,740		14		0.28	%		5,156		42		3.23	%
Other borrowings		17,130		28		0.65	%		12,397		92		2.94	%

Total interest-bearing liabilities		935,542		2,148		0.91	%		870,024		3,307		1.51	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		270,868							197,015
Other liabilities		1,756							3,365
Stockholders’ equity		146,253							137,843

Total liabilities and stockholders’ equity	$	1,354,419						$	1,208,247

Net interest income			$	11,359						$	10,578

Interest rate spread ⁽¹⁾						3.32	%						3.35	%
Net interest margin ⁽²⁾						3.57	%						3.72	%
Ratio of average interest-earning assets to average interest-bearing liabilities						137.63	%						131.95	%

(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 $186 and $185 for the three months ended September 30, 2020 and 2019, respectively.

(4)	Includes dividends received on restricted stock.


	For the Three Months Ended
	September 30,							June 30,
	2020							2020
	Average				Average			Average				Average
	Balance		Interest		Yield/Cost			Balance		Interest		Yield/Cost
Interest-earning assets:
Loans receivable ⁽³⁾	$	1,121,763	$	12,603		4.48	%	$	1,092,095	$	12,281		4.53	%
Investment securities ⁽³⁾		111,994		867		3.66	%		107,765		840		3.76	%
Interest-earning deposits with other banks ⁽⁴⁾		53,826		37		0.27	%		58,541		34		0.23	%

Total interest-earning assets		1,287,583		13,507		4.23	%		1,258,401		13,155		4.27	%

Noninterest-earning assets		66,836							62,976

Total assets	$	1,354,419						$	1,321,377

Interest-bearing liabilities:
Interest-bearing demand deposits	$	149,048	$	120		0.32	%	$	129,917	$	112		0.35	%
Money market deposits		176,136		312		0.70	%		164,434		381		0.93	%
Savings deposits		223,507		113		0.20	%		198,967		104		0.21	%
Certificates of deposit		349,981		1,561		1.77	%		350,298		1,739		2.00	%
Short-term borrowings		19,740		14		0.28	%		55,973		32		0.23	%
Other borrowings		17,130		28		0.65	%		15,615		62		1.60	%

Total interest-bearing liabilities		935,542		2,148		0.91	%		915,204		2,430		1.07	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		270,868							262,575
Other liabilities		1,756							4,311
Stockholders’ equity		146,253							139,287

Total liabilities and stockholders’ equity	$	1,354,419						$	1,321,377

Net interest income			$	11,359						$	10,725

Interest rate spread ⁽¹⁾						3.32	%						3.20	%
Net interest margin ⁽²⁾						3.57	%						3.49	%
Ratio of average interest-earning assets to average interest-bearing liabilities						137.63	%						137.50	%

(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 $186 and $190 for the three months ended September 30, 2020, and June 30, 2020, respectively.

(4)	Includes dividends received on restricted stock.


	For the Nine Months Ended
	September 30, 2020							September 30, 2019
	Average Balance		Interest		Average Yield/Cost			Average Balance		Interest		Average Yield/Cost
Interest-earning assets:
Loans receivable ⁽³⁾	$	1,065,964	$	36,962		4.64	%	$	1,000,291	$	37,998		5.09	%
Investment securities ⁽³⁾		108,551		2,493		3.68	%		100,461		2,330		3.71	%
Interest-earning deposits with other banks ⁽⁴⁾		51,361		216		0.56	%		44,985		761		2.26	%

Total interest-earning assets		1,225,876		39,671		4.38	%		1,145,737		41,089		4.86	%

Noninterest-earning assets		64,938							60,695

Total assets	$	1,290,814						$	1,206,432

Interest-bearing liabilities:
Interest-bearing demand deposits	$	130,886	$	349		0.36	%	$	100,822	$	263		0.35	%
Money market deposits		166,193		1,246		1.00	%		170,544		1,880		1.47	%
Savings deposits		201,871		443		0.29	%		199,829		1,090		0.73	%
Certificates of deposit		358,048		5,269		1.97	%		368,540		6,162		2.24	%
Short-term borrowings		30,174		81		0.36	%		17,967		334		2.49	%
Other borrowings		15,149		166		1.46	%		13,114		283		2.89	%

Total interest-bearing liabilities		902,321		7,554		1.12	%		870,816		10,012		1.54	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		242,951							196,871
Other liabilities		2,593							4,369
Stockholders’ equity		142,949							134,376

Total liabilities and stockholders’ equity	$	1,290,814						$	1,206,432

Net interest income			$	32,117						$	31,077

Interest rate spread ⁽¹⁾						3.26	%						3.32	%
Net interest margin ⁽²⁾						3.56	%						3.69	%
Ratio of average interest-earning assets to average interest-bearing liabilities						135.86	%						131.57	%

(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 $565 and $523 for the nine months ended September 30, 2020 and 2019, respectively.

(4)	Includes dividends received on restricted stock.

MIDDLEFIELD BANC CORP - FORM 8-K - EX-99 - October 21, 2020

Attached files

MIDDLEFIELD BANC CORP Reports