Middlefield Banc Corp. Reports 2022 First Half Financial Results

MIDDLEFIELD, Ohio, July 18, 2022 (GLOBE NEWSWIRE) -- Middlefield Banc Corp. (NASDAQ: MBCN) reported financial results for the 2022 first half and second quarter ended June 30, 2022.

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

• Returned $4.4 million of capital to shareholders through dividends and the repurchase of 95,364 shares at an average price of $25.39 per share
• Net income was $7.9 million, or $1.35 per diluted share, compared to $8.6 million, or $1.35 per diluted share
• First-half pre-tax income benefited from $1.2 million of accelerated net fees associated with the Paycheck Protection Program (“PPP”), compared to $1.9 million in the 2021 first half
• Net income during the second quarter was negatively impacted by $579,000 of one-time expenses associated with the proposed Liberty Bancshares, Inc. merger
• Net interest margin improved by 20 basis points to 3.91%, compared to 3.71%
• Total loans were $978.0 million, compared to $981.7 million at December 31, 2021
• Total loans increased by $27.8 million, or 6.1% annualized from December 31, 2021, without the impact of PPP loan forgiveness
• Return on average assets was 1.21%, compared to 1.26%
• Return on average equity was 11.49%, compared to 11.88%
• Return on average tangible common equity⁽¹⁾ was 13.03%, compared to 13.41%
• Strong asset quality with nonperforming loans to total loans of 0.48%, compared to 0.73%
• Allowance for loan losses was 1.49% of total loans, compared to 1.34%
• Merger with Liberty Bancshares, Inc. on schedule to close during the 2022 fourth quarter
  

“We are focused on profitably growing our business, supporting our communities, and creating value for our shareholders, and I am pleased with the progress we made during the second quarter,” stated James R. Heslop, II, President and Chief Executive Officer. “Profitability has remained strong despite lower year-over-year fees associated with the Paycheck Protection Program and $579,000 of one-time expenses associated with the proposed Liberty Bancshares, Inc. merger. Reflecting our profitable financial model, second-quarter net interest margin increased 30 basis points to 4.02%. I am also encouraged by the growth we experienced in our return on tangible common equity, demonstrating the additional benefits of our share repurchase program.”  

Mr. Heslop continued, “We are working on growing our balance sheet while controlling risk in a very fluid business environment. During the second quarter, core loans increased at an annualized rate of 6.9% since the beginning of the year. We continue to work on completing the merger with Liberty Bancshares, Inc., which we expect to close during the 2022 fourth quarter. Once complete, we expect to benefit as a larger bank with total assets of approximately $1.80 billion, strong earnings accretion, and a robust footprint in two of Ohio’s largest and fastest-growing markets. We believe the merger will generate meaningful earnings per share accretion while having a minimal tangible book value dilution and manageable earn-back period.”

Mr. Heslop concluded, “Over the past several years, we have invested throughout our organization, expanded our digital banking capabilities, and assembled a strong team of motivated and experienced leaders. We expect 2022 to be another good year for Middlefield Banc Corp., and I am excited by the direction we are headed,” concluded Mr. Heslop.

Income Statement

Net interest income for the 2022 first half decreased 0.9% to $23.5 million, compared to $23.7 million for the same period last year. Year-to-date, the net interest margin was 3.91%, compared to 3.71% for the same period last year. Net interest income for the 2022 second quarter was $12.0 million, compared to $11.9 million for the 2021 second quarter. The 1.5% increase in net interest income for the 2022 second quarter was largely a result of a 26.9% reduction in total interest expense. The net interest margin for the 2022 second quarter was 4.02%, compared to 3.72% for the same period of 2021.

For the 2022 first half, noninterest income was $2.8 million, compared to $3.9 million for the same period last year. Noninterest income for the 2022 second quarter was $1.4 million, compared to $1.6 million for the same period last year.

For the 2022 first half, noninterest expense increased 3.6% to $16.8 million, compared to $16.2 million for the same period last year. Operating costs in the 2022 second quarter increased 8.1% to $8.5 million from $7.9 million for the 2021 second quarter. The Company incurred $579,000 of additional operating expenses during the 2022 second quarter associated with the proposed Liberty Bancshares, Inc. merger.

Net income for the 2022 first half ended June 30, 2022, was $7.9 million, or $1.35 per diluted share, compared to $8.6 million, or $1.35 per diluted share for the same period last year. Net income for the 2022 second quarter ended June 30, 2022, was $4.1 million, or $0.70 per diluted share, compared to $4.4 million, or $0.70 per diluted share for the same period last year.

Balance Sheet

Total assets at June 30, 2022, decreased 4.9% to $1.29 billion, compared to $1.36 billion at June 30, 2021. Net loans at June 30, 2022, decreased 7.5% to $963.4 million, compared to $1.04 billion at June 30, 2021. Since 2020, Middlefield has helped customers receive $211.1 million of forgiveness payments under the terms of the Paycheck Protection Program, including processing $16.3 million of forgiveness payments during the second quarter of 2022, and $32.7 million of forgiveness payments year-to-date. The balance of PPP loans outstanding at June 30, 2022, was $1.4 million.

Total deposits at June 30, 2022, were $1.15 billion, compared to $1.20 billion at June 30, 2021. The 4.0% decrease in deposits was primarily due to a decline in time-based and interest-bearing accounts, partially offset by increased noninterest-bearing accounts. The investment portfolio was $172.0 million at June 30, 2022, compared with $150.9 million at June 30, 2021.

Donald L. Stacy, Chief Financial Officer, stated, “We remain well-positioned to benefit from a rising interest rate environment. In addition, as economic uncertainty has increased, we are entering this period from a position of strength with a historically strong balance sheet and excellent asset quality. These trends allow us to navigate a changing economic cycle while simultaneously allocating capital to support our long-term growth strategies, dividend payment, and share repurchase program.”

Mr. Stacy continued, “We continue to allocate excess capital to our dividend and share repurchase programs. Year-to-date, we have repurchased 95,364 shares of our common stock at a total cost of $2.4 million. This includes 63,214 shares repurchased during the 2022 second quarter at an average price of $25.35 per share at June 30, 2022. With 292,187 shares remaining under our repurchase program, we will continue to focus on returning capital to shareholders through our share repurchase program.”

Stockholders’ Equity and Dividends
At June 30, 2022, stockholders’ equity was $128.2 million compared to $146.0 million at June 30, 2021. The 12.2% year-over-year decline in stockholders’ equity was primarily due to an increase in the unrealized loss on the available-for-sale investment portfolio during the three-month period and the Company’s stock repurchase program. On a per-share basis, shareholders’ equity at June 30, 2022, was $22.07 compared to $23.50 at June 30, 2021.

At June 30, 2022, tangible stockholders’ equity⁽¹⁾ was $111.9 million, compared to $129.4 million at June 30, 2021. On a per-share basis, tangible stockholders’ equity⁽¹⁾ was $19.26 at June 30, 2022, compared to $20.82 at June 30, 2021.

Through the 2022 first half, the Company declared cash dividends of $0.34 per share, compared to $0.32 per share for the same period last year.

At June 30, 2022, the Company had an equity-to-assets ratio of 9.91%, compared to 10.74% at June 30, 2021.

Asset Quality

There was no provision for loan losses for the 2022 second quarter versus a $200,000 provision for loan losses for the same period last year. The year-over-year decline in the provision for loan losses was partially due to strong asset quality and the previous year’s prudent build in the Company’s allowance for loan losses associated with the potential economic impacts caused by the COVID-19 pandemic. There was no provision for loan losses for the 2022 first half versus $900,000 for the same period last year.

Net recoveries were $58,000, or 0.02% of average loans, annualized, during the 2022 second quarter, compared to net charge-offs of $122,000, or 0.05% of average loans, annualized, at June 30, 2021. Year-to-date net recoveries were $208,000, or 0.04% of average loans, annualized, compared to net charge-offs of $159,000, or 0.03% of average loans, annualized for the six-months ended June 30, 2021.

Nonperforming loans at June 30, 2022, were $4.7 million, compared to $7.8 million at June 30, 2021. Nonperforming assets at June 30, 2022, were $11.5 million, compared to $14.9 million at June 30, 2021. The allowance for loan losses at June 30, 2022, stood at $14.6 million, or 1.49% of total loans, compared to $14.2 million, or 1.34% of total loans at June 30, 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 $1.29 billion at June 30, 2022. 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, 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) 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; (9) the Company’s failure to integrate Liberty Bancshares, Inc. and Liberty National Bank with Middlefield in accordance with expectations and deviations from performance expectations related to Liberty Bancshares, Inc. and Liberty National Bank; or (10) 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.   

IMPORTANT ADDITIONAL INFORMATION

In connection with the proposed merger with Liberty Bancshares, Inc., (“Liberty”), the Company intends to file with the SEC a registration statement on Form S-4 to register the shares of the Company’s common stock that will be issued to Liberty shareholders in connection with the merger. The registration statement will include a joint proxy statement/prospectus and other relevant materials in connection with the proposed merger, which will be sent to the shareholders of Liberty and the Company seeking their approval of the proposed merger.
SHAREHOLDERS OF LIBERTY, COMPANY SHAREHOLDERS, AND OTHER INVESTORS ARE URGED TO CAREFULLY READ THE PROXY STATEMENT AND PROSPECTUS TO BE INCLUDED IN THE REGISTRATION STATEMENT ON FORM S-4, BECAUSE THE PROXY STATEMENT/PROSPECTUSES WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY, LIBERTY, THE PROPOSED MERGER, THE PERSONS SOLICITING PROXIES WITH RESPECT TO THE PROPOSED MERGER, AND THEIR INTERESTS IN THE PROPOSED MERGER AND RELATED MATTERS.

Investors and security holders will be able to obtain free copies of the Registration Statement on Form S-4 (when available) and other documents filed by the Company with the SEC through the website maintained by the SEC at www.sec.gov. Copies of the documents filed with the SEC by the Company will be available free of charge on the Company’s website at www.middlefieldbank.bank or may be obtained from the Company by written request to Middlefield Banc Corp., 15985 East High Street P. O. Box 35 Middlefield, Ohio 44062, Attention: Investor Relations.  

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities nor shall there be any sale of securities in any jurisdiction in which the offer, solicitation or sale is unlawful before registration or qualification of the securities under the securities laws of the jurisdiction. No offer of securities shall be made except by means of a prospectus satisfying the requirements of Section 10 of the Securities Act.

The respective directors and executive officers of the Company and Liberty and other persons may be deemed to be participants in the solicitation of proxies from Liberty shareholders with respect to the proposed merger. Information regarding the directors of the Company is available in its proxy statement filed with the SEC on April 5, 2022 in connection with its 2022 Annual Meeting of Shareholders and information regarding the executive officers of the Company is available in its Form 10-K filed with the SEC on March 15, 2022. Information regarding the directors and executive officers of Liberty, which is a private company, and other information regarding the participants in the solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus to be included in the Form S-4 Registration Statement and other relevant materials to be filed with the SEC when they become available.

MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
(Dollar amounts in thousands, unaudited)

 

		June 30,				March 31,				December 31,				September 30,				June 30,
Balance Sheets (period end)		2022				2022				2021				2021				2021
ASSETS
Cash and due from banks	$	60,114			$	78,804			$	97,172			$	113,177			$	82,435
Federal funds sold		19,039				29,474				22,322				19,174				10,034
Cash and cash equivalents		79,153				108,278				119,494				132,351				92,469
Equity securities, at fair value		779				851				818				833				730
Investment securities available for sale, at fair value		171,958				175,216				170,199				163,057				150,850
Loans held for sale		-				9				1,051				676				790
Loans:
Commercial real estate:
Owner occupied		120,771				113,590				111,470				110,883				109,777
Non-owner occupied		288,334				293,745				283,618				310,222				304,324
Multifamily		29,152				29,385				31,189				30,762				34,926
Residential real estate		246,453				244,747				240,089				232,020				228,102
Commercial and industrial		137,398				131,683				148,812				163,052				200,558
Home equity lines of credit		111,730				106,300				104,355				105,450				107,685
Construction and other		35,988				50,152				54,148				49,378				62,229
Consumer installment		8,171				8,118				8,010				8,515				8,694
Total loans		977,997				977,720				981,691				1,010,282				1,056,295
Less allowance for loan and lease losses		14,550				14,492				14,342				14,234				14,200
Net loans		963,447				963,228				967,349				996,048				1,042,095
Premises and equipment, net		17,030				17,142				17,272				17,507				17,680
Goodwill		15,071				15,071				15,071				15,071				15,071
Core deposit intangibles		1,249				1,326				1,403				1,484				1,564
Bank-owned life insurance		17,274				17,166				17,060				16,954				16,846
Other real estate owned		6,792				6,992				6,992				7,090				7,090
Accrued interest receivable and other assets		20,624				18,019				14,297				14,794				15,033
TOTAL ASSETS	$	1,293,377			$	1,323,298			$	1,331,006			$	1,365,865			$	1,360,218
		June 30,				March 31,				December 31,				September 30,				June 30,
		2022				2022				2021				2021				2021
LIABILITIES
Deposits:
Noninterest-bearing demand	$	379,872			$	361,251			$	334,171			$	316,770			$	326,665
Interest-bearing demand		154,788				162,010				196,308				237,576				207,725
Money market		185,494				187,807				177,281				178,423				183,453
Savings		252,179				264,784				260,125				256,114				252,171
Time		174,833				191,320				198,725				211,674				225,271
Total deposits		1,147,166				1,167,172				1,166,610				1,200,557				1,195,285
Other borrowings		12,910				12,975				12,901				12,966				13,031
Accrued interest payable and other liabilities		5,081				5,507				6,160				6,287				5,858
TOTAL LIABILITIES		1,165,157				1,185,654				1,185,671				1,219,810				1,214,174
STOCKHOLDERS' EQUITY
Common stock, no par value; 10,000,000 shares authorized, 7,347,526
shares issued, 5,810,351 shares outstanding as of June 30, 2022		87,562				87,562				87,131				87,131				87,131
Retained earnings		89,900				86,804				83,971				80,376				76,150
Accumulated other comprehensive (loss) income		(17,591	)			(6,674	)			3,462				3,610				3,893
Treasury stock, at cost;  1,537,175 shares as of June 30, 2022		(31,651	)			(30,048	)			(29,229	)			(25,062	)			(21,130	)
TOTAL STOCKHOLDERS' EQUITY		128,220				137,644				145,335				146,055				146,044
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,293,377			$	1,323,298			$	1,331,006			$	1,365,865			$	1,360,218

MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
(Dollar amounts in thousands, unaudited)

		For the Three Months Ended																	For the Six Months Ended
		June 30,				March 31,			December 31,				September 30,			June 30,			June 30,				June 30,
Statements of Income		2022				2022			2021				2021			2021			2022				2021
INTEREST AND DIVIDEND INCOME
Interest and fees on loans	$	11,268			$	10,985		$	11,586			$	12,258		$	11,885		$	22,253			$	24,052
Interest-earning deposits in other institutions		74				24			30				30			12			98				30
Federal funds sold		46				3			1				1			1			49				1
Investment securities:
Taxable interest		442				443			438				461			410			885				780
Tax-exempt interest		955				784			732				673			602			1,739				1,160
Dividends on stock		33				24			23				24			26			57				55
Total interest and dividend income		12,818				12,263			12,810				13,447			12,936			25,081				26,078
INTEREST EXPENSE
Deposits		709				726			783				915			1,010			1,435				2,215
Other borrowings		81				69			67				69			71			150				146
Total interest expense		790				795			850				984			1,081			1,585				2,361
NET INTEREST INCOME		12,028				11,468			11,960				12,463			11,855			23,496				23,717
Provision for loan losses		-				-			(200	)			-			200			-				900
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES		12,028				11,468			12,160				12,463			11,655			23,496				22,817
NONINTEREST INCOME
Service charges on deposit accounts		956				914			906				876			856			1,870				1,643
(Loss) gain on equity securities		(72	)			33			(14	)			102			40			(39	)			121
Earnings on bank-owned life insurance		108				106			106				108			106			214				332
Gains on sale of loans		18				3			118				309			221			21				813
Revenue from investment services		153				141			198				192			210			294				339
Other income		220				206			221				234			199			426				602
Total noninterest income		1,383				1,403			1,535				1,821			1,632			2,786				3,850
NONINTEREST EXPENSE
Salaries and employee benefits		3,785				4,386			4,088				4,488			4,321			8,171				8,575
Occupancy expense		583				505			542				425			517			1,088				1,081
Equipment expense		274				315			358				333			313			589				670
Data processing and information technology     costs		822				682			660				736			698			1,665				1,484
Ohio state franchise tax		292				293			285				287			286			585				572
Federal deposit insurance expense		90				50			50				150			150			140				294
Professional fees		383				455			435				136			323			838				742
Net loss (gain) on other real estate owned		206				8			(66)				9			22			214				68
Advertising expense		229				228			221				222			221			457				442
Software amortization expense		40				48			119				88			74			88				154
Core deposit intangible amortization		77				77			80				81			80			154				160
Merger-related costs		579				-			-				-			-			579				-
Other expense		1,175				1,219			1,059				951			889			2,233				1,969
Total noninterest expense		8,535				8,266			7,831				7,906			7,894			16,801				16,211
Income before income taxes		4,876				4,605			5,864				6,378			5,393			9,481				10,456
Income taxes		787				772			1,027				1,174			968			1,559				1,864
NET INCOME	$	4,089			$	3,833		$	4,837			$	5,204		$	4,425		$	7,922			$	8,592
PTPP (1)	$	4,876			$	4,605		$	5,664			$	6,378		$	5,593		$	9,481			$	11,356
(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 Six Months Ended
		June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
		2022			2022			2021			2021			2021			2022			2021
Per common share data
Net income per common share - basic	$	0.70		$	0.65		$	0.81		$	0.85		$	0.70		$	1.35		$	1.36
Net income per common share - diluted	$	0.70		$	0.65		$	0.81		$	0.85		$	0.70		$	1.35		$	1.35
Dividends declared per share	$	0.17		$	0.17		$	0.21		$	0.16		$	0.16		$	0.34		$	0.32
Book value per share (period end)	$	22.07		$	23.43		$	24.68		$	24.13		$	23.50		$	22.07		$	23.50
Tangible book value per share (period end) (2) (3)	$	19.26		$	20.64		$	21.88		$	21.39		$	20.82		$	19.26		$	20.82
Dividends declared	$	993		$	1,000		$	1,242		$	978		$	1,004		$	1,993		$	1,920
Dividend yield		2.71	%		2.78	%		3.37	%		2.66	%		2.72	%		2.72	%		2.73	%
Dividend payout ratio		24.28	%		26.09	%		25.68	%		18.79	%		22.69	%		25.16	%		22.35	%
Average shares outstanding - basic		5,851,422			5,879,025			5,951,838			6,136,648			6,297,071			5,865,147			6,331,356
Average shares outstanding - diluted		5,860,098			5,889,836			5,975,333			6,157,181			6,312,230			5,873,823			6,348,345
Period ending shares outstanding		5,810,351			5,873,565			5,888,737			6,054,083			6,215,511			5,810,351			6,215,511
Selected ratios
Return on average assets		1.25	%		1.17	%		1.41	%		1.51	%		1.30	%		1.21	%		1.26	%
Return on average equity		12.30	%		10.75	%		13.17	%		13.95	%		12.10	%		11.49	%		11.88	%
Return on average tangible common equity (2) (4)		14.02	%		12.13	%		14.85	%		15.71	%		13.65	%		13.03	%		13.41	%
Efficiency (1)		61.82	%		62.54	%		56.56	%		54.04	%		57.18	%		62.17	%		57.50	%
Equity to assets at period end		9.91	%		10.40	%		10.92	%		10.69	%		10.74	%		9.91	%		10.74	%
Noninterest expense to average assets		0.65	%		0.62	%		0.58	%		0.58	%		0.58	%		1.27	%		1.18	%
(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 Six Months Ended
		June 30,			March 31,			December 31,			September 30,			June 30,			June 30,				June 30,
Yields		2022			2022			2021			2021			2021			2022				2021
Interest-earning assets:
Loans receivable (2)		4.66	%		4.53	%		4.61	%		4.74	%		4.43	%		4.60	%			4.45	%
Investment securities (2)		3.76	%		3.41	%		3.30	%		3.37	%		3.47	%		3.59	%			3.60	%
Interest-earning deposits with other banks		0.77	%		0.23	%		0.20	%		0.21	%		0.18	%		0.48	%			0.19	%
Total interest-earning assets		4.28	%		4.06	%		4.07	%		4.20	%		4.05	%		4.17	%			4.08	%
Deposits:
Interest-bearing demand deposits		0.15	%		0.14	%		0.12	%		0.12	%		0.12	%		0.15	%			0.14	%
Money market deposits		0.49	%		0.47	%		0.47	%		0.46	%		0.46	%		0.48	%			0.47	%
Savings deposits		0.06	%		0.06	%		0.06	%		0.06	%		0.06	%		0.06	%			0.07	%
Certificates of deposit		0.83	%		0.87	%		0.90	%		1.08	%		1.19	%		0.85	%			1.24	%
Total interest-bearing deposits		0.36	%		0.37	%		0.36	%		0.41	%		0.46	%		0.36	%			0.50	%
Non-Deposit Funding:
Borrowings		2.51	%		2.16	%		2.09	%		2.11	%		2.18	%		2.34	%			2.16	%
Total interest-bearing liabilities		0.39	%		0.39	%		0.37	%		0.42	%		0.47	%		0.39	%			0.50	%
Cost of deposits		0.24	%		0.25	%		0.26	%		0.30	%		0.34	%		0.25	%			0.37	%
Cost of funds		0.27	%		0.27	%		0.27	%		0.31	%		0.35	%		0.27	%			0.38	%
Net interest margin (1)		4.02	%		3.80	%		3.82	%		3.91	%		3.72	%		3.91	%			3.71	%
(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
		June 30,				March 31,				December 31,				September 30,				June 30,
Asset quality data		2022				2022				2021				2021				2021
(Dollar amounts in thousands, unaudited)
Nonperforming loans (1)	$	4,670			$	4,728			$	4,859			$	6,806			$	7,760
Other real estate owned		6,792				6,992				6,992				7,090				7,090
Nonperforming assets	$	11,462			$	11,720			$	11,851			$	13,896			$	14,850
Allowance for loan losses	$	14,550			$	14,492			$	14,342			$	14,234			$	14,200
Allowance for loan losses/total loans		1.49	%			1.48	%			1.46	%			1.41	%			1.34	%
Net (recoveries) charge-offs:
Quarter-to-date	$	(58	)		$	(150	)		$	(308	)		$	(34	)		$	122
Year-to-date		(208	)			(150	)			(183	)			125				159
Net charge-offs to average loans, annualized:
Quarter-to-date		-0.02	%			-0.06	%			-0.12	%			-0.01	%			0.05	%
Year-to-date		-0.04	%			-0.06	%			-0.02	%			0.02	%			0.03	%
Nonperforming loans/total loans		0.48	%			0.48	%			0.49	%			0.67	%			0.73	%
Allowance for loan losses/nonperforming loans		311.56	%			306.51	%			295.16	%			209.14	%			182.99	%
Nonperforming assets/total assets		0.89	%			0.89	%			0.89	%			1.02	%			1.09	%
(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
(Dollar amounts in thousands, unaudited)		June 30,				March 31,				December 31,				September 30,				June 30,
		2022				2022				2021				2021				2021
Stockholders' Equity	$	128,220			$	137,644			$	145,335			$	146,055			$	146,044
Less Goodwill and other intangibles		16,320				16,397				16,474				16,555				16,635
Tangible Common Equity	$	111,900			$	121,247			$	128,861			$	129,500			$	129,409
Shares outstanding		5,810,351				5,873,565				5,888,737				6,054,083				6,215,511
Tangible book value per share	$	19.26			$	20.64			$	21.88			$	21.39			$	20.82

Reconciliation of Average Equity to Return on Average Tangible Common Equity		For the Three Months Ended															For the Six Months Ended
		June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
		2022			2022			2021			2021			2021			2022			2021
Average Stockholders' Equity	$	133,377		$	144,630		$	145,716		$	148,048		$	146,719		$	139,003		$	145,892
Less Average Goodwill and other intangibles		16,357			16,435			16,513			16,594			16,674			16,396			16,714
Average Tangible Common Equity	$	117,020		$	128,195		$	129,203		$	131,454		$	130,045		$	122,607		$	129,178
Net income	$	4,089		$	3,833		$	4,837		$	5,204		$	4,425		$	7,922		$	8,592
Return on average tangible common equity (annualized)		14.02	%		12.13	%		14.85	%		15.71	%		13.65	%		13.03	%		13.41	%
Reconciliation of Pre-Tax Pre-Provision Income (PTPP)		For the Three Months Ended															For the Six Months Ended
		June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
		2022			2022			2021			2021			2021			2022			2021
Net income	$	4,089		$	3,833		$	4,837		$	5,204		$	4,425		$	7,922		$	8,592
Add Income Taxes		787			772			1,027			1,174			968			1,559			1,864
Add Provision for loan losses		-			-			(200	)		-			200			-			900
PTPP	$	4,876		$	4,605		$	5,664		$	6,378		$	5,593		$	9,481		$	11,356

MIDDLEFIELD BANC CORP.
Average Balance Sheets
(Dollar amounts in thousands, unaudited)

		For the Three Months Ended
		June 30,												June 30,
		2022												2021
		Average								Average				Average								Average
		Balance				Interest				Yield/Cost				Balance				Interest				Yield/Cost
Interest-earning assets:
Loans receivable (3)		$	970,820			$	11,268			4.66	%			$	1,078,866			$	11,885			4.43	%
Investment securities (3)		176,138				1,397				3.76	%			135,338				1,012				3.47	%
Interest-earning deposits with other banks (4)		79,924				153				0.77	%			85,245				39				0.18	%
Total interest-earning assets		1,226,882				12,818				4.28	%			1,299,449				12,936				4.05	%
Noninterest-earning assets		89,555												70,692
Total assets		$	1,316,437											$	1,370,141
Interest-bearing liabilities:
Interest-bearing demand deposits		$	159,779			$	59			0.15	%			$	207,080			$	64			0.12	%
Money market deposits		185,711				228				0.49	%			185,728				212				0.46	%
Savings deposits		260,226				40				0.06	%			253,612				38				0.06	%
Certificates of deposit		184,748				382				0.83	%			233,930				696				1.19	%
Short-term borrowings		-				-				0.00	%			227				-				0.00	%
Other borrowings		12,945				81				2.51	%			13,062				71				2.18	%
Total interest-bearing liabilities		803,409				790				0.39	%			893,639				1,081				0.49	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		375,013												323,590
Other liabilities		4,638												6,193
Stockholders' equity		133,377												146,719
Total liabilities and stockholders' equity		$	1,316,437											$	1,370,141
Net interest income						$	12,028											$	11,855
Interest rate spread (1)										3.89	%											3.56	%
Net interest margin (2)										4.02	%											3.72	%
Ratio of average interest-earning assets to
average interest-bearing liabilities										152.71	%											145.41	%
(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 $271 and $179 for the three months ended June 30, 2022 and 2021, respectively
(4) Includes dividends received on restricted stock.

		For the Three Months Ended
		June 30,												March 31,
		2022												2022
		Average								Average				Average								Average
		Balance				Interest				Yield/Cost				Balance				Interest				Yield/Cost
Interest-earning assets:
Loans receivable (3)		$	970,820			$	11,268			4.66	%			$	983,853			$	10,985			4.53	%
Investment securities (3)		176,138				1,397				3.76	%			170,829				1,227				3.41	%
Interest-earning deposits with other banks (4)		79,924				153				0.77	%			91,690				51				0.23	%
Total interest-earning assets		1,226,882				12,818				4.28	%			1,246,372				12,263				4.06	%
Noninterest-earning assets		89,555												85,667
Total assets		$	1,316,437											$	1,332,039
Interest-bearing liabilities:
Interest-bearing demand deposits		$	159,779			$	59			0.15	%			$	170,353			$	60			0.14	%
Money market deposits		185,711				228				0.49	%			184,265				212				0.47	%
Savings deposits		260,226				40				0.06	%			260,162				38				0.06	%
Certificates of deposit		184,748				382				0.83	%			193,657				416				0.87	%
Short-term borrowings		-				-				0.00	%			-				-				0.00	%
Other borrowings		12,945				81				2.51	%			12,943				69				2.16	%
Total interest-bearing liabilities		803,409				790				0.39	%			821,380				795				0.39	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		375,013												359,656
Other liabilities		4,638												6,373
Stockholders' equity		133,377												144,630
Total liabilities and stockholders' equity		$	1,316,437											$	1,332,039
Net interest income						$	12,028											$	11,468
Interest rate spread (1)										3.89	%											3.67	%
Net interest margin (2)										4.02	%											3.80	%
Ratio of average interest-earning assets to
average interest-bearing liabilities										152.71	%											151.74	%
(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 $271 and $223 for the three months ended June 30, 2022, and March 31, 2022, respectively.
(4) Includes dividends received on restricted stock.

		For the Six Months Ended
		June 30,												June 30,
		2022												2021
		Average								Average				Average								Average
		Balance				Interest				Yield/Cost				Balance				Interest				Yield/Cost
Interest-earning assets:
Loans receivable (3)		$	977,336			$	22,253			4.60	%			$	1,091,119			$	24,052			4.45	%
Investment securities (3)		173,483				2,624				3.59	%			125,924				1,940				3.60	%
Interest-earning deposits with other banks (4)		85,807				204				0.48	%			89,477				86				0.19	%
Total interest-earning assets		1,236,626				25,081				4.17	%			1,306,520				26,078				4.08	%
Noninterest-earning assets		87,382												70,850
Total assets		$	1,324,008											$	1,377,370
Interest-bearing liabilities:
Interest-bearing demand deposits		$	165,066			$	119			0.15	%			$	205,063			$	141			0.14	%
Money market deposits		184,988				440				0.48	%			190,502				441				0.47	%
Savings deposits		260,194				78				0.06	%			254,882				85				0.07	%
Certificates of deposit		189,203				798				0.85	%			251,711				1,548				1.24	%
Short-term borrowings		-				-				0.00	%			169				-				0.00	%
Other borrowings		12,944				150				2.34	%			13,660				146				2.16	%
Total interest-bearing liabilities		812,395				1,585				0.39	%			915,987				2,361				0.52	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		367,334												309,395
Other liabilities		5,276												6,096
Stockholders' equity		139,003												145,892
Total liabilities and stockholders' equity		$	1,324,008											$	1,377,370
Net interest income						$	23,496											$	23,717
Interest rate spread (1)										3.78	%											3.56	%
Net interest margin (2)										3.91	%											3.71	%
Ratio of average interest-earning assets to
average interest-bearing liabilities										152.22	%											142.64	%
(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 $494 and $347 for the six months ended June 30, 2022 and 2021, respectively.
(4) Includes dividends received on restricted stock.

Company Contact:	Investor and Media Contact:
James Heslop President/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