Middlefield Banc Corp. Reports 2023 Nine-Month Financial Results

Source: Nasdaq GlobeNewswire / 23 Oct 2023 08:00:49 America/New_York

MIDDLEFIELD, OHIO, Oct. 23, 2023 (GLOBE NEWSWIRE) -- Middlefield Banc Corp. (NASDAQ: MBCN) today reported financial results for the three and nine months ended September 30, 2023.

2023 Nine-Month Financial Highlights (on a year-over-year basis unless noted):

Net income increased 13.6% to a record $13.8 million
Earnings were $1.70 per diluted share compared to $2.08 per diluted share, reflecting a 38.6% increase in the average diluted shares outstanding related to the Liberty Bancshares, Inc. merger
Pre-tax, pre-provision net income increased 28.6% to a record $19.0 million⁽¹⁾
Net interest income increased 38.0% to a record $49.8 million
Net interest margin improved by 13 basis points to 4.15%, compared to 4.02%
Noninterest income increased 17.5% to $5.1 million
Total loans were a record $1.45 billion, compared to $1.35 billion at December 31, 2022
Total deposits were a record $1.46 billion, compared to $1.40 billion at December 31, 2022
Return on average assets was 1.06%, compared to 1.24%
Return on average equity was 9.43%, compared to 11.96%
Return on average tangible common equity⁽¹⁾ was 11.92%, compared to 13.59%
Strong asset quality with nonperforming assets to total assets of 0.75%, compared to 0.78%
Allowance for credit losses was 1.45% of total loans, compared to 1.46%
Equity to assets increased to 10.80% from 9.09%

⁽¹⁾See non-GAAP reconciliation under the section “GAAP to Non-GAAP Reconciliations”

"Our third quarter performance reflects record loans, stable asset quality, and controlled operating expenses. Throughout the year, we have added proven executives to our leadership team to help support our growth. We have also added experienced lenders and treasury management professionals to grow Middlefield's brand and drive loan and deposit growth across our Northeast, Central, and Western Ohio markets. As a result of our team's efforts, we ended the third quarter with record total loans and assets and a 103-basis point year-over-year increase in our yield on earning assets. While this has produced strong levels of interest income, the higher rate environment and significant competition for deposits increased our funding costs at a faster rate and pressured net interest income during the quarter. We expect increased competition for deposits and higher funding costs to continue throughout 2023 and into 2024," stated James R. Heslop, II, Chief Executive Officer.

"We continue prudently managing our balance sheet and closely monitoring our loan portfolio. Despite the higher rate environment, economic activity remains stable across our Ohio markets, supported by low unemployment and large-scale, multi-year economic development projects. Our local presence in attractive Ohio markets, combined with $840 million in maximum borrowing capacity and a proven team of banking professionals, allows us to support the local needs of our communities while continuing to invest in our long-term growth initiatives," concluded Mr. Heslop.

Income Statement
Net interest income for the 2023 nine-month period increased 38.0% to $49.8 million, compared to $36.1 million for the same period last year. Year-to-date, the net interest margin was 4.15%, compared to 4.02% for the same period last year. Net interest income for the 2023 third quarter increased 26.7% to $16.0 million, compared to $12.6 million for the 2022 third quarter. The net interest margin for the 2023 third quarter was 3.88%, compared to 4.23% for the same period of 2022.

Pre-tax income for the 2022 nine-month period benefited from $1.2 million of accelerated net fees associated with the Paycheck Protection Program ("PPP").

For the 2023 nine-month period, noninterest income was $5.1 million, compared to $4.3 million for the same period last year. Noninterest income for the 2023 third quarter was $1.8 million, compared to $1.5 million for the same period the previous year.

For the 2023 nine-month period, noninterest expense was $36.0 million, compared to $25.7 million for the same period last year. Noninterest expense in the 2023 third quarter were $12.1 million, compared to $8.9 million for the 2022 third quarter. Higher 2023 third-quarter and year-to-date expenses were primarily associated with the Liberty Bancshares, Inc. merger.

Net income for the 2023 nine-month period ended September 30, 2023, was $13.8 million, or $1.70 per diluted share, compared to $12.2 million, or $2.08 per diluted share for the same period last year. Net income for the 2023 third quarter ended September 30, 2023, was $3.8 million, or $0.47 per diluted share, compared to $4.2 million, or $0.73 per diluted share, for the same period last year.

Pre-tax, pre-provision net income for the 2023 nine-months was $19.0 million, an increase of 28.6% from $14.7 million last year. For the 2023 third quarter, pre-tax, pre-provision net income was $5.7 million, an increase of 7.7% from $5.3 million last year. (See non-GAAP reconciliation under the section “GAAP to Non-GAAP Reconciliations”).

Balance Sheet
Total assets at September 30, 2023, increased 32.7% to $1.79 billion, compared to $1.35 billion at September 30, 2022. Total loans at September 30, 2023, increased 45.6% to $1.45 billion, compared to $995.2 million at September 30, 2022. The 45.6% year-over-year increase in total loans was due to the Liberty Bancshares, Inc. merger and organic loan growth. At September 30, 2023, total loans have increased organically by approximately 9.4% on an annualized basis.

Total deposits at September 30, 2023, were $1.46 billion, compared to $1.13 billion at September 30, 2022. The 28.9% year-over-year increase in deposits was primarily due to the Liberty Bancshares, Inc. merger. Noninterest-bearing deposits were 29.1% of total deposits at September 30, 2023, compared to 33.9% at September 30, 2022. At September 30, 2023, the Company had brokered deposits of $53.5 million, compared to $5.0 million at September 30, 2022.

The investment securities portfolio was $159.4 million at September 30, 2023, compared with $162.1 million at September 30, 2022.

Michael Ranttila, Chief Financial Officer, stated, "Our balance sheet remains strong, and during the quarter, we continued to benefit from stable asset quality, ample capital levels, and limited exposure to unrealized losses within our investment portfolio. Reflecting the stability of our loan portfolio, at September 30, 2023, nonperforming assets to total assets were 0.75%, compared to 0.78% at September 30, 2022. In addition, we ended the quarter with $65.5 million in cash and cash equivalents, $159.4 million in available for sale investment securities, and $570.8 million of maximum borrowing capacity at the Federal Home Loan Bank, demonstrating ample liquidity levels. Finally, we maintained a modest level of unrealized losses on all securities, which was 13.6% of total capital at September 30, 2023, compared to 20.4% at September 30, 2022. We are confident we have sufficient liquidity to navigate a more complex economic environment while supporting our growth strategies and capital allocation priorities."

Middlefield's CRE portfolio included the following categories at September 30, 2023:

CRE Category	Balance (in thousands)		Percent of CRE Portfolio	Percent of Loan Portfolio
Office Space	$	76,048	11.7%	5.3%
Shopping Plazas	$	76,036	11.7%	5.3%
Multi-Family	$	82,578	12.7%	5.7%
Self-Storage	$	59,734	9.2%	4.1%
Hospitality	$	40,450	6.2%	2.8%
Senior Living	$	23,629	3.6%	1.6%
Other	$	292,372	44.9%	20.2%
Total CRE	$	650,847	100.0%	45.0%

Middlefield's commercial real estate office credit exposure represented 5.3% of the Company's total loan portfolio at September 30, 2023, with a weighted average loan-to-value of approximately 53%.

Stockholders' Equity and Dividends
At September 30, 2023, stockholders' equity was $193.7 million compared to $122.9 million at September 30, 2022. The 57.7% year-over-year increase in stockholders' equity was primarily due to the Liberty Bancshares, Inc. merger, partially offset by an increase in the unrealized loss on the available-for-sale investment portfolio and acquisition of stock under the Company's stock repurchase program. On a per-share basis, shareholders' equity at September 30, 2023, was $23.94 compared to $21.30 at September 30, 2022.

At September 30, 2023, tangible stockholders' equity⁽¹⁾ was $150.6 million, compared to $106.6 million at September 30, 2022. On a per-share basis, tangible stockholders' equity⁽¹⁾ was $18.62 at September 30, 2023, compared to $18.48 at September 30, 2022. (See non-GAAP reconciliation under the section “GAAP to Non-GAAP Reconciliations”).

Through the 2023 nine-month period, the Company declared cash dividends of $0.60 per share, a 17.6% increase from $0.51 per share for the same period last year.

At September 30, 2023, the Company had an equity-to-assets ratio of 10.80%, compared to 9.09% at September 30, 2022.

Asset Quality
For the 2023 nine-month period and third quarter, the Company recorded provisions for credit losses of $2.4 million and $1.1 million, respectively, versus no provisions for credit losses for the same periods last year. The increase is largely due to growth in unfunded commitments.

Net recoveries were $16,000 or 0.00% of average loans, annualized, during the 2023 third quarter, compared to net charge-offs of $18,000, or 0.01% of average loans, annualized, at September 30, 2022. Year-to-date net charge-offs were $87,000, or 0.01% of average loans, annualized, compared to net recoveries of $190,000, or 0.02% of average loans, annualized, for the nine-months ended September 30, 2022.

Nonperforming loans at September 30, 2023, were $7.7 million, compared to $3.7 million at September 30, 2022. Nonperforming assets at September 30, 2023, were $13.5 million, compared to $10.5 million at September 30, 2022. The allowance for credit losses at September 30, 2023, stood at $21.0 million, or 1.45% of total loans, compared to $14.5 million, or 1.46% of total loans at September 30, 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 $1.79 billion at September 30, 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)

		September 30,				June 30,				March 31,			December 31,				September 30,
Balance Sheets (period end)			2023				2023			2023				2022				2022
ASSETS
Cash and due from banks	$		56,228		$		49,422		$	59,609		$		51,404		$		119,777
Federal funds sold			9,274				9,654			7,048				2,405				8,800
Cash and cash equivalents			65,502				59,076			66,657				53,809				128,577
Investment securities available for sale, at fair value			159,414				167,209			169,605				164,967				162,064
Other investments			958				711			777				915				972
Loans held for sale			632				171			104				-				-
Loans:
Commercial real estate:
Owner occupied			185,593				187,919			185,661				191,748				120,912
Non-owner occupied			382,676				385,846			400,314				380,580				285,419
Multifamily			82,578				58,579			63,892				58,251				38,063
Residential real estate			321,331				312,196			306,179				296,308				247,612
Commercial and industrial			214,334				209,349			195,024				195,602				146,987
Home equity lines of credit			127,494				126,894			126,555				128,065				114,344
Construction and other			127,106				118,851			97,406				94,199				33,748
Consumer installment			7,481				9,801			7,816				8,119				8,110
Total loans			1,448,593				1,409,435			1,382,847				1,352,872				995,195
Less allowance for credit losses			20,986				20,591			20,162				14,438				14,532
Net loans			1,427,607				1,388,844			1,362,685				1,338,434				980,663
Premises and equipment, net			21,708				21,629			21,775				21,961				16,215
Goodwill			36,197				36,197			31,735				31,735				15,071
Core deposit intangibles			6,906				7,171			7,436				7,701				1,171
Bank-owned life insurance			34,153				34,235			34,015				33,811				17,382
Other real estate owned			5,792				5,792			5,792				5,821				6,792
Accrued interest receivable and other assets			34,551				30,472			27,258				28,528				22,104
TOTAL ASSETS	$		1,793,420		$		1,751,507		$	1,727,839		$		1,687,682		$		1,351,011

		September 30,				June 30,				March 31,			December 31,				September 30,
			2023				2023			2023				2022				2022
LIABILITIES
Deposits:
Noninterest-bearing demand	$		424,055		$		441,102		$	474,977		$		503,907		$		383,675
Interest-bearing demand			243,973				229,633			196,086				164,677				160,112
Money market			275,766				241,537			221,723				187,498				162,052
Savings			216,453				231,508			287,859				307,917				247,466
Time			296,732				287,861			244,962				238,020				177,182
Total deposits			1,456,979				1,431,641			1,425,607				1,402,019				1,130,487
Short-term borrowings:
Federal Home Loan Bank advances			118,000				100,000			85,000				65,000				80,000
Other borrowings			11,912				11,961			12,010				12,059				12,107
Accrued interest payable and other liabilities			12,780				10,678			10,057				10,913				5,562
TOTAL LIABILITIES			1,599,671				1,554,280			1,532,674				1,489,991				1,228,156
STOCKHOLDERS' EQUITY
Common stock, no par value; 25,000,000 shares authorized, 9,928,028
shares issued, 8,092,576 shares outstanding as of September 30, 2023			161,312				161,211			161,248				161,029				87,640
Retained earnings			98,717				96,500			93,024				94,154				93,166
Accumulated other comprehensive loss			(26,426	)			(20,630	)		(19,253	)			(22,144	)			(25,080	)
Treasury stock, at cost; 1,835,452 shares as of September 30, 2023			(39,854	)			(39,854	)		(39,854	)			(35,348	)			(32,871	)
TOTAL STOCKHOLDERS' EQUITY			193,749				197,227			195,165				197,691				122,855

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$		1,793,420		$		1,751,507		$	1,727,839		$		1,687,682		$		1,351,011

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			2023				2023			2023				2022				2022			2023			2022

INTEREST AND DIVIDEND INCOME
Interest and fees on loans	$		20,899		$		20,762		$	18,275		$		14,368		$		11,892		$	59,935		$	34,145
Interest-earning deposits in other institutions			300				369			250				240				134			920			232
Federal funds sold			266				158			253				119				51			678			100
Investment securities:
Taxable interest			477				479			458				477				449			1,415			1,334
Tax-exempt interest			980				978			980				986				982			2,938			2,721
Dividends on stock			148				91			88				68				59			326			116
Total interest and dividend income			23,070				22,837			20,304				16,258				13,567			66,212			38,648
INTEREST EXPENSE
Deposits			5,632				3,851			2,990				1,771				812			12,472			2,247
Short-term borrowings			1,258				1,462			653				263				44			3,373			44
Other borrowings			213				170			155				142				112			539			262
Total interest expense			7,103				5,483			3,798				2,176				968			16,384			2,553

NET INTEREST INCOME			15,967				17,354			16,506				14,082				12,599			49,828			36,095

Provision for credit losses			1,127				814			507				-				-			2,449			-

NET INTEREST INCOME AFTER PROVISION
FOR CREDIT LOSSES			14,840				16,540			15,999				14,082				12,599			47,379			36,095
NONINTEREST INCOME
Service charges on deposit accounts			954				940			987				976				1,004			2,880			2,874
Gain (loss) on equity			48				(67	)		(138	)			(77	)			(57	)		(157	)		(96	)
Gain on other real estate owned			-				-			2				-				-			2			-
Earnings on bank-owned life insurance			207				220			200				137				108			627			322
Gain (loss) on sale of loans			45				6			23				(4	)			7			74			28
Revenue from investment services			190				174			186				147				233			550			527
Gross rental income			110				77			102				951				-			290			-
Other income			263				242			318				284				251			822			677
Total noninterest income			1,817				1,592			1,680				2,414				1,546			5,088			4,332

NONINTEREST EXPENSE
Salaries and employee benefits			5,994				6,019			5,852				4,886				4,491			17,865			12,662
Occupancy expense			699				659			696				487				458			2,054			1,546
Equipment expense			297				354			317				252				233			969			822
Data processing costs			1,209				1,137			1,070				1,050				985			3,587			2,650
Ohio state franchise tax			398				398			385				279				293			1,180			878
Federal deposit insurance expense			207				249			120				105				84			576			224
Professional fees			545				550			538				382				280			1,633			1,118
Other real estate owned writedowns			-				-			-				1,000				-			-			215
Advertising expense			414				415			486				308				268			1,315			725
Software amortization expense			24				23			26				28				27			73			115
Core deposit intangible amortization			265				265			265				140				78			794			232
Gross other real estate owned expenses			195				63			132				692				1			390			-
Merger-related costs			22				206			245				1,413				390			300			969
Other expense			1,849				1,716			1,661				1,321				1,298			5,228			3,531
Total noninterest expense			12,118				12,054			11,793				12,343				8,886			35,964			25,687

Income before income taxes			4,539				6,078			5,886				4,153				5,259			16,503			14,740
Income taxes			703				986			989				651				1,010			2,678			2,569

NET INCOME	$		3,836		$		5,092		$	4,897		$		3,502		$		4,249		$	13,825		$	12,171

PTPP⁽¹⁾	$		5,666		$		6,892		$	6,393		$		4,153		$		5,259		$	18,952		$	14,740

⁽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 Nine Months Ended
		September 30,				June 30,				March 31,			December 31,				September 30,				September 30,			September 30,
			2023				2023			2023				2022				2022			2023			2022
Per common share data
Net income per common share - basic	$		0.47		$		0.63		$	0.60		$		0.53		$		0.73		$	1.71		$	2.08
Net income per common share - diluted	$		0.47		$		0.63		$	0.60		$		0.53		$		0.73		$	1.70		$	2.08
Dividends declared per share	$		0.20		$		0.20		$	0.20		$		0.30		$		0.17		$	0.60		$	0.51
Book value per share (period end)	$		23.94		$		24.38		$	24.13		$		23.98		$		21.30		$	23.94		$	21.30
Tangible book value per share (period end) ^{(1) (2)}	$		18.62		$		19.02		$	19.29		$		19.19		$		18.48		$	18.62		$	18.48
Dividends declared	$		1,619		$		1,616		$	1,605		$		2,514		$		983		$	4,841		$	2,976
Dividend yield			3.12	%			2.99	%		2.89	%			4.34	%			2.49	%		3.16	%		2.52	%
Dividend payout ratio			42.21	%			31.74	%		32.78	%			71.79	%			23.13	%		35.02	%		24.45	%
Average shares outstanding - basic			8,092,494				8,088,793			8,138,771				6,593,616				5,792,773			8,106,517			5,840,757
Average shares outstanding - diluted			8,101,306				8,101,984			8,152,629				6,610,907				5,805,799			8,115,329			5,853,783
Period ending shares outstanding			8,092,576				8,088,793			8,088,793				8,245,235				5,767,803			8,092,576			5,767,803

Selected ratios
Return on average assets (Annualized)			0.86	%			1.17	%		1.16	%			0.97	%			1.32	%		1.06	%		1.24	%
Return on average equity (Annualized)			7.73	%			10.41	%		10.19	%			9.35	%			12.94	%		9.43	%		11.96	%
Return on average tangible common equity ^{(1) (3)}			9.91	%			13.12	%		12.77	%			11.13	%			14.79	%		11.92	%		13.59	%
Efficiency ⁽⁴⁾			65.65	%			61.27	%		62.44	%			72.75	%			61.07	%		63.10	%		61.79	%
Equity to assets at period end			10.80	%			11.26	%		11.30	%			11.71	%			9.09	%		10.80	%		9.09	%
Noninterest expense to average assets			0.68	%			0.69	%		0.69	%			0.86	%			0.69	%		2.06	%		1.96	%

⁽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 Nine Months Ended
		September 30,				June 30,				March 31,			December 31,				September 30,				September 30,			September 30,
Yields			2023				2023			2023				2022				2022			2023			2022
Interest-earning assets:
Loans receivable ⁽¹⁾			5.82	%			5.96	%		5.45	%			5.11	%			4.78	%		5.75	%		4.66	%
Investment securities ⁽¹⁾			4.09	%			4.08	%		4.11	%			3.83	%			3.90	%		4.08	%		3.69	%
Interest-earning deposits with other banks			4.13	%			3.98	%		3.46	%			3.42	%			2.06	%		3.85	%		0.82	%
Total interest-earning assets			5.58	%			5.69	%		5.22	%			4.88	%			4.55	%		5.50	%		4.30	%
Deposits:
Interest-bearing demand deposits			1.51	%			1.11	%		0.83	%			0.83	%			0.22	%		1.20	%		0.17	%
Money market deposits			2.94	%			2.21	%		1.52	%			1.00	%			0.46	%		2.29	%		0.47	%
Savings deposits			0.58	%			0.73	%		1.03	%			0.49	%			0.19	%		0.80	%		0.10	%
Certificates of deposit			3.27	%			2.35	%		1.71	%			1.30	%			0.96	%		2.50	%		0.89	%
Total interest-bearing deposits			2.16	%			1.60	%		1.28	%			0.87	%			0.43	%		1.70	%		0.39	%
Non-Deposit Funding:
Borrowings			5.66	%			5.26	%		4.78	%			4.25	%			2.94	%		5.30	%		2.61	%
Total interest-bearing liabilities			2.48	%			2.02	%		1.52	%			1.02	%			0.50	%		2.03	%		0.43	%
Cost of deposits			1.53	%			1.09	%		0.84	%			0.57	%			0.29	%		1.16	%		0.26	%
Cost of funds			1.80	%			1.43	%		1.02	%			0.68	%			0.34	%		1.42	%		0.29	%
Net interest margin ⁽²⁾			3.88	%			4.34	%		4.26	%			4.23	%			4.23	%		4.15	%		4.02	%

⁽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
		September 30,				June 30,				March 31,			December 31,				September 30,
Asset quality data			2023				2023			2023				2022				2022
(Dollar amounts in thousands, unaudited)
Nonperforming loans ⁽¹⁾	$		7,717		$		7,116		$	6,882		$		2,111		$		3,692
Other real estate owned			5,792				5,792			5,792				5,821				6,792
Nonperforming assets	$		13,509		$		12,908		$	12,674		$		7,932		$		10,484

Allowance for credit losses	$		20,986		$		20,591		$	20,162		$		14,438		$		14,532
Allowance for credit losses/total loans			1.45	%			1.46	%		1.46	%			1.07	%			1.46	%
Net charge-offs (recoveries):
Quarter-to-date	$		(16	)	$		111		$	(8	)	$		94		$		18
Year-to-date			87				103			(8	)			(96	)			(190	)
Net charge-offs (recoveries) to average loans, annualized:
Quarter-to-date			0.00	%			0.03	%		0.00	%			0.03	%			0.01	%
Year-to-date			0.01	%			0.01	%		0.00	%			(0.01	%)			(0.02	%)

Nonperforming loans/total loans			0.53	%			0.50	%		0.50	%			0.16	%			0.37	%
Allowance for credit losses/nonperforming loans			271.95	%			289.36	%		292.97	%			683.94	%			393.61	%
Nonperforming assets/total assets			0.75	%			0.74	%		0.73	%			0.47	%			0.78	%
⁽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)		September 30,				June 30,				March 31,			December 31,				September 30,
			2023				2023			2023				2022				2022

Stockholders' equity	$		193,749		$		197,227		$	195,165		$		197,691		$		122,855
Less goodwill and other intangibles			43,103				43,368			39,171				39,436				16,242
Tangible common equity	$		150,646		$		153,859		$	155,994		$		158,255		$		106,613

Shares outstanding			8,092,576				8,088,793			8,088,793				8,245,235				5,767,803
Tangible book value per share	$		18.62		$		19.02		$	19.29		$		19.19		$		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,				June 30,				March 31,			December 31,				September 30,				September 30,			September 30,
			2023				2023			2023				2022				2022			2023			2022

Average stockholders' equity	$		196,795		$		196,183		$	194,814		$		148,616		$		130,263		$	196,074		$	136,090
Less average goodwill and other intangibles			43,232				40,522			39,300				23,731				16,280			41,018			16,357
Average tangible common equity	$		153,563		$		155,661		$	155,514		$		124,885		$		113,983		$	155,056		$	119,733

Net income	$		3,836		$		5,092		$	4,897		$		4,896		$		3,502		$	13,825		$	12,171
Return on average tangible common equity (annualized)			9.91	%			13.12	%		12.77	%			11.13	%			14.79	%		11.92	%		13.59	%

Reconciliation of Pre-Tax Pre-Provision Income (PTPP)
Reconciliation of Pre-Tax Pre-Provision Income (PTPP)	For the Three Months Ended																				For the Nine Months Ended

		September 30,				June 30,				March 31,			December 31,				September 30,				September 30,			September 30,
			2023				2023			2023				2022				2022			2023			2022

Net income	$		3,836		$		5,092		$	4,897		$		3,502		$		4,249		$	13,825		$	12,171
Add income taxes			703				986			989				651				1,010			2,678			2,569
Add provision for credit losses			1,127				814			507				-				-			2,449			-
PTPP	$		5,666		$		6,892		$	6,393		$		4,153		$		5,259		$	18,952		$	14,740

MIDDLEFIELD BANC CORP.
Average Balance Sheets
(Dollar amounts in thousands, unaudited)
		For the Three Months Ended
		September 30,											September 30,
			2023											2022
		Average								Average			Average								Average
		Balance				Interest				Yield/Cost			Balance				Interest				Yield/Cost
Interest-earning assets:
Loans Receivable ⁽¹⁾		$	1,425,375			$	20,899			5.82	%		$	987,689			$	11,892			4.78	%
Investment securities ⁽¹⁾			166,671				1,457			4.09	%			172,316				1,431			3.90	%
Interest-earning deposits with other banks ⁽²⁾			68,587				714			4.13	%			46,938				244			2.06	%
Total interest-earning assets			1,660,633				23,070			5.58	%			1,206,943				13,567			4.55	%
Noninterest-earning assets			115,353											73,753
Total assets		$	1,775,986										$	1,280,696
Interest-bearing liabilities:
Interest-bearing demand deposits		$	256,153			$	975			1.51	%		$	162,878			$	91			0.22	%
Money market deposits			259,802				1,928			2.94	%			155,095				180			0.46	%
Savings deposits			225,216				327			0.58	%			249,898				119			0.19	%
Certificates of deposit			291,409				2,402			3.27	%			174,091				422			0.96	%
Short-term borrowings			91,201				1,258			5.47	%			8,554				44			2.04	%
Other borrowings			11,940				213			7.08	%			12,530				112			3.55	%
Total interest-bearing liabilities			1,135,721				7,103			2.48	%			763,046				968			0.50	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			431,775											382,351
Other liabilities			11,695											5,036
Stockholders' equity			196,795											130,263
Total liabilities and stockholders' equity		$	1,775,986										$	1,280,696
Net interest income						$	15,967										$	12,599
Interest rate spread ⁽³⁾										3.10	%										4.05	%
Net interest margin ⁽⁴⁾										3.88	%										4.23	%
Ratio of average interest-earning assets to average interest-bearing liabilities										146.22	%										158.17	%


⁽¹⁾ Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $270 and $277 for the three months ended September 30, 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⁾ Includes dividends received on restricted stock.

		For the Three Months Ended
		September 30,											June 30,
			2023											2023
		Average								Average			Average								Average
		Balance				Interest				Yield/Cost			Balance				Interest				Yield/Cost
Interest-earning assets:
Loans Receivable ⁽¹⁾		$	1,425,375			$	20,899			5.82	%		$	1,400,074			$	20,762			5.96	%
Investment securities⁽¹⁾			166,671				1,457			4.09	%			168,890				1,457			4.08	%
Interest-earning deposits with other banks ⁽²⁾			68,587				714			4.13	%			62,296				618			3.98	%
Total interest-earning assets			1,660,633				23,070			5.58	%			1,631,260				22,837			5.69	%
Noninterest-earning assets			115,353											114,120
Total assets		$	1,775,986										$	1,745,380
Interest-bearing liabilities:
Interest-bearing demand deposits		$	256,153			$	975			1.51	%		$	214,045			$	595			1.11	%
Money market deposits			259,802				1,928			2.94	%			234,497				1,294			2.21	%
Savings deposits			225,216				327			0.58	%			263,587				478			0.73	%
Certificates of deposit			291,409				2,402			3.27	%			252,785				1,484			2.35	%
Short-term borrowings			91,201				1,258			5.47	%			112,349				1,462			5.22	%
Other borrowings			11,940				213			7.08	%			11,992				170			5.69	%
Total interest-bearing liabilities			1,135,721				7,103			2.48	%			1,089,255				5,483			2.02	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			431,775											450,835
Other liabilities			11,695											9,107
Stockholders' equity			196,795											196,183
Total liabilities and stockholders' equity		$	1,775,986										$	1,745,380
Net interest income						$	15,967										$	17,354
Interest rate spread ⁽³⁾										3.10	%										3.67	%
Net interest margin ⁽⁴⁾										3.88	%										4.34	%
Ratio of average interest-earning assets to average interest-bearing liabilities										146.22	%										149.76	%


⁽¹⁾ Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $270 and $294 for the three months ended September 30, 2023 and June 30, 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⁾ Includes dividends received on restricted stock.

		For the Nine Months Ended
		September 30,											September 30,
			2023											2022
		Average								Average			Average								Average
		Balance				Interest				Yield/Cost			Balance				Interest				Yield/Cost
Interest-earning assets:
Loans Receivable ⁽¹⁾		$	1,395,438			$	59,935			5.75	%		$	980,787			$	34,145			4.66	%
Investment securities⁽¹⁾			168,049				4,353			4.08	%			173,094				4,055			3.69	%
Interest-earning deposits with other banks ⁽²⁾			66,730				1,924			3.85	%			72,851				448			0.82	%
Total interest-earning assets			1,630,217				66,212			5.50	%			1,226,732				38,648			4.30	%
Noninterest-earning assets			115,627											82,733
Total assets		$	1,745,844										$	1,309,465
Interest-bearing liabilities:
Interest-bearing demand deposits		$	216,044			$	1,934			1.20	%		$	164,337			$	210			0.17	%
Money market deposits			234,236				4,005			2.29	%			175,024				620			0.47	%
Savings deposits			267,951				1,608			0.80	%			256,762				197			0.10	%
Certificates of deposit			263,448				4,925			2.50	%			184,165				1,220			0.89	%
Short-term borrowings			86,670				3,373			5.20	%			2,851				44			2.06	%
Other borrowings			11,990				539			6.01	%			12,806				262			2.74	%
Total interest-bearing liabilities			1,080,339				16,384			2.03	%			795,945				2,553			0.43	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			458,086											372,343
Other liabilities			11,345											5,087
Stockholders' equity			196,074											136,090
Total liabilities and stockholders' equity		$	1,745,844										$	1,309,465
Net interest income						$	49,828										$	36,095
Interest rate spread ⁽³⁾										3.47	%										3.87	%
Net interest margin ⁽⁴⁾										4.15	%										4.02	%
Ratio of average interest-earning assets to average interest-bearing liabilities										150.90	%										154.12	%

⁽¹⁾ Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $824 and $768 for the nine months ended September 30, 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:
James R. Heslop II Chief Executive Officer Middlefield Banc Corp. (440) 632-1666 Ext. 3219 JHeslop@middlefieldbank.com	Andrew M. Berger Managing Director SM Berger & Company, Inc. (216) 464-6400 andrew@smberger.com

Middlefield Banc Corp. Reports 2023 Nine-Month Financial Results

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