Middlefield Banc Corp. Reports 2023 Full-Year Financial Results

Source: Nasdaq GlobeNewswire / 26 Jan 2024 08:00:41 America/New_York

MIDDLEFIELD, Ohio, Jan. 26, 2024 (GLOBE NEWSWIRE) -- Middlefield Banc Corp. (NASDAQ: MBCN) today reported financial results for the three and twelve-months ended December 31, 2023.

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

Net income increased 10.8% to a record $17.4 million
Earnings were $2.14 per diluted share compared to $2.59 per diluted share, reflecting a 34.5% increase in the average diluted shares outstanding related to the Liberty Bancshares, Inc. merger
Pre-tax, pre-provision net income increased 25.7% to a record $23.8 million⁽¹⁾
Net interest income increased 29.9% to a record $65.2 million, supported by a strong net interest margin of 4.04%
Total loans were a record $1.48 billion, compared to $1.35 billion at December 31, 2022
Total deposits were $1.43 billion, compared to $1.40 billion at December 31, 2022
Return on average assets was 0.99%, compared to 1.17%
Return on average equity was 8.83%, compared to 11.25%
Return on average tangible common equity⁽¹⁾ was 11.20%, compared to 12.95%
Strong asset quality continues with nonperforming assets to total assets of 0.60% at year end
Allowance for credit losses was 1.47% of total loans, compared to 1.07%
Equity to assets remained strong at 11.28%
Book value increased 6.0% to $25.41 per share
Declared $0.85 per share in dividends, a 4.9% increase

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

Ronald L. Zimmerly, Jr., President and Chief Executive Officer, stated, "By many accounts, 2023 was a historic year for Middlefield as we successfully integrated the Liberty Bancshares, Inc. (“Liberty”) merger and ended the year with record total assets, stockholders’ equity, and annual net income. Through the Liberty merger, we expanded Middlefield’s footprint into Western Ohio and deepened our exposure in Central Ohio – creating one of the leading independent community banks in the state. In addition, we enhanced our management team and added seasoned Ohio bankers with deep expertise across Commercial, Business, and Consumer Banking as we remain focused on developing talent from within the Company and attracting leading bankers from outside our organization. Finally, we added new resources to drive deposit growth in a more competitive environment, enhanced our small business lending capabilities, and made strategic adjustments to our operating structure to provide more value to our retail customers. These actions have significantly enhanced our infrastructure, which we believe will allow us to serve our communities better, provide our team members more opportunities, and support Middlefield’s growth."

"As we look to 2024, we are focused on executing against our long-term strategic plan, benefiting from the synergies of the Liberty merger, and realizing the value from the investments we have made across our business this past year. While we expect uncertainty about FOMC monetary policies and their impact on national economic conditions in 2024, economic activity and employment within our Ohio markets remain stable. We believe 2024 will be another good year of balance sheet growth and profitability, and we remain committed to creating long-term value for our customers, communities, team members, and shareholders," concluded Mr. Zimmerly.

Income Statement
Net interest income for the 2023 twelve-month period increased 29.9% to $65.2 million, compared to $50.2 million for the same period last year. For the full year, the net interest margin was 4.04%, compared to 4.08% last year. Net interest income for the 2023 fourth quarter increased 9.2% to $15.4 million, compared to $14.1 million for the 2022 fourth quarter. The net interest margin for the 2023 fourth quarter was 3.70%, compared to 4.23% for the same period of 2022.

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

For the 2023 twelve-month period, noninterest income was $6.7 million, compared to $6.7 million for the same period last year. Noninterest income for the 2023 fourth quarter was $1.6 million, compared to $2.4 million for the same period the previous year.

For the 2023 twelve-month period, noninterest expense was $48.1 million, compared to $38.0 million for the same period last year. Higher year-over-year expenses for the year ended December 31, 2023, were primarily associated with the Liberty merger and higher personnel expenses, partially offset by a decrease in merger-related costs. Noninterest expense in the 2023 fourth quarter was $12.2 million, compared to $12.3 million for the 2022 fourth quarter.

Net income for the 2023 twelve-month period ended December 31, 2023, was $17.4 million, or $2.14 per diluted share, compared to $15.7 million, or $2.59 per diluted share for the same period last year. Net income for the 2023 fourth quarter ended December 31, 2023, was $3.5 million, or $0.44 per diluted share, compared to $3.5 million, or $0.53 per diluted share, for the same period last year.

Pre-tax, pre-provision net income for the 2023 twelve-months was $23.8 million, an increase of 25.7% from $18.9 million last year. For the 2023 fourth quarter, pre-tax, pre-provision net income was $4.8 million, an increase of 15.7% from $4.2 million last year. (See non-GAAP reconciliation under the section “GAAP to Non-GAAP Reconciliations”).

Balance Sheet
Total assets at December 31, 2023, increased 8.0% to $1.82 billion, compared to $1.69 billion at December 31, 2022. Total loans at December 31, 2023, were $1.48 billion, compared to $1.35 billion at December 31, 2022. The 9.3% year-over-year increase in total loans was primarily due to higher commercial and industrial, residential real estate, commercial real estate, and construction and other loans.

Total liabilities at December 31, 2023, increased 8.5% to $1.62 billion, compared to $1.49 billion at December 31, 2022. Total deposits at December 31, 2023, were $1.43 billion, compared to $1.40 billion at December 31, 2022. The 1.8% year-over-year increase in deposits was primarily due to growth in money market, interest-bearing demand, and time deposits, partially offset by declines in noninterest-bearing demand and savings accounts. Noninterest-bearing demand deposits were 28.1% of total deposits at December 31, 2023, compared to 35.9% at December 31, 2022. At December 31, 2023, the Company had brokered deposits of $90.3 million, compared to $5.0 million at December 31, 2022.

The investment securities available for sale portfolio was $170.8 million at December 31, 2023, compared with $165.0 million at December 31, 2022.

Michael Ranttila, Chief Financial Officer, stated, “Asset quality remains historically strong due to our conservative underwriting standards and balanced portfolio composition, as well as steady economic trends across our Central, Western, and Northeast Ohio markets. During the fourth quarter, we sold an other real estate owned property that was on our balance sheet for $5.8 million for a loss of $173,000. In addition, during the fourth quarter, we downgraded one self-storage loan in the Southwest Ohio market, which resulted in an approximately $3.2 million increase in nonperforming loans since the 2023 third quarter. The issue is isolated to this borrower and does not indicate a trend in the market, our portfolio, or an issue in underwriting.”

Mr. Ranttila continued, "We ended the quarter with $60.8 million in cash and cash equivalents, $170.8 million in available for sale investment securities, and $618.1 million of maximum borrowing capacity at the Federal Home Loan Bank, demonstrating ample liquidity. In addition, market values associated with our securities available for sale improved during 2023, resulting in a lower level of unrealized losses, which were 7.8% of total stockholders’ equity at December 31, 2023, compared to 11.2% at December 31, 2022. We remain confident that we have sufficient liquidity to navigate a more complex economic environment while continuing to support our growth strategies and capital allocation priorities and maintain the available for sale investment portfolio."

Middlefield's CRE portfolio included the following categories at December 31, 2023:

CRE Category	Balance (in thousands)		Percent of CRE Portfolio		Percent of Loan Portfolio
Multi-Family	$	82,506	12.4	%	5.6	%
Office Space	$	81,032	12.1	%	5.5	%
Shopping Plazas	$	75,024	11.3	%	5.1	%
Self-Storage	$	60,233	9.0	%	4.1	%
Hospitality	$	40,155	6.0	%	2.7	%
Senior Living	$	37,543	5.6	%	2.5	%
Other	$	291,138	43.6	%	19.7	%
Total CRE	$	667,631	100.0	%	45.2	%

Stockholders' Equity and Dividends
At December 31, 2023, stockholders' equity was $205.7 million compared to $197.7 million at December 31, 2022. The 4.0% year-over-year increase in stockholders' equity was primarily due to higher retained earnings and an improvement in the unrealized losses on the available-for-sale investment portfolio, partially offset by acquisition of stock under the Company's stock repurchase program. On a per-share basis, shareholders' equity at December 31, 2023, was $25.41 compared to $23.98 at December 31, 2022.

At December 31, 2023, tangible stockholders' equity⁽¹⁾ was $162.7 million, compared to $158.3 million at December 31, 2022. On a per-share basis, tangible stockholders' equity⁽¹⁾ was $20.10 at December 31, 2023, compared to $19.19 at December 31, 2022. ⁽¹⁾See non-GAAP reconciliation under the section “GAAP to Non-GAAP Reconciliations”.

For the 2023 full year, the Company declared cash dividends of $0.85 per share, a 4.9% increase from $0.81 per share for the same period last year. In the 2023 fourth quarter, the Company declared a $0.05 special cash dividend in addition to its regular cash dividend payment of $0.20. The Company declared a $0.10 special cash dividend in the 2022 fourth quarter.

At December 31, 2023, the Company had an equity-to-assets ratio of 11.28%, compared to 11.71% at December 31, 2022.

Asset Quality

For the 2023 twelve-month period and fourth quarter, the Company recorded provisions for credit losses of $3.0 million and $0.6 million, respectively, versus no provisions for credit losses for the same periods last year. The increase is due to the January 1, 2023 adoption of ASU 2016-13, Financial Instruments – Credit Losses – Topic (326): Measurement of Credit Losses on Financial Instruments. Upon adoption, the reserve for credit losses increased by $5.4 million.

For the year ended December 31, 2023, the Company had net recoveries of $31,000, or 0.00% of average loans, annualized, compared to net recoveries of $96,000, or 0.01% of average loans, annualized, for the year ended December 31, 2022. Net recoveries were $117,000 or 0.03% of average loans, annualized, during the 2023 fourth quarter, compared to net charge-offs of $94,000, or 0.03% of average loans, annualized, at December 31, 2022.

Nonperforming loans at December 31, 2023, were $10.9 million, compared to $2.1 million at December 31, 2022. Nonperforming assets at December 31, 2023, were $10.9 million, compared to $7.9 million at December 31, 2022. The allowance for credit losses at December 31, 2023, stood at $21.7 million, or 1.47% of total loans, compared to $14.4 million, or 1.07% of total loans at December 31, 2022.

About Middlefield Banc Corp.

Middlefield Banc Corp., headquartered in Middlefield, Ohio, is the Bank holding Company of The Middlefield Banking Company, with total assets of $1.82 billion at December 31, 2023. The Bank operates 21 full-service banking centers and an LPL Financial® brokerage office serving Ada, Beachwood, Bellefontaine, Chardon, Cortland, Dublin, Garrettsville, Kenton, Mantua, Marysville, Middlefield, Newbury, Orwell, Plain City, Powell, Solon, Sunbury, Twinsburg, and Westerville. The Bank also operates a Loan Production Office in Mentor, Ohio.

Additional information is available at www.middlefieldbank.bank

NON-GAAP FINANCIAL MEASURES

This press release includes disclosure of Middlefield Banc Corp.'s tangible book value per share, return on average tangible equity, and pre-tax, pre-provision for loan losses income, which are financial measures not prepared in accordance with generally accepted accounting principles in the United States (GAAP). A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed by GAAP. Middlefield Banc Corp. believes that these non-GAAP financial measures provide both management and investors a more complete understanding of the underlying operational results and trends and Middlefield Banc Corp.'s marketplace performance. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with GAAP. The reconciliations of non-GAAP financial measures are included in the tables following Consolidated Financial Highlights below.

FORWARD-LOOKING STATEMENTS
This press release of Middlefield Banc Corp. and the reports Middlefield Banc Corp. files with the Securities and Exchange Commission often contain "forward-looking statements" relating to present or future trends or factors affecting the banking industry and, specifically, the financial operations, markets and products of Middlefield Banc Corp. These forward-looking statements involve certain risks and uncertainties. There are a number of important factors that could cause Middlefield Banc Corp.'s future results to differ materially from historical performance or projected performance. These factors include, but are not limited to: (1) a significant increase in competitive pressures among financial institutions; (2) changes in the interest rate environment that may reduce interest margins; (3) changes in prepayment speeds, charge-offs and loan loss provisions; (4) less favorable than expected general economic conditions; (5) legislative or regulatory changes that may adversely affect businesses in which Middlefield Banc Corp. is engaged; (6) technological issues which may adversely affect Middlefield Banc Corp.'s financial operations or customers; (7) changes in the securities markets; or (8) risk factors mentioned in the reports and registration statements Middlefield Banc Corp. files with the Securities and Exchange Commission. Middlefield Banc Corp. undertakes no obligation to release revisions to these forward-looking statements or to reflect events or circumstances after the date of this press release.

MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
(Dollar amounts in thousands, unaudited)
		December 31,			September 30,			June 30,			March 31,			December 31,
Balance Sheets (period end)			2023			2023			2023			2023			2022
ASSETS
Cash and due from banks		$	56,397		$	56,228		$	49,422		$	59,609		$	51,404
Federal funds sold			4,439			9,274			9,654			7,048			2,405
Cash and cash equivalents			60,836			65,502			59,076			66,657			53,809
Investment securities available for sale, at fair value			170,779			159,414			167,209			169,605			164,967
Other investments			955			958			711			777			915
Loans held for sale			-			632			171			104			-
Loans:
Commercial real estate:
Owner occupied			183,545			185,593			187,919			185,661			191,748
Non-owner occupied			401,580			382,676			385,846			400,314			380,580
Multifamily			82,506			82,578			58,579			63,892			58,251
Residential real estate			328,854			321,331			312,196			306,179			296,308
Commercial and industrial			221,508			214,334			209,349			195,024			195,602
Home equity lines of credit			127,818			127,494			126,894			126,555			128,065
Construction and other			125,105			127,106			118,851			97,406			94,199
Consumer installment			7,214			7,481			9,801			7,816			8,119
Total loans			1,478,130			1,448,593			1,409,435			1,382,847			1,352,872
Less allowance for credit losses			21,693			20,986			20,591			20,162			14,438
Net loans			1,456,437			1,427,607			1,388,844			1,362,685			1,338,434
Premises and equipment, net			21,339			21,708			21,629			21,775			21,961
Goodwill			36,356			36,197			36,197			31,735			31,735
Core deposit intangibles			6,642			6,906			7,171			7,436			7,701
Bank-owned life insurance			34,349			34,153			34,235			34,015			33,811
Other real estate owned			-			5,792			5,792			5,792			5,821
Accrued interest receivable and other assets			35,190			34,551			30,472			27,258			28,528
TOTAL ASSETS		$	1,822,883		$	1,793,420		$	1,751,507		$	1,727,839		$	1,687,682

		December 31,			September 30,			June 30,			March 31,			December 31,
			2023			2023			2023			2023			2022
LIABILITIES
Deposits:
Noninterest-bearing demand		$	401,384		$	424,055		$	441,102		$	474,977		$	503,907
Interest-bearing demand			205,582			243,973			229,633			196,086			164,677
Money market			274,682			275,766			241,537			221,723			187,498
Savings			210,639			216,453			231,508			287,859			307,917
Time			334,315			296,732			287,861			244,962			238,020
Total deposits			1,426,602			1,456,979			1,431,641			1,425,607			1,402,019
Federal Home Loan Bank advances			163,000			118,000			100,000			85,000			65,000
Other borrowings			11,862			11,912			11,961			12,010			12,059
Accrued interest payable and other liabilities			15,738			12,780			10,678			10,057			10,913
TOTAL LIABILITIES			1,617,202			1,599,671			1,554,280			1,532,674			1,489,991
STOCKHOLDERS' EQUITY
Common stock, no par value; 25,000,000 shares authorized, 9,930,704
shares issued, 8,095,252 shares outstanding as of December 31, 2023			161,388			161,312			161,211			161,248			161,029
Retained earnings			100,237			98,717			96,500			93,024			94,154
Accumulated other comprehensive loss			(16,090	)		(26,426	)		(20,630	)		(19,253	)		(22,144	)
Treasury stock, at cost; 1,835,452 shares as of December 31, 2023			(39,854	)		(39,854	)		(39,854	)		(39,854	)		(35,348	)
TOTAL STOCKHOLDERS' EQUITY			205,681			193,749			197,227			195,165			197,691

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	1,822,883		$	1,793,420		$	1,751,507		$	1,727,839		$	1,687,682

MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
(Dollar amounts in thousands, unaudited)
		For the Three Months Ended															For the Twelve Months Ended
		December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
Statements of Income			2023			2023			2023			2023			2022			2023			2022

INTEREST AND DIVIDEND INCOME
Interest and fees on loans		$	22,027		$	20,899		$	20,762		$	18,275		$	14,368		$	81,963		$	48,513
Interest-earning deposits in other institutions			370			300			369			250			240			1,289			472
Federal funds sold			94			266			158			253			119			771			219
Investment securities:
Taxable interest			479			477			479			458			477			1,893			1,811
Tax-exempt interest			976			980			978			980			986			3,914			3,707
Dividends on stock			144			148			91			88			68			471			184
Total interest and dividend income			24,090			23,070			22,837			20,304			16,258			90,301			54,906
INTEREST EXPENSE
Deposits			6,522			5,632			3,851			2,990			1,771			18,995			4,018
Short-term borrowings			2,013			1,258			1,462			653			263			5,386			307
Other borrowings			179			213			170			155			142			717			404
Total interest expense			8,714			7,103			5,483			3,798			2,176			25,098			4,729

NET INTEREST INCOME			15,376			15,967			17,354			16,506			14,082			65,203			50,177

Provision for credit losses			554			1,127			814			507			-			3,002			-

NET INTEREST INCOME AFTER PROVISION
FOR CREDIT LOSSES			14,822			14,840			16,540			15,999			14,082			62,201			50,177
NONINTEREST INCOME
Service charges on deposit accounts			997			954			940			987			976			3,878			3,850
Loss on equity securities			(4	)		48			(67	)		(138	)		(77	)		(161	)		(173	)
(Loss) gain on other real estate owned			(172	)		-			-			2			-			(170	)		-
Earnings on bank-owned life insurance			196			207			220			200			137			823			459
Gain (loss) on sale of loans			23			45			6			23			(4	)		97			24
Revenue from investment services			193			190			174			186			147			743			674
Gross rental income			132			110			77			102			951			421			951
Other income			237			263			242			318			284			1,060			961
Total noninterest income			1,602			1,817			1,592			1,680			2,414			6,691			6,746

NONINTEREST EXPENSE
Salaries and employee benefits			6,646			5,994			6,019			5,852			4,886			24,511			17,548
Occupancy expense			512			699			659			696			487			2,566			2,033
Equipment expense			273			297			354			317			252			1,241			1,074
Data processing costs			1,348			1,209			1,137			1,070			1,050			4,764			3,701
Ohio state franchise tax			397			398			398			385			279			1,578			1,157
Federal deposit insurance expense			285			207			249			120			105			861			329
Professional fees			660			545			550			538			382			2,293			1,500
Other real estate owned writedowns			-			-			-			-			1,000			-			1,200
Advertising expense			162			414			415			486			308			1,477			1,033
Software amortization expense			22			24			23			26			28			95			143
Core deposit intangible amortization			264			265			265			265			140			1,059			372
Gross other real estate owned expenses			120			195			63			132			692			510			707
Merger-related costs			-			22			206			245			1,413			473			2,382
Other expense			1,483			1,849			1,716			1,661			1,321			6,709			4,851
Total noninterest expense			12,172			12,118			12,054			11,793			12,343			48,137			38,030

Income before income taxes			4,252			4,539			6,078			5,886			4,153			20,755			18,893
Income taxes			709			703			986			989			651			3,387			3,220

NET INCOME		$	3,543		$	3,836		$	5,092		$	4,897		$	3,502		$	17,368		$	15,673

PTPP⁽¹⁾		$	4,806		$	5,666		$	6,892		$	6,393		$	4,153		$	23,757		$	18,893

⁽¹⁾See section “GAAP to Non-GAAP Reconciliations” for the reconciliation of GAAP performance measures to non-GAAP measures.

MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
(Dollar amounts in thousands, except per share and share amounts, unaudited)
		For the Three Months Ended															For the Twelve Months Ended
		December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
			2023			2023			2023			2023			2022			2023			2022
Per common share data
Net income per common share - basic		$	0.44		$	0.47		$	0.63		$	0.60		$	0.53		$	2.14		$	2.60
Net income per common share - diluted		$	0.44		$	0.47		$	0.63		$	0.60		$	0.53		$	2.14		$	2.59
Dividends declared per share		$	0.25		$	0.20		$	0.20		$	0.20		$	0.30		$	0.85		$	0.81
Book value per share (period end)		$	25.41		$	23.94		$	24.38		$	24.13		$	23.98		$	25.41		$	23.98
Tangible book value per share (period end)^{(1) (2)}		$	20.10		$	18.62		$	19.02		$	19.29		$	19.19		$	20.10		$	19.19
Dividends declared		$	2,023		$	1,619		$	1,616		$	1,605		$	2,514		$	6,864		$	5,490
Dividend yield			3.06	%		3.12	%		2.99	%		2.89	%		4.34	%		2.63	%		2.96	%
Dividend payout ratio			57.10	%		42.21	%		31.74	%		32.78	%		71.79	%		39.52	%		37.23	%
Average shares outstanding - basic			8,093,478			8,092,494			8,088,793			8,138,771			6,593,616			8,103,230			6,027,091
Average shares outstanding - diluted			8,116,609			8,101,306			8,101,984			8,152,629			6,610,907			8,126,361			6,044,382
Period ending shares outstanding			8,095,252			8,092,576			8,088,793			8,088,793			8,245,235			8,095,252			8,245,235

Selected ratios
Return on average assets (Annualized)			0.78	%		0.86	%		1.17	%		1.16	%		0.97	%		0.99	%		1.17	%
Return on average equity (Annualized)			7.13	%		7.73	%		10.41	%		10.19	%		9.35	%		8.83	%		11.25	%
Return on average tangible common equity^{(1) (3)}			9.11	%		9.91	%		13.12	%		12.77	%		11.13	%		11.20	%		12.95	%
Efficiency⁽⁴⁾			68.99	%		65.65	%		61.27	%		62.44	%		72.75	%		64.49	%		64.96	%
Equity to assets at period end			11.28	%		10.80	%		11.26	%		11.30	%		11.71	%		11.28	%		11.71	%
Noninterest expense to average assets			0.68	%		0.68	%		0.69	%		0.69	%		0.86	%		2.74	%		2.84	%

⁽¹⁾See section “GAAP to Non-GAAP Reconciliations” for the reconciliation of GAAP performance measures to non-GAAP measures.
⁽²⁾Calculated by dividing tangible common equity by shares outstanding.
⁽³⁾Calculated by dividing annualized net income for each period by average tangible common equity.
⁽⁴⁾The efficiency ratio is calculated by dividing noninterest expense less amortization of intangibles by the sum of net interest income on a fully taxable equivalent basis plus noninterest income.

MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
(Unaudited)
		For the Three Months Ended															For the Twelve Months Ended
		December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
Yields			2023			2023			2023			2023			2022			2023			2022
Interest-earning assets:
Loans receivable⁽¹⁾			6.01	%		5.82	%		5.96	%		5.45	%		5.11	%		5.82	%		4.79	%
Investment securities⁽¹⁾			4.26	%		4.09	%		4.08	%		4.11	%		3.83	%		4.13	%		3.73	%
Interest-earning deposits with other banks			3.71	%		4.13	%		3.98	%		3.46	%		3.42	%		3.82	%		1.31	%
Total interest-earning assets			5.76	%		5.58	%		5.69	%		5.22	%		4.88	%		5.57	%		4.45	%
Deposits:
Interest-bearing demand deposits			1.67	%		1.51	%		1.11	%		0.83	%		0.83	%		1.32	%		0.34	%
Money market deposits			3.58	%		2.94	%		2.21	%		1.52	%		1.00	%		2.65	%		0.61	%
Savings deposits			0.59	%		0.58	%		0.73	%		1.03	%		0.49	%		0.76	%		0.20	%
Certificates of deposit			3.68	%		3.27	%		2.35	%		1.71	%		1.30	%		2.83	%		1.00	%
Total interest-bearing deposits			2.56	%		2.16	%		1.60	%		1.28	%		0.87	%		1.92	%		0.51	%
Non-Deposit Funding:
Borrowings			5.57	%		5.66	%		5.26	%		4.78	%		4.25	%		5.40	%		3.35	%
Total interest-bearing liabilities			2.96	%		2.48	%		2.02	%		1.52	%		1.02	%		2.28	%		0.59	%
Cost of deposits			1.81	%		1.53	%		1.09	%		0.84	%		0.57	%		1.32	%		0.34	%
Cost of funds			2.18	%		1.80	%		1.43	%		1.02	%		0.68	%		1.62	%		0.40	%
Net interest margin⁽²⁾			3.70	%		3.88	%		4.34	%		4.26	%		4.23	%		4.04	%		4.08	%

⁽¹⁾Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were determined using an effective tax rate of 21%.
⁽²⁾Net interest margin represents net interest income as a percentage of average interest-earning assets.

		For the Three Months Ended
		December 31,			September 30,			June 30,			March 31,			December 31,
Asset quality data			2023			2023			2023			2023			2022
(Dollar amounts in thousands, unaudited)
Nonperforming loans⁽¹⁾		$	10,877		$	7,717		$	7,116		$	6,882		$	2,111
Other real estate owned			-			5,792			5,792			5,792			5,821
Nonperforming assets		$	10,877		$	13,509		$	12,908		$	12,674		$	7,932

Allowance for credit losses		$	21,693		$	20,986		$	20,591		$	20,162		$	14,438
Allowance for credit losses/total loans			1.47	%		1.45	%		1.46	%		1.46	%		1.07	%
Net charge-offs (recoveries):
Quarter-to-date		$	(117	)	$	(16	)	$	111		$	(8	)	$	94
Year-to-date			(31	)		87			103			(8	)		(96	)
Net charge-offs (recoveries) to average loans, annualized:
Quarter-to-date			(0.03	%)		0.00	%		0.03	%		0.00	%		0.03	%
Year-to-date			0.00	%		0.01	%		0.01	%		0.00	%		(0.01	%)

Nonperforming loans/total loans			0.74	%		0.53	%		0.50	%		0.50	%		0.16	%
Allowance for credit losses/nonperforming loans			199.44	%		271.95	%		289.36	%		292.97	%		683.94	%
Nonperforming assets/total assets			0.60	%		0.75	%		0.74	%		0.73	%		0.47	%
⁽¹⁾On January 1, 2023, the Company adopted ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. As a result, nonperforming loans for the periods after January 1, 2023, include certain loans which were modified to borrowers experiencing financial difficulty. Amounts prior to January 1, 2023, exclude nonperforming troubled debt restructurings that were performing in according with their terms over a prescribed period of time, for which accounting guidance was eliminated upon adoption of ASU 2022-02.

MIDDLEFIELD BANC CORP.
GAAP to Non-GAAP Reconciliations

Reconciliation of Common Stockholders' Equity to Tangible Common Equity
	For the Three Months Ended
(Dollar amounts in thousands, unaudited)		December 31,			September 30,			June 30,			March 31,			December 31,
			2023			2023			2023			2023			2022

Stockholders' equity		$	205,681		$	193,749		$	197,227		$	195,165		$	197,691
Less goodwill and other intangibles			42,998			43,103			43,368			39,171			39,436
Tangible common equity		$	162,683		$	150,646		$	153,859		$	155,994		$	158,255

Shares outstanding			8,095,252			8,092,576			8,088,793			8,088,793			8,245,235
Tangible book value per share		$	20.10		$	18.62		$	19.02		$	19.29		$	19.19								0

Reconciliation of Average Equity to Return on Average Tangible Common Equity
	For the Three Months Ended																For the Twelve Months Ended

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

Average stockholders' equity		$	197,208		$	196,795		$	196,183		$	194,814		$	148,616		$	196,602		$	139,270
Less average goodwill and other intangibles			42,972			43,232			40,522			39,300			23,731			41,507			18,200
Average tangible common equity		$	154,236		$	153,563		$	155,661		$	155,514		$	124,885		$	155,095		$	121,070

Net income		$	3,543		$	3,836		$	5,092		$	4,897		$	3,502		$	17,368		$	15,673
Return on average tangible common equity (annualized)			9.11	%		9.91	%		13.12	%		12.77	%		11.13	%		11.20	%		12.95	%

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

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

Net income		$	3,543		$	3,836		$	5,092		$	4,897		$	3,502		$	17,368		$	15,673
Add income taxes			709			703			986			989			651			3,387			3,220
Add provision for credit losses			554			1,127			814			507			-			3,002			-
PTPP		$	4,806		$	5,666		$	6,892		$	6,393		$	4,153		$	23,757		$	18,893

MIDDLEFIELD BANC CORP.
Average Balance Sheets
(Dollar amounts in thousands, unaudited)
		For the Three Months Ended
		December 31,									December 31,
			2023									2022
		Average						Average			Average						Average
		Balance			Interest			Yield/Cost			Balance			Interest			Yield/Cost
Interest-earning assets:
Loans receivable ⁽¹⁾		$	1,454,688		$	22,027			6.01	%	$	1,117,221		$	14,368			5.11	%
Investment securities ⁽¹⁾			159,493			1,455			4.26	%		178,772			1,463			3.83	%
Interest-earning deposits with other banks ⁽²⁾			64,989			608			3.71	%		49,569			427			3.42	%
Total interest-earning assets			1,679,170			24,090			5.76	%		1,345,562			16,258			4.88	%
Noninterest-earning assets			116,160									89,740
Total assets		$	1,795,330								$	1,435,302
Interest-bearing liabilities:
Interest-bearing demand deposits		$	222,517		$	935			1.67	%	$	165,267		$	344			0.83	%
Money market deposits			276,354			2,493			3.58	%		172,437			435			1.00	%
Savings deposits			211,997			317			0.59	%		266,613			330			0.49	%
Certificates of deposit			299,427			2,777			3.68	%		201,972			662			1.30	%
Short-term borrowings			144,344			2,013			5.53	%		25,750			263			4.05	%
Other borrowings			11,890			179			5.97	%		12,086			142			4.66	%
Total interest-bearing liabilities			1,166,529			8,714			2.96	%		844,125			2,176			1.02	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			422,151									428,155
Other liabilities			9,442									14,406
Stockholders' equity			197,208									148,616
Total liabilities and stockholders' equity		$	1,795,330								$	1,435,302
Net interest income					$	15,376								$	14,082
Interest rate spread ⁽³⁾									2.80	%								3.86	%
Net interest margin ⁽⁴⁾									3.70	%								4.23	%
Ratio of average interest-earning assets to average interest-bearing liabilities									143.95	%								159.40	%


⁽¹⁾Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $282 and $278 for the three months ended December 31, 2023 and 2022, respectively.
⁽²⁾Includes dividends received on restricted stock.
⁽³⁾Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
⁽⁴⁾Net interest margin represents net interest income as a percentage of average interest-earning assets.

		For the Three Months Ended
		December 31,									September 30,
			2023									2023
		Average						Average			Average						Average
		Balance			Interest			Yield/Cost			Balance			Interest			Yield/Cost
Interest-earning assets:
Loans receivable ⁽¹⁾		$	1,454,688		$	22,027			6.01	%	$	1,425,375		$	20,899			5.82	%
Investment securities ⁽¹⁾			159,493			1,455			4.26	%		166,671			1,457			4.09	%
Interest-earning deposits with other banks ⁽²⁾			64,989			608			3.71	%		68,587			714			4.13	%
Total interest-earning assets			1,679,170			24,090			5.76	%		1,660,633			23,070			5.58	%
Noninterest-earning assets			116,160									115,353
Total assets		$	1,795,330								$	1,775,986
Interest-bearing liabilities:
Interest-bearing demand deposits		$	222,517		$	935			1.67	%	$	256,153		$	975			1.51	%
Money market deposits			276,354			2,493			3.58	%		259,802			1,928			2.94	%
Savings deposits			211,997			317			0.59	%		225,216			327			0.58	%
Certificates of deposit			299,427			2,777			3.68	%		291,409			2,402			3.27	%
Short-term borrowings			144,344			2,013			5.53	%		91,201			1,258			5.47	%
Other borrowings			11,890			179			5.97	%		11,940			213			7.08	%
Total interest-bearing liabilities			1,166,529			8,714			2.96	%		1,135,721			7,103			2.48	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			422,151									431,775
Other liabilities			9,442									11,695
Stockholders' equity			197,208									196,795
Total liabilities and stockholders' equity		$	1,795,330								$	1,775,986
Net interest income					$	15,376								$	15,967
Interest rate spread ⁽³⁾									2.80	%								3.10	%
Net interest margin ⁽⁴⁾									3.70	%								3.88	%
Ratio of average interest-earning assets to average interest-bearing liabilities									143.95	%								146.22	%


⁽¹⁾Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $282 and $270 for the three months ended December 31, 2023 and September 30, 2023, respectively.
⁽²⁾Includes dividends received on restricted stock.
⁽³⁾Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
⁽⁴⁾Net interest margin represents net interest income as a percentage of average interest-earning assets.

		For the Twelve Months Ended
		December 31,									December 31,
			2023									2022
		Average						Average			Average						Average
		Balance			Interest			Yield/Cost			Balance			Interest			Yield/Cost
Interest-earning assets:
Loans receivable ⁽¹⁾		$	1,410,251		$	81,963			5.82	%	$	1,014,896		$	48,513			4.79	%
Investment securities ⁽¹⁾			165,910			5,807			4.13	%		174,514			5,518			3.73	%
Interest-earning deposits with other banks ⁽²⁾			66,295			2,531			3.82	%		67,030			875			1.31	%
Total interest-earning assets			1,642,456			90,301			5.57	%		1,256,440			54,906			4.45	%
Noninterest-earning assets			116,459									84,484
Total assets		$	1,758,915								$	1,340,924
Interest-bearing liabilities:
Interest-bearing demand deposits		$	217,662		$	2,870			1.32	%	$	164,569		$	554			0.34	%
Money market deposits			244,765			6,498			2.65	%		174,377			1,055			0.61	%
Savings deposits			253,962			1,925			0.76	%		259,225			527			0.20	%
Certificates of deposit			272,443			7,702			2.83	%		188,617			1,882			1.00	%
Short-term borrowings			101,088			5,386			5.33	%		8,576			307			3.58	%
Other borrowings			11,965			717			5.99	%		12,626			404			3.20	%
Total interest-bearing liabilities			1,101,885			25,098			2.28	%		807,990			4,729			0.59	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			449,102									386,296
Other liabilities			11,326									7,368
Stockholders' equity			196,602									139,270
Total liabilities and stockholders' equity		$	1,758,915								$	1,340,924
Net interest income					$	65,203								$	50,177
Interest rate spread ⁽³⁾									3.29	%								3.86	%
Net interest margin ⁽⁴⁾									4.04	%								4.08	%
Ratio of average interest-earning assets to average interest-bearing liabilities									149.06	%								155.50	%

⁽¹⁾Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $1,106 and $1,046 for the twelve months ended December 31, 2023 and 2022, respectively.
⁽²⁾Includes dividends received on restricted stock.
⁽³⁾Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
⁽⁴⁾Net interest margin represents net interest income as a percentage of average interest-earning assets.

Company Contact:	Investor and Media Contact:
Ronald L. Zimmerly, Jr. President and Chief Executive Officer Middlefield Banc Corp. (419) 673-1217 rzimmerly@middlefieldbank.com	Andrew M. Berger Managing Director SM Berger & Company, Inc. (216) 464-6400 andrew@smberger.com

Middlefield Banc Corp. Reports 2023 Full-Year Financial Results

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