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Middlefield Banc Corp. Reports 2020 First Half Financial Results

Company Release - 7/22/2020 8:00 AM ET

MIDDLEFIELD, Ohio, July 22, 2020 (GLOBE NEWSWIRE) -- Middlefield Banc Corp. (NASDAQ: MBCN) today reported financial results for the 2020 first half and second quarter ended June 30, 2020.

2020 First Half Financial Highlights versus 2019 First Half (unless noted):

  • Net interest income up 1.3% to $20.8 million
  • Noninterest income increased 5.7% to $2.6 million
  • Net income totaled $4.0 million and included a $3.4 million increase in the year-to-date provision for loan losses as a result of the COVID-19 crisis
  • Book value per share was up 6.7% to a record $22.09 per share
  • Tangible book value(1) per share was up 7.7% to $19.42 per share
  • Total loans increased 11.2% to $1.11 billion
  • Approved 1,343 PPP applications for $142.7 million during the second quarter
  • Net charge-offs declined 37.1% to $0.3 million
  • Second quarter provision was $1.0 million, compared to $2.7 million for the first quarter
  • Allowance for loan losses to nonperforming loans was 104.2%, compared to 68.1% for the same period last year
  • Equity to assets increased slightly to 10.5%

Thomas G. Caldwell, President and Chief Executive Officer, stated: “We continue to focus on protecting our customers and employees, while helping our communities respond to the unprecedented challenges created by the COVID-19 pandemic.  After temporarily restricting walk-in transactions in our bank lobbies in late March, all our branches reopened for lobby banking during the second quarter.  We have implemented safeguards to ensure we are doing our part to protect the health and well-being of our communities.  This includes requiring all employees to wear masks, limiting the number of customers allowed in our branches at one time, encouraging customers to social distance, installing partitions to limit exposure, offering special lobby hours for at-risk customers, and allowing employees to work from home.  I am extremely pleased with how our team and customers have responded to the operational adjustments we have made because of the pandemic.”

Mr. Caldwell continued, “At the same time we were adapting the Bank to operate safely throughout the COVID-19 pandemic, we quickly implemented our Paycheck Protection Program (“PPP”) process. During the second quarter, we successfully secured $142.7 million for 1,343 small businesses throughout Ohio and protected over 12,000 jobs.  The PPP process has driven significant loan and deposit growth during the quarter, and we are currently adjusting our focus to help customers qualify for forgiveness as permitted under the program.  I am encouraged that approximately 47% of PPP applicants booked were to small businesses without a prior banking relationship demonstrating our ability to serve our communities and the need for local and responsive financial relationships.” 

“For the second quarter, net interest income increased 4.4% reflecting the proactive adjustments we made to increase the yield on investment securities and reduce our cost of funds.  In addition, we were able to offset the operational and financial challenges caused by the COVID-19 crisis and the low rate environment.  Our book value increased 6.7% from the prior year period to a record of $22.09 per share, and noninterest income increased 15.1% to a quarterly record of $1.5 million. While the COVID-19 crisis continues to evolve, we remain dedicated to managing items under our control and maximizing shareholder value by profitably serving our Northeast and Central Ohio communities,” concluded Mr. Caldwell.  

Income Statement
For the 2020 first half, net interest income increased 1.3% to $20.8 million, compared to $20.5 million for the same period last year.  Year-to-date, the net interest margin was 3.56%, compared to 3.67% for the same period last year.  Net interest income for the 2020 second quarter was $10.7 million, compared to $10.3 million for the 2019 second quarter.  The 4.4% increase in net interest income for the 2020 second quarter was largely a result of a 29.6% reduction in interest expense.  The net interest margin for the 2020 second quarter was 3.49%, compared to 3.65% for the same period of 2019. 

For the 2020 first half, noninterest income was $2.6 million, compared to $2.4 million for the same period last year.  Noninterest income for the 2020 second quarter was $1.5 million, compared to $1.3 million for the same period last year. 

For the 2020 first half, noninterest expense decreased 0.3% to $14.9 million, compared to $15.0 million for the same period last year.  Operating costs in the 2020 second quarter increased 2.8% to $7.7 million from $7.5 million for the 2019 second quarter. 

Donald L. Stacy, Chief Financial Officer stated, “We continue to prudently increase our allowance for loan losses and took a $1.0 million provision in the quarter, in addition to the $2.7 million provision incurred during the first quarter.  As a result, our allowance for loan losses to nonperforming loans was 104.2% at June 30, 2020, compared to 68.1% at June 30, 2019.  We continue working on providing temporary relief to our customers and have modified 362 loans.  We continue to believe our asset quality was strong heading into the crisis, and nonperforming assets are down 3.0% from the prior year period, while year-to-date charge-offs have declined 37.1%.”

“As benchmark rates have declined, we have quickly reduced our funding costs and our cost of funds have improved from 1.29% at June 30, 2019 to 0.83% at June 30, 2020.  In addition, we continue to focus on proactively controlling expenses and second quarter noninterest expenses were up less than 3.0% and expenses are down slightly through the first six months of the year.  We believe our focus on asset quality, liquidity, and profitability provides us with the flexibility to navigate the current economic challenges associated with the COVID-19 crisis, while providing local, dedicated and responsive financial services to our communities.”

Net income for the 2020 first half ended June 30, 2020, was $4.0 million, or $0.62 per diluted share, compared to $6.3 million, or $0.97 per diluted share for the same period last year.  The decline in net income for the first half ended June 30, 2020 was primarily due to a $3.4 million increase in the year-to-date provision for loan losses as a result of the COVID-19 crisis.  Net income for the 2020 second quarter ended June 30, 2020, was $3.0 million, or $0.46 per diluted share, compared to $3.3 million, or $0.50 per diluted share for the same period last year.  The 2020 second quarter provision for loan losses increased $0.9 million, from the prior year period. 

Balance Sheet
Total assets at June 30, 2020, increased 4.3% to approximately $1.34 billion from $1.29 billion at June 30, 2019.  Net loans at June 30, 2020, were $1.10 billion, compared to $990.9 million at June 30, 2019, and $977.5 million at December 31, 2019.  The 11.0% year-over-year improvement in net loans was primarily a result of PPP loans originated during the quarter. 

Total deposits at June 30, 2020, were $1.16 billion, compared to $1.05 billion at June 30, 2019.  The 10.2% increase in deposits was driven by PPP deposits and pandemic uncertainty.  The investment portfolio, which is entirely classified as available for sale, was $112.5 millionJune 30, 2020, compared with $98.8 million at June 30, 2019. 

Stockholders’ Equity and Dividends
At the end of the 2020 second quarter, shareholders’ equity increased 4.8% to $140.7 million compared to $134.3 million at June 30, 2019.  On a per share basis, shareholders’ equity at June 30, 2020, was $22.09 compared to $20.70 at the same period last year. 

Tangible stockholders’ equity(1) increased 5.8% to $123.7 million for the 2020 second quarter, compared to $117.0 million at June 30, 2019.  On a per-share basis, tangible stockholders’ equity(1) was $19.42 at June 30, 2020, compared to $18.04 at June 30, 2019. 

Through the first six months of 2020, the company declared cash dividends of $0.30 per share, compared to $0.28 per share for the same period last year.

At June 30, 2020, the company had an equity to assets leverage ratio of 10.47%, compared to 10.42% at June 30, 2019. 

Asset Quality
The provision for loan losses for the 2020 second quarter was $1.0 million versus $110,000 for the same period last year.  Most of the increased provision is the result of increases to the economic conditions qualitative factors.  Nonperforming assets at June 30, 2020, were $10.5 million, compared to $10.8 million at June 30, 2019. 

Net charge-offs for the 2020 second quarter were $34,000, or 0.01% of average loans, annualized, compared to $12,000, or 0.00% of average loans, annualized at June 30, 2019.  Year-to-date net charge-offs were $298,000, or 0.06% of average loans, annualized compared to $474,000, or 0.10% of average loans, annualized for the same period last year. The allowance for loan losses at June 30, 2020, stood at $10.2 million, or 0.92% of total loans, compared to $7.3 million, or 0.73% of total loans at June 30, 2019. 

COVID-19 Update
The following table provides information with respect to our commercial loans by type at June 30, 2020.

At Risk Loans at June 30, 2020
Loan Type Number of
Loans
 Balance
(in thousands)
 % of Total
Loans
Retail 270 $  195,550 17.6%
Multifamily & Residential NOO 354  120,697 10.9%
Ambulatory Care, Nursing/Rehabilitation and Social Assistance 218  81,491 7.3%
Hospitality & tourism 58  44,923 4.0%
Restaurant/food service/bar 136  24,938 2.3%
Other 219  20,208 1.8%
  Total 1,255 $  487,807 43.9%

The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was signed into law on March 27, 2020, and as a qualified SBA lender, we were automatically authorized to originate PPP loans.

As of June 30, 2020, we approved 1,343 applications for up to $142.7 million of loans under the PPP.

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

Details with respect to actual loan modifications are as follows:

Deferrals at June 30, 2020
Loan Type Number of
Loans
 Balance
(in thousands)
 % of Total
Loans
Retail 58 $  89,438 8.1%
Multifamily & Residential NOO 16  7,628 0.7%
Ambulatory Care, Nursing/Rehabilitation and Social Assistance 10  22,456 2.0%
Hospitality & tourism 23  35,700 3.2%
Restaurant/food service/bar 10  5,216 0.5%
Other 245  54,379 4.9%
  Total 362 $  214,817 19.4%

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 $1.34 billion at June 30, 2020.  The bank operates 16 full-service banking centers and an LPL Financial® brokerage office serving Beachwood, Chardon, Cortland, Dublin, Garrettsville, Mantua, Middlefield, Newbury, Orwell, Plain City, Powell, Solon, Sunbury, Twinsburg, and Westerville.  The Bank also operates a Loan Production Office in Mentor, Ohio. 

Additional information is available at www.middlefieldbank.bank

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

This press release of Middlefield Banc Corp. and the reports Middlefield Banc Corp. files with the Securities and Exchange Commission often contain “forward-looking statements” relating to present or future trends or factors affecting the banking industry and, specifically, the financial operations, markets and products of Middlefield Banc Corp.  These forward-looking statements involve certain risks and uncertainties. There are a number of important factors that could cause Middlefield Banc Corp.’s future results to differ materially from historical performance or projected performance.  These factors include, but are not limited to: (1) a significant increase in competitive pressures among financial institutions; (2) changes in the interest rate environment that may reduce interest margins; (3) changes in prepayment speeds, charge-offs and loan loss provisions; (4) less favorable than expected general economic conditions; (5) legislative or regulatory changes that may adversely affect businesses in which Middlefield Banc Corp. is engaged; (6) technological issues which may adversely affect Middlefield Banc Corp.’s financial operations or customers; (7) the effect of the COVID-19 pandemic, including on our credit quality and business operations, as well as its impact on general economic and financial market conditions; (8) changes in the securities markets; or (9) risk factors mentioned in the reports and registration statements Middlefield Banc Corp. files with the Securities and Exchange Commission.  Middlefield Banc Corp. undertakes no obligation to release revisions to these forward-looking statements or to reflect events or circumstances after the date of this press release.

Company Contact:Investor and Media Contact:
Thomas G. Caldwell
President/Chief Executive Officer
Middlefield Banc Corp.
(440) 632-1666 Ext. 3200
tcaldwell@middlefieldbank.com
Andrew M. Berger
Managing Director
SM Berger & Company, Inc.
(216) 464-6400
andrew@smberger.com


MIDDLEFIELD BANC CORP. 
Consolidated Selected Financial Highlights 
(Dollar amounts in thousands, unaudited)           
 
  June 30,  March 31,   December 31,   September 30,  June 30,
Balance Sheets (period end) 2020  2020  2019  2019  2019
ASSETS              
  Cash and due from banks$55,741 $53,533 $35,113 $118,956 $133,372
  Federal funds sold 2,520  1,800  -  1,069  2,010
  Cash and cash equivalents 58,261  55,333  35,113  120,025  135,382
  Equity securities, at fair value 581  550  710  628  660
  Investment securities available for sale, at fair value 112,529  102,959  105,733  105,041  98,809
  Loans held for sale 4,151  513  1,220  791  431
  Loans:              
Commercial real estate:              
Owner occupied 110,134  113,272  102,386  106,839  109,944
Non-owner occupied 300,577  292,775  302,180  312,049  307,562
Multifamily 37,604  52,276  62,028  70,633  75,252
Residential real estate 227,427  233,900  234,798  236,280  232,168
Commercial and industrial 240,096  106,797  89,527  85,861  85,520
Home equity lines of credit 117,196  114,933  112,248  111,459  113,662
Construction and other 66,015  71,186  66,680  60,957  58,161
Consumer installment 11,210  12,861  14,411  15,204  15,963
Total loans 1,110,259  998,000  984,258  999,282  998,232
Less allowance for loan and lease losses 10,210  9,244  6,768  7,001  7,304
Net loans 1,100,049  988,756  977,490  992,281  990,928
  Premises and equipment, net 18,962  17,653  17,874  17,182  16,788
  Goodwill 15,071  15,071  15,071  15,071  15,071
  Core deposit intangibles 1,890  1,973  2,056  2,141  2,227
  Bank-owned life insurance 16,723  16,618  16,511  16,403  16,294
  Accrued interest receivable and other assets 15,078  14,513  10,697  11,015  11,832
  TOTAL ASSETS$1,343,295 $1,213,939 $1,182,475 $1,280,578 $1,288,422
               


  June 30,   March 31,    December 31,    September 30,   June 30, 
  2020    2020    2019    2019    2019  
LIABILITIES                  
  Deposits:                  
  Noninterest-bearing demand$270,738  $206,372  $191,370  $199,235  $198,817 
  Interest-bearing demand 136,722   125,184   107,844   107,033   94,266 
  Money market168,842   156,556   160,826   155,419   152,885 
  Savings218,545   175,468   192,003   182,005   194,505 
  Time 363,420   340,130   368,800   390,721   411,034 
  Total deposits1,158,267   1,003,710   1,020,843   1,034,413   1,051,507 
                    
  Short-term borrowings 20,417   60,000   5,075   92,000   85,000 
  Other borrowings17,162   12,662   12,750   12,359   12,449 
  Accrued interest payable and other liabilities 6,779   4,880   6,032   5,893   5,206 
  TOTAL LIABILITIES 1,202,625   1,081,252   1,044,700   1,144,665   1,154,162 
STOCKHOLDERS' EQUITY *               
  Common stock, no par value; 10,000,000 shares authorized, 7,298,829                   
shares issued, 6,369,467 shares outstanding as of June 30, 2020 86,722   86,722   86,617   86,617   86,590 
  Retained earnings 67,125   65,140   65,063   62,886   60,517 
  Accumulated other comprehensive income (loss) 3,761   (2,237  1,842   2,157   1,377 
  Treasury stock, at cost; 929,362 shares as of June 30, 2020 (16,938)  (16,938)  (15,747)  (15,747)  (14,224)
  TOTAL STOCKHOLDERS' EQUITY 140,670   132,687   137,775   135,913   134,260 
                    
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$1,343,295  $1,213,939  $1,182,475  $1,280,578  $1,288,422 
                    
* All share and per share information has been adjusted for a two-for-one stock split completed on November 8, 2019 


MIDDLEFIELD BANC CORP. 
Consolidated Selected Financial Highlights 
(Dollar amounts in thousands, unaudited)
  For the Three Months Ended  For the Six Months Ended
  June 30,  March 31,  December 31,  September 30, June 30,  June 30,  June 30,
Statements of Income 2020  2020 2019 2019 2019  2020  2019
                     
INTEREST AND DIVIDEND INCOME                    
  Interest and fees on loans$12,281 $12,078  $12,392 $12,804  $12,706  $24,359  $25,194
  Interest-earning deposits in other institutions 7  94   124  193   169   101   356
  Federal funds sold -  21   22  24   25   21   32
  Investment securities:                    
  Taxable interest 206  157   197  206   214   363   393
  Tax-exempt interest 634  629   661  613   553   1,263   1,118
  Dividends on stock 27  30   40  45   53   57   111
  Total interest and dividend income 13,155  13,009   13,436  13,885   13,720   26,164   27,204
INTEREST EXPENSE                    
  Deposits 2,336  2,865   3,014  3,173   3,277   5,201   6,222
  Short-term borrowings 32  35   34  42   79   67   292
  Other borrowings 62  76   80  92   95   138   191
  Total interest expense 2,430  2,976   3,128  3,307   3,451   5,406   6,705
                     
NET INTEREST INCOME 10,725  10,033   10,308  10,578   10,269   20,758   20,499
                     
Provision for loan losses 1,000  2,740   460  80   110   3,740   350
                     
NET INTEREST INCOME AFTER PROVISION                     
  FOR LOAN LOSSES 9,725  7,293   9,848  10,498   10,159   17,018   20,149
NONINTEREST INCOME                    
  Service charges on deposit accounts 566  553   577  571   530   1,119   1,038
  Investment securities gains on sale, net -  -   -  4   190   -   190
  Gain (loss) on equity securities 31  (160)  82  (32)  (14)  (129)  44
  Earnings on bank-owned life insurance 105  107   108  109   109   212   214
  Gains on sale of loans 381  114   148  128   98   495   157
  Other income 412  460   390  325   386   872   788
  Total noninterest income 1,495  1,074   1,305  1,105   1,299   2,569   2,431
                     
NONINTEREST EXPENSE                    
  Salaries and employee benefits 4,076  3,524   4,049  4,272   4,078   7,600   8,202
  Occupancy expense 483  550   580  535   496   1,033   1,049
  Equipment expense 307  273   270  244   291   580   526
  Data processing costs 684  666   614  580   549   1,350   1,014
  Ohio state franchise tax 281  268   262  262   261   549   520
  Federal deposit insurance expense 74  123   -  -   100   197   230
  Professional fees 369  349   448  401   403   718   834
  Advertising expense 217  209   128  202   200   426   403
  Software amortization expense 74  141   159  182   152   215   297
  Core deposit intangible amortization 83  83   85  86   85   166   170
  Other expense 1,041  1,066   783  909   867   2,107   1,737
  Total noninterest expense 7,689  7,252   7,378  7,673   7,482   14,941   14,982
                     
Income before income taxes 3,531  1,115   3,775  3,930   3,976   4,646   7,598
Income taxes 565  74   634  661   686   639   1,297
                     
NET INCOME$2,966 $1,041  $3,141 $3,269  $3,290  $4,007  $6,301
                     


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,
  2020  2020 2019  2019  2019  2020  2019
Per common share data (5)                     
Net income per common share - basic$0.47  $0.16  $0.48  $0.51  $0.51  $0.63  $0.97 
Net income per common share - diluted$0.46  $0.16  $0.48  $0.50  $0.50  $0.62  $0.97 
Dividends declared per share$0.15  $0.15  $0.15  $0.14  $0.14  $0.30  $0.28 
Book value per share (period end)$22.09  $20.83  $21.45  $21.16  $20.70  $22.09  $20.70 
Tangible book value per share (period end) (2) (3)$19.42  $18.16  $18.78  $18.48  $18.04  $19.42  $18.04 
Dividends declared$956  $964  $964  $900  $912  $1,920  $1,821 
Dividend yield 2.91%  3.82%  2.28%  2.37%  2.74%  2.91%  2.75%
Dividend payout ratio 32.23%  92.60%  30.69%  27.53%  27.72%  47.92%  28.90%
Average shares outstanding - basic 6,369,467   6,417,109   6,423,543   6,458,258   6,502,508   6,393,288   6,500,406 
Average shares outstanding - diluted 6,388,118   6,429,443   6,455,387   6,479,066   6,514,946   6,412,585   6,513,050 
Period ending shares outstanding 6,369,467   6,369,467   6,423,630   6,423,130   6,485,170   6,369,467   6,485,170 
                     
Selected ratios                    
Return on average assets 0.90%  0.35%  1.04%  1.07%  1.09%  0.78%  1.05%
Return on average equity 8.56%  3.01%  8.87%  9.41%  9.79%  5.79%  9.58%
Return on average tangible common equity (2) (4) 9.76%  3.43%  10.11%  10.76%  11.23%  6.59%  11.02%
Efficiency (1) 61.29%  63.47%  61.75%  63.93%  63.03%  62.33%  63.66%
Equity to assets at period end 10.47%  10.93%  11.65%  10.61%  10.42%  10.47%  10.42%
Noninterest expense to average assets 0.58%  0.61%  0.61%  0.64%  0.62%  1.44%  1.24%
                     
(1) The efficiency ratio is calculated by dividing noninterest expense less amortization of intangibles by the sum of net interest income on a fully taxable equivalent basis plus noninterest income 
(2) See reconciliation of non-GAAP measures below 
(3) Calculated by dividing tangible common equity by shares outstanding 
(4) Calculated by dividing annualized net income for each period by average tangible common equity 
(5) All share and per share information has been adjusted for the two-for-one stock split completed on November 8, 2019 
                     
MIDDLEFIELD BANC CORP. 
Consolidated Selected Financial Highlights 
(unaudited) 
  For the Three Months Ended  For the Six Months Ended
  June 30,  March 31,  December 31,  September 30, June 30,  June 30,  June 30,
Yields  2020  2020 2019 2019 2019   2020  2019
Interest-earning assets:                     
  Loans receivable (2) 4.53%  4.95%  4.97%  5.09%  5.09%  4.73%  5.08%
  Investment securities (2) 3.76%  3.62%  3.94%  3.80%  3.70%  3.69%  3.71%
  Interest-earning deposits with other banks 0.23%  1.40%  1.65%  2.31%  2.21%  0.72%  2.24%
Total interest-earning assets 4.27%  4.69%  4.75%  4.86%  4.86%  4.47%  4.85%
Deposits:                    
  Interest-bearing demand deposits 0.35%  0.42%  0.41%  0.39%  0.36%  0.38%  0.33%
  Money market deposits 0.93%  1.41%  1.41%  1.43%  1.40%  1.17%  1.50%
  Savings deposits 0.21%  0.50%  0.62%  0.68%  0.69%  0.35%  0.75%
  Certificates of deposit 2.00%  2.12%  2.18%  2.18%  2.35%  2.06%  2.27%
Total interest-bearing deposits 1.11%  1.39%  1.43%  1.48%  1.56%  1.25%  1.51%
Non-Deposit Funding:                     
  Borrowings 0.53%  1.62%  2.52%  3.03%  2.70%  0.83%  2.57%
Total interest-bearing liabilities 1.07%  1.40%  1.46%  1.51%  1.59%  1.23%  1.56%
Cost of deposits 0.85%  1.13%  1.15%  1.20%  1.26%  0.98%  1.22%
Cost of funds 0.83%  1.14%  1.17%  1.23%  1.29%  0.98%  1.27%
Net interest margin (1) 3.49%  3.63%  3.66%  3.72%  3.65%  3.56%  3.67%
                     
(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 2020  2020
 2019 2019 2019
(Dollar amounts in thousands)               
Nonaccrual loans$9,803  $8,405  $8,879  $10,053  $10,671 
Troubled debt restructuring           -   - 
90 day past due and accruing -   -   -   -   58 
Nonperforming loans (1) 9,803   8,405   8,879   10,053   10,729 
Other real estate owned 687   456   155   89   89 
Nonperforming assets$10,490  $8,861  $9,034  $10,142  $10,818 
               
Allowance for loan losses$10,210  $9,244  $6,768  $7,001  $7,304 
Allowance for loan losses/total loans 0.92%  0.93%  0.69%  0.70%  0.73%
Net charge-offs:              
  Quarter-to-date$34  $264  $693  $383  $12 
  Year-to-date 298   264   1,550   857   474 
Net charge-offs to average loans, annualized:               
  Quarter-to-date 0.01%  0.11%  0.28%  0.15%  0.00%
  Year-to-date 0.06%  0.11%  0.16%  0.11%  0.10%
               
Nonperforming loans/total loans 0.88%  0.84%  0.90%  1.01%  1.07%
Allowance for loan losses/nonperforming loans 104.15%  109.98%  76.22%  69.64%  68.08%
Nonperforming assets/total assets 0.78%  0.73%  0.76%  0.79%  0.84%
(1) Nonperforming loans exclude troubled debt restructurings that are performing in accordance with their terms over a prescribed period of time.


                     
Reconciliation of Common Stockholders' Equity to Tangible Common Equity *                    
For the Three Months Ended  For the Six Months Ended
(Dollar amounts in thousands) June 30,  March 31,  December 31,  September 30, June 30,  June 30,  June 30,
  2020  2020 2019 2019 2019  2020  2019
                     
Stockholders' Equity$140,670  $132,687  $137,775  $135,913  $134,260  $140,670  $134,260 
Less Goodwill and other intangibles 16,961   17,044   17,127   17,212   17,298   16,961   17,298 
Tangible Common Equity$123,709  $115,643  $120,648  $118,701  $116,962  $123,709  $116,962 
                     
Shares outstanding 6,369,467   6,369,467   6,423,630   6,423,130   6,485,170   6,369,467   6,485,170 
Tangible book value per share$19.42  $18.16  $18.78  $18.48  $18.04  $19.42  $18.04 
                     
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,
  2020  2020 2019 2019 2019  2020  2019
                     
Average Stockholders' Equity$139,287  $139,208  $140,475  $137,843  $134,836  $139,287  $132,643 
Less Average Goodwill and other intangibles 17,002   17,085   17,169   17,254   17,339   17,043   17,381 
Average Tangible Common Equity$122,285  $122,123  $123,306  $120,589  $117,497  $122,244  $115,262 
                     
Net income$2,966  $1,041  $3,141  $3,269  $3,290  $4,007  $6,301 
Return on average tangible common equity (annualized) 9.76%  3.43%  10.11%  10.76%  11.23%  6.59%  11.02%
* All share and per share information has been adjusted for a two-for-one stock split completed on November 8, 2019 


MIDDLEFIELD BANC CORP.
Average Balance Sheets 
(Dollar amounts in thousands, unaudited) 
  For the Three Months Ended
  June 30,  June 30,
   2020    2019 
  Average     Average  Average     Average
  Balance  Interest  Yield/Cost  Balance  Interest  Yield/Cost
Interest-earning assets:                  
Loans receivable (3) $1,092,095  $12,281  4.53%  $1,002,346  $12,706  5.09%
Investment securities (3)  107,765   840  3.76%   99,022   767  3.70%
Interest-earning deposits with other banks (4)  58,541   34  0.23%   44,747   247  2.21%
Total interest-earning assets  1,258,401   13,155  4.27%   1,146,115   13,720  4.86%
Noninterest-earning assets  62,976         61,267      
Total assets $1,321,377        $1,207,382      
Interest-bearing liabilities:                  
  Interest-bearing demand deposits $129,917  $112  0.35%  $98,929  $88  0.36%
  Money market deposits  164,434   381  0.93%   159,705   558  1.40%
  Savings deposits  198,967   104  0.21%   195,451   336  0.69%
  Certificates of deposit  350,298   1,739  2.00%   390,997   2,295  2.35%
  Short-term borrowings  55,973   32  0.23%   13,354   79  2.37%
  Other borrowings  15,615   62  1.60%   12,489   95  3.05%
Total interest-bearing liabilities  915,204   2,430  1.07%   870,925   3,451  1.59%
Noninterest-bearing liabilities:                  
  Noninterest-bearing demand deposits  262,575         198,234      
  Other liabilities  4,311         3,387      
Stockholders' equity  139,287         134,836      
Total liabilities and stockholders' equity $1,321,377        $1,207,382      
Net interest income    $10,725        $10,269   
Interest rate spread (1)        3.20%        3.27%
Net interest margin (2)        3.49%        3.65%
Ratio of average interest-earning assets to                  
  average interest-bearing liabilities        137.50%        131.60%
                  
(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 $190 and $168 for the three months ended June 30, 2020 and 2019, respectively.
(4) Includes dividends received on restricted stock. 
                  
  For the Three Months Ended
  June 30,  March 31,
   2020    2020 
  Average     Average  Average     Average
  Balance  Interest  Yield/Cost  Balance  Interest  Yield/Cost
Interest-earning assets:               
Loans receivable (3) $1,092,095  $12,281  4.53%  $984,034  $12,078  4.95%
Investment securities (3)  107,765   840  3.76%   105,894   786  3.62%
Interest-earning deposits with other banks (4)  58,541   34  0.23%   41,717   145  1.40%
Total interest-earning assets  1,258,401   13,155  4.27%   1,131,645   13,009  4.69%
Noninterest-earning assets  62,976         65,003      
Total assets $1,321,377        $1,196,648      
Interest-bearing liabilities:                  
  Interest-bearing demand deposits $129,917  $112  0.35%  $113,691  $119  0.42%
  Money market deposits  164,434   381  0.93%   158,008   552  1.41%
  Savings deposits  198,967   104  0.21%   183,137   226  0.50%
  Certificates of deposit  350,298   1,739  2.00%   373,866   1,968  2.12%
  Short-term borrowings  55,973   32  0.23%   14,808   35  0.95%
  Other borrowings  15,615   62  1.60%   12,703   76  2.41%
Total interest-bearing liabilities  915,204   2,430  1.07%   856,213   2,976  1.40%
Noninterest-bearing liabilities:                  
  Noninterest-bearing demand deposits  262,575         195,411      
  Other liabilities  4,311         5,816      
Stockholders' equity  139,287         139,208      
Total liabilities and stockholders' equity $1,321,377        $1,196,648      
Net interest income    $10,725        $10,033   
Interest rate spread (1)        3.20%        3.29%
Net interest margin (2)        3.49%        3.63%
Ratio of average interest-earning assets to                  
  average interest-bearing liabilities        137.50%        132.17%
                  
(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 $190 and $189 for the three months ended June 30, 2020 and March 31, 2020, respectively.
(4) Includes dividends received on restricted stock. 
                  
  For the Six Months Ended
  June 30,  June 30,
   2020    2019 
  Average     Average  Average     Average
  Balance  Interest  Yield/Cost  Balance  Interest  Yield/Cost
Interest-earning assets:                  
Loans receivable (3) $1,038,064  $24,359  4.73%  $1,001,344  $25,194  5.08%
Investment securities (3)  106,829   1,626  3.69%   98,253   1,511  3.71%
Interest-earning deposits with other banks (4)  50,129   179  0.72%   45,015   499  2.24%
Total interest-earning assets  1,195,022   26,164  4.47%   1,144,612   27,204  4.85%
Noninterest-earning assets  63,990         60,912      
Total assets $1,259,012        $1,205,524      
Interest-bearing liabilities:                  
  Interest-bearing demand deposits $121,804  $229  0.38%  $96,594  $160  0.33%
  Money market deposits  161,221   934  1.17%   176,970   1,313  1.50%
  Savings deposits  191,052   331  0.35%   201,650   753  0.75%
  Certificates of deposit  362,082   3,707  2.06%   355,620   3,996  2.27%
  Short-term borrowings  35,390   67  0.38%   24,372   292  2.42%
  Other borrowings  14,159   138  1.96%   13,473   191  2.86%
Total interest-bearing liabilities  885,708   5,406  1.23%   868,679   6,705  1.56%
Noninterest-bearing liabilities:                  
  Noninterest-bearing demand deposits  228,993         199,332      
  Other liabilities  5,024         4,870      
Stockholders' equity  139,287         132,643      
Total liabilities and stockholders' equity $1,259,012        $1,205,524      
Net interest income    $20,758        $20,499   
Interest rate spread (1)        3.24%        3.29%
Net interest margin (2)        3.56%        3.67%
Ratio of average interest-earning assets to                  
  average interest-bearing liabilities        134.92%        131.76%
                  
(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 $379 and $338 for the six months ended June 30, 2020 and 2019, respectively.
(4) Includes dividends received on restricted stock. 

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Source: Middlefield Banc Corp.