Press Release

MIDDLEFIELD, Ohio, Jan. 25, 2022 (GLOBE NEWSWIRE) -- Middlefield Banc Corp. (NASDAQ: MBCN) today reported financial results for the three and twelve months ended December 31, 2021.

2021 Financial Highlights (on a year-over-year basis unless noted):

• Returned $16.6 million of capital to shareholders through dividends and the repurchase of 512,449 shares
• Net income increased 123.2% to a record $18.6 million, compared to $8.3 million
• Net interest margin improved by 25 basis points to 3.79%, compared to 3.54%
• Total noninterest income increased 20.3% to $7.2 million
• Pre-tax, pre-provision⁽¹⁾ income increased 19.4% to $23.4 million
• Return on average assets increased to 1.36% from 0.64%
• Return on average equity increased to 12.74% from 5.87%
• Return on average tangible common equity⁽¹⁾ increased to 14.38% from 6.66%
• Efficiency ratio improved to 56.48%, compared to 58.77%
• Strong asset quality with nonperforming loans to total loans of 0.49%, compared to 0.71%

“We achieved record earnings in 2021 driven by strong asset quality, the contribution of PPP forgiveness, prudent expense management, and record annual noninterest income,” stated Thomas G. Caldwell, President and Chief Executive Officer. “We also returned a record amount of capital to our shareholders in 2021 through our share repurchase program and growing dividend policy. During 2021, we invested $12.3 million in our share repurchase program, retiring approximately 8.0% of our outstanding shares, and at an average price of $23.99 or 109.6% of our tangible book value of $21.88 at December 31, 2021. In addition, we paid $4.2 million in dividends during the year, reflecting an increase of 10.6% over the prior year.⁽¹⁾”  

“We expect loan growth will remain challenging in 2022, as we work to forgive the remaining $34.1 million balance of PPP loans in our loan portfolio at December 31, 2021, and we continue to focus on controlling risk and pricing on loans. However, we are proactively working on several growth initiatives that we expect will improve demand throughout 2022 and beyond. Strategies include enhancing our digital banking offerings, adding new lenders throughout our Northeast Ohio and Central Ohio markets, and pursuing new marketing initiatives that better promote our services to current and perspective customers.”  

“Having celebrated our 120^th year in business, I am proud of the milestones we achieved in 2021. I believe Middlefield’s local, community-oriented financial offerings are well positioned to add value to current and prospective customers and look forward to the Company’s success in the future. Finally, our accomplishments are a direct result of the commitment and dedication of our associates and I want to thank everyone at Middlefield for their continued hard work,” concluded Mr. Caldwell.

Income Statement
For the 2021 full year, net interest income increased 11.3% to $48.3 million, compared to $43.4 million for the same period last year. The net interest margin for the 2021 twelve-month period was 3.79%, compared to 3.54% for the same period last year. Net interest income for the 2021 fourth quarter was $12.0 million, compared to $11.3 million for the 2020 fourth quarter. The 6.4% increase in net interest income for the 2021 fourth quarter was largely a result of a 51.7% reduction in interest expense. The net interest margin for the 2021 fourth quarter was 3.82%, compared to 3.49% for the same period of 2020.

For the 2021 full year, noninterest income increased 20.3% to $7.2 million, compared to $6.0 million for the same period last year. Noninterest income for the 2021 fourth quarter was $1.5 million, compared to $1.6 million for the 2020 fourth quarter. These increases were driven primarily through the service charges recognized on deposit account activity.

For the 2021 full year, noninterest expense increased 7.7% to $32.1 million, compared to $29.8 million for the same period last year. For the 2021 fourth quarter, noninterest expense was $7.9 million, compared to $7.8 million for the same period last year. These changes were driven primarily by changes in salaries and benefits expense between the periods.

Net income for the year ended December 31, 2021, was a record $18.6 million, or a record $3.00 per diluted share, compared to $8.3 million, or $1.30 per diluted share for the same period last year. Net income for the 2021 fourth quarter, was $4.8 million, or $0.81 per diluted share, compared to $2.5 million, or $0.39 per diluted share for the same period last year.

Balance Sheet
Total assets at December 31, 2021, were $1.33 billion from $1.39 billion at December 31, 2020. Net loans at December 31, 2021, decreased 11.3% to $967.3 million, compared to $1.09 billion at December 31, 2020, as PPP forgiveness increased. Throughout 2021, Middlefield has helped customers receive $149.6 million of forgiveness payments under the terms of the program, including processing $20.1 million of forgiveness payments during the fourth quarter of 2021. The balance of PPP loans outstanding at December 31, 2021, was $34.1 million.

Total deposits at December 31, 2021, were $1.17 billion, compared to $1.23 billion at December 31, 2020. The 4.8% decrease in deposits was primarily due to a decline in time-based and money market accounts, partially offset by increased noninterest-bearing, savings, and interest-bearing accounts. The investment portfolio was $170.2 million December 31, 2021, compared with $114.4 million at December 31, 2020.

Donald L. Stacy, Chief Financial Officer stated, “We are well positioned to continue returning capital to our shareholders, while supporting our growth oriented strategic plan as a result of our strong balance sheet, liquidity position, and asset quality. The prudent funding of our allowance in 2020, combined with favorable asset quality throughout 2021, has resulted in one of the strongest reserve levels in our 120-year history.”  

“Reflecting our commitment to help our communities navigate the Covid-19 pandemic, we helped our customers receive $212.6 million of PPP loans over the past two years, while processing $178.4 million of forgiveness during this period. In addition, we also supported 390 customers during the pandemic through our Covid-19 related deferral programs. At December 31, 2021, there were no loans with Covid-19 related payment modifications,” concluded Mr. Stacy.

Stockholders’ Equity and Dividends
At December 31, 2021, shareholders’ equity increased 1.1% to $145.3 million compared to $143.8 million at December 31, 2020. On a per share basis, shareholders’ equity at December 31, 2021, increased 9.5% to $24.68 compared to $22.54 at the same period last year.  

Tangible stockholders’ equity⁽¹⁾ increased 1.5% to $128.9 million for the 2021 fourth quarter, compared to $127.0 million at December 31, 2020. On a per-share basis, tangible stockholders’ equity⁽¹⁾ at December 31, 2021, increased 9.9% to $21.88, compared to $19.91 at December 31, 2020.

For the 2021 full year, cash dividends declared per share increased 15.0% to $0.69 totaling $4.2 million, compared to $0.60 per share or $3.8 million for the same period last year. Dividends in 2021, included a $0.04 per share one-time dividend payment declared in the 2021 fourth quarter.

At December 31, 2021, the Company had an equity-to-assets leverage ratio of 10.92%, compared to 10.33% at December 31, 2020. The year-over-year increase in the Company’s equity-to-assets leverage ratio occurred even as Middlefield invested $12.3 million in its share repurchase program.

Asset Quality
The Company had a negative provision for loan losses for the 2021 fourth quarter of $200,000, versus a provision for loan losses of $2.1 million for the fourth quarter last year. The year-over-year decline in the provision for loan losses was partially due to strong asset quality and last year’s prudent build in the Company’s allowance for loan losses associated with the potential economic impacts caused by the COVID-19 pandemic. The provision for loan losses for 2021 full year was $700,000 compared to $9.8 million for the 2020 full year.  

Net recoveries were $308,000, or 0.12% of average loans, annualized, during the 2021 fourth quarter, compared to no net charge-offs for the same quarter last year. For the 2021 full year, net recoveries were $183,000, or 0.02% of average loans, compared to net charge-offs of $3.1 million, or 0.29% of average loans for the full year ended December 31, 2020.

Nonperforming assets at December 31, 2021, improved 22.3% to $11.9 million, compared to $15.2 million at December 31, 2020. Nonperforming loans at December 31 2021, were $4.9 million, a 38.2% decrease from the same period last year. The allowance for loan losses at December 31, 2021, stood at $14.3 million, or 1.46% of total loans, compared to $13.5 million, or 1.22% of total loans at December 31, 2020.

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 $1.33 billion at December 31, 2021. The bank operates 16 full-service banking centers and an LPL Financial® brokerage office serving Beachwood, Chardon, Cortland, Dublin, Garrettsville, Mantua, Middlefield, Newbury, Orwell, Plain City, Powell, Solon, Sunbury, Twinsburg, and Westerville. The Bank also operates a Loan Production Office in Mentor, Ohio.  

Additional information is available at www.middlefieldbank.bank

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

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

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

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

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

MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
(unaudited)

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