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Middlefield Banc Corp. Reports Third Quarter Performance

Middlefield Banc Corp. 2003 Press Releases

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Contact Info: James R. Heslop, 2nd
Executive Vice President/Chief Operating Officer
440.632.1666 Ext. 3219
Date: October 21, 2003

MIDDLEFIELD, OHIO Middlefield Banc Corp. (Pink Sheets:  MBCN) reported third quarter 2003 net income of $702,185, up 9.8% from the $639,357 earned during the same period last year.  Year-to-date earnings were $1,969,881, representing an increase of 11.9% over the net income reported for the first nine months of 2002.  Diluted earnings per share for the third quarter and for the year-to-date are $0.60 and $1.70.  These compare to the similar 2002 figures of $0.55 and $1.52, respectively.

The Company’s key ratios for the quarter and for the first nine months of 2003 reflect mixed results in comparison to the same periods last year.  Returns on average assets (ROA) for the quarter and year-to-date were 1.10% and 1.08%, respectively, compared to 1.16% and 1.12% a year ago.  Returns on average equity (ROE) were improved at 12.29% for the quarter and 11.74% year-to-date compared to 12.21% and 11.48% respectively last year.  The Company’s efficiency ratio for the quarter was 60.19% and 59.49% for the first nine months of the year.  The comparable ratios for 2002 were 55.61% and 57.79%, respectively.  Middlefield Banc Corp.’s net interest margin was 3.91% for the quarter, up slightly from 2002’s 3.88%.  For the nine month periods, the 2003 result is 3.91%, down slightly from the 4.01% recorded in 2002.

"During the first nine months of this year, we have opened a new banking office in Orwell and have begun offering a full range of financial services in conjunction with LPL Financial.  Although these moves have negatively impacted our efficiency ratio, we do anticipate that the impact of both of these actions will be positive in the near term," commented Thomas G. Caldwell, President and CEO.  "The improved return on equity for both reporting periods with the resilience of our net interest margin for the third quarter are very gratifying."

Non-interest income for the quarter increased 31.5% from the amount reported for the third quarter of 2002.  A similar improvement was recorded for the three quarters of 2003, as non-interest income was 21.6% higher than the same period of last year.  Contributing to these results were an overall increase in fee income related to deposit accounts as well as the earnings from bank-owned life insurance.

Non-interest expense for the quarter was $1.6 million, compared to $1.3 million for the same period of 2002.  The comparable nine month figures are $4.5 million and $3.9 million respectively.  The increased level of non-interest expense for 2003 reflects the opening of a new banking office, the addition of financial services, increased health care costs, and the introduction of a new logo and marketing image for the company and its subsidiary bank.

"Our new banking office in Orwell is well exceeding both loan and deposit projections," noted Donald L. Stacy, Treasurer and Chief Financial Officer.  "Our new logo and marketing campaign have been very well received.  They serve to portray our organization as the dynamic financial services company that we have become.  We anticipate that our affiliation with LPL Financial will have a positive improvement on our bottom line as it continues to mature."

Total assets increased 16.1% over the prior year, ending the third quarter of 2003 at $261.0 million as compared to $224.8 million at September 30, 2002.  Net loans at September 30, 2003, were $186.3 million, up 11.6% from September 30, 2002.  The investment portfolio also experienced growth between the two periods, being up 34.2% over the 2002 balance.  Deposit totals were $219.1 million at the end of the third quarter of 2003.  This is an increase of 17.7% from the level at mid-year 2002. 

Credit quality remained a strong focus for the company.  For the year-to-date, the company has experienced net charge-offs of only $9,718.  Non-performing loan and non-performing asset levels, at September 30, 2003, were 0.18% and 0.13%, respectively.  The comparable figures at the same point in 2002 were 0.20% and 0.15%.  The Company’s loan loss reserve at the end of the quarter was 1.38% of period-end loans, 6 basis points stronger than a year ago.  President and Chief Executive Officer Thomas G. Caldwell stated, "We have added extra focus to the quality of our loan portfolio.  We believe that our underwriting standards and our attention to our local communities and customers have permitted us to keep our exposures at reasonable levels."

Caldwell continued, "Our commitment to our shareholders remains strong.  Our continuing goal is to provide them with a fair return, while generating conservative growth.  We firmly believe that our approach to being a full service community bank will position us well to continue this trend."

Middlefield Banc Corp. and The Middlefield Banking Company are headquartered in Middlefield, Ohio.  The bank operates full service banking centers and a LPL Financial brokerage office serving Chardon, Garrettsville, Mantua, Middlefield, and Orwell, Ohio.

This announcement contains forward-looking statements that involve risk and uncertainties, including changes in general economic and financial market conditions and the Company’s ability to execute its business plans.  Although management believes the expectations reflected in such statements are reasonable, actual results may differ materially. 

Middlefield Banc Corp.

Financial Highlights

Quarterly Data

(Dollars in thousands, except per share)

 

September 2003

 

 

June 2003

 

 

September 2002

Earnings:

Net interest income

$

2,270,201

$

2,175,419

$

1,994,884

Provision for loan losses

105,000

105,000

75,000

 

Non-interest income

375,363

358,102

285,499

 

Security (losses) gains

0

0

0

 

Non-interest expense

1,592,379

1,613,208

1,268,026

 

Federal income taxes

246,000

200,363

298,000

 

Net income

$

702,185

$

614,950

$

639,357

 

Per share:

Basic earnings

$

0.61

$

0.53

$

0.55

 

Diluted earnings

0.60

0.53

0.55

 

Common dividends

0.21

0.20

0.19

 

Book value

19.83

19.61

18.36

 

Weighted average shares

outstanding:

Basic

1,158,971

1,156,245

1,156,181

 

Diluted

1,162,366

1,159,275

1,159,277

 

Period end balance sheet:

Assets

$

260,968,090

$

249,885,875

$

224,843,468

 

Securities

52,676,332

40,507,882

39,249,739

 

Total loans

188,947,859

182,418,551

169,158,698

 

Allowance for loan losses

2,605,767

2,512,866

2,226,813

 

Deposits

219,070,209

206,115,632

186,082,858

 

Total shareholders' equity

22,979,984

22,709,943

21,228,075

 

Total capital ratio

8.81%

9.09%

9.44%

 

Average balance sheet:

Assets

$

255,426,983

$

244,241,700

$

219,729,509

 

Earning assets

238,564,234

228,518,674

210,969,233

 

Loans

185,887,150

181,863,235

167,459,156

 

Deposits

214,615,616

200,987,836

182,573,110

 

Shareholders' equity

22,845,964

20,882,567

20,950,729

 

Key ratios (%):

Return on average assets (ROA)

1.10%

1.01%

1.16%

 

Return on average shareholders'

   equity (ROE)

12.29%

11.78%

12.21%

 

Net interest margin

3.91%

3.94%

3.88%

 

Net overhead

2.04%

2.20%

1.86%

 

Efficiency ratio

60.19%

63.67%

55.61%

 

Credit quality:

Non-accrual loans

$

334,081

$

509,545

$

338,429

 

Restructured loans

0

0

0

 

90 day past due and accruing

0

0

0

 

Non-performing loans

334,081

509,545

338,429

 

Other real estate owned

0

0

0

 

Non-performing assets

$

334,081

$

509,545

$

338,429

 

 

Charge-offs

$

28,321

$

10,710

$

24,246

 

Recoveries

16,222

28,965

14,015

 

Net charge-offs (recoveries)

$

12,099

$

(18,255)

$

10,231

 

Allowance for loan losses as a percent

 

   of period-end loans (%)

1.38%

1.38%

1.32%

Net charge-offs (annualized) as a percent

 

   of average loans (%)

0.01%

-0.04%

 

0.01%

Non-performing loans as a percent of

 

   loans

0.18%

0.28%

0.20%

Non-performing assets as a percent of

 

   assets

0.13%

0.20%

0.15%

 

Middlefield Banc Corp.

Financial Highlights

Year-to-Date Data

(Dollars in thousands, except per share)

 

September 2003

 

 

June 2003

 

 

September 2002

Earnings:

Net interest income

$

6,582,110

$

4,311,909

$

5,872,019

Provision for loan losses

315,000

210,000

225,000

Non-interest income

1,009,502

634,139

830,291

Security (losses) gains

542

542

0

Non-interest expense

4,516,345

2,923,966

3,873,120

Federal income taxes

790,928

544,928

844,000

Net income

$

1,969,881

$

1,267,696

$

1,760,190

Per share:

Basic earnings

$

1.70

$

1.10

$

1.52

Diluted earnings

1.70

1.09

1.52

Common dividends

0.61

0.40

0.55

Book value

19.86

19.61

18.34

Weighted average shares

outstanding:

Basic

1,157,125

1,156,188

1,157,670

Diluted

1,160,050

1,158,877

1,159,250

Period end balance sheet:

Assets

$

260,968,090

$

249,885,875

$

224,843,468

Securities

52,676,333

40,507,882

39,249,739

Total loans

188,947,859

182,418,551

169,158,698

Allowance for loan losses

2,605,767

2,512,866

2,226,813

Deposits

219,070,209

206,115,632

186,082,858

Total shareholders' equity

22,979,984

22,709,943

21,228,075

Total capital ratio

8.81%

9.09%

9.44%

Average balance sheet:

Assets

$

244,288,115

$

237,073,107

$

210,290,121

Earning assets

230,588,121

225,224,016

200,636,435

Loans

181,176,430

178,782,048

161,137,481

Deposits

201,055,436

194,162,968

174,917,622

Shareholders' equity

22,366,253

21,581,058

20,445,132

Key ratios (%):

Return on average assets (ROA)

1.08%

1.07%

1.12%

Return on average shareholders'

 

 

   equity (ROE)

11.74%

11.75%

11.48%

Net interest margin

3.91%

3.94%

4.01%

Net overhead

2.03%

2.03%

2.02%

Efficiency ratio

59.49%

59.11%

57.79%

Credit quality:

Non-accrual loans

$

334,081

$

509,545

$

338,429

Restructured loans

0

0

0

90 day past due and accruing

0

0

0

Non-performing loans

334,081

509,545

338,429

Other real estate owned

0

0

0

Non-performing assets

$

334,081

$

509,545

$

338,429

 

Charge-offs

$

56,641

$

28,319

$

115,349

Recoveries

46,923

30,700

54,910

Net charge-offs (recoveries)

$

9,718

$

(2,381)

$

60,439

 

Allowance for loan losses as a percent

 

   of period-end loans (%)

1.38%

1.38%

1.32%

Net charge-offs (annualized) as a percent

 

   of average loans (%)

0.01%

0.00%

0.05%

Non-performing loans as a percent of

 

   loans

0.18%

0.28%

0.20%

Non-performing assets as a percent of

 

   assets

0.13%

0.20%

0.15%

 

 

Middlefield Banc Corp.

Consolidated Statements of Income

Quarterly Data

(Dollars in thousands, except per share data)

September 2003

 

 

June 2003

 

 

September 2002

INTEREST INCOME

Loans (including fees)

$

3,270,175

$

3,209,192

$

3,126,762

Deposits in other institutions

3,850

4,719

36,235

Securities:

Taxable

270,921

275,853

307,806

Exempt from federal income taxes

121,503

113,502

102,623

Federal funds sold and other temp. investments

20,837

9,906

0

Dividends on FHLB stock

12,987

12,926

12,185

Total interest income

3,700,273

3,626,098

3,585,611

INTEREST EXPENSE

Deposits

1,227,318

1,236,828

1,410,512

Federal funds purchased and securities sold

under agreement to repurchase

365

1,049

5,777

Federal Home Loan Bank advances

202,389

212,802

174,438

Total interest expense

1,430,072

1,450,679

1,590,727

Net interest income

2,270,201

2,175,419

1,994,884

Provision for loan losses

105,000

105,000

75,000

Net interest income after provision for

   loan losses

2,165,201

2,070,419

1,919,884

NON-INTEREST INCOME

Service charges on deposit accounts

269,757

251,910

245,343

Security gains (losses)

0

0

0

Other operating income

105,606

106,192

40,156

Total non-interest income

375,363

358,102

285,499

NON-INTEREST EXPENSE

Salaries and employee benefits

829,874

810,919

625,624

Net occupancy

105,248

106,492

85,296

Equipment

89,649

57,586

92,112

Data processing costs

93,601

70,958

87,228

Ohio state franchise tax

75,000

75,000

67,500

Other expense

399,007

492,253

310,266

Total non-interest expense

1,592,379

1,613,208

1,268,026

Income before federal income taxes

948,185

815,313

937,357

Income tax expense

246,000

200,363

298,000

Net income

$

702,185

$

614,950

$

639,357

 

 

 

 

NET INCOME PER COMMON SHARE:

 

 

 

 

Basic

$

0.61

$

0.53

$

0.55

Diluted

$

0.60

$

0.53

$

0.55

 

 

 

 

 

Middlefield Banc Corp.

Consolidated Statements of Income

Year-to-Date Data

(Dollars in thousands, except per share data)

September 2003

 

 

June 2003

 

 

September 2002

INTEREST INCOME

Loans (including fees)

$

9,609,355

$

6,339,180

$

9,204,917

Deposits in other institutions

15,670

11,820

91,358

Securities:

Taxable

855,382

584,461

867,607

Exempt from federal income taxes

354,595

233,092

313,239

Federal funds sold and other temp. investments

40,050

19,213

0

Dividends on FHLB stock

38,842

25,855

33,953

Total interest income

10,913,894

7,213,621

10,511,074

INTEREST EXPENSE

Deposits

3,709,505

2,482,187

4,155,138

Federal funds purchased and securities sold

under agreement to repurchase

3,704

3,339

9,323

Federal Home Loan Bank advances

618,575

416,186

474,594

Total interest expense

4,331,784

2,901,712

4,639,055

Net interest income

6,582,110

4,311,909

5,872,019

Provision for loan losses

315,000

210,000

225,000

Net interest income after provision for

   loan losses

6,267,110

4,101,909

5,647,019

NON-INTEREST INCOME

Service charges on deposit accounts

760,318

490,561

712,391

Security gains (losses)

542

542

0

Other operating income

249,184

143,578

117,900

Total non-interest income

1,010,044

634,681

830,291

NON-INTEREST EXPENSE

Salaries and employee benefits

2,287,264

1,457,390

1,877,547

Net occupancy

310,292

205,044

260,498

Equipment

227,261

137,612

256,487

Data processing costs

281,031

187,430

256,359

Ohio state franchise tax

225,050

150,050

202,550

Other expense

1,185,447

786,440

1,019,679

Total non-interest expense

4,516,345

2,923,966

3,873,120

Income before federal income taxes

2,760,809

1,812,624

2,604,190

Income tax expense

790,928

544,928

844,000

Net income

$

1,969,881

$

1,267,696

$

1,760,190

NET INCOME PER COMMON SHARE:

Basic

$

1.70

$

1.10

$

1.52

Diluted

$

1.70

$

1.09

$

1.52

 

Middlefield Banc Corp.

Consolidated Balance Sheets

(Dollars in thousands)

September 2003

 

 

June 2003

 

 

September 2002

ASSETS

Cash and due from banks

$

4,216,941

$

6,102,703

$

4,846,689

Federal funds sold and other temp. investments.

2,967,618

8,809,402

5,171,007

Securities:

   Available for sale

49,911,627

37,241,937

31,961,166

   Held to maturity

2,764,706

3,265,945

7,288,573

      Total securities

52,676,333

40,507,882

39,249,739

 

Loans:

188,947,859

182,418,551

169,158,698

Less:  reserve for loan losses

2,605,767

2,512,866

2,226,813

      Net loans

186,342,092

179,905,685

166,931,885

Premises and equipment

6,913,457

6,908,111

6,330,353

Bank-owned life insurance

5,135,305

5,068,286

                 -  

Accrued interest receivable and other assets

2,716,344

2,583,806

2,313,795

      Total assets

$

260,968,090

$

249,885,875

$

224,843,468

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:

   Demand -- non-interest bearing

$

29,986,047

$

29,595,597

$

25,583,496

   Demand -- interest bearing

22,749,710

21,096,468

17,475,400

   Savings

64,722,200

54,867,549

47,372,399

   Time deposits

101,612,252

100,556,018

95,651,563

      Total deposits

219,070,209

206,115,632

186,082,858

Federal funds purchased and securities sold

   under agreements to repurchase

399,176

399,176

955,515

Accrued expenses and other liabilities

655,461

667,174

771,897

Federal Home Loan Bank advances

17,863,260

19,993,950

15,805,123

      Total liabilities

237,988,106

227,175,932

203,615,393

Shareholders' equity:

   Common stock, no par value; 5,000,000

      shares authorized

8,134,763

8,006,055

7,820,001

   Retained earnings

16,315,403

15,856,470

14,541,705

   Accumulated other comprehensive income

274,727

592,327

465,684

   Treasury stock

(1,744,909)

(1,744,909)

(1,599,315)

      Total shareholders' equity

22,979,984

22,709,943

21,228,075

      Total liabilities and shareholders' equity

$

260,968,090

$

249,885,875

$

224,843,468

Miscellaneous data:

   Common shares issued

1,217,514

1,213,255

1,206,921

   Treasury shares

55,309

55,309

50,342