Middlefield Banc Corp. Reports 17% Increase in 3rd Quarter Earnings

Middlefield Banc Corp. 2004 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 19, 2004

MIDDLEFIELD, OHIO  – Middlefield Banc Corp. (Pink Sheets: MBCN) today reported net earnings for the three months ended September 30, 2004 of $821,791, or $0.66 per diluted share. The third quarter 2004 earnings represent an increase of 17% over the $702,187, or $0.57 per diluted share, in net earnings that the company recorded for the quarter ended September 30, 2003.

For the nine months ended September 30, 2004, Middlefield Banc Corp. recorded net income of $2,415,567, or $1.95 per diluted share, an increase of 22.6% over the $1,969,881, or $1.61 per diluted share, in net income for the first nine months of 2003.

The key ratios for the company for the quarter and the first nine months of 2004 reflect positively in comparison to the results posted for the same periods of 2003. Returns on average assets (ROA) for the quarter and year-to-date were 1.15% and 1.17%, respectively, as compared to 1.10% and 1.08% a year ago. Return on average equity (ROE) for the third quarter of 2004, as well as for the nine-month period was 13.19%. The quarterly figure for 2003 was 12.29%, while the first nine months of 2003 showed a return of 11.74%.

Total assets ended the third quarter of 2004 at $289.2 million, an increase of 10.8% over the $261.0 million in total assets recorded at September 30, 2003, and 3.1% over the $280.5 million in assets on the books at June 30, 2004. Net loans at September 30, 2004 were $206.6 million, up 10.9% over the $186.3 million in net loans at September 30, 2003. The investment portfolio at September 30, 2004, stood at $55.8 million, an increase of 6.0% from the September 30, 2003 balance of $52.7 million.

The level of deposits, on a year-to-year comparison, increased 8.98%. Total deposits at September 30, 2004 were $238.7 million. This figure as of September 30, 2003, was $219.1 million. The company also increased its use of the Federal Home Loan Bank as a funding source. At the quarter-end, total borrowings from this provider were $24.0 million, up from$17.9 million a year earlier.

Commenting on Middlefield Banc Corp.’s third quarter results, President and CEO Thomas G. Caldwell said, “In a broad sense, we are pleased with our performance. Our earnings growth has been very satisfactory, while our asset levels approximate those within our financial plan. We are also very pleased with the growth in our non-interest income. This is primarily the result of the overdraft privilege program that we initiated earlier this year.”

“The level of our non-performing loans is higher than what we have seen in recent periods. However, this exposure is concentrated in a few credits that are well secured,” Caldwell continued. “We have, however, been able to maintain a relatively low level of loss within our loan portfolio, with our charge-offs for the year-to-date being only $5,722. On an annualized basis, this equates to 0.01% of our average loan totals.”

For the three months ended September 30, 2004, non-interest income grew 29% from the prior year’s comparable period. This variance on a nine-month basis was 35.3%. The primary components of the overall increase, in addition to periodic changes in the level of service charges, were the income from bank-owned life insurance as well as the implementation of an overdraft privilege program during the second quarter of 2004.

Non-interest expense for the third quarter was $1.8 million, representing a 13.3% increase over the $1.6 million recorded in the third quarter of 2003. During the quarter the banking subsidiary upgraded the capabilities of its Internet banking service, which contributed to a part of the increase. Additionally, normal salary costs, increased health insurance costs, and increased marketing costs impacted the results for 2004.

Middlefield Banc Corp. is a financial holding company headquartered in Middlefield, Ohio. Its sole subsidiary, The Middlefield Banking Company, 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
(Unaudited)
                 
    September
2004

 

 

June
2004

 

 

September
2003
             
Earnings:                
Net interest income $ 2,522,105   $ 2,477,236   $ 2,270,202
Provision for loan losses   51,000     30,000     105,000
Non-interest income   484,244     485,889     375,364
Security (losses) gains   0     0     0
Non-interest expense   1,803,558     1,682,607     1,592,379
Federal income taxes   330,000     342,000     246,000
Net income $ 821,791   $ 908,518   $ 702,187
                 
Per share:                
Basic earnings $ 0.67   $ 0.74   $ 0.58
Diluted earnings   0.66     0.74     0.57
Common dividends   0.22     0.21     0.20
Book value   20.67   19.75     18.79
                 
Weighted average shares outstanding:                
Basic   1,232,047     1,228,039     1,219,685
Diluted   1,239,837     1,235,829     1,223,250
                 
Period end balance sheet:                
Assets $ 289,214,138   $ 280,479,893   $ 260,968,090
Securities   55,840,461     56,189,796     52,676,332
Total loans   209,257,288     203,103,305     188,947,859
Allowance for loan losses   2,626,548     2,595,791     2,605,767
Deposits   238,739,091     236,038,287     219,070,209
Total stockholders' equity   25,509,396     24,315,949     22,979,984
Total capital ratio   8.82%     8.67%     8.81%
                 
Average balance sheet:                
Assets $ 284,847,016   $ 276,994,334   $ 255,426,983
Earning assets   269,119,544     260,052,997     238,564,234
Loans   206,931,239     201,722,951     185,887,150
Deposits   239,030,560     232,269,556     214,615,616
Stockholders' equity   24,912,672     24,328,300     22,845,964
                 
Key ratios (%):                
Return on average assets (ROA)   1.15%     1.31%     1.10%
Return on average stockholders'                
   equity (ROE)   13.19%     14.94%     12.29%
Net interest margin   3.86%     3.90%     3.91%
Net overhead   1.96%     1.84%     2.04%
Efficiency ratio   59.99%     56.78%     60.19%
                 
Credit quality:                
Non-accrual loans $ 454,959   $ 432,308   $ 334,081
Restructured loans   0     0     0
90 day past due and accruing   773,162     654,944     0
Non-performing loans   1,228,121     1,087,252     334,081
Other real estate owned   0     0     0
Non-performing assets $ 1,228,121   $ 1,087,252   $ 334,081
                 
Charge-offs $ 28,321   $ 10,340   $ 28,321
Recoveries   16,222     30,680     16,222
Net charge-offs (recoveries) $ 12,099   $ (20,340)   $ 12,099
                 
Allowance for loan losses as a percent                
   of period-end loans (%)   1.26%     1.28%     1.38%
Net charge-offs (annualized) as a percent                
   of average loans (%)   0.02%     -0.04%     0.01%
Non-performing loans as a percent of                
   loans   0.59%     0.54%     0.18%
Non-performing assets as a percent of                
   assets   0.42%     0.39%     0.13%
 

   

Middlefield Banc Corp.
Financial Highlights
Year-to-Date Data
(Unaudited)
             
      September
2004

 

 

June
2004

 

 

September
2003
                   
Earnings:                
  Net interest income $ 7,415,198   $ 4,893,093   $ 6,582,110
  Provision for loan losses   111,000     60,000     315,000
  Non-interest income   1,366,852     882,608     1,009,502
  Security gains   0     0     542
  Non-interest expense   5,267,483     3,463,925     4,516,345
  Income taxes   988,000     658,000     790,928
  Net income $ 2,415,567   $ 1,593,776   $ 1,969,881
                   
Per share:                
  Basic earnings $ 1.97   $ 1.30   $ 1.62
  Diluted earnings   1.95     1.29     1.61
  Common dividends   0.64     0.42     0.58
  Book value   20.67     19.75     18.79
                   
Weighted average shares                
  outstanding:                
  Basic   1,228,292     1,226,394     1,217,715
  Diluted   1,235,595     1,233,697     1,220,786
                   
Period end balance sheet:                
  Assets $ 289,214,138   $ 280,479,893   $ 260,968,090
  Securities   55,840,461     56,189,797     52,676,333
  Total loans   209,257,288     203,103,305     188,947,859
  Allowance for loan losses   2,626,548     2,595,791     2,605,767
  Deposits   238,739,091     236,038,287     219,070,209
  Total stockholders' equity   25,509,396     24,315,949     22,979,984
  Total capital ratio   8.82%     8.67%     8.81%
                   
Average balance sheet:                
  Assets $ 276,453,880   $ 271,424,671

 

$ 244,288,115
  Earning assets   260,362,611     255,319,528     230,588,121
  Loans   201,473,297     198,714,337     181,176,430
  Deposits   231,442,081     227,606,146     201,055,436
  Stockholders' equity   24,417,577     23,910,132     22,366,253
                   
Key ratios (%):                
  Return on average assets (ROA)   1.17%     1.17%     1.08%
  Return on average stockholders'                
     equity (ROE)   13.19%     13.33%     11.74%
  Net interest margin   3.93%     3.94%     3.91%
  Net overhead   2.00%     2.02%     2.03%
  Efficiency ratio   59.98%     59.97%     59.49%
                   
Credit quality:                
  Non-accrual loans $ 454,959   $ 432,308   $ 334,081
  Restructured loans   0     0     0
  90 day past due and accruing   773,162     654,944     0
  Non-performing loans   1,228,121     1,087,252     334,081
  Other real estate owned   0     0     0
  Non-performing assets $ 1,228,121   $ 1,087,252   $ 334,081
                   
  Charge-offs $ 59,738   $ 21,959   $ 56,641
  Recoveries   54,016     36,480     46,923
  Net charge-offs (recoveries) $ 5,722   $ (14,521)   $ 9,718
                   
  Allowance for loan losses as a percent                
     of period-end loans (%)   1.26%     1.28%     1.38%
  Net charge-offs (annualized) as a percent                
     of average loans (%)   0.01%     -0.01%     0.01%
  Non-performing loans as a percent of                
     loans   0.59%     0.54%     0.18%
  Non-performing assets as a percent of                
     assets   0.42%     0.39%     0.13%
  

  

Middlefield Banc Corp. 
Consolidated Statements of Income
Quarterly Data
(Unaudited)
                 
        September
2004

 

 

June
2004

 

 

September
2003
                 
INTEREST INCOME                
  Interest and fees on loans $ 3,432,153   $ 3,385,891   $ 3,270,175
  Interest bearing deposits in other institutions   1,538     1,662     3,850
  Investment securities:                
    Taxable   354,392     339,046     270,921
    Tax-exempt interest   166,645     137,608     121,503
  Federal funds sold   10,884     12,055     20,836
  Dividends on FHLB stock   12,964     12,935     12,988
    Total interest income   3,978,576     3,889,197     3,700,273
INTEREST EXPENSE                
  Deposits   1,246,617     1,208,525     1,227,318
  Short-term borrowings   304     181     365
  Other borrowings   209,550     203,255     202,388
    Total interest expense   1,456,471     1,411,961     1,430,071
                     
    Net interest income   2,522,105     2,477,236     2,270,202
                     
  Provision for loan losses   51,000     30,000     105,000
                     
    Net interest income after provision for                
       loan losses   2,471,105     2,447,236     2,165,202
                     
NON-INTEREST INCOME                
  Service charges on deposit accounts   371,495     381,121     269,757
  Earnings on bank-owned life insurance   53,114     47,860     67,019
  Other operating income   59,635     56,908     38,588
    Total non-interest income   484,244     485,889     375,364
                     
NON-INTEREST EXPENSE                
  Salaries and employee benefits   941,353     790,815     829,874
  Occupancy expense   114,691     118,839     105,248
  Equipment expense   94,948     99,274     89,649
  Data processing costs   125,077     84,616     93,601
  Ohio state franchise tax   82,500     82,500     75,000
  Other expense   444,989     506,563     399,007
    Total non-interest expense   1,803,558     1,682,607     1,592,379
Income before income taxes   1,151,791     1,250,518     948,187
Income taxes   330,000     342,000     246,000
Net income $ 821,791   $ 908,518   $ 702,187
                     
NET INCOME PER COMMON SHARE:                
    Basic $ 0.67   $ 0.74   $ 0.58
    Diluted $ 0.66   $ 0.74   $ 0.57
    

  

Middlefield Banc Corp.
Consolidated Statements of Income
Year-to-Date Data
(Unaudited)
                 
        September
2004

 

 

June
2004

 

 

September
2003
                 
INTEREST INCOME                
  Interest and fees on loans $ 10,115,762   $ 6,683,609   $ 9,609,355
  Interest bearing deposits in other institutions   3,539     2,001     15,670
  Investment securities:                
    Taxable   1,050,915     696,523     855,382
    Tax-exempt interest   429,556     262,911     354,595
  Federal funds sold   28,046     17,162     40,049
  Dividends on FHLB stock   38,883     25,919     38,843
    Total interest income   11,666,701     7,688,125     10,913,894
INTEREST EXPENSE                
  Deposits   3,642,941     2,396,324     3,709,505
  Short-term borrowings   1,143     839     3,704
  Other borrowings   607,419     397,869     618,575
    Total interest expense   4,251,503     2,795,032     4,331,784
                     
    Net interest income   7,415,198     4,893,093     6,582,110
                     
  Provision for loan losses   111,000     60,000     315,000
                     
    Net interest income after provision for                
       loan losses   7,304,198     4,833,093     6,267,110
                     
NON-INTEREST INCOME                
  Service charges on deposit accounts   1,034,095     662,600     760,318
  Security gains (losses)   0     0     542
  Earnings on bank-owned life insurance   167,970     114,856     135,305
  Other operating income   164,787     105,152     113,879
    Total non-interest income   1,366,852     882,608     1,010,044
                     
NON-INTEREST EXPENSE                
  Salaries and employee benefits   2,652,971     1,711,618     2,287,264
  Net occupancy   378,011     263,320     310,292
  Equipment   288,208     193,260     227,261
  Data processing costs   339,038     213,961     281,031
  Ohio state franchise tax   247,500     165,000     225,050
  Other expense   1,361,755     916,766     1,185,447
    Total non-interest expense   5,267,483     3,463,925     4,516,345
Income before federal income taxes   3,403,567     2,251,776     2,760,809
Income tax expense   988,000     658,000     790,928
Net income $ 2,415,567   $ 1,593,776   $ 1,969,881
                     
NET INCOME PER COMMON SHARE:                
    Basic $ 1.97   $ 1.30   $ 1.62
    Diluted $ 1.95   $ 1.29   $ 1.61
 

   

Middlefield Banc Corp.
Consolidated Balance Sheets
(Unaudited)
                 
    September
2004

 

 

June
2004

 

 

September
2003
             
ASSETS                
Cash and due from banks $ 7,324,873   $ 4,900,236   $ 4,216,941
Federal funds sold and interest-bearing deposits                
    in other institutions   4,032,575     4,221,065     2,967,618
Securities:                
   Available for sale   55,278,450     54,901,165     49,911,627
   Held to maturity   562,011     747,567     2,764,706
      Total securities   55,840,461     55,648,732     52,676,333
                 
Loans:   209,257,288     203,103,305     188,947,859
Less:  Allowance for loan losses   2,626,548     2,595,791     2,605,767
      Net loans   206,630,740     200,507,514     186,342,092
Premises and equipment   6,668,043     6,704,260     6,913,457
Bank-owned life insurance   5,370,355     5,317,241     5,135,305
Accrued interest and other assets   3,347,091     3,180,845     2,716,344
      Total assets $ 289,214,138   $ 280,479,893   $ 260,968,090
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Deposits:                
   Demand -- non-interest bearing $ 35,110,530   $ 34,973,397   $ 29,986,047
   Demand -- interest bearing   23,595,367     22,299,891     22,749,710
   Savings   75,110,539     75,001,599     64,722,200
   Time deposits   104,922,655     103,763,401     101,612,252
      Total deposits   238,739,091     236,038,288     219,070,209
                 
Short-term borrowings   102,881     115,102     399,176
Other borrowings   23,957,754     19,077,999     17,863,260
Accrued interest and other liabilities   905,016     932,556     655,461
      Total liabilities   263,704,742     256,163,945     237,988,106
Stockholders' equity:                
   Common stock, no par value; 5,000,000                
      shares authorized   10,385,960     10,286,211     8,134,763
   Retained earnings   16,715,668     16,164,824     16,315,403
   Accumulated other comprehensive income (loss) 152,677     (390,178)     274,727
   Treasury stock   (1,744,909)     (1,744,909)     (1,744,909)
      Total stockholders' equity   25,509,396     24,315,948     22,979,984
      Total liabilities and stockholders' equity $ 289,214,138   $ 280,479,893   $ 260,968,090
                 
Miscellaneous data:                
   Common shares issued   1,289,602     1,286,792     1,278,390
   Treasury shares   55,309     55,309     55,309