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Middlefield Banc Corp. Reports 2nd Quarter Earnings and Record Asset Levels

Middlefield Banc Corp. 2005 Press Releases

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Contact Info: James R. Heslop, 2nd
Executive Vice President/Chief Operating Officer
440.632.1666 Ext. 3219
Date: July 19, 2005

MIDDLEFIELD, OHIO  Middlefield Banc Corp. (Pink Sheets:  MBCN)

today reported second quarter 2005 net income of $917,000, or $0.71 per diluted share, compared to $909,000, or $0.70 per diluted share, for the second quarter of 2004. Returns on average equity and assets were 14.33% and 1.22%, respectively. For the six months ended June 30, 2005, net income was $1,631,000, or $1.27 per diluted share, compared to $1,594,000, or $1.23 per diluted share in the first half of 2004.

As of June 30, 2005, total assets equaled $303,969,000. This represents an increase of 8.37% from the year ago level and the first time that total assets have surpassed the $300 million mark.   

President and Chief Executive Officer Thomas G. Caldwell commented, "Although we are generally satisfied with the results of our second quarter, we also recognize that much work remains for 2005. Our credit quality remains strong and our net interest margin has reached a level of stability."

"Our earnings to this point in 2005 have met our expectations.  However, our growth has been slower than projected as we have continued to experience a very competitive interest rate environment. We will continue to work for increased efficiencies within our operations, while maintaining our personalized delivery of customer service. " 

Highlights for the second quarter and year-to-date periods of 2005 include:

  • Net interest income was $2,646,000 for the second quarter of 2005, an increase of 6.80% from the comparable period in the prior year.  Net interest margin was 3.91% in the second quarter of 2005, relatively equal with the 3.90% recorded in the second quarter of 2004.  For the first half of 2005, net interest income was $5,214,000, up 6.56% from the prior year, while the net interest margin was 3.80% as opposed to 2004's 3.94%.  The lower margin in the first six months of 2005 reflects a flattened yield curve and the effects of narrower loan spreads.
  • Net loans at June 30, 2005, stood at $220,809,000, an increase of $20,302,000, or 10.12% over the same point in 2004.  This increase is attributable to strong growth in the commercial and home equity portfolios. Total deposits at the mid-point of 2005 were $249,198,000.  Reflecting an increase of 5.58% from June 30, 2004, the growth was centered in demand deposit accounts and certificates of deposit. 
  • Non-interest income increased $14,000 for the three-month period and $125,000 for the six-month period ending June 30, 2005, over the same periods of 2004.  Higher service charge revenue associated with an increase in the number of deposit accounts, as well as the introduction of an overdraft privilege program in 2004, were the primary drivers of the increases.
  • Non-interest expense for the quarter was 9.69% higher than the second quarter of 2004 and totaled $1,846,000. The leading factors for this increase are higher salary and benefit costs, data processing fees, and state franchise taxes. 
  • Provision for loan losses was $60,000 for the second quarter and $120,000 for the first six months of 2005.  Although higher than the $30,000 and $60,000 reported for the comparable periods of 2004, the levels were in keeping with the 2005 financial plan and are attributable to higher loan levels.  At June 30, 2005, the allowance for loan losses as a percentage of total loans was 1.20%, which was lower than the 1.28% recorded at June 30, 2004.
  • Stockholders' equity at June 30, 2005, was $26,238,000, or 8.63% of total assets.  This represents an increase of 5.70% from the $24,822,000 reported as of December 31, 2004.  Book value per share at June 30, 2005, was $20.59. 
  • During the second quarter of 2005, Middlefield paid a cash dividend of $0.22 per share.  Adjusted for the 5% stock dividend paid in December 2004, this cash dividend was 10% higher than that paid in the second quarter of 2004.

"We are pleased that our net interest margin has stabilized during the second quarter," noted Donald L. Stacy, Chief Financial Officer and Treasurer of Middlefield Banc Corp.  "The competitive pressures on interest rates, on both the loan and deposit sides of the balance sheet, are very strong within our market areas."

Stacy continued, "Our technology expenditures at the banking subsidiary during the first half of 2005 have provided us with some exciting new customer delivery alternatives.  During the third quarter we will be introducing e-mail delivery of checking statements as well as images of checks available with our online banking service." 

Commenting on the outlook for Middlefield Banc Corp., Chief Executive Officer Caldwell noted, "As we enter our next phase of growth, we believe that we are adopting the technological tools that will permit us to continue offering the high level of service for which we are known. Just as importantly, these moves will have a bottom line impact as we continue to properly reward our shareholders for their confidence in our company."

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.
Consolidated Selected Financial Highlights
(dollars in thousands)
June 30, 2005 and 2004 and December 31, 2004
  (unaudited)           (unaudited)
Balance Sheet (period end) June 30,     December 31,     June 30,
2005     2004 2004
Assets
Cash and due from banks $ 6,399 $ 5,312 $ 4,900
Interest bearing deposits in other institutions 618 615 541
Federal funds sold 0 0 3,680
Available for sale securities 60,473 57,241 54,901
Held to maturity securities 221 221 748
      Total cash and securities 67,711 63,389 64,770
Loans: 223,487 215,653 203,103
Less:  reserve for loan losses 2,677 2,623 2,596
      Net loans 220,809 213,030 200,508
Premises and equipment 6,562 6,618 6,704
Bank-owned life insurance 5,527 5,424 5,317
Accrued interest receivable and other assets 3,359 2,754 3,181
Total Assets $ 303,969 $ 291,214 $ 280,480
June 30, December 31, June 30,
2005     2004 2004
Liabilities and Stockholders' Equity
Non-interest bearing demand deposits $ 38,110 $ 36,332 $ 34,973
Interest bearing demand deposits 9,910 8,818 8,557
Money market accounts 14,965 15,667 13,743
Savings deposits 69,839 75,280 75,002
Certificates of deposit 116,373 103,789 103,763
   Total Deposits 249,198 239,885 236,038
Borrowed funds 27,599 25,555   19,193
Other liabilities 935 951   933
   Total Liabilities 277,731 266,392   256,164
 
Common equity 29,210 27,820   26,451
Net Unrealized gain (loss) on securities (2) (29)   (390)
Treasury stock (2,970) (2,970)   (1,745)
   Total Stockholders' Equity 26,238 24,822 24,316
 
Total Liabilities and Stockholders' Equity $ 303,969 $ 291,214 $ 280,480
 
 
 
MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
June 30, 2005 and 2004
(unaudited, dollars in thousands, except per share amounts)
For the Three Months Ended For the Six Months Ended
June 30, June 30,
  2005     2004   2005     2004
Statement of Income
Interest Income $ 4,275 $ 3,889 $ 8,391 $ 7,688
Interest Expense 1,629 1,412 3,177 2,795
   Net interest income 2,646 2,477 5,214 4,893
Provision for loan losses 60 30 120 60
   Net interest income after provision
      for loan losses 2,586 2,447 5,094 4,833
Non-interest income
   Service charges on deposits 389 381 742 663
   Other income 138 105 266 220
   Net securities gains (losses) 0 0 0 0
      Total non-interest income 527 486 1,008 883
Non-interest expense
   Salaries and employee benefits 808 791 1,825 1,712
   Net occupancy and equipment 231 218 474 457
   Other operating 807 674 1,560 1,296
      Total non-interest expense 1,846 1,683 3,860 3,464
   Income before income taxes 1,266 1,251 2,242 2,252
Provision for income taxes 349 342 611 658
Net income $ 917 $ 909 $ 1,631 $ 1,594
Per common share data
Net income per common share - basic $ 0.72 $ 0.70 $ 1.28 $ 1.24
Net income per common share - diluted $ 0.71 $ 0.70 $ 1.27 $ 1.23
Dividends declared $ 0.22 $ 0.20 $ 0.44 $ 0.40
Book value (period end) $ 20.59 $ 18.76 $ 20.59 $ 18.76
Average shares outstanding - basic 1,271,596 1,289,441 1,269,353 1,287,714
Average shares outstanding -diluted 1,292,238 1,297,620 1,288,821 1,174,950
Period ending shares outstanding 1,274,288 1,295,823 1,274,288 1,295,823
Selected ratios
Return on average assets 1.22% 1.31% 1.09% 1.17%
Return on average equity 14.33% 14.94% 13.30% 13.33%
Yield on earning assets 6.16% 6.09% 6.11% 6.11%
Cost of interest bearing liabilities 2.76% 2.59% 2.71% 2.60%
Net interest spread 3.40% 3.50% 3.40% 3.51%
Net interest margin 3.91% 3.90% 3.80% 3.94%
Efficiency 58.20% 56.78% 62.03% 59.97%
Equity to assets at period end 8.63% 8.67% 8.63% 8.67%
June 30,     June 30,      
Asset quality data 2005     2004  
Allowance for loan losses $ 2,677 $ 2,596
Allowance for loan losses/total loans 1.20% 1.28%
Net charge-offs:
   Quarter-to-date $ 68 $ (20)
   Year-to-date 66 (15)
Net charge-offs to average loans
   Quarter-to-date 0.12% -0.02%
   Year-to-date 0.06% -0.01%
Non-performing loans/total loans 0.82% 0.54%
Allowance for loan losses/non-performing loans 145.96% 238.75%