Middlefield Banc Corp. Reports 19.1% Increase in Third Quarter Earnings Per Share

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: October 19, 2005

MIDDLEFIELD, OHIO  Middlefield Banc Corp. (Pink Sheets:  BCN) reported consolidated net income for the quarter ended September 30, 2005, of $976,000, representing an increase of 18.8% over the same period in the prior year. Earnings per diluted share for the third quarter of 2005 were $0.75, up 19.1% from the $0.63 earned during the third quarter of 2004.

For the nine months ended September 30, 2005, Middlefield Banc Corp. recorded net earnings of $2,607,000, or $2.02 per diluted share. Net income for the comparable period of 2004 was $2,416,000, or $1.86 per diluted share.

The key ratios for the company for the quarter and the first nine months of 2005 reflect positively in comparison to the results posted for the same periods of 2004. Return on average assets (ROA) for the quarter and year-to-date were 1.29% and 1.16%, respectively, as compared to 1.15% and 1.17% a year ago. Return on average equity (ROE) for the third quarter of 2005 was 14.76%, while the figure for the first nine months was 13.81%. The respective returns for 2004 were 13.19% for both reporting periods.

Discussing the results, Middlefield Banc Corp. President and CEO Thomas G. Caldwell said, "The Company posted a solid increase in earnings, of which we are pleased. This was driven by a modest increase in earning assets and a steady net interest margin. Another strong contributing factor to our performance was the growth in non-interest income, which may be tied to an overall increase in deposit accounts as well as the continued performance of our overdraft privilege program."

"Our balance sheet growth, however, has not met our targets for the year. Highly competitive pricing for both loans and deposits has been the primary factor in the slower growth. While we continue to seek quality relationships, we have felt it imprudent, in light of the current interest rate environment, to pursue those opportunities that posed the potential to have a strong negative impact on our net interest margin."

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

  • Net interest income for the third quarter of 2005 was $2.76 million, an increase of 9.6% over the comparable period of 2004. The net interest margin was 4.02% in the third quarter of 2005, up from the 3.86% posted for the same quarter of 2004. For the first nine months of 2005, net interest income was $7.98 million, up 7.6% from the prior year, while the net interest margin was 3.91% for the 2005 period and 3.93% for the first nine months of 2004.
  • Non-interest income increased $75,000 for the three-month period and $200,000 for the nine-month period ending September 30, 2005, over the equal reporting periods of 2004. This increase was primarily the result of higher service charge revenue associated with an increase in the number of deposit accounts as well as an increase in revenue from investment services. Offsetting the increase was a decline in earnings on bank-owned life insurance and check order fees.
  • Non-interest expense for the quarter was 4.3% higher than the third quarter of 2004, while the nine months of 2005 were 17.1% higher than the 2004 first nine months. The majority of the increase was attributable to higher equipment depreciation, franchise taxes, maintenance contracts, and data processing fees. Also being an important factor in the higher 2005 figure were costs associated with efforts on the part of the company to ensure compliance with the Sarbanes-Oxley Act of 2002.
  • Total deposit growth during 2005 was $8.3 million. The slower growth is directly the result of the competitive interest rate environment present within the company's market area. The company also had a shift in the deposit composition as certificates of deposits and IRA accounts increased $16.3 million during the nine months and savings accounts decreased $9.0 million. Net loans at September 30, 2005, stood at $223.1 million, reflecting an increase of $10.1 million during the first nine months of 2005. Increases in commercial loans and home equity lines of credit were partially offset by an unusually high number of pay-offs on residential mortgage loans during the year.
  • Provision for loan losses was $75,000 for the third quarter and $195,000 for the nine-month period of 2005. While these levels were higher than those reported for 2004, they are in keeping with the company's 2005 financial plan and are attributable to higher loan levels. At September 30, 2005, the allowance for loan losses as a percentage of total loans was 1.21%, which was lower than the 1.26% recorded at September 30, 2004.
  • Stockholders' equity at September 30, 2005, was $26.7 million, or 8.74% of total assets. This represents an increase of 7.5% from the December 31, 2004 figure. Book value as of September 30, 2005 was $20.90.
  • During the third quarter of 2005, Middlefield Banc Corp. paid a cash dividend of $0.24 per common share. Adjusted for the 5% stock dividend paid in December 2004, this cash dividend 14.3% higher than that paid in the third quarter of 2004.

"Management of the balance sheet has become an even more integral part of our success," noted Donald L. Stacy, Chief Financial Officer and Treasurer of Middlefield Banc Corp. "While we have chosen to avoid assuming questionable interest rate exposure on the loan side, we have also witnessed a strong shift to higher cost deposits. Because of this environment, we have re-affirmed our commitment to closely monitor non-interest expense so that we may continue to deliver satisfactory bottom line results to our shareholders."

"We are also pleased to announce," Stacy continued, "that during the third quarter of 2005 we have introduced e-mail delivery of checking statements and made images of checks available with our online banking service. We firmly believe that these technological advances represent our on-going commitment to the best in customer service. We would encourage current and potential customers to visit us at www.middlefieldbank.com."

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)
September 30, 2005 and 2004 and December 31, 2004
      
  (unaudited) (unaudited)
Balance Sheet (period end) September 30, December 31, September 30,
2005 2004 2004
Assets
Cash and due from banks    $ 5,584    $ 5,312    $ 7,325
Interest bearing deposits in other institutions 524 615 613
Federal funds sold 0 0 3,420
Available for sale securities 59,954 57,241 55,278
Held to maturity securities 221 221 562
      Total cash and securities 66,284   63,389   67,198
Loans: 225,850 215,653 209,257
Less:  reserve for loan losses 2,736 2,623 2,627
      Net loans 223,113   213,030   206,631
Premises and equipment 6,590 6,618 6,668
Bank-owned life insurance 5,580 5,424 5,370
Accrued interest receivable and other assets 3,754 2,754 3,347
Total Assets $ 305,322 $ 291,214 $ 289,214
  
September 30, December 31, September 30,
2005 2004 2004
Liabilities and Stockholders' Equity
Non-interest bearing demand deposits $ 38,673 $ 36,332 $ 35,111
Interest bearing demand deposits 8,834 8,818 8,877
Money market accounts 14,339 15,667 14,718
Savings deposits 66,245 75,280 75,111
Certificates of deposit 120,076 103,789 104,923
   Total Deposits   248,167     239,885     238,739
Borrowed funds 29,439 25,555 24,061
Other liabilities 1,030 951 905
   Total Liabilities 278,636   266,392   263,705
  
Common equity 29,989 27,820 27,102
Accumulated other comprehensive income (loss) (334) (29) 153
Treasury stock (2,970) (2,970) (1,745)
   Total Stockholders' Equity 26,686   24,822   25,509
  
Total Liabilities and Stockholders' Equity $ 305,322 $ 291,214 $ 289,214

 

 

MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
September 30, 2005 and 2004
(unaudited, dollars in thousands, except per share amounts)
     
For the Three Months Ended     For the Six Months Ended  
September 30,   September 30,
  2005     2004   2005     2004
Statement of Income                
Interest Income $ 4,427 $ 3,979 $ 12,818 $ 11,667
Interest Expense 1,663 1,456 4,840 4,252
   Net interest income 2,764 2,522 7,978 7,415
Provision for loan losses 75 51 195 111
   Net interest income after provision
      for loan losses 2,689 2,471 7,783 7,304
Non-interest income
   Service charges on deposits 426 371 1,168 1,034
   Earnings on bank-owned life insurance 53 53 156 168
   Other income 81 60 243 165
   Net securities gains (losses) 0 0 0 0
      Total non-interest income 559 484 1,567 1,367
Non-interest expense
   Salaries and employee benefits 934 941 2,759 2,653
   Net occupancy and equipment 228 210 702 666
   Other operating 721 653 2,281 1,948
      Total non-interest expense 1,882 1,804 5,742 5,267
   Income before income taxes 1,366 1,152 3,608 3,404
Provision for income taxes 390 330 1,001 988
Net income $ 976 $ 822 $ 2,607 $ 2,416
    
Per common share data
Net income per common share - basic $ 0.77 $ 0.63 $ 2.05 $ 1.87
Net income per common share - diluted $ 0.75 $ 0.63 $ 2.02 $ 1.86
Dividends declared $ 0.24 $ 0.21 $ 0.68 $ 0.61
Book value (period end) $ 20.90 $ 19.64 $ 20.90 $ 19.64
Average shares outstanding - basic 1,274,765 1,296,415 1,271,177 1,292,472
Average shares outstanding -diluted 1,293,567 1,304,594 1,290,423 1,300,140
Period ending shares outstanding 1,276,913 1,298,773 1,276,913 1,298,773
  
Average balance sheet
Assets $ 303,645 $ 284,847 $ 299,943 $ 276,454
Earning assets 286,670 269,120 283,071 260,363
Loans 224,274 206,931 220,824 201,473
Deposits 248,771 239,031 247,899 231,442
Total stockholders' equity 26,459 24,913 25,181 24,418
  
Selected ratios
Return on average assets 1.29% 1.15% 1.16% 1.17%
Return on average equity 14.76% 13.19% 13.81% 13.19%
Yield on earning assets 6.34% 6.02% 6.19% 6.11%
Cost of interest bearing liabilities 2.80% 2.60% 2.74% 2.60%
Net interest spread 3.54% 3.43% 3.45% 3.50%
Net interest margin 4.02% 3.86% 3.91% 3.93%
Efficiency 56.63% 59.99% 60.15% 59.98%
Equity to assets at period end 8.74% 8.82% 8.74% 8.82%
  
  
September 30, September 30,
Asset quality data 2005 2004
Allowance for loan losses $ 2,736 $ 2,627
Allowance for loan losses/total loans 1.21%   1.26%
Net charge-offs:
   Quarter-to-date $ 16 $ 12
   Year-to-date 82 6
Net charge-offs to average loans    
   Quarter-to-date 0.03% 0.02%
   Year-to-date 0.07% 0.01%
Non-performing loans/total loans 0.70% 0.59%
Allowance for loan losses/non-performing loans 174.32% 213.87%
  
Non-accrual loans $ 1,110 $ 455
Restructured loans 0 0
90 days past due and still accruing 460 773
Non-performing loans 1,570 1,228
Other real estate owned 0 0
Non-performing assets $ 1,570 $ 1,228