The Middlefield Banking Company

The Middlefield Banking Company

 

Middlefield Banc Corp. 2009 Press Releases

Middlefield Banc Corp. Posts Strong Growth and Third Quarter Earnings

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Contact Info:

James R. Heslop, 2nd
Middlefield Banc Corp.
Executive Vice President/Chief Operating Officer
(440) 632-1666 Ext. 3219
Date: October 21, 2009

MIDDLEFIELD, OHIO   Middlefield Banc Corp. (Pink Sheets:  MBCN), parent of The Middlefield Banking Company and Emerald Bank, today announced the following results for the third quarter ended September 30, 2009.

  • Total assets increased $50.1 million, or 10.7%, from December 31, 2008
  • Equity to assets stood at 7.24% following an increase in equity of $2.4 million from December 31, 2008
  • Total deposits stood at $447.9 million, an increase of 13.5% from year-end 2008
  • Net interest income increased $1.4 million, or 15.5% from the same nine month period of 2008
  • Diluted earnings per common share for the third quarter were $0.14.

The company reported that earnings for the third quarter ended September 30, 2009, were $213,000 compared to earnings of $704,000 for the same period in the prior year.  The reduced earnings were primarily the result of provision charges to increase loan loss reserves and an increase in FDIC premiums due to higher rates for all FDIC insured banks.  The same factors contributed to a decrease in nine month earnings from $2,224,000 for the 2008 period to $1,277,000 for the 2009 nine month period.

Annualized returns on average equity ("ROE") and average assets ("ROA") for the quarter were 2.34% and 0.17%, respectively, compared with 8.77% and 0.63% for the third quarter of 2008.  ROE and ROA were 4.72% and 0.35%, respectively, for the nine-month period of 2009.  Comparable results for the 2008 nine-month period were 8.78% and 0.66%, respectively.

"We are pleased to report positive earnings for the quarter and year-to-date periods," stated Thomas G. Caldwell, President and Chief Executive Officer, "Looking forward, we remain cautiously optimistic.  Throughout the credit crisis and recession, we have continued to maintain a "well capitalized" equity position, while diversifying our asset base and improving our core liquidity.  While we continue to see continued improvement in our net interest margin, our focus remains on the successful resolution of our problem assets."

"Following our acquisition of Emerald Bank, we recognized the need for a change in that affiliate's management.  I am pleased with the effort put forth by our new management team as they continue to identify problem assets within the portfolio, while continuing to prudently grow the bank.  While the efforts have led us to take a provision expense of $1.8 million for the first nine months, we are growing comfortable that each credit within the portfolio has been properly reviewed and assessed."  

Asset Quality

The provision for loan losses for the three and nine month periods ended September 30, 2009 increased 620% and 393% to $1,346,000 and $1,760,000 compared to the $187,000 and $357,000, respectively, for the comparable periods of 2008.  "The economics of the communities that we serve are reflected in our asset quality numbers," said Donald L. Stacy, Chief Financial Officer of Middlefield Banc Corp.  "In our northeastern Ohio markets, credit issues are tied to owner occupied residential properties and are a reflection of current unemployment rates.  Our central Ohio market is reporting delinquencies tied to non-owner occupied residential properties." 

The following table summarizes asset quality and reserve coverage ratios as of the end of the last five quarters.

       
  Asset Quality History
  (Dollars in thousands)
           
  9/30/2009 6/30/2009 3/31/2009 12/31/2008 9/30/2008
               
Nonperforming loans $ 14,368     $ 14,023     $ 13,370     $ 8,481     $ 6,749
Real estate owned 1,775 1,967 1,331 1,106 1,108
           
Nonperforming assets $ 16,143 $ 15,991 $ 14,701 $ 9,587 $ 7,857
           
Allowance for loan losses $ 4,422 $ 3,668 $ 3,621 $ 3,557 $ 3,614
           
Ratios          
Nonperforming loans to total loans 4.15% 4.18% 4.16% 2.64% 2.11%
Nonperforming assets to total assets 3.12% 3.33% 3.14% 2.11% 1.76%
Allowance for loan losses to total loans 1.28% 1.09% 1.13% 1.11% 1.13%
Allowance for loan losses to nonperforming loans 30.78% 26.16% 27.08% 41.94% 53.55%
           

 

The increased loan loss provision, which has significantly outpaced loan charge-offs, has substantially strengthened the allowance for loan losses.  The ratio of the allowance for loan losses to total loans increased to 1.28% of total loans at September 30, 2009 compared to the 1.09% reported at June 30, 2009 and 1.13% at September 30, 2008.

Net Interest Income

Net interest income for the third quarter of 2009 increased $635,000, or 20.1%, to $3,786,000 compared to $3,152,000 in the third quarter of 2008.  The net interest margin increased 26 basis points to 3.46% compared to the 3.20% reported for the year-ago quarter.  Net interest income for the nine months ended September 30, 2009 increased by $1,390,000, or 15.5%, to $10,370,000 compared to the $8,981,000 for the first nine months of 2008.  The net interest margin for the first nine months of 2009 stood at 3.31%, a 23 basis point increase from the 3.08% reported for the nine month period of 2008.

The improvement in net interest income reflects strong core deposit growth and the implementation of new pricing strategies.  Total deposits at September 30, 2009 stood at $447.9 million, representing an increase of 13.5% from the year-end 2008 figure.  Savings account deposits accounted for growth of $30.4 million, with Money Market deposits increasing $14.2 million.

Non-Interest Income and Operating Expenses

Non-interest income remained relatively flat for both the three and nine month periods.  Service charges on deposit accounts decreased $4,500 for the three months of 2009 compared to 2008, and $23,500 for the nine month periods.  Earnings on bank-owned life insurance were lower, reflective  of the current interest rate environment.

Operating expenses increased by 11.4%, or $310,000 for the quarter and $1,515,000, or 19.4% for the nine month period, when compared to the same periods of 2008.  Expense increases in salaries and employee benefits, occupancy expense, and data processing costs are all directly related to the growth of the company.  The Middlefield Banking Company opened its Cortland office in June 2008, while Emerald Bank acquired an office in Westerville in November 2008.  Both of these actions, while expanding the company's footprint, contributed to the higher expense levels.  The premium for FDIC insurance increased 20.1% in the third quarter of 2009 over the same period of 2008 and 350.8% for the nine month period of 2009 over 2008.

Balance Sheet Growth

The company's total assets ended the third quarter of 2009 at $517.9 million, an increase of 10.7% over the $467.8 million in total assets reported at December 31, 2008.  Net loans at September 30, 2009, were $341.5 million, up $23.5 million, or 7.4%, over the $318.0 million reported at December 31, 2008.  Total deposits at September 30, 2009, were $447.9 million, or 13.5% greater than the deposit level of $394.8 million at December 31, 2008. 

The investment portfolio, which is entirely classified as available for sale, stood at $116.9 million at September 30, 2009.  This figure represented growth within that portfolio of $12.6 million during the nine-month period.  Stockholders' equity at September 30, 2009, was $37.5 million, or 7.24% of total assets.  Book value per share as of September 30, 2009 was $24.07.

Dividends   

In the first nine months of 2009, Middlefield paid cash dividends of $0.78 per share.  This represents only a slight increase over the $0.77 per share paid during the first nine months of 2008.

Middlefield Banc Corp. headquartered in Middlefield, Ohio is a multi-bank holding company with total assets of $517.9 million.  The company's lead bank, The Middlefield Banking Company, operates full service banking centers and a LPL Financial¨ brokerage office serving Chardon, Cortland, Garrettsville, Mantua, Middlefield, Newbury, and Orwell.  The company also serves the central Ohio market through its Emerald Bank subsidiary, with offices in Dublin and Westerville, Ohio.  Additional information is available at www.middlefieldbank.com and www.emeraldbank.com

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
                 
September 30, 2009 and 2008 and December 31, 2008
    (unaudited)           (unaudited)
Balance Sheet (period end)   September 30,     December 31,     September 30,
    2009     2008     2008
Assets                
Cash and due from banks $ 11,143,127    $ 9,795,248    $ 8,263,756
Federal funds sold   19,533,878     7,548,000     4,570,827
Interest-bearing deposits in other institutions   120,885     112,215     112,215
   Cash and cash equivalents   30,797,890     17,455,463     12,946,798
Investment securities available for sale   116,880,660     104,270,366     96,371,351
Loans:   345,918,924     321,575,293     320,151,943
Less:  allowance for loan losses   4,422,250     3,556,763     3,613,857
      Net loans   341,496,674     318,018,530     316,538,086
Premises and equipment   8,256,905     8,448,915     8,018,503
Goodwill   4,558,687     4,558,687     4,371,205
Bank-owned life insurance   7,637,731     7,440,687     7,371,180
Accrued interest receivable and other assets   8,317,212     7,654,287     8,450,812
                 
Total Assets $ 517,945,759     467,846,935     454,067,935
                 
    September 30,     December 31,     September 30,
    2009     2008     2008
Liabilities and Stockholders' Equity                
Non-interest bearing demand deposits $ 40,963,722   $ 42,357,154   $ 40,929,373
Interest bearing demand deposits   34,877,418     26,404,660     27,409,745
Money market accounts   42,078,988     27,845,438     26,831,740
Savings deposits   99,322,206     68,968,844     69,835,964
Time deposits   230,686,676     229,243,506     214,957,328
   Total Deposits   447,929,010     394,819,602     379,964,150
Short-term borrowings   1,667,967     1,886,253     1,693,699
Other borrowings   28,772,173     33,903,019     36,687,924
Other liabilities   2,097,903     2,178,813     2,340,455
   Total Liabilities   480,467,053     432,787,687     420,686,228
                 
Common equity   27,759,557     27,301,403     27,159,602
Retained earnings   14,860,713     14,786,353     14,793,600
Accumulated other comprehensive income (loss)   1,592,043     (294,901)     (1,837,888)
Treasury stock   (6,733,607)     (6,733,607)     (6,733,607)
   Total Stockholders' Equity   37,478,706     35,059,248     33,381,707
                 
Total Liabilities and Stockholders' Equity $ 517,945,759   $ 467,846,935   $ 454,067,935
                 
                 

 

MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
September 30, 2009 and 2008
(unaudited)
                       
  For the Three Months Ended   For the Nine Months Ended
  September 30,   September 30,
    2009     2008     2009     2008
INTEREST INCOME                      
   Interest and fees on loans $ 5,175,354    $ 5,425,266    $ 15,079,662    $ 16,273,630
   Interest-bearing deposits in other institutions   2,293     1,949     11,800     10,790
   Federal funds sold   3,936     22,181     10,977     124,467
   Investment securities                      
      Taxable interest   975,580     622,184     2,752,897     1,793,645
      Tax-exempt interest   474,629     449,351     1,374,847     1,360,226
   Dividends on FHLB Stock   15,847     29,514     46,611     88,526
      Total interest income   6,647,639     6,550,445     19,276,794     19,651,284
INTEREST EXPENSE                      
   Deposits   2,501,502     2,948,998     7,776,369     9,381,666
   Short term borrowings   4,987     17,610     15,161     34,793
   Other borrowings   354,769     432,055     1,114,899     1,254,040
      Total interest expense   2,861,258     3,398,663     8,906,429     10,670,499
NET INTEREST INCOME   3,786,381     3,151,782     10,370,365     8,980,785
Provision for loan losses   1,346,000     187,000     1,760,000     357,000
NET INTEREST INCOME AFTER PROVISION                      
   FOR LOAN LOSSES   2,440,381     2,964,782     8,610,365     8,623,785
NONINTEREST INCOME                      
   Service charges on deposits   488,747     493,228     1,394,312     1,417,789
   Net securities gains (losses)   0     25,728     0     34,508
   Earnings on bank-owned life insurance   68,413     75,336     197,044     217,798
   Other income   133,300     85,925     358,775     284,820
      Total non-interest income   690,460     680,247     1,950,131     1,954,915
NONINTEREST EXPENSE                      
   Salaries and employee benefits   1,395,388     1,322,026     4,303,972     3,643,199
   Occupancy expense   215,768     203,298     691,538     643,884
   Equipment expense   151,742     150,334     425,175     435,770
   Data processing costs   224,615     193,033     692,362     591,098
   Ohio state franchise tax   123,300     117,000     369,900     351,000
     FDIC assessment   86,108     71,702     529,268     117,394
   Other operating expense   843,030     672,188     2,326,521     2,041,882
      Total non-interest expense   3,039,951     2,729,581     9,338,736     7,824,227
Income before income taxes   90,890     915,448     1,221,760     2,754,473
Provision (benefit) for income taxes   (122,574)     211,000     (55,574)     530,000
NET INCOME $ 213,464   $ 704,448   $ 1,277,334   $ 2,224,473
                                
Per common share data                      
Net income per common share - basic $ 0.14   $ 0.46   $ 0.83   $ 1.45
Net income per common share - diluted $ 0.14   $ 0.46   $ 0.83   $ 1.44
 Dividends declared $ 0.26   $ 0.26   $                0.78   $ 0.77
Book value per share(period end) $ 24.07   $ 21.83   $ 24.07   $ 21.83
Tangible book value per share (period end) $ 21.15   $ 18.97   $ 21.15   $ 18.97
Dividend payout ratio   188.77%     56.19%     94.18%     52.95%
Average shares outstanding - basic   1,551,056     1,523,044     1,543,577     1,533,741
Average shares outstanding - diluted   1,551,056     1,525,373     1,544,704     1,546,400
Period ending shares outstanding   1,556,774     1,529,292     1,556,774     1,529,292
                       
Selected ratios                      
Return on average assets   0.17%     0.63%     0.35%     0.66%
Return on average equity   2.34%     8.77%     4.72%     8.78%
Yield on earning assets   5.92%     6.42%     5.97%     6.48%
Cost of interest bearing liabilities   2.72%     3.62%     2.97%     3.85%
Net interest spread   3.20%     2.80%     3.00%     2.64%
Net interest margin   3.46%     3.20%     3.31%     3.08%
Efficiency (1)   64.39%     67.17%     71.68%     67.24%
Equity to assets at period end   7.24%     7.35%     7.24%     7.35%
                       
(1)  The efficiency ratio is calculated by dividing non-interest expense less amortization of intangibles by the sum of net interest income on a fully taxable equivalent basis plus non-interest income.
                       
                       
    September 30,     September 30,            
Asset quality data   2009     2008            
                       
Non-accrual loans $ 11,312,822   $ 3,421,782            
90 day past due and accruing   3,054,951     3,327,162            
Non-performing loans   14,367,773       6,748,944            
Other real estate owned   1,775,082     1,107,547            
Non-performing assets $ 16,142,855    $ 7,856,491            
                       
                       
Allowance for loan losses $ 4,422,250   $ 3,613,857            
Allowance for loan losses/total loans   1.28%     1.13%            
Net charge-offs:                      
   Quarter-to-date $ 592   $ 8            
   Year-to-date   895     42            
Net charge-offs to average loans                      
   Quarter-to-date   0.17%     0.00%            
   Year-to-date   0.27%     0.01%            
Non-performing loans/total loans   4.15%     2.11%            
Allowance for loan losses/non-performing loans   30.78%     46.00%            
The Middlefield Banking Company, Member FDICEqual Housing Lender 
Copyright © 2004- Middlefield Banc Corp.
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