• personal banking
  • business banking
  • online banking
  • investments
  • planning/tools

Middlefield Banc Corp. Earnings Increase and Continued Asset Growth for First Quarter

Middlefield Banc Corp. 2010 Press Releases

Font Size 
Facebook Icon   Twitter Icon   Email Icon   Printer Icon
Contact Info: James R. Heslop, 2nd
Middlefield Banc Corp.
Executive Vice President/Chief Operating Officer
440.632.1666 Ext. 3219
Date: April 26, 2010

MIDDLEFIELD, OHIO Middlefield Banc Corp. (Pink Sheets:  MBCN), parent of The Middlefield Banking Company and Emerald Bank, today announced the following results for the quarter ended March 31, 2010.

  • Total assets increased $35.4 million, or 6.3%, from December 31, 2009
  • Net interest income in a year-to-year comparison grew $0.8 million or 26.2%
  • Total deposits stood at $522.3 million, an increase of 7.2% from year-end 2009
  • Net loans grew $5.7 million during the quarter, ending up 1.6%
  • Diluted earnings per common share for the quarter were $0.41, up 5.1% from the first quarter of 2009.

The company reported that earnings for the first quarter ended March 31, 2010, were $645,000 compared to earnings of $603,000 for the same period in the prior year.  Earnings per diluted share for the 2010 quarter were $0.41, while those reported for the 2009 period were $0.39.

During the 2010 first quarter, net interest income increased $842,000 from the first quarter of 2009.  This was offset by a $285,000 higher provision for loan losses, and an increase in other total non-interest expense of $562,000.  Non-interest income during the first quarter of 2010 was $15,000 below that reported in the same period of 2009.    

Annualized returns on average equity ("ROE") and average assets ("ROA") for the 2010 quarter were 7.06% and 0.45%, respectively, compared with 7.00% and 0.52% for the first quarter of 2009.

"We are pleased to report positive earnings for the first quarter of 2010," stated Thomas G. Caldwell, President and Chief Executive Officer, "Historically low interest rates have permitted the opportunity to improve our net interest margin.  We have also maintained our focus on managing our non-interest expenses.  The dollar increase in this area is attributable to the continued growth of the company."

"The first quarter of the new year has also witnessed continued strong growth in our deposit base.  However, loan demand within our markets has remained soft.  While we continue to seek strong quality credits, we have deployed our additional funding into our securities portfolio.  We have also reduced the level of borrowings from the Federal Home Loan Bank."

"In a broad sense, we are cautiously optimistic that a transition to better economic times will begin in 2010.  As we work through that interim period, our focus remains keen on delivering excellence in customer service, increasing value to our shareholders, and operating our company in accordance with safe and sound banking practices," Caldwell concluded.

Asset Quality

The provision for loan losses for the three month period ended March 31, 2010 increased 185% to $439,000 compared to the $154,000 for the comparable period of 2009.  "To a great extent, the success of our company is dependent upon sustainable economic activity within the markets we serve.  Many within our market area have been negatively impacted by weaknesses within the various economic segments.  Our asset quality numbers reflect these factors, including continued high unemployment, increased levels of under-employment, and lower real estate values," said Donald L. Stacy, Chief Financial Officer of Middlefield Banc Corp.  "As we have reported earlier, credit issues are tied to owner occupied residential properties in our northeastern Ohio markets, while our central Ohio market is reporting delinquencies tied to non-owner occupied residential properties." 

Stacy continued, "We believe that it is prudent, in light of these on-going economic issues and heightened regulatory scrutiny, to operate with higher levels of general loan loss reserves.  During 2010, we will continue to provide a higher than historic level of provision to address credit quality issues."

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

Asset Quality History
(dollars in thousands)
  
  3/31/2010     12/31/2009     3/31/2009     12/31/2008
  
Nonperforming loans    $ 18,143    $ 16,285    $ 13,370    $ 8,481
Real estate owned   2,175   2,164   1,331   1,106
  
Nonperforming assets $ 20,318 $ 18,449 $ 14,701 $ 9,587
  
Allowance for loan losses $ 5,279 $ 4,937 $ 3,621 $ 3,557
  
Ratios:
Nonperforming loans to total loans 5.04% 4.61% 4.16% 2.64%
Nonperforming assets to total
  assets 3.42% 3.30% 3.14% 2.11%
Allowance for loan losses to total
  loans 1.47% 1.40% 1.13% 1.11%
Allowance for loan losses to
  nonperforming loans 29.10% 30.31% 27.08% 41.94%
  

The increased loan loss provision, which has significantly outpaced loan charge-offs, has strengthened the allowance for loan losses.  The ratio of the allowance for loan losses to total loans increased to 1.47% of total loans at March 31, 2010, compared to the 1.40% reported at December 31, 2009, and 1.11% at December 31, 2008.

Net Interest Income

Net interest income was $4.06 million, an increase of 26.2% from the $3.21 million reported for the comparable quarter of 2009.  The net interest margin was 3.29%, representing an increase from the 2009 first quarter of 3.21%.  While interest income was negatively impacted by an increase in the total of non-performing loans, the company benefited from an historically low interest rate environment.  Total interest expense of $2.87 million was 7.8% below the level experienced during the first quarter of 2009, which was $3.11 million.  

Non-Interest Income and Operating Expenses

Non-interest income decreased $15,000 for the three-month period of 2010 from the comparable 2009 period.  A decrease in service charges on deposit accounts and lower earnings on bank-owned life insurance were partially offset by a gain on the sale of investment securities and a slight increase in other fee income. 

Non-interest expense of $3.56 million for the first quarter of 2010 was 18.8%, or $562,000 higher than the first quarter of 2009.  Increases in salaries and employee benefits of $140,000 are primarily attributable to staff additions in accounting and special assets, as well as an increase in health insurance costs.  Equipment expense was $75,000 higher in the 2010 quarter than for the 2009 period.  The company's two affiliate banks are moving to a new core data processing provider in late April and have incurred additional expense related to that migration.  Increases in the FDIC deposit insurance assessment and occupancy expense are directly related to the growth of the company.  Other expenses were $289,000 higher in the 2010 period than in the same quarter of 2009.  Losses on other real estate and costs associated with maintaining owned properties, as well as legal fees in pursuing collection activities accounted for $239,000 of the increase.        

Balance Sheet Growth

The company's total assets as of March 31, 2010 stood at $594.0 million, an increase of 6.3% over the $558.7 million in total assets reported at December 31, 2009.  Net loans at March 31, 2010, were $354.4 million, up $5.7 million, or 1.6%, over the $348.7 million reported at December 31, 2009.  Total deposits at the end of the first quarter 2010 were $522.3 million, or 7.2% greater than the deposit level of $487.1 million at December 31, 2009. 

The investment portfolio, which is entirely classified as available for sale, stood at $164.9 million at March 31, 2010.  This figure represented growth within that portfolio of $28.1 million from the prior year-end.  Stockholders' equity at March 31, 2010, was $37.7 million.  Book value per share as of March 31, 2010, was $24.05.

Dividends   

During the first quarter of both 2010 and 2009, Middlefield paid cash dividends of $0.26 per share.

Middlefield Banc Corp. headquartered in Middlefield, Ohio is a multi-bank holding company with total assets of $594.0 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 press release of Middlefield Banc Corp. and the reports Middlefield Banc Corp. files with the Securities and Exchange Commission often contain "forward-looking statements" relating to present or future trends or factors affecting the banking industry and, specifically, the financial operations, markets and products of Middlefield Banc Corp.  These forward-looking statements involve certain risks and uncertainties.  There are a number of important factors that could cause Middlefield Banc Corp.'s future results to differ materially from historical performance or projected performance.  These factors include, but are not limited to: (1) a significant increase in competitive pressures among financial institutions; (2) changes in the interest rate environment that may reduce interest margins; (3) changes in prepayment speeds, charge-offs and loan loss provisions; (4) less favorable than expected general economic conditions; (5) legislative or regulatory changes that may adversely affect businesses in which Middlefield Banc Corp. is engaged; (6) technological issues which may adversely affect Middlefield Banc Corp.'s financial operations or customers; (7) changes in the securities markets; or (8) risk factors mentioned in the reports and registration statements Middlefield Banc Corp. files with the Securities and Exchange Commission.  Middlefield Banc Corp. undertakes no obligation to release revisions to these forward-looking statements or to reflect events or circumstances after the date of this press release.

Middlefield Banc Corp.
Consolidated Selected Financial Highlights
  
March 31, 2010 and 2009 and December 31, 2009
  
   (unaudited)  (unaudited)
Balance Sheet (period end)     March 31,     December 31,     March 31,
(Dollar amounts in thousands) 2010 2009 2009
  
ASSETS
Cash and due from banks $ 13,039 $ 12,909 $ 12,569
Federal funds sold 28,492 28,123 5,780
Interest-bearing deposits in other institutions 123 121 119
Cash and cash equivalents 41,654 41,153 18,468
Investment securities available for sale 164,852 136,711 102,324
Loans 359,651 353,597 326,688
Less allowance for loan losses 5,279 4,937 3,620
Net loans 354,372 348,660 323,068
Premises and equipment 8,408 8,394 8,333
Goodwill 4,559 4,559 4,559
Bank-owned life insurance 7,773 7,706 7,509
Accrued interest and other assets 12,399 11,475 9,113
  
Total Assets $ 594,017 $ 558,658 $ 473,374
  
LIABILITIES
Noninterest-bearing demand $ 44,082 $ 44,387 $ 43,271
Interest-bearing demand 41,959     38,111 29,753
Money market 64,808 56,451 31,059
Savings 120,544   107,358   77,706
Time 250,885   240,799   222,297
Total deposits 522,278 487,106 404,086
Short-term borrowings 6,772 6,800 1,533
Other borrowings 25,374 25,865 30,890
Accrued interest and other liabilities 1,847 2,180 2,007
Total Liabilities 556,271 521,951 438,516
  
STOCKHOLDERS' EQUITY
Common stock 28,035 27,919 27,428
Retained earnings    15,197 14,960 14,990
Accumulated other comprehensive gain/(loss) 1,248 562 (826)
Treasury stock (6,734) (6,734) (6,734)
Total Stockholders' Equity 37,746 36,707 34,858
  
Total Liabilities and Stockholders' Equity $ 594,017 $ 558,658 $ 473,374
  
  
  
MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
  
March 31, 2010 and 2009 (unaudited) (unaudited)
   For the Three Months Ended
Income Statement March31,
(Dollar amounts in thousands) 2010 2009
  
INTEREST INCOME
Interest and fees on loans $ 5,097 $ 4,998
Interest-bearing deposits in
other institutions 4 7
Federal funds sold 11 4
Investment securities:
Taxable interest 1,203 853
Tax-exempt interest 592 446
Dividends on FHLB stock 17   16  
Total interest income 6,924   6,324  
  
INTEREST EXPENSE
Deposits 2,485 2,716
Short term borrowings 58 6
Other borrowings 190 257
Trust preferred securities 136 132
Total interest expense 2,869 3,111
  
NET INTEREST INCOME 4,055 3,213
   -
Provision for loan losses 439 154
  
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 3,616 3,059
  
NONINTEREST INCOME
Service charges on deposit accounts 415   439  
Investment securities gains, net 9   -  
Earnings on bank-owned life insurance 67 69
Other income 118 116
Total noninterest income 609 624
  
NONINTEREST EXPENSE
Salaries and employee benefits 1,511 1,371
Occupancy expense 276 255
Equipment expense 198 123
Data processing costs 243 249
Ohio state franchise tax 136 123
Federal deposit insurance expense 202 172
Other expense 992 703
Total noninterest expense 3,558 2,996
  
Income before income taxes 667 687
Income taxes 22 84
  
NET INCOME $ 645 $ 603
  
  
        
Per common share data      
Net income per common share - basic $
0.41
  $
0.39
 
Net income per common share - diluted $
0.41
$
0.39
Dividends declared $
0.26
$
0.26
Book value per share(period end) $
24.05
$
23.82
Tangible book value per share (period end) $
21.15
$
20.86
Dividend payout ratio
63.26%
66.17%
Average shares outstanding - basic
1,565,454
1,536,930
Average shares outstanding -diluted
1,567,441
1,538,534
Period ending shares outstanding
1,569,486
1,541,247
  
Selected ratios
Return on average assets 0.45% 0.52%  
Return on average equity 7.06% 7.00%  
Yield on earning assets 5.45% 6.11%  
Cost of interest bearing liabilities 2.36% 3.25%
Net interest spread 3.09% 2.86%
Net interest margin 3.29% 3.21%
Efficiency (1) 71.60% 73.59%
Equity to assets at period end 6.35% 6.57%
  
(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.
  
  
  
March 31, March 31,
Asset quality data 2010 2009
(Dollar amounts in thousands)
  
Non-accrual loazzns $ 18,140 $ 13,370
90 day past due and accruing 3 1,331
Non-performing loans 18,143 14,701
Other real estate owned 2,175 2,164
Non-performing assets $ 20,318 $ 16,865
Allowance for loan losses $ 5,279 $ 4,937
Allowance for loan losses/total loans 1.47% 1.40%
Net charge-offs:
Quarter-to-date $ 97 $ 90
Year-to-date 97 90
Net charge-offs to average loans
Quarter-to-date 0.03% 0.03%
Year-to-date 0.03% 0.03%
Non-performing loans/total loans 5.04% 4.16%
Allowance for loan losses/non-performing loans 29.10% 33.58%