Middlefield Banc Corp. Reports First Quarter 2013 Net Income of $1.66 Million

Middlefield Banc Corp. 2013 Press Releases

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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: April 23, 2013

MIDDLEFIELD, OHIO, Middlefield Banc Corp. (OTCQB:  MBCN), reported net income of $1.66 million for the quarter ended March 31, 2013, compared to $1.52 million for the quarter ended March 31, 2012, an increase of 8.8%.  On a per share basis, the Company's diluted earnings were $0.82 for the 2013 first quarter, as compared to $0.86 for the comparable period of 2012.

Annualized returns on average equity ("ROE") and average assets ("ROA") for the 2013 quarter were 12.18% and 1.01%, respectively, compared with 12.81% and 0.94% for the first quarter of 2012.

"Our first quarter results continue the strong performance that we enjoyed in 2012.  To be able to continue to post this level of success is even more remarkable given the economic and regulatory environment that continues to present a great challenge" stated Thomas G. Caldwell, President and Chief Executive Officer.  "Our return on average assets of 1.01% and return on average equity of 12.18% reflect well on the effort put forth by our team."

"As we move forward into 2013, we continue to believe that we are well positioned to address the threats of continued sluggish economy, historically low interest rates, and increased regulatory costs," continued Caldwell.  Our focus remains on delivering excellence in customer service, increasing value to our shareholders, and operating our company in accordance with safe and sound banking practices."   

Net Interest Income

For the first three months of 2013, net interest income increased $39,000, or 0.7% from the same period last year.  While interest income experienced a decline of $218,000, or 3.0%, interest expense was $257,000, or 15.2%, lower in the 2013 quarter as compared to the same period of 2012.  The net interest margin for the three months ended March 31, 2013 was 3.92%, compared to 3.89% for the same period of the prior year.

Noninterest Income and Operating Expenses

Noninterest income for the first quarter of 2013 was $898,000.  This was a modest increase of 13.1% from the comparable period of 2012.  The largest factor in the increase was the recognition of $185,000 due to gains on the sale of securities.  A partial off-set was the gain recognized during the 2012 quarter of $85,000 from the sale of loans.  Deposit service charges increased year-over-year, primarily due to increased debit card usage and a greater amount of overdraft fees.   

Operating expense for the first quarter of 2013 totaled $4.0 million, an increase of $249,000, or 6.6% from the same period last year.  Salaries and benefits, the company's largest noninterest expense, contributed $121,000 to the increase.  This increase is largely related to the growth of the company, including increased staffing levels in regulatory compliance.  Higher data processing costs and equipment expense were directly related to the growth of the company since the first quarter of 2012.  The increase in professional fees is, in part, attributable to the negotiation of a new data processing contract and increased regulatory compliance efforts, while the company also incurred increased expenses related to the maintenance of other real estate owned properties. 

Balance Sheet

The company's total assets as of March 31, 2013 stood at $667.0 million, an increase of 1.4% over the $657.9 million in total assets reported March 31, 2012.  The March 31, 2013 total does reflect a decrease of 0.5% from the December 31, 2012 total.  Net loans at March 31, 2013, were $399.3 million, up $2.3 million from the comparable 2012 quarter-end.  Net loan totals were down 0.3% during the first three months of 2013.  The investment portfolio, which is entirely classified as available for sale, stood at $190.7 million at March 31, 2013.  This total reflects an increase of $6.9 million from the year-ago period and a decrease of $3.8 million from December 31, 2012.  Total deposits at the end of the first quarter 2013 were $591.5 million.  This represents an increase of $7.6 million from March 31, 2012 and a decrease of $1.8 million from year-end 2012. 

Shareholders' Equity and Dividends 

At March 31, 2013, shareholders' equity totaled $55.9 million, which was an increase of $7.4 million from the comparable 2012 quarter-end and $400,000 from December 31, 2012.  Tangible book value per share as of March 31, 2013 was $25.35.  During the first quarter of both 2013 and 2012, Middlefield paid cash dividends of $0.26 per share.

Asset Quality

For the three months ended March 31, 2013, management provided $313,000 to the allowance for loan losses, which compares to $600,000 for the same period of 2012.  Net charge-offs for the 2013 first quarter were $360,000, or 0.09% of average loans.  The allowance for loan losses at March 31, 2013 stood at $7.7 million, or 1.90% of total loans.  At March 31, 2012, the allowance for loan losses was $7.3 million, representing 1.80% of total loans.  Based on the evaluation of the adequacy of the allowance for loan losses, management believes that, at March 31, 2013, the allowance for loan losses was adequate and reflects probable losses in the loan portfolio.

Asset Quality History
(dollars in thousands)
 
    Mar 31
2013
    Dec 31
2012
    Mar 31
2012
    Dec 31
2011
    Dec 31
2010
 
Nonperforming loans $ 13,899 $ 14,194 $ 17,677 $ 24,546 $ 19,986
Real estate owned 2,155 1,846 2,125 2,196 2,302
Nonperforming assets $ 16,054 $ 16,040 $ 19,802 $ 26,742 $ 22,288
Allowance for loan losses $ 7,732 $ 7,779 $ 7,267 $ 6,819 $ 6,221
   
Ratios:
   
Nonperforming loans to total loans 3.41% 3.48% 4.37% 6.12% 5.37%
Nonperforming assets to total assets 2.41% 2.39% 3.01% 4.09% 3.52%
Allowance for loan losses to total loans 1.90% 1.90% 1.80% 1.70% 1.67%
Allowance for loan losses to nonperforming loans 55.63% 54.80% 41.11% 27.78% 31.13%

Middlefield Banc Corp. headquartered in Middlefield, Ohio is a multi-bank holding company with total assets of $667.0 million.  The company's lead bank, The Middlefield Banking Company, operates full service banking centers and an 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, 2013 and 2012 and December 31, 2012
   (unaudited)  (audited)  (unaudited)
Balance Sheet (period end)      March 31,  December 31,  March 31,
(Dollar amounts in thousands) 2013 2012 2012
   
ASSETS
Cash and due from banks   $ 32,426 $   33,568 $ 22,022
Federal funds sold 13,204   11,778 23,587
Cash and cash equivalents 45,630   45,346 45,609
Investment securities available for sale 190,687   194,472 183,770
Loans 407,054   408,433 404,269
Less allowance for loan losses 7,732   7,779 7,267
Net loans 399,322   400,654 397,002
Premises and equipment 8,694   8,670 8,368
Goodwill 4,559   4,559 4,559
Core deposit intangible 184   195 225
Bank-owned life insurance 8,604   8,536 8,326
Accrued interest and other assets 9,294   7,856 10,090
Total Assets   $ 666,974 $   670,288 $ 657,949
   
LIABILITIES
Noninterest-bearing demand   $ 73,354 $ 75,912 $ 64,517
Interest-bearing demand 68,060 63,915 63,509
Money market 80,051 81,349 71,047
Savings 181,872 175,406 172,236
Time 188,160 196,753 212,633
Total deposits 591,497 593,335 583,942
Short-term borrowings 5,240 6,538 7,365
Other borrowings 12,779 12,970 16,561
Other liabilities 1,608 2,008 1,622
Total Liabilities 611,124 614,851 609,490
   
STOCKHOLDERS' EQUITY
Common stock 34,697 34,295 31,420
Retained earnings 23,622 22,485 19,272
Accumulated other comprehensive income 4,265 5,391 4,501
Treasury stock (6,734) (6,734) (6,734)
Total Stockholders' Equity 55,850 55,437 48,459
Total Liabilities and Stockholders' Equity   $ 666,974 $ 670,288 $ 657,949

   

MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
March 31, 2013 and 2012 (unaudited)
   
For the Three Months Ended
Income Statement March 31,
(Dollar amounts in thousands)     2013 2012
             
INTEREST INCOME
Interest and fees on loans   $ 5,572 $ 5,537
Interest-bearing deposits in other institutions 8 4
Federal funds sold 4 3
Investment securities:
Taxable interest 674 915
Tax-exempt interest 733 747
Dividends on FHLB stock 23 26
Total interest income  7,014 7,232
   
INTEREST EXPENSE
Deposits 1,297 1,497
Short term borrowings 52 59
Other borrowings  46 84
Trust preferred securities 34 46
Total interest expense 1,429 1,686
       
NET INTEREST INCOME 5,585 5,546
       
Provision for loan losses 313 600
   
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES
5,272 4,946
   
NONINTEREST INCOME
Service charges on deposit accounts 447 431
Net securities gains 185 -
Earnings on bank-owned life insurance 73 68
Gain on sale of loans  - 85
Other income 193 210
Total noninterest income 898 794
   
NONINTEREST EXPENSE
Salaries and employee benefits 1,871 1,750
Occupancy expense 274 248
Equipment expense 189  170
Data processing costs 213 199
Ohio state franchise tax 154 129
Federal deposit insurance expense 154 243
 Professional fees 276 214
(Gain) Loss on sale of other real estate owned 8 18
Advertising expense 112 20
Other real estate 106 10
Other expense 674 781
Total noninterest expense 4,031 3,782
       
Income before income taxes  2,139 1,958
Income taxes 482 435
NET INCOME   $ 1,657 $ 1,523

   

MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
March 31, 2013 and 2012
(unaudited)
For the Three Months Ended
March 31,
  2013     2012
Per common share data
Net income per common share - basic $ 0.83 $ 0.86
Net income per common share - diluted $ 0.82 $ 0.86
Dividends declared $ 0.26 $ 0.26
Book value per share (period end) $ 27.70 $ 27.35
Tangible book value per share (period end) $ 25.35 $ 24.78
Dividend payout ratio 31.38% 30.01%
Average shares outstanding - basic 1,999,612 1,763,982
Average shares outstanding -diluted 2,010,259 1,764,585
Period ending shares outstanding 2,016,284 1,771,687
   
Selected ratios
Return on average assets 1.01% 0.94%
Return on average equity 12.18% 12.81%
Yield on earning assets 4.86% 4.99%
Cost of interest bearing liabilities 1.09% 1.26%
Net interest spread 3.77% 3.74%
Net interest margin 3.92% 3.89%
Efficiency (1) 58.75% 56.24%
Equity to assets at period end 8.37% 7.37%
   
(1)  The efficiency ratio is calculated by dividing noninterest expense less amortization of intangibles by the sum of net interest income on a fully taxable equivalent basis plus non-interest income.

   

MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
March 31, 2013 and 2012
(unaudited)
       March 31,      March 31,
Asset quality data     2013 2012
(Dollar amounts in thousands)
 
Non-accrual loans   $   9,730 $   15,641
Troubled debt restructuring   3,808   926
90 day past due and accruing   361   1,110
Nonperforming loans   13,899   17,677
Other real estate owned   2,155   2,125
Nonperforming assets   $   16,054 $   19,802
             
Allowance for loan losses   $   7,732 $   7,267
Allowance for loan losses/total loans 1.90% 1.80%
Net charge-offs:
Quarter-to-date   $   360 $   152
Year-to-date   360   152
Net charge-offs to average loans
Quarter-to-date 0.09% 0.04%
Year-to-date 0.09% 0.04%
Nonperforming loans/total loans 3.41% 4.37%
Allowance for loan losses/non-performing loans 55.63% 41.11%
       
 March 31,  March 31,
Loans 2013 2012
(Dollar amounts in thousands)
 
Commercial and industrial   $ 55,401 $ 60,924
Real estate - construction 22,817 21,444
Real estate - mortgage
Residential 199,063 207,735
Commercial 125,799 109,941
Consumer installment 3,974 4,225
Total Loans   $ 407,054 $ 404,269