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Middlefield Banc Corp. Reports Earnings for Third Quarter and Year-to-Date 2013

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: October 31, 2013

MIDDLEFIELD, OHIO, October 31, 2013 Middlefield Banc Corp. (OTCQB: MBCN) reported financial results for the three and nine months ended September 30, 2013.

Net income for the three month period ended September 30, 2013 was $1.9 million, compared to $1.8 million for the same period of 2012. On a per share basis, net income for the third quarter of 2013 was $0.92 per diluted share, compared to $0.93 for the third quarter of 2012. For the nine months ended September 30, 2013 net income was $5.2 million, while the net income for the comparable period of 2012 was $5.0 million. On a per share basis, net income for the nine months ended September 30, 2013 was $2.58 per diluted share. For the same period of 2012, net income per diluted share was $2.65. 

Annualized returns on average equity ("ROE") and average assets ("ROA") for the 2013 third quarter were 13.66% and 1.12%, respectively, compared with 16.57% and 1.12% for the third quarter of 2012. ROE and ROA were 12.74% and 1.05%, respectively, for the nine month period of 2013. Comparable results for the 2012 nine month period were 15.26% and 1.02%, respectively.

"We are pleased with our quarter and year-to-date results," stated Thomas G. Caldwell, President and Chief Executive Officer. "With an economy that is growing very slowly, we continue to encounter pockets of soft loan demand. In response, our team has become even more cohesive and continues to develop strong relationships within our markets, while remaining mindful of the necessity of proper expense control. To have been able to achieve these results during a period of continued economic and regulatory uncertainty is testament to our strong staff and keen community banking focus."

"Our diligence in maintaining our community banking focus is key to our success. We will continue to expand our business development efforts to drive prudent asset growth. We will remain firmly focused on delivering excellent customer service, increasing value to our shareholders, and operating our company under safe and sound banking principles," Caldwell concluded.

Net Interest Income

Net interest income for the 2013 third quarter of $5.8 million was 1.8% higher than the $5.7 million reported for the same quarter of 2012. The 2013 nine month period saw net interest income of $17.0 million as compared to $16.9 million reported for the same period of 2012, an increase of 1.0%. The net interest margin for the third quarter of 2013 increased 3 basis points to 4.05% compared to the 4.02% reported for the year-ago quarter. The net interest margin for the 2013 nine month period was 4.03%, an 8 basis point increase from the 3.95% reported for 2012.

Noninterest Income and Operating Expenses

Noninterest income decreased for both the three and nine month periods. The company experienced increases in revenue from deposit services charges and in other income which was offset by a decrease in the recognized gains on investment securities. During the third quarter of 2012, a gain of $0.2 million related to the sale of certain investment securities was recognized. In 2013 third quarter, no sales of securities took place. The first nine months of 2013 saw the company report a gain on the sale of securities equal to $0.2 million, while the same period of 2012 had a gain on the sale of securities of $0.4 million. 

Noninterest expense for the third quarter of 2013 totaled $4.1 million, equaling the $4.1 million reported for the third quarter of 2012. Increases in salaries and employee benefits, occupancy, equipment expense and professional fees were nearly equally matched by reductions in Federal deposit insurance premiums and the recognition of a gain on the disposition of other real estate owned. For the first nine months of 2013, total noninterest expense of $12.1 million was $0.1 million more than the 2012 comparable period. The primary factors were nearly consistent with those of the third quarter. 

Balance Sheet

The company's total assets at September 30, 2013 stood at $658.1 million, a decrease of $12.1 million, or 1.8%, from the figure reported at December 31, 2012. Net loans at September 30, 2013 were $411.2 million, representing an increase of $10.6 million, or 2.6%, over the year-end 2012 position. Total deposits stood at $579.2 million as of September 30, 2013. This figure represents a decrease of $14.1 million, or 2.4%, from year-end 2012. The investment portfolio, which is entirely classified as available for sale, was $180.8 million at September 30, 2013. This reflects a decrease of $13.7 million from December 31, 2012, with the funds being utilized for loan growth and deposit run-off. 

Shareholders' Equity and Dividends

At September 30, 2013, shareholders' equity totaled $52.5 million, a decrease of $2.9 million, or 5.2%, from the $55.4 million reported at December 31, 2012, and a decrease of $2.6 million, or 4.6%, from the September 30, 2012 figure of $55.1 million. This change primarily results from certain mark-to-market adjustments in securities available for sale due to increases in long-term interest rates, offset by an increase in retained earnings. Tangible book value per share at September 30, 2013 was $23.59. The comparable figure at September 30, 2012, was $25.37. The decrease in tangible book value per share was also the result of the aforementioned mark-to-market adjustments in securities available for sale. Shareholders received a cash dividend of $0.26 per share in the third quarter of both 2013 and 2012. 

Asset Quality 

For the three months ended September 30, 2013, management added $0.2 million to the allowance for loan losses, which compares to $0.1 million for the same period of 2012. The comparable nine month figures are $0.8 million for 2013 and $1.2 million for 2012. Net charge-offs for the first nine months of 2013 were $0.7 million, or 0.23% of average loans. Figures for the comparable period of 2012 were $0.8 million and 0.28% of average loans, respectively. The allowance for loan losses at September 30, 2013 stood at $7.8 million, or 1.87% of total loans. At September 30, 2012, the allowance for loan losses was $7.2 million, representing 1.75% of total loans. 

The following table provides a summary of asset quality and allowance for loan loss coverage ratios.

Asset Quality History
                               
(dollars in thousands)
                               
      9/30/2013     12/31/2012     9/30/2012     12/31/2011     12/31/2010
                               
Nonperforming loans   $ 13,607   $ 14,194   $ 15,404   $ 24,546   $ 19,986
Real estate owned     2,719     1,846     2,332     2,196     2,302
                               
Nonperforming assets   $ 16,326   $ 16,040   $ 17,736   $ 26,742   $ 22,288
                               
Allowance for loan losses   $ 7,821   $ 7,779   $ 7,173   $ 6,819   $ 6,221
                               
Ratios:                              
Nonperforming loans to total loans     3.25%     3.48%     3.76%     6.12%     5.37%
Nonperforming assets to total assets     2.48%     2.39%     2.67%     4.09%     3.52%
Allowance for loan losses to total loans     1.87%     1.90%     1.75%     1.70%     1.67%
Allowance for loan losses to nonperforming loans     57.48%     54.80%     46.57%     27.78%     31.13%

Middlefield Banc Corp. headquartered in Middlefield, Ohio is a multi-bank holding company with total assets of $658.1 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 atwww.middlefieldbank.comandwww.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

                   

September 30, 2013 and 2012 and December 31, 2012

                   
      (unaudited)           (unaudited)
Balance Sheet (period end)     September 30,     December 31,     September 30,
(Dollar amounts in thousands)     2013     2012     2012
                   
Assets                  
Cash and due from banks   $ 21,124   $ 33,568   $ 32,735
Federal funds sold     11,069     11,778     19,871
 Cash and cash equivalents     32,193     45,346     52,606
Investment securities available for sale     180,771     194,473     179,140
Loans:     419,060     408,433     409,175
Less: reserve for loan losses     7,821     7,779     7,173
 Net loans     411,239     400,654     402,002
Premises and equipment     8,555     8,670     8,701
Goodwill     4,559     4,559     4,559
Core deposit intangible     161     195     215
Bank-owned life insurance     8,745     8,536     8,465
Accrued interest receivable and other assets     11,918     7,855     8,493
Total Assets   $ 658,141   $ 670,288   $ 664,181
                   
      September 30,     December 31,     September 30,
      2013     2012     2012
Liabilities and Stockholders' Equity                  
Noninterest-bearing demand deposits   $ 81,760   $ 75,912   $ 70,505
Interest-bearing demand deposits     59,799     63,915     65,164
Money market accounts     77,118     81,349     72,831
Savings deposits     179,581     175,406     174,273
Time deposits     180,964     196,753     201,965
 Total Deposits     579,222     593,335     584,738
Short-term borrowings     10,575     6,538     6,518
Federal funds purchased     1,639     -     -
Other borrowings     12,261     12,970     15,836
Accrued interest and other liabilities     1,915     2,008     2,003
 Total Liabilities     605,612     614,851     609,095
                   
Common equity     34,833     34,295     34,082
Retained earnings     26,123     22,485     21,736

Accumulated other comprehensive income (loss)

    (1,693)     5,391     6,002
Treasury stock     (6,734)     (6,734)     (6,734)
 Total Stockholders' Equity     52,529     55,437     55,086
                   
Total Liabilities and Stockholders' Equity   $ 658,141   $ 670,288   $ 664,181

   

MIDDLEFIELD BANC CORP.

Consolidated Selected Financial Highlights

September 30, 2013 and 2012
(Dollar amounts in thousands)
(unaudited)
               
      For the
Three Months Ended
    For the
Nine Months Ended
      September 30,     September 30,
      2013     2012     2013     2012
INTEREST INCOME                        
 Interest and fees on loans   $ 5,754   $ 5,810   $ 16,876   $ 16,988
 Interest-bearing deposits in other institutions     6     7     23     19
 Federal funds sold     4     6     12     13
 Investment securities                        
 Taxable interest     610     749     1,909     2,455
 Tax-exempt interest     782     749     2,259     2,249
 Dividends on FHLB Stock     18     21     56     73
 Total interest income     7,174     7,342     21,135     21,797
INTEREST EXPENSE                        
 Deposits     1,170     1,418     3,686     4,349
 Short-term borrowings     41     61     140     219
 Other borrowings     42     78     132     244
 Trust preferred securities     75     45     156     122
 Total interest expense     1,328     1,602     4,114     4,934
                         
NET INTEREST INCOME     5,846     5,740     17,021     16,863
                         
Provision for loan losses     153     143     766     1,193
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES     5,693     5,597     16,255     15,670
NONINTEREST INCOME                        
 Service charges on deposits     510     481     1,468     1,383
 Earnings on bank-owned life insurance     66     71     209     208
 Other income     232     164     643     555
 Gain on sale of loans     -     -     -      85
 Net securities gains     -     152     175     448
 Total non-interest income     808     868     2,495     2,679
NONINTEREST EXPENSE                        
 Salaries and employee benefits     1,872     1,705     5,649     5,255
 Occupancy expense     273     233     795     703
 Equipment expense     228     186     603     557
 Data processing costs     209     184     609     574
 Ohio state franchise tax     164     160     467     417
 Federal deposit insurance expense     135     250     353     751
 Professional fees     316     270     883     670
 (Gain)Loss on sale of other real estate owned     (35)     188     (40)     238
 Other operating expense     953     946     2,745     2,780
 Total non-interest expense     4,115     4,122     12,064     11,945
                         
Income before income taxes     2,386     2,343     6,686     6,404
Provision for income taxes     521     494     1,479     1,392
NET INCOME   $ 1,865   $ 1,849   $ 5,207   $ 5,012

   

MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
      (unaudited)     (unaudited)     (unaudited)     (unaudited)
      For the Three Months Ended     For the Nine Months Ended
      September 30,     September 30,
      2013     2012     2013     2012
Per common share data                        
Net income per common share - basic   $ 0.92   $ 0.93   $ 2.59   $ 2.66
Net income per common share - diluted   $ 0.92   $ 0.93   $ 2.58   $ 2.65
Dividends declared   $ 0.26   $ 0.26   $ 0.78   $ 0.78
Book value per share(period end)   $ 25.92   $ 27.77   $ 25.92   $ 27.77
Tangible book value per share (period end)   $ 23.59   $ 25.37   $ 23.59   $ 25.37
Dividend payout ratio     27.99%     27.80%     30.13%     29.57%
Average shares outstanding - basic     2,022,490     1,978,181     2,013,217     1,887,497
Average shares outstanding -diluted     2,029,420     1,983,863     2,021,198     1,891,733
Period ending shares outstanding     2,026,569     1,983,404     2,026,569     1,983,404
                         
Selected ratios                        
Return on average assets     1.12%     1.12%     1.05%     1.02%
Return on average equity     13.66%     16.57%     12.74%     15.26%
Yield on earning assets     4.92%     5.07%     4.93%     5.03%
Cost of interest-bearing liabilities     1.01%     1.20%     1.04%     1.23%
Net interest spread     3.91%     3.87%     3.89%     3.79%
Net interest margin     4.05%     4.02%     4.03%     3.95%
Efficiency (1)     58.31%     58.94%     57.31%     57.70%
Tier 1 capital ratio     8.70%     7.92%     8.70%     7.92%
                         
(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.

 

               

   

MIDDLEFIELD BANC CORP.            
Consolidated Selected Financial Highlights   (unaudited)     (unaudited)
             
      September 30,     September 30,
Asset quality data     2013     2012
(Dollar amounts in thousands)            
Nonaccrual loans   $ 9,223    $ 13,135
Troubled debt restructuring     3,621     2,173
90 days past due and accruing     764     96
Nonperforming loans     13,607     15,404
Other real estate owned     2,719     2,332
Nonperforming assets   $ 16,326    $ 17,736
             
             
Allowance for loan losses   $ 7,821   $ 7,173
Allowance for loan losses/total loans     1.87%     1.75%
Net charge-offs:            
 Quarter-to-date   $ 81   $ 722
 Year-to-date     724     839
Net charge-offs to average loans (annualized)            
 Quarter-to-date     0.08%     0.72%
 Year-to-date     0.23%     0.28%
Nonperforming loans/total loans     3.25%     3.76%
Allowance for loan losses/nonperforming loans     57.48%     46.57%
             
             
      September 30,     September 30,
Loans     2013     2012
(Dollar amounts in thousands)            
Commercial and industrial   $ 50,265    $ 65,323
Real estate - construction     25,487     21,322
Real estate - mortgage            
 Residential     203,312     205,433
 Commercial     135,760     112,867
Consumer installment     4,236     4,230
Total Loans   $ 419,060    $ 409,175