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

MIDDLEFIELD, Ohio, April 26 /PRNewswire-FirstCall/ -- 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 UVEST Financial Services® 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

March 31,



(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 loans

$

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%









Contact:

James R. Heslop, 2nd


Executive Vice President/Chief Operating Officer


(440) 632-1666 Ext. 3219


jheslop@middlefieldbank.com



SOURCE Middlefield Banc Corp.



RELATED LINKS
http://www.middlefieldbank.com

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