Middlefield Banc Corp. Reports 84% Increase in Net Income for First Six Months of 2012

MIDDLEFIELD, Ohio, July 26, 2012 /PRNewswire/ -- Middlefield Banc Corp. (OTCQB:  MBCN), parent company of The Middlefield Banking Company and Emerald Bank, announced net income for the second quarter of 2012 of $1,640,000, or $0.85 per share.  Net income for the second quarter of 2011 was $720,000, or $0.44 per share.  Net income for the first six months of 2012 was $3,163,000, or $1.72 per share.  For the same period of 2011, net income of $1,722,000 equated to $1.05 per share.

Annualized returns on average equity ("ROE") and average assets ("ROA") for the 2012 second quarter were 13.22% and 1.01%, respectively, compared with 7.22% and 0.45% for the second quarter of 2011.  ROE and ROA were 13.02% and 0.97%, respectively, for the six month period of 2012.  Comparable results for the 2011 six month period were 8.89% and 0.55%, respectively.

"We are pleased to report a solid increase in earnings for the second quarter and first half of 2012," stated Thomas G. Caldwell, President and Chief Executive Officer. "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."

"We have continued to see many positive trends in our operations during the second quarter.  In spite of the current interest rate environment, which the Fed has chosen to keep at record low levels, and strong competitive pricing, we have been able to maintain a level of stability in our net interest margin.  As we move forward in 2012, we will continue to 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 second quarter of 2012 increased $460,000, or 9.0%, to $5,577,000 compared to $5,117,000 in the second quarter of 2011.  The net interest margin increased 29 basis points to 3.93% compared to the 3.64% reported for the year-ago quarter.  Net interest income for the first six months of 2012 increased by $988,000, or 9.7%, to $11,123,000.  For the same period of 2011, net interest income was $10,135,000.  The net interest margin for the 2012 six month period was 3.91%, a 25 basis point increase from the 3.66% reported for 2011.

"The improvement in our net interest income was driven by deliberate strategies initiated by management near the end of 2009.  This included an effort to maintain the maximum yield on newly originated loans, while pricing deposits so as to reduce funding costs," commented Donald L. Stacy, Chief Financial Officer.  "However, the challenges relative to consistent net interest margin improvement are far from over.  The Fed's policy of maintaining a continued low rate environment has led to aggressive pricing on the part of many of our competitors.  These market pressures have contributed to a 23 basis point decrease in our yield on earning assets for the six month period.  We have been able to offset this decline because our cost of interest-bearing liabilities has fallen 49 basis points for the same period."

Non-Interest Income and Operating Expenses

Non-interest income increased for both the three and six month periods.  During the second quarter, the company recorded a gain of $296,000 related to the sale of certain investment securities.  In 2011, a loss on securities of $37,000 was booked during the second quarter, with the six month figure reflecting a loss of $22,000.  Also, for the six month period, fees related to debit cards increased $72,000, while income from investment services grew $68,000.

Noninterest expense for the second quarter of 2012 totaled $4,041,000, a decrease of $251,000 from the same period last year.  The two largest components of this decrease were salaries and benefits, which was down $144,000, and loss on the sale of other real estate owned which improved by $291,000.  For the first half of 2012, total non-interest expense of $7,823,000 was $174,000 less than the 2011 comparable period.  As with the quarter, a decrease in salaries and benefits combined with a lower loss on sale of other real estate owned were the primary factors. 

Balance Sheet

The company's total assets at mid-year 2012 stood at $649.8 million, a decrease of $4.7 million, or 0.7%, from the figure reported at December 31, 2011.  Net loans at June 30, 2012 were $403.1 million, up $8.1 million, or 2.0%, over the year-end 2011 position.  Total deposits stood at $571.7 million as of June 30, 2012.  This figure represents a decrease of $9.2 million, or 1.6%, from year-end 2011.  The investment portfolio, which is entirely classified as available for sale, stood at $173.4 million at June 30, 2012.  This reflects a decrease of $20.5 million from December 31, 2012, with the funds being utilized for loan growth and deposit run-off.  Stockholders' equity at June 30, 2012, was $53.2 million.  Tangible book value per share was $24.47

Asset Quality    

For the three months ended June 30, 2012, management added $450,000 to the allowance for loan losses, which compares to $700,000 for the same period of 2011.  The comparable six months figures are $1,050,000 for 2012 and $1,565,000 for 2011.  The lower loan loss provision was related to a lower level of charge-offs and a decrease in the total of non-performing assets.  Net charge-offs for the first six months of 2012 were $117,000, or 0.03% of average loans.  The allowance for loan losses at June 30, 2012 stood at $7,752,000, or 1.89% of total loans.  At June 30, 2011, the allowance for loan losses was $7,027,000, representing 1.82% of total loans. 

The following table provides a summary of asset quality and reserve coverage ratios.



Asset Quality History



















(dollars in thousands)




















6/30/2012



12/31/2011



6/30/2011



12/31/2010



12/31/2009

















Nonperforming loans


$

17,177


$

24,546


$

22,469


$

19,986


$

16,285

Real estate owned



1,986



2,196



2,145



2,302



2,164

















Nonperforming assets


$

19,163


$

26,742


$

24,614


$

22,288


$

18,449

















Allowance for loan losses


$

7,752


$

6,819


$

7,027


$

6,221


$

4,937

















Ratios:
















Nonperforming loans to
















  total loans



4.18%



6.11%



5.83%



5.37%



4.61%

Nonperforming assets to
















  total assets



2.95%



4.09%



3.85%



3.53%



3.30%

Allowance for loan losses to
















  total loans



1.89%



1.70%



1.82%



1.67%



1.40%

Allowance for loan losses to
















  nonperforming loans



45.13%



27.78%



31.27%



31.13%



30.32%

Dividends   

During the second quarter of both 2012 and 2011, 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 $649.8 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

























June 30, 2012 and 2011 and December 31, 2011














(unaudited)






(unaudited)




Balance Sheet (period end)



June 30,



December 31,



June 30,




(Dollar amounts in thousands)



2012



2011



2011

















Assets













Cash and due from banks


$

30,908


$

15,730


$

15,540




Federal funds sold



11,953



18,660



19,364




   Cash and cash equivalents



42,861



34,390



34,904




Investment securities available for sale



173,446



193,977



193,821




Loans:



410,868



401,880



385,339




Less:  reserve for loan losses



7,752



6,819



7,027




      Net loans



403,116



395,061



378,312




Premises and equipment



8,598



8,264



7,939




Goodwill



4,559



4,559



4,559




Bank-owned life insurance



8,394



8,257



8,118




Accrued interest receivable and other assets



8,866



10,043



11,921




Total Assets


$

649,840


$

654,551


$

639,574




















June 30,



December 31,



June 30,







2012



2011



2011




Liabilities and Stockholders' Equity













Noninterest-bearing demand deposits


$

65,969


$

63,348


$

58,219




Interest-bearing demand deposits



61,935



55,853



55,315




Money market accounts



67,533



75,621



74,482




Savings deposits



171,150



167,207



160,141




Time deposits



205,142



218,933



221,588




   Total Deposits



571,729



580,962



569,745




Short-term borrowings



6,959



7,392



6,787




Other borrowings



16,363



16,831



18,694




Accrued interest and other liabilities



1,631



2,113



2,045




   Total Liabilities



596,682



607,298



597,271

















Common equity



33,944



31,240



29,485




Retained earnings



20,399



18,206



16,712




Accumulated other comprehensive income



5,549



4541



2,840




Treasury stock



(6,734)



(6,734)



(6,734)




   Total Stockholders' Equity



53,158



47,253



42,303

















Total Liabilities and Stockholders' Equity


$

649,840


$

654,551


$

639,574
























































MIDDLEFIELD BANC CORP.













Consolidated Selected Financial Highlights












June 30, 2012 and 2011













(Dollar amounts in thousands)













(unaudited)















For the Three Months Ended


For the Six Months Ended




June 30,



June 30,




2012



2011



2012



2011

INTEREST INCOME













   Interest and fees on loans


$

5,641


$

5,399


$

11,178


$

10,700

   Interest-bearing deposits in other institutions



8



2



12



4

   Federal funds sold



4



4



7



13

   Investment securities













      Taxable interest



791



1,289



1,706



2,612

      Tax-exempt interest



753



702



1,500



1,400

   Dividends on FHLB Stock



26



25



52



51

      Total interest income



7,223



7,421



14,455



14,780

INTEREST EXPENSE













   Deposits



1,434



2,004



2,931



4,041

   Short-term borrowings



99



59



158



118

   Other borrowings



82



104



166



213

   Trust preferred securities



31



137



77



273

      Total interest expense



1,646



2,304



3,332



4,645














NET INTEREST INCOME



5,577



5,117



11,123



10,135














Provision for loan losses



450



700



1,050



1,565

NET INTEREST INCOME AFTER PROVISION












   FOR LOAN LOSSES



5,127



4,417



10,073



8,570

NONINTEREST INCOME













   Service charges on deposits



471



416



902



844

   Earnings on bank-owned life insurance



69



66



137



139

   Other income



181



149



476



332

   Net securities gains (losses)



296



(37)



296



(22)

      Total non-interest income



1017



594



1,811



1,293

NONINTEREST EXPENSE













   Salaries and employee benefits



1,800



1,944



3,550



3,634

   Occupancy expense



222



223



470



495

   Equipment expense



201



155



371



313

   Data processing costs



191



173



390



353

   Ohio state franchise tax



128



97



257



225

   Federal deposit insurance expense



258



272



501



497

   Professional fees



186



185



400



396

   Loss on sale of other real estate owned



32



323



50



303

   Other operating expense



1023



920



1,834



1,781

      Total non-interest expense



4,041



4,292



7,823



7,997














Income before income taxes



2103



719



4,061



1,866

Provision for income taxes



463



(1)



898



144

NET INCOME


$

1640


$

720


$

3,163


$

1,722






























(unaudited)



(unaudited)



(unaudited)



(unaudited)



For the Three Months Ended


For the Six Months Ended





June 30,




June 30,




2012



2011



2012



2011

Per common share data













Net income per common share - basic


$

0.85


$

0.44


$

1.72


$

1.05

Net income per common share - diluted


$

0.85


$

0.44


$

1.72


$

1.05

Dividends declared


$

0.26


$

0.26


$

0.52


$

0.52

Book value per share(period end)


$

26.88


$

25.58


$

26.88


$

25.58

Tangible book value per share (period end)


$

24.47


$

22.82


$

24.47


$

22.82

Dividend payout ratio



31.28%



56.94%



30.67%



49.36%

Average shares outstanding - basic



1,919,333



1,647,771



1,841,657



1,634,901

Average shares outstanding -diluted



1,921,205



1,647,920



1,842,865



1,634,976

Period ending shares outstanding



1,977,321



1,653,660



1,977,321



1,653,660














Selected ratios













Return on average assets



1.01%



0.45%



0.97%



0.55%

Return on average equity



13.22%



7.22%



13.02%



8.89%

Yield on earning assets



5.01%



5.17%



5.00%



5.23%

Cost of interest-bearing liabilities



1.24%



1.71%



1.25%



1.74%

Net interest spread



3.78%



3.46%



3.76%



3.49%

Net interest margin



3.93%



3.64%



3.91%



3.66%

Efficiency (1)



57.88%



70.68%



57.07%



65.82%

Equity to assets at period end



8.18%



6.61%



8.18%



6.61%














(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.

























June 30,



June 30,







Asset quality data



2012



2011







(Dollar amounts in thousands)


























Non-accrual loans


$

15,310


$

19,155







Troubled debt restructuring



1,731



3,198







90 days past due and accruing



136



116







Non-performing loans



17,177



22,469







Other real estate owned



1,986



2,145







Non-performing assets


$

19,163


$

24,614

































Allowance for loan losses


$

7,752


$

7,027







Allowance for loan losses/total loans



1.89%



1.82%







Net charge-offs:













   Quarter-to-date


$

(35)


$

358







   Year-to-date



117



759







Net charge-offs to average loans













   Quarter-to-date



-0.01%



0.09%







   Year-to-date



0.03%



0.20%







Non-performing loans/total loans



4.18%



5.83%







Allowance for loan losses/non-performing loans



45.13%



31.27%




































June 30,



June 30,







Loans



2012



2011







(Dollar amounts in thousands)













Commercial and industrial


$

65,651


$

58,665







Real estate - construction



20,409



19,952







Real estate - mortgage













   Residential



207,080



209,115







   Commercial



113,383



92,851







Consumer installment



4,345



4,756







Total Loans


$

410,868


$

385,339







 

Contact:

James R. Heslop, 2nd


Executive Vice President/Chief Operating Officer


(440) 632-1666 Ext. 3219


jheslop@middlefieldbank.com

SOURCE Middlefield Banc Corp.



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