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

MIDDLEFIELD, Ohio, July 31, 2013 /PRNewswire/ -- Middlefield Banc Corp. (OTCQB:  MBCN) reported net income for the second quarter of 2013 of $1.69 million, or $0.83 per diluted share.  Net income for the second quarter of 2012 was $1.64 million, or $0.85 per diluted share.  Net income for the first six months of 2013 was $3.34 million, or $1.66 per diluted share.  For the same period of 2012, net income of $3.16 million equated to $1.72 per diluted share.

Annualized returns on average equity ("ROE") and average assets ("ROA") for the 2013 second quarter were 12.47% and 1.02%, respectively, compared with 13.22% and 1.01% for the second quarter of 2012.  ROE and ROA were 12.32% and 1.02%, respectively, for the six month period of 2013.  Comparable results for the 2012 six month period were 13.02% and 0.97%, respectively.

"We are pleased to report stable earnings for the second quarter and first half of 2013," 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 improvement in our asset quality figures.  This has permitted us to maintain a strong allowance relative to the portfolio, while reducing the provision expense relative to last year.  As we move forward in 2013, 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 2013 was relatively flat when compared to the second quarter of 2012.  For the six month periods of 2013 and 2012, the same was true.  The 2013 six month period saw net interest income of $11.18 million as compared to $11.12 million for the same period of 2012.  The net interest margin decreased 5 basis points to 3.88% compared to the 3.93% reported for the year-ago quarter.  The net interest margin for the 2013 six month period was 3.90%, a 1 basis point decrease from the 3.91% reported for 2012.

"The Fed's policy, now in its fifth year, of holding interest rates at historic lows continues to have an impact on the net interest margin.  We are finding extremely aggressive pricing on both new loans as well as on refinancing opportunities.  We have chosen to control our growth so as to maximize profitability, while not becoming locked in to long-term, low-rate assets.  Further, we fully recognize the community-based focus of our funding sources and have continued our efforts to control the costs of our liabilities," commented Donald L. Stacy, Chief Financial Officer. 

Noninterest Income and Operating Expenses

Noninterest income decreased for both the three and six 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 second quarter of 2012, a gain of $296,000 related to the sale of certain investment securities was recognized.  In 2013, a loss on securities of $10,000 was booked during the second quarter, with the six month figure reflecting a gain of $175,000

Noninterest expense for the second quarter of 2013 totaled $3.95 million, a decrease of $93,000 from the same period in the prior year.  Increases in salaries and employee benefits, occupancy, franchise tax and professional fees were nearly equally matched by reductions in Federal deposit insurance premiums, equipment expense, and the recognition of a gain on the disposition of other real estate owned.  For the first half of 2013, total noninterest expense of $7.95 million was $126,000 more than the 2012 comparable period.  The primary factors were nearly consistent with those of the second quarter.    

Balance Sheet

The company's total assets at mid-year 2013 stood at $657.8 million, a decrease of $12.5 million, or 1.9%, from the figure reported at December 31, 2012.  Net loans at June 30, 2013 were $404.7 million, up $4.0 million, or 1.0%, over the year-end 2012 position.  Total deposits stood at $585.4 million as of June 30, 2013.  This figure represents a decrease of $7.9 million, or 1.3%, from year-end 2012.  The investment portfolio, which is entirely classified as available for sale, stood at $179.8 million at June 30, 2013.  This reflects a decrease of $14.7 million from December 31, 2012, with the funds being utilized for loan growth and deposit run-off. 

Shareholders' Equity and Dividends

At June 30, 2013, shareholders' equity totaled $52.6 million, a decrease of $600,000, or 1.1%, from the $53.2 million reported at June 30, 2012.  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 June 30, 2013 was $23.66.  The comparable figure at June 30, 2012, was $24.47.  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 both the second quarter of 2013 and 2012.   

Asset Quality    

For the three months ended June 30, 2013, management added $300,000 to the allowance for loan losses, which compares to $450,000 for the same period of 2012.  The comparable six months figures are $613,000 for 2013 and $1,050,000 for 2012.  Net charge-offs for the first six months of 2013 were $643,000, or 0.16% of average loans.  The allowance for loan losses at June 30, 2013 stood at $7.75 million, or 1.88% of total loans.  At June 30, 2012, the allowance for loan losses was $7.75 million, representing 1.89% of total loans. 

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

 



Asset Quality History



















(dollars in thousands)




















6/30/2013



12/31/2012



6/30/2012



12/31/2011



12/31/2010

















Nonperforming loans


$

12,869


$

14,194


$

17,177


$

24,546


$

19,986

Real estate owned



2,361



1,846



1,986



2,196



2,302

















Nonperforming assets


$

15,230


$

16,040


$

19,163


$

26,742


$

22,288

















Allowance for loan losses


$

7,749


$

7,779


$

7,752


$

6,819


$

6,221

















Ratios:
















Nonperforming loans to
















  total loans



3.12%



3.48%



4.18%



6.12%



5.37%

Nonperforming assets to
















  total assets



2.32%



2.39%



2.95%



4.09%



3.52%

Allowance for loan losses to
















  total loans



1.88%



1.90%



1.89%



1.70%



1.67%

Allowance for loan losses to
















  nonperforming loans



60.21%



54.80%



45.13%



27.78%



31.13%

 

Middlefield Banc Corp. headquartered in Middlefield, Ohio is a multi-bank holding company with total assets of $657.8 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.   

Contact:

James R. Heslop, 2nd


Executive Vice President/Chief Operating Officer


(440) 632-1666 Ext. 3219


jheslop@middlefieldbank.com

 

MIDDLEFIELD BANC CORP.













Consolidated Selected Financial Highlights

























June 30, 2013 and 2012 and December 31, 2012














(unaudited)






(unaudited)




Balance Sheet (period end)



June 30,



December 31,



June 30,




(Dollar amounts in thousands)



2013



2012



2012

















Assets













Cash and due from banks


$

22,052


$

33,568


$

30,908




Federal funds sold



18,377



11,778



11,953




   Cash and cash equivalents



40,429



45,346



42,861




Investment securities available for sale



179,757



194,472



173,446




Loans:



412,399



408,433



410,868




Less:  reserve for loan losses



7,749



7,779



7,752




      Net loans



404,650



400,654



403,116




Premises and equipment



8,583



8,670



8,598




Goodwill



4,559



4,559



4,559




Core deposit intangible



173



195



215




Bank-owned life insurance



8,675



8,536



8,394




Accrued interest receivable and other assets



10,966



7,856



8,651




Total Assets


$

657,792


$

670,288


$

649,840




















June 30,



December 31,



June 30,







2013



2012



2012




Liabilities and Stockholders' Equity













Noninterest-bearing demand deposits


$

83,095


$

75,912


$

65,969




Interest-bearing demand deposits



58,238



63,915



61,935




Money market accounts



77,563



81,349



67,533




Savings deposits



180,875



175,406



171,150




Time deposits



185,648



196,753



205,142




   Total Deposits



585,419



593,335



571,729




Short-term borrowings



5,407



6,538



6,959




Other borrowings



12,635



12,970



16,363




Accrued interest and other liabilities



1,781



2,008



1,631




   Total Liabilities



605,242



614,851



596,682

















Common equity



34,694



34,295



33,944




Retained earnings



24,780



22,485



20,399




Accumulated other comprehensive income



(190)



5,391



5,549




Treasury stock



(6,734)



(6,734)



(6,734)




   Total Stockholders' Equity



52,550



55,437



53,158

















Total Liabilities and Stockholders' Equity


$

657,792


$

670,288


$

649,840

















 

 

MIDDLEFIELD BANC CORP.













Consolidated Selected Financial Highlights












June 30, 2013 and 2012













(Dollar amounts in thousands)













(unaudited)















For the Three Months Ended


For the Six Months Ended



June 30,


June 30,




2013



2012



2013



2012

INTEREST INCOME













   Interest and fees on loans


$

5,550


$

5,641


$

11,122


$

11,178

   Interest-bearing deposits in other institutions



9



8



17



12

   Federal funds sold



4



4



8



7

   Investment securities













      Taxable interest



625



791



1,299



1,706

      Tax-exempt interest



744



753



1,477



1,500

   Dividends on FHLB Stock



15



26



38



52

      Total interest income



6,947



7,223



13,961



14,455

INTEREST EXPENSE













   Deposits



1,219



1,434



2,516



2,931

   Short-term borrowings



47



99



99



158

   Other borrowings



44



82



90



166

   Trust preferred securities



47



31



81



77

      Total interest expense



1,357



1,646



2,786



3,332














NET INTEREST INCOME



5,590



5,577



11,175



11,123














Provision for loan losses



300



450



613



1,050

NET INTEREST INCOME AFTER PROVISION












   FOR LOAN LOSSES



5,290



5,127



10,562



10,073

NONINTEREST INCOME













   Service charges on deposits



511



471



958



902

   Earnings on bank-owned life insurance



75



69



143



137

   Gain on sale of loans



-



-



-



85

   Other income



243



181



411



391

   Net securities gains (losses)



(10)



296



175



296

      Total noninterest income



819



1,017



1,687



1,811

NONINTEREST EXPENSE













   Salaries and employee benefits



1,994



1,800



3,865



3,550

   Occupancy expense



248



222



522



470

   Equipment expense



186



201



375



371

   Data processing costs



187



191



400



390

   Ohio state franchise tax



149



128



303



257

   Federal deposit insurance expense



64



258



218



501

   Professional fees



203



186



479



400

  (Gain) Loss on sale of other real estate owned



(13)



32



(5)



50

   Other operating expense



930



1,023



1,792



1,834

      Total noninterest expense



3,948



4,041



7,949



7,823














Income before income taxes



2,161



2,103



4,300



4,061

Provision for income taxes



476



463



958



898

NET INCOME


$

1,685


$

1,640


$

3,342


$

3,163

 

 

MIDDLEFIELD BANC CORP.













Consolidated Selected Financial Highlights












June 30, 2013 and 2012













(Dollar amounts in thousands)













(unaudited)















For the Three Months Ended


For the Six Months Ended



June 30,


June 30,




2013



2012



2013



2012

Per common share data













Net income per common share - basic


$

0.84


$

0.85


$

1.66


$

1.72

Net income per common share - diluted


$

0.83


$

0.85


$

1.66


$

1.72

Dividends declared


$

0.26


$

0.26


$

0.52


$

0.52

Book value per share(period end)


$

26.00


$

26.88


$

26.00


$

26.88

Tangible book value per share (period end)


$

23.66


$

24.47


$

23.66


$

24.47

Dividend payout ratio



31.28%



31.28%



31.33%



30.67%

Average shares outstanding - basic



2,017,264



1,919,333



2,008,503



1,841,657

Average shares outstanding -diluted



2,023,961



1,021,205



2,017,060



1,842,865

Period ending shares outstanding



2,021,292



1,977,321



2,021,292



1,977,321














Selected ratios













Return on average assets



1.02%



1.01%



1.02%



0.97%

Return on average equity



12.47%



13.22%



12.32%



13.02%

Yield on earning assets



4.77%



5.01%



4.81%



5.00%

Cost of interest-bearing liabilities



1.04%



1.24%



1.06%



1.25%

Net interest spread



3.73%



3.78%



3.75%



3.76%

Net interest margin



3.88%



3.93%



3.90%



3.91%

Efficiency (1)



58.12%



57.88%



58.35%



57.07%

Equity to assets at period end



7.99%



8.18%



7.99%



8.18%














(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 noninterest income.









 

 

MIDDLEFIELD BANC CORP.













Consolidated Selected Financial Highlights












June 30, 2013 and 2012













(Dollar amounts in thousands)













(unaudited)
















June 30,



June 30,







Asset quality data



2013



2012







(Dollar amounts in thousands)













Nonaccrual loans


$

9,162


$

15,310







Troubled debt restructuring



3,166



1,731







90 days past due and accruing



541



136







Nonperforming loans



12,869



17,177







Other real estate owned



2,361



1,986







Nonperforming assets


$

15,230


$

19,163

































Allowance for loan losses


$

7,749


$

7,752







Allowance for loan losses/total loans



1.88%



1.89%







Net charge-offs:













   Quarter-to-date


$

283


$

(35)







   Year-to-date



643



117







Net charge-offs to average loans













   Quarter-to-date



0.07%



-0.01%







   Year-to-date



0.16%



0.03%







Nonperforming loans/total loans



3.12%



4.18%







Allowance for loan losses/nonperforming loans



60.21%



45.13%




































June 30,



June 30,







Loans



2013



2012







(Dollar amounts in thousands)













Commercial and industrial


$

49,898


$

65,651







Real estate - construction



24,084



20,409







Real estate - mortgage













   Residential



199,250



207,080







   Commercial



135,006



113,383







Consumer installment



4,161



4,345







Total Loans


$

412,399


$

410,868

































 

SOURCE Middlefield Banc Corp.



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