Middlefield Banc Corp. Reports Net Income of $1.76 million for the First Quarter of 2014

MIDDLEFIELD, Ohio, April 25, 2014 /PRNewswire/ -- Middlefield Banc Corp. (OTCQB: MBCN), parent of The Middlefield Banking Company, today reported net income for the first quarter of 2014 of $1.76 million, or $0.86 per diluted share.  This compares to net income of $1.66 million, or $0.82 per diluted share, for the first quarter of 2013.

"Our capability to produce consistent financial results clearly demonstrates the strength of our company," stated Thomas G. Caldwell, President and Chief Executive Officer.  "Our performance in the first quarter was driven by an improved net interest margin, improved credit quality, and expansion of our loan portfolio." 

"Moving forward into 2014," Caldwell continued, "we believe that we are well positioned to address the continued environment of historically low interest rates and the increased burden of regulatory costs.  We remain focused on delivering excellence in customer service, increasing value to our shareholders, and operating our company in accordance with safe and sound banking practices."

First quarter highlights include:

  • Total net loans increased 9.4% from the first quarter of 2013 and 1.9% compared to the fourth quarter of 2013.       
  • The net interest margin was 4.20% for the first quarter of 2014, compared to 3.92% for the same period of 2013.  The yield on earning assets increased 2 basis points, while the cost of interest-bearing liabilities decreased 28 basis points from the year ago period.
  • The provision for loan and leases losses for the first quarter of 2014 was $0.2 million compared to $0.3 million for the 2013 comparable period.  The current quarter's charge was the result of lower historical charge-offs and improved credit metrics over the preceding 12 months.
  • Nonperforming assets totaled $13.4 million at March 31, 2014.  At the same point of 2013 nonperforming assets equaled $16.1 million

Annualized return on average equity ("ROE") and average assets ("ROA") for the 2014 quarter were 13.10% and 1.08%, respectively.  For the first quarter of 2013, ROE was 12.18%, with the ROA being 1.01%. 

Income Statement

Net interest income for the first quarter of 2014 increased 6.6%, or $0.4 million, compared to the first quarter of 2013.  This increase was driven by the increase in average net loans and a reduction in funding costs, primarily time deposits.  This activity resulted in a net interest margin of 4.20% for the first quarter of 2014 compared to 3.92% for the first quarter of 2013.

Noninterest income decreased 17.6% to $0.7 million for the first quarter of 2014.  This decrease was driven by a reduction in gains on investment securities transactions of $0.2 million

Noninterest expense was up $0.2 million, or 5.7%, from the year ago quarter.  Salaries and benefits, the company's largest noninterest expense, was the leading factor in the increase and was directly related to the growth of the company.  Higher levels of occupancy and equipment expense were, in part, offset by decreases in franchise tax, FDIC insurance premiums, and expenses related to other real estate owned.  The non-GAAP efficiency ratio was 59.90% for the first quarter of 2014 compared to 58.57% for the first quarter of 2013.

"We have taken the opportunity to reposition our balance sheet by permitting a reduction in higher cost funding sources.  This effort afforded us the ability to maintain our levels of net interest margin.  Moving forward into 2014, we do anticipate continued pressure on margin levels," stated Donald L. Stacy, Chief Financial Officer.  "We are committed to executing our plan of growing our base of quality client relationships.  We fully expect that this focus will continue to add value for our shareholders."

Balance Sheet

The company's total assets ended the first quarter of 2014 at $670.0 million, an increase of 0.5% from the $667.0 million in total assets reported at March 31, 2013.  Net loans at March 31, 2014, were $436.7 million, up $37.4 million, or 9.4%, over the $399.3 million reported at March 31, 2013.  Total deposits at the end of the first quarter of 2014 were $594.8 million, or 0.6% above the deposit level of $591.5 million at March 31, 2013.  The investment portfolio, which is entirely classified as available for sale, stood at $155.9 million at March 31, 2014.  This figure represented a reduction in the portfolio of $34.7 million from the year ago quarter end.      

The company experienced growth in all loan categories.  Residential real estate loans increased $16.7 million year-over-year, with commercial real estate loans experiencing growth of $14.7 million.  Noninterest-bearing deposits grew $15.6 million when compared to the end of the first quarter of 2013.  During the same 12 month period, time deposits increased $1.8 million.  These gains were offset by a decrease of $14.2 million, year-over-year, in all other interest-bearing deposit categories.

Shareholders' Equity

Tangible book value per share increased from $25.35 per share at March 31, 2013 to $25.52 per share at March 31, 2014.  The increase is the result of a higher level of retained earnings offset by cash dividends paid to shareholders.  During the 2014 first quarter, the company paid cash dividends of $0.26 per share, which equaled the amount paid in first quarter 2013.  At March 31, 2014, the company had a Tier 1 leverage ratio of 9.15%.  At the same point of 2013, the ratio stood at 8.22%. 

Asset Quality

The provision for loan losses for the 2014 first quarter was $0.2 million, compared to the $0.3 million posted for the 2013 period.  Net charge-offs for the first quarter of 2014 were $0.2 million, or an annualized 0.19% of average loans.  For the first three months of 2013, net charge-offs totaled $0.4 million, which equaled an annualized 0.36% of average loans.  At March 31, 2014, the allowance for loan losses was $7.0 million, representing 1.58% of total loans.

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


Asset Quality History

















(dollars in thousands)


















3/31/2014



12/31/2013



3/31/2013



12/31/2012



12/31/2011
















Nonperforming loans

$

10,741


$

12,290


$

13,899


$

14,194


$

24,546

Real estate owned


2,656



2,698



2,155



1,846



2,196
















Nonperforming assets

$

13,397


$

14,988


$

16,054


$

16,040


$

26,742
















Allowance for loan losses

$

7,015


$

7,046


$

7,732


$

7,779


$

6,819
















Ratios:















Nonperforming loans to















  total loans


2.42%



2.82%



3.41%



3.48%



6.12%

Nonperforming assets to















  total assets


2.00%



2.32%



2.41%



2.39%



4.09%

Allowance for loan losses to















  total loans


1.58%



1.62%



1.90%



1.90%



1.70%

Allowance for loan losses to















  nonperforming loans


65.31%



57.33%



55.63%



54.80%



27.78%

Middlefield Banc Corp., headquartered in Middlefield, Ohio, is a bank holding company with total assets of $670.0 million.  On January 20, 2014, the company consolidated its Emerald Bank subsidiary into the company's lead bank, The Middlefield Banking Company.  The bank operates 10 full service banking centers and a LPL Financial® brokerage office serving Chardon, Cortland, Dublin, Garrettsville, Mantua, Middlefield, Newbury, Orwell, and Westerville.  Additional information is available at www.middlefieldbank.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, 2014 and 2013 and December 31, 2013
















Balance Sheet (period end)


March 31,



December 31,



March 31,

(Dollar amounts in thousands)


2014



2013



2013

(unaudited)









Assets









Cash and due from banks

$

28,663


$

20,926


$

32,426

Federal funds sold 


14,147



5,267



13,204

   Cash and cash equivalents


42,810



26,193



45,630

Investment securities available for sale


155,940



157,143



190,687

Loans:


443,729



435,725



407,054

Less:  reserve for loan losses


7,015



7,046



7,732

      Net loans


436,714



428,679



399,322

Premises and equipment


9,797



9,828



8,694

Goodwill


4,559



4,559



4,559

Core deposit intangible


146



156



184

Bank-owned life insurance


8,883



8,816



8,604

Accrued interest receivable and other assets


11,173



11,716



9,294

Total Assets

$

670,022



647,090



666,974












March 31,



December 31,



March 31,



2014



2013



2013

Liabilities and Stockholders' Equity









Noninterest-bearing demand deposits

$

88,988


$

85,905


$

73,354

Interest bearing demand deposits


60,673



53,741



68,060

Money market accounts


75,296



77,473



80,051

Savings deposits


179,805



177,303



181,872

Time deposits


190,004



174,414



188,160

   Total Deposits


594,766



568,836



591,497

Short-term borrowings


5,320



10,809



5,240

Other borrowings


11,468



11,609



12,779

Other liabilities


1,774



2,363



1,608

   Total Liabilities


613,328



593,617



611,124










Common equity


35,115



34,979



34,697

Retained earnings


28,699



27,465



23,622

Accumulated other comprehensive (loss) income


(386)



(2,237)



4,265

Treasury stock


(6,734)



(6,734)



(6,734)

   Total Stockholders' Equity


56,694



53,473



55,850










Total Liabilities and Stockholders' Equity

$

670,022


$

647,090


$

666,974




























MIDDLEFIELD BANC CORP.





Consolidated Selected Financial Highlights





March 31, 2014 and 2013





(Dollar amounts in thousands)




(unaudited)






For the Three Months Ended



March 31,



2014



2013

INTEREST INCOME






   Interest and fees on loans

$

5,694


$

5,572

   Interest-bearing deposits in other institutions


5



8

   Federal funds sold


3



4

   Investment securities






      Taxable interest


509



674

      Tax-exempt interest


755



733

   Dividends on stock


23



23

      Total interest income


6,989



7,014

INTEREST EXPENSE






   Deposits


940



1,297

   Short-term borrowings


35



52

   Other borrowings


32



46

   Trust preferred securities


26



34

      Total interest expense


1,033



1,429







NET INTEREST INCOME


5,956



5,585







Provision for loan losses


180



313

NET INTEREST INCOME AFTER PROVISION






   FOR LOAN LOSSES


5,776



5,272

NONINTEREST INCOME






   Service charges on deposits


441



447

   Investment securities (losses) gains, net


(6)



185

   Earnings on bank-owned life insurance


67



68

   Other income


213



168

      Total noninterest income


715



868

NONINTEREST EXPENSE






   Salaries and employee benefits


2,016



1,871

   Occupancy expense


321



274

   Equipment expense


220



189

   Data processing costs


214



213

   Ohio state franchise tax


83



154

   Federal deposit insurance expense


132



154

   Professional fees


287



276

  (Gain) loss on sale of other real estate owned


(5)



8

   Advertising expense


123



112

   Other real estate expense


63



106

   Directors Fees


86



105

   Other operating expense


689



539

      Total noninterest expense


4,229



4,001

Income before income taxes


2,262



2,139

Provision for income taxes


499



482

NET INCOME

$

1,763


$

1,657














For the Three Months Ended


March 31,



2014



2013

Per common share data






Net income per common share - basic

$

0.87


$

0.83

Net income per common share - diluted

$

0.86


$

0.82

Dividends declared

$

0.26


$

0.26

Book value per share(period end)

$

27.83


$

27.70

Tangible book value per share (period end)

$

25.52


$

25.35

Dividend payout ratio


30.01%



31.38%

Average shares outstanding - basic


2,033,480



1,999,645

Average shares outstanding -diluted


2,039,515



2,010,292

Period ending shares outstanding


2,037,359



2,016,284







Selected ratios






Return on average assets


1.08%



1.01%

Return on average equity


13.10%



12.18%

Yield on earning assets


4.88%



4.86%

Cost of interest-bearing liabilities


0.81%



1.09%

Net interest spread


4.07%



3.78%

Net interest margin


4.20%



3.92%

Efficiency (1)


59.90%



58.57%

Tier 1 capital ratio


9.15%



8.22%







(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.









March 31,



March 31,



2014



2013







Commercial and industrial

$

56,855


$

55,401

Real estate - construction


25,241



22,817

Real estate - mortgage:






     Residential


215,809



199,063

     Commercial


140,543



125,799

Consumer installment


5,281



3,974



443,729



407,054









March 31,



March 31,

Asset quality data


2014



2013

(Dollar amounts in thousands)




Non-accrual loans

$

7,463


$

9,730

Troubled debt restructuring


2,035



3,808

90 day past due and accruing


1,243



361

Nonperforming loans


10,741



13,899

Other real estate owned


2,656



2,155

Nonperforming assets

$

13,397


$

16,054













Allowance for loan and lease losses

$

7,015


$

7,732

Allowance for loan and lease losses/total loans


1.58%



1.90%

Net charge-offs:






   Year-to-date


211



360

Net charge-offs to average loans, annualized






   Year-to-date


0.19%



0.36%

Nonperforming loans/total loans


2.42%



3.41%

Allowance for loan and lease losses/nonperforming loans


65.31%



55.63%







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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