2014

Middlefield Banc Corp. Reports Third Quarter 2012 Earnings of $0.93 Per Share

MIDDLEFIELD, Ohio, Oct. 25, 2012 /PRNewswire/ -- Middlefield Banc Corp. (OTCQB: MBCN), parent company of The Middlefield Banking Company and Emerald Bank, announced net income for the third quarter of 2012 of $1,849,000, or $0.93 per diluted share.  Net income for the third quarter of 2011 was $1,079,000, or $0.63 per diluted share.  Annualized returns on average equity ("ROE") and average assets ("ROA") for the third quarter of 2012 were 16.57% and 1.12%, respectively. 

For the first nine months of 2012 net income was $5,012,000, or $2.65 per diluted share.  For the same period of 2011, net income of $2,801,000 equated to $1.69 per diluted share.  ROE and ROA were 15.26% and 1.02%, respectively, for the nine month period of 2012.  Comparable results for the 2011 nine month period were 9.82% and 0.59%, respectively.

"We are pleased to report continued strong financial results for the third quarter and year-to-date periods of 2012," stated Thomas G. Caldwell, President and Chief Executive Officer. "Our performance reflects our ongoing focus on core banking fundamentals even as the slow growth economic recovery and historically low interest rate environment continue."

"Although we have seen many positive trends in our operations during the year, we are concerned with the interest rate environment, which the Fed has chosen to maintain.  With all indications being that we are faced with this level until mid-2015, we fully anticipate that our net interest margin will begin to be flat or down moving forward.  Our team has been keenly attentive to effectively managing the margin as evidenced by our positive performance with a year-to-date margin of 3.95%," said Caldwell.

"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 third quarter of 2012 increased $346,000, or 6.4%, to $5,740,000 compared to $5,394,000 in the comparable quarter of 2011.  The net interest margin increased 27 basis points to 4.02% compared to the 3.75% reported for the year-ago quarter.  Net interest income for the first nine months of 2012 increased by $1,334,000, or 8.6%, to $16,863,000.  For the same period of 2011, net interest income was $15,529,000.  The net interest margin for the 2012 nine month period was 3.95%, a 26 basis point increase from the 3.69% reported for the 2011 period.

"Our performance this year has benefited by the continued improvement in our asset quality.  This has permitted us to lower our provision expense significantly," commented Donald L. Stacy, Chief Financial Officer.  "Additionally, we have re-positioned our investment portfolio, recognizing gains in the process."

Stacy continued, "In addition to the potential of a shrinking net interest margin, our primary concern as we look at 2013 is the continued increase in our costs to address regulatory mandates.  The continued cost of compliance with an ever-increasing level of regulations and rules has the potential to have a significant negative impact upon the earnings capacity of all within the industry."

Non-Interest Income and Operating Expenses

Non-interest income increased for both the three and nine month periods.  During the third quarter, the company recorded a gain of $152,000 related to the sale of certain investment securities.  For the year-to-date period, the company has recognized gains on the sale of investment securities in the aggregate of $448,000.  During 2011, a loss on securities of $16,000 was booked for the nine month period.  Fees related to debit card usage and income from investment services also saw positive gains year over year. 

Noninterest expense for the third quarter of 2012 totaled $4,122,000, an increase of $216,000 from the same period last year.  The two largest components of this increase were higher professional fees, which were up $89,000, and Federal deposit insurance, which was up $74,000.  For the first nine months of 2012, total non-interest expense of $11,945,000 was $42,000, or 0.4%, higher than the 2011 comparable period.  Lower costs related to salaries/benefits, occupancy expense, and loss on other real estate owned, were offset by higher levels of professional fees, Federal deposit insurance, and franchise tax expenses. 

Balance Sheet

The company's total assets at the end of the third quarter of 2012 stood at $664.2 million, an increase of $9.6 million, or 1.5%, from the figure reported at December 31, 2011.  Net loans at September 30, 2012 were $402.0 million, up $6.9 million, or 1.8%, over the year-end 2011 figure.  Total deposits stood at $584.7 million as of September 30, 2012.  This figure represents an increase of $3.8 million, or 0.6%, from year-end 2011.  The investment portfolio, which is entirely classified as available for sale, stood at $179.1 million at September 30, 2012.  This reflects a decrease of $14.8 million from December 31, 2011.  Stockholders' equity at September 30, 2012, was $55.1 million, while tangible book value per share was $25.37

Asset Quality    

For the three months ended September 30, 2012, management added $143,000 to the allowance for loan losses, which compares to $920,000 for the same period of 2011.  The comparable nine months figures are $1,193,000 for 2012 and $2,485,000 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 nine months of 2012 were $839,000, or 0.21% of average loans.  The comparable period of 2011 saw net charge-offs of $1,132,000, or 0.30% of average loans.  The allowance for loan losses at September 30, 2012 stood at $7,173,000, or 1.75% of total loans.  At September 30, 2011, the allowance for loan losses was $7,574,000, representing 1.95% of total loans. 

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

 



Asset Quality History



















(dollars in thousands)




















9/30/2012



12/31/2011



9/30/2011



12/31/2010



12/31/2009

















Nonperforming loans


$

15,404


$

24,546


$

22,725


$

19,986


$

16,285

Real estate owned



2,332



2,196



2,173



2,302



2,164

















Nonperforming assets


$

17,736


$

26,742


$

24,898


$

22,288


$

18,450

















Allowance for loan losses


$

7,173


$

6,819


$

7,574


$

6,221


$

4,937

















Ratios:
















Nonperforming loans to
















  total loans



3.76%



6.12%



5.85%



5.37%



4.61%

Nonperforming assets to
















  total assets



2.67%



4.09%



3.77%



3.52%



3.30%

Allowance for loan losses to
















  total loans



1.75%



1.70%



1.82%



1.67%



1.40%

Allowance for loan losses to
















  nonperforming loans



46.57%



27.78%



33.33%



31.13%



30.31%

Dividends   

During the third 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 $664.2 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



















September 30, 2012 and 2011 and December 31, 2011










(unaudited)






(unaudited)

Balance Sheet (period end)



September 30,



December 31,



September 30,

(Dollar amounts in thousands)



2012



2011



2011











Assets










Cash and due from banks


$

32,735


$

15,730


$

21,269

Federal funds sold



19,871



18,660



22,318

   Cash and cash equivalents



52,606



34,390



43,587

Investment securities available for sale



179,140



193,977



204,455

Loans:



409,175



401,880



388,558

Less:  reserve for loan losses



7,173



6,819



7,574

      Net loans



402,002



395,061



380,984

Premises and equipment



8,701



8,264



8,042

Goodwill



4,559



4,559



4,559

Bank-owned life insurance



8,465



8,257



8,188

Accrued interest receivable and other assets



8,708



10,043



10,864

Total Assets


$

664,181


$

654,551


$

660,679














September 30,



December 31,



September 30,




2012



2011



2011

Liabilities and Stockholders' Equity










Noninterest-bearing demand deposits


$

70,505


$

63,348


$

60,806

Interest-bearing demand deposits



65,164



55,853



61,483

Money market accounts



72,831



75,621



76,851

Savings deposits



174,273



167,207



166,531

Time deposits



201,965



218,933



221,567

   Total Deposits



584,738



580,962



587,238

Short-term borrowings



6,518



7,392



6,908

Other borrowings



15,836



16,831



17,955

Accrued interest and other liabilities



2,003



2,113



1,915

   Total Liabilities



609,095



607,298



614,016











Common equity



34,082



31,240



31,112

Retained earnings



21,736



18,206



17,335

Accumulated other comprehensive income



6,002



4,541



4,950

Treasury stock



(6,734)



(6,734)



(6,734)

   Total Stockholders' Equity



55,086



47,253



46,663











Total Liabilities and Stockholders' Equity


$

664,181


$

654,551


$

660,679











 

MIDDLEFIELD BANC CORP.













Consolidated Selected Financial Highlights












September 30, 2012 and 2011













(Dollar amounts in thousands)













(unaudited)
















For the Three Months Ended



For the Nine Months Ended




September 30,



September 30,




2012



2011



2012



2011

INTEREST INCOME













   Interest and fees on loans


$

5,810


$

5,555


$

16,988


$

16,255

   Interest-bearing deposits in other institutions



7



4



19



8

   Federal funds sold



6



-



13



13

   Investment securities













      Taxable interest



749



1,220



2,455



3,832

      Tax-exempt interest



749



724



2,249



2,124

   Dividends on FHLB Stock



21



25



73



76

      Total interest income



7,223



7,528



21,797



22,308

INTEREST EXPENSE













   Deposits



1,418



1,836



4,349



5,877

   Short-term borrowings



61



59



219



177

   Other borrowings



78



100



244



313

   Trust preferred securities



45



139



122



412

      Total interest expense



1,602



2,134



4,934



6,779














NET INTEREST INCOME



5,740



5,394



16,863



15,529














Provision for loan losses



143



920



1,193



2,485

NET INTEREST INCOME AFTER PROVISION












   FOR LOAN LOSSES



5,597



4,474



15,670



13,044

NONINTEREST INCOME













   Service charges on deposits



481



455



1,383



1,299

   Earnings on bank-owned life insurance



71



70



208



209

   Other income



164



155



640



487

   Net securities gains (losses)



152



6



448



(16)

      Total non-interest income



868



686



2,679



1,979

NONINTEREST EXPENSE













   Salaries and employee benefits



1,705



1,754



5,255



5,388

   Occupancy expense



233



242



703



737

   Equipment expense



186



175



557



488

   Data processing costs



184



162



574



515

   Ohio state franchise tax



160



126



417



351

   Federal deposit insurance expense



250



176



751



673

   Professional fees



270



181



670



577

   Loss on sale of other real estate owned



188



195



238



498

   Other operating expense



946



895



2,780



2,676

      Total non-interest expense



4,122



3,906



11,945



11,903














Income before income taxes



2,343



1,254



6,404



3,120

Provision for income taxes



494



175



1,392



319

NET INCOME


$

1,849


$

1,079


$

5,012


$

2,801














 

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,




2012



2011



2012



2011

Per common share data













Net income per common share - basic


$

0.93


$

0.63


$

2.66


$

1.69

Net income per common share - diluted


$

0.93


$

0.63


$

2.65


$

1.69

Dividends declared


$

0.26


$

0.26


$

0.78


$

0.78

Book value per share(period end)


$

27.77


$

26.59


$

27.77


$

26.59

Tangible book value per share (period end)


$

25.37


$

23.99


$

25.37


$

23.99

Dividend payout ratio



27.80%



44.11%



29.57%



46.63%

Average shares outstanding - basic



1,978,181



1,704,677



1,887,497



1,658,415

Average shares outstanding -diluted



1,980,465



1,704,677



1,889,003



1,658,415

Period ending shares outstanding



1,983,404



1,754,856



1,983,404



1,754,856














Selected ratios













Return on average assets



1.12%



0.66%



1.02%



0.59%

Return on average equity



16.57%



11.11%



15.26%



9.82%

Yield on earning assets



5.07%



5.14%



5.03%



5.20%

Cost of interest-bearing liabilities



1.20%



1.56%



1.23%



1.68%

Net interest spread



3.87%



3.58%



3.79%



3.52%

Net interest margin



4.02%



3.75%



3.95%



3.69%

Efficiency (1)



58.94%



60.53%



57.70%



63.99%

Tier 1 capital ratio



8.04%



7.02%



8.04%



7.02%














(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









September 30,



September 30,

Asset quality data



2012



2011

(Dollar amounts in thousands)







Non-accrual loans


$

13,135


$

17,805

Troubled debt restructuring



2,173



4,337

90 days past due and accruing



96



583

Non-performing loans



15,404



22,725

Other real estate owned



2,332



2,173

Non-performing assets


$

17,736


$

24,898















Allowance for loan losses


$

7,173


$

7,574

Allowance for loan losses/total loans



1.75%



1.95%

Net charge-offs:







   Quarter-to-date


$

722


$

373

   Year-to-date



839



1,132

Net charge-offs to average loans







   Quarter-to-date



0.18%



0.10%

   Year-to-date



0.21%



0.30%

Non-performing loans/total loans



3.76%



5.85%

Allowance for loan losses/non-performing loans



46.57%



33.33%


















September 30,



September 30,

Loans



2012



2011

(Dollar amounts in thousands)







Commercial and industrial


$

65,323


$

58,903

Real estate - construction



21,322



21,619

Real estate - mortgage







   Residential



205,433



209,449

   Commercial



112,867



93,827

Consumer installment



4,230



4,760

Total Loans


$

409,175


$

388,558








 

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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