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2022-07-18 | NDAQ:MBCN | Press Release

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MIDDLEFIELD, Ohio, July 18, 2022 (GLOBE NEWSWIRE) — Middlefield Banc Corp. (NASDAQ: MBCN) reported financial results for the 2022 first half and second quarter ended June 30, 2022.

2022 First Half Financial Highlights Include (on a year-over-year basis unless noted):

  • Returned $4.4 million of capital to shareholders through dividends and the repurchase of 95,364 shares at an average price of $25.39 per share
  • Net income was $7.9 million, or $1.35 per diluted share, compared to $8.6 million, or $1.35 per diluted share
  • First-half pre-tax income benefited from $1.2 million of accelerated net fees associated with the Paycheck Protection Program (“PPP”), compared to $1.9 million in the 2021 first half
  • Net income during the second quarter was negatively impacted by $579,000 of one-time expenses associated with the proposed Liberty Bancshares, Inc. merger
  • Net interest margin improved by 20 basis points to 3.91%, compared to 3.71%
  • Total loans were $978.0 million, compared to $981.7 million at December 31, 2021
  • Total loans increased by $27.8 million, or 6.1% annualized from December 31, 2021, without the impact of PPP loan forgiveness
  • Return on average assets was 1.21%, compared to 1.26%
  • Return on average equity was 11.49%, compared to 11.88%
  • Return on average tangible common equity(1) was 13.03%, compared to 13.41%
  • Strong asset quality with nonperforming loans to total loans of 0.48%, compared to 0.73%
  • Allowance for loan losses was 1.49% of total loans, compared to 1.34%
  • Merger with Liberty Bancshares, Inc. on schedule to close during the 2022 fourth quarter

“We are focused on profitably growing our business, supporting our communities, and creating value for our shareholders, and I am pleased with the progress we made during the second quarter,” stated James R. Heslop, II, President and Chief Executive Officer. “Profitability has remained strong despite lower year-over-year fees associated with the Paycheck Protection Program and $579,000 of one-time expenses associated with the proposed Liberty Bancshares, Inc. merger. Reflecting our profitable financial model, second-quarter net interest margin increased 30 basis points to 4.02%. I am also encouraged by the growth we experienced in our return on tangible common equity, demonstrating the additional benefits of our share repurchase program.”

Mr. Heslop continued, “We are working on growing our balance sheet while controlling risk in a very fluid business environment. During the second quarter, core loans increased at an annualized rate of 6.9% since the beginning of the year. We continue to work on completing the merger with Liberty Bancshares, Inc., which we expect to close during the 2022 fourth quarter. Once complete, we expect to benefit as a larger bank with total assets of approximately $1.80 billion, strong earnings accretion, and a robust footprint in two of Ohio’s largest and fastest-growing markets. We believe the merger will generate meaningful earnings per share accretion while having a minimal tangible book value dilution and manageable earn-back period.”

Mr. Heslop concluded, “Over the past several years, we have invested throughout our organization, expanded our digital banking capabilities, and assembled a strong team of motivated and experienced leaders. We expect 2022 to be another good year for Middlefield Banc Corp., and I am excited by the direction we are headed,” concluded Mr. Heslop.

Income Statement

Net interest income for the 2022 first half decreased 0.9% to $23.5 million, compared to $23.7 million for the same period last year. Year-to-date, the net interest margin was 3.91%, compared to 3.71% for the same period last year. Net interest income for the 2022 second quarter was $12.0 million, compared to $11.9 million for the 2021 second quarter. The 1.5% increase in net interest income for the 2022 second quarter was largely a result of a 26.9% reduction in total interest expense. The net interest margin for the 2022 second quarter was 4.02%, compared to 3.72% for the same period of 2021.

For the 2022 first half, noninterest income was $2.8 million, compared to $3.9 million for the same period last year. Noninterest income for the 2022 second quarter was $1.4 million, compared to $1.6 million for the same period last year.

For the 2022 first half, noninterest expense increased 3.6% to $16.8 million, compared to $16.2 million for the same period last year. Operating costs in the 2022 second quarter increased 8.1% to $8.5 million from $7.9 million for the 2021 second quarter. The Company incurred $579,000 of additional operating expenses during the 2022 second quarter associated with the proposed Liberty Bancshares, Inc. merger.

Net income for the 2022 first half ended June 30, 2022, was $7.9 million, or $1.35 per diluted share, compared to $8.6 million, or $1.35 per diluted share for the same period last year. Net income for the 2022 second quarter ended June 30, 2022, was $4.1 million, or $0.70 per diluted share, compared to $4.4 million, or $0.70 per diluted share for the same period last year.

Balance Sheet

Total assets at June 30, 2022, decreased 4.9% to $1.29 billion, compared to $1.36 billion at June 30, 2021. Net loans at June 30, 2022, decreased 7.5% to $963.4 million, compared to $1.04 billion at June 30, 2021. Since 2020, Middlefield has helped customers receive $211.1 million of forgiveness payments under the terms of the Paycheck Protection Program, including processing $16.3 million of forgiveness payments during the second quarter of 2022, and $32.7 million of forgiveness payments year-to-date. The balance of PPP loans outstanding at June 30, 2022, was $1.4 million.

Total deposits at June 30, 2022, were $1.15 billion, compared to $1.20 billion at June 30, 2021. The 4.0% decrease in deposits was primarily due to a decline in time-based and interest-bearing accounts, partially offset by increased noninterest-bearing accounts. The investment portfolio was $172.0 million at June 30, 2022, compared with $150.9 million at June 30, 2021.

Donald L. Stacy, Chief Financial Officer, stated, “We remain well-positioned to benefit from a rising interest rate environment. In addition, as economic uncertainty has increased, we are entering this period from a position of strength with a historically strong balance sheet and excellent asset quality. These trends allow us to navigate a changing economic cycle while simultaneously allocating capital to support our long-term growth strategies, dividend payment, and share repurchase program.”

Mr. Stacy continued, “We continue to allocate excess capital to our dividend and share repurchase programs. Year-to-date, we have repurchased 95,364 shares of our common stock at a total cost of $2.4 million. This includes 63,214 shares repurchased during the 2022 second quarter at an average price of $25.35 per share at June 30, 2022. With 292,187 shares remaining under our repurchase program, we will continue to focus on returning capital to shareholders through our share repurchase program.”

Stockholders’ Equity and Dividends

At June 30, 2022, stockholders’ equity was $128.2 million compared to $146.0 million at June 30, 2021. The 12.2% year-over-year decline in stockholders’ equity was primarily due to an increase in the unrealized loss on the available-for-sale investment portfolio during the three-month period and the Company’s stock repurchase program. On a per-share basis, shareholders’ equity at June 30, 2022, was $22.07 compared to $23.50 at June 30, 2021.

At June 30, 2022, tangible stockholders’ equity(1) was $111.9 million, compared to $129.4 million at June 30, 2021. On a per-share basis, tangible stockholders’ equity(1) was $19.26 at June 30, 2022, compared to $20.82 at June 30, 2021.

Through the 2022 first half, the Company declared cash dividends of $0.34 per share, compared to $0.32 per share for the same period last year.

At June 30, 2022, the Company had an equity-to-assets ratio of 9.91%, compared to 10.74% at June 30, 2021.

Asset Quality

There was no provision for loan losses for the 2022 second quarter versus a $200,000 provision for loan losses for the same period last year. The year-over-year decline in the provision for loan losses was partially due to strong asset quality and the previous year’s prudent build in the Company’s allowance for loan losses associated with the potential economic impacts caused by the COVID-19 pandemic. There was no provision for loan losses for the 2022 first half versus $900,000 for the same period last year.

Net recoveries were $58,000, or 0.02% of average loans, annualized, during the 2022 second quarter, compared to net charge-offs of $122,000, or 0.05% of average loans, annualized, at June 30, 2021. Year-to-date net recoveries were $208,000, or 0.04% of average loans, annualized, compared to net charge-offs of $159,000, or 0.03% of average loans, annualized for the six-months ended June 30, 2021.

Nonperforming loans at June 30, 2022, were $4.7 million, compared to $7.8 million at June 30, 2021. Nonperforming assets at June 30, 2022, were $11.5 million, compared to $14.9 million at June 30, 2021. The allowance for loan losses at June 30, 2022, stood at $14.6 million, or 1.49% of total loans, compared to $14.2 million, or 1.34% of total loans at June 30, 2021.

ABOUT MIDDLEFIELD BANC CORP.

Middlefield Banc Corp., headquartered in Middlefield, Ohio, is the bank holding company of The Middlefield Banking Company, with total assets of $1.29 billion at June 30, 2022. The Bank operates 16 full-service banking centers and an LPL Financial® brokerage office serving Beachwood, Chardon, Cortland, Dublin, Garrettsville, Mantua, Middlefield, Newbury, Orwell, Plain City, Powell, Solon, Sunbury, Twinsburg, and Westerville. The Bank also operates a Loan Production Office in Mentor, Ohio.

Additional information is available at www.middlefieldbank.bank

(1) This press release includes disclosure of Middlefield Banc Corp.’s tangible book value per share, return on average tangible equity, and pre-tax, pre-provision for loan losses income, which are financial measures not prepared in accordance with generally accepted accounting principles in the United States (GAAP). A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed by GAAP. Middlefield Banc Corp. believes that these non-GAAP financial measures provide both management and investors a more complete understanding of the underlying operational results and trends and Middlefield Banc Corp.’s marketplace performance. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with GAAP. The reconciliations of non-GAAP financial measures are included in the tables following Consolidated Financial Highlights below.

FORWARD-LOOKING STATEMENTS

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) the effect of the COVID-19 pandemic, including on our credit quality and business operations, as well as its impact on general economic and financial market conditions; (8) changes in the securities markets; (9) the Company’s failure to integrate Liberty Bancshares, Inc. and Liberty National Bank with Middlefield in accordance with expectations and deviations from performance expectations related to Liberty Bancshares, Inc. and Liberty National Bank; or (10) 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.

IMPORTANT ADDITIONAL INFORMATION

In connection with the proposed merger with Liberty Bancshares, Inc., (“Liberty”), the Company intends to file with the SEC a registration statement on Form S-4 to register the shares of the Company’s common stock that will be issued to Liberty shareholders in connection with the merger. The registration statement will include a joint proxy statement/prospectus and other relevant materials in connection with the proposed merger, which will be sent to the shareholders of Liberty and the Company seeking their approval of the proposed merger.

SHAREHOLDERS OF LIBERTY, COMPANY SHAREHOLDERS, AND OTHER INVESTORS ARE URGED TO CAREFULLY READ THE PROXY STATEMENT AND PROSPECTUS TO BE INCLUDED IN THE REGISTRATION STATEMENT ON FORM S-4, BECAUSE THE PROXY STATEMENT/PROSPECTUSES WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY, LIBERTY, THE PROPOSED MERGER, THE PERSONS SOLICITING PROXIES WITH RESPECT TO THE PROPOSED MERGER, AND THEIR INTERESTS IN THE PROPOSED MERGER AND RELATED MATTERS.

Investors and security holders will be able to obtain free copies of the Registration Statement on Form S-4 (when available) and other documents filed by the Company with the SEC through the website maintained by the SEC at www.sec.gov. Copies of the documents filed with the SEC by the Company will be available free of charge on the Company’s website at www.middlefieldbank.bank or may be obtained from the Company by written request to Middlefield Banc Corp., 15985 East High Street P. O. Box 35 Middlefield, Ohio 44062, Attention: Investor Relations.

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities nor shall there be any sale of securities in any jurisdiction in which the offer, solicitation or sale is unlawful before registration or qualification of the securities under the securities laws of the jurisdiction. No offer of securities shall be made except by means of a prospectus satisfying the requirements of Section 10 of the Securities Act.

The respective directors and executive officers of the Company and Liberty and other persons may be deemed to be participants in the solicitation of proxies from Liberty shareholders with respect to the proposed merger. Information regarding the directors of the Company is available in its proxy statement filed with the SEC on April 5, 2022 in connection with its 2022 Annual Meeting of Shareholders and information regarding the executive officers of the Company is available in its Form 10-K filed with the SEC on March 15, 2022. Information regarding the directors and executive officers of Liberty, which is a private company, and other information regarding the participants in the solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus to be included in the Form S-4 Registration Statement and other relevant materials to be filed with the SEC when they become available.


MIDDLEFIELD BANC CORP.

Consolidated Selected Financial Highlights

(Dollar amounts in thousands, unaudited)

June 30, March 31, December 31, September 30, June 30,
Balance Sheets (period end) 2022 2022 2021 2021 2021
ASSETS
Cash and due from banks $ 60,114 $ 78,804 $ 97,172 $ 113,177 $ 82,435
Federal funds sold 19,039 29,474 22,322 19,174 10,034
Cash and cash equivalents 79,153 108,278 119,494 132,351 92,469
Equity securities, at fair value 779 851 818 833 730
Investment securities available for sale, at fair value 171,958 175,216 170,199 163,057 150,850
Loans held for sale 9 1,051 676 790
Loans:
Commercial real estate:
Owner occupied 120,771 113,590 111,470 110,883 109,777
Non-owner occupied 288,334 293,745 283,618 310,222 304,324
Multifamily 29,152 29,385 31,189 30,762 34,926
Residential real estate 246,453 244,747 240,089 232,020 228,102
Commercial and industrial 137,398 131,683 148,812 163,052 200,558
Home equity lines of credit 111,730 106,300 104,355 105,450 107,685
Construction and other 35,988 50,152 54,148 49,378 62,229
Consumer installment 8,171 8,118 8,010 8,515 8,694
Total loans 977,997 977,720 981,691 1,010,282 1,056,295
Less allowance for loan and lease losses 14,550 14,492 14,342 14,234 14,200
Net loans 963,447 963,228 967,349 996,048 1,042,095
Premises and equipment, net 17,030 17,142 17,272 17,507 17,680
Goodwill 15,071 15,071 15,071 15,071 15,071
Core deposit intangibles 1,249 1,326 1,403 1,484 1,564
Bank-owned life insurance 17,274 17,166 17,060 16,954 16,846
Other real estate owned 6,792 6,992 6,992 7,090 7,090
Accrued interest receivable and other assets 20,624 18,019 14,297 14,794 15,033
TOTAL ASSETS $ 1,293,377 $ 1,323,298 $ 1,331,006 $ 1,365,865 $ 1,360,218
June 30, March 31, December 31, September 30, June 30,
2022 2022 2021 2021 2021
LIABILITIES
Deposits:
Noninterest-bearing demand $ 379,872 $ 361,251 $ 334,171 $ 316,770 $ 326,665
Interest-bearing demand 154,788 162,010 196,308 237,576 207,725
Money market 185,494 187,807 177,281 178,423 183,453
Savings 252,179 264,784 260,125 256,114 252,171
Time 174,833 191,320 198,725 211,674 225,271
Total deposits 1,147,166 1,167,172 1,166,610 1,200,557 1,195,285
Other borrowings 12,910 12,975 12,901 12,966 13,031
Accrued interest payable and other liabilities 5,081 5,507 6,160 6,287 5,858
TOTAL LIABILITIES 1,165,157 1,185,654 1,185,671 1,219,810 1,214,174
STOCKHOLDERS’ EQUITY
Common stock, no par value; 10,000,000 shares authorized, 7,347,526
shares issued, 5,810,351 shares outstanding as of June 30, 2022 87,562 87,562 87,131 87,131 87,131
Retained earnings 89,900 86,804 83,971 80,376 76,150
Accumulated other comprehensive (loss) income (17,591 ) (6,674 ) 3,462 3,610 3,893
Treasury stock, at cost; 1,537,175 shares as of June 30, 2022 (31,651 ) (30,048 ) (29,229 ) (25,062 ) (21,130 )
TOTAL STOCKHOLDERS’ EQUITY 128,220 137,644 145,335 146,055 146,044
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,293,377 $ 1,323,298 $ 1,331,006 $ 1,365,865 $ 1,360,218


MIDDLEFIELD BANC CORP.

Consolidated Selected Financial Highlights

(Dollar amounts in thousands, unaudited)

For the Three Months Ended



For the Six Months Ended
June 30, March 31, December 31, September 30, June 30, June 30, June 30,
Statements of Income 2022 2022 2021 2021 2021 2022 2021
INTEREST AND DIVIDEND INCOME
Interest and fees on loans $ 11,268 $ 10,985 $ 11,586 $ 12,258 $ 11,885 $ 22,253 $ 24,052
Interest-earning deposits in other institutions 74 24 30 30 12 98 30
Federal funds sold 46 3 1 1 1 49 1
Investment securities:
Taxable interest 442 443 438 461 410 885 780
Tax-exempt interest 955 784 732 673 602 1,739 1,160
Dividends on stock 33 24 23 24 26 57 55
Total interest and dividend income 12,818 12,263 12,810 13,447 12,936 25,081 26,078
INTEREST EXPENSE
Deposits 709 726 783 915 1,010 1,435 2,215
Other borrowings 81 69 67 69 71 150 146
Total interest expense 790 795 850 984 1,081 1,585 2,361
NET INTEREST INCOME 12,028 11,468 11,960 12,463 11,855 23,496 23,717
Provision for loan losses (200 ) 200 900
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 12,028 11,468 12,160 12,463 11,655 23,496 22,817
NONINTEREST INCOME
Service charges on deposit accounts 956 914 906 876 856 1,870 1,643
(Loss) gain on equity securities (72 ) 33 (14 ) 102 40 (39 ) 121
Earnings on bank-owned life insurance 108 106 106 108 106 214 332
Gains on sale of loans 18 3 118 309 221 21 813
Revenue from investment services 153 141 198 192 210 294 339
Other income 220 206 221 234 199 426 602
Total noninterest income 1,383 1,403 1,535 1,821 1,632 2,786 3,850
NONINTEREST EXPENSE
Salaries and employee benefits 3,785 4,386 4,088 4,488 4,321 8,171 8,575
Occupancy expense 583 505 542 425 517 1,088 1,081
Equipment expense 274 315 358 333 313 589 670
Data processing and information technology

costs
822 682 660 736 698 1,665 1,484
Ohio state franchise tax 292 293 285 287 286 585 572
Federal deposit insurance expense 90 50 50 150 150 140 294
Professional fees 383 455 435 136 323 838 742
Net loss (gain) on other real estate owned 206 8 (66) 9 22 214 68
Advertising expense 229 228 221 222 221 457 442
Software amortization expense 40 48 119 88 74 88 154
Core deposit intangible amortization 77 77 80 81 80 154 160
Merger-related costs 579 579
Other expense 1,175 1,219 1,059 951 889 2,233 1,969
Total noninterest expense 8,535 8,266 7,831 7,906 7,894 16,801 16,211
Income before income taxes 4,876 4,605 5,864 6,378 5,393 9,481 10,456
Income taxes 787 772 1,027 1,174 968 1,559 1,864
NET INCOME $ 4,089 $ 3,833 $ 4,837 $ 5,204 $ 4,425 $ 7,922 $ 8,592
PTPP (1) $ 4,876 $ 4,605 $ 5,664 $ 6,378 $ 5,593 $ 9,481 $ 11,356
(1) The pre-tax pre-provision (PTPP) is the income before income taxes before provision for loan losses considerations, for reconciliation of non-GAAP measures.


MIDDLEFIELD BANC CORP.

Consolidated Selected Financial Highlights

(Dollar amounts in thousands, except per share and share amounts, unaudited)

For the Three Months Ended

For the Six Months Ended
June 30, March 31, December 31, September 30, June 30, June 30, June 30,
2022 2022 2021 2021 2021 2022 2021
Per common share data
Net income per common share – basic $ 0.70 $ 0.65 $ 0.81 $ 0.85 $ 0.70 $ 1.35 $ 1.36
Net income per common share – diluted $ 0.70 $ 0.65 $ 0.81 $ 0.85 $ 0.70 $ 1.35 $ 1.35
Dividends declared per share $ 0.17 $ 0.17 $ 0.21 $ 0.16 $ 0.16 $ 0.34 $ 0.32
Book value per share (period end) $ 22.07 $ 23.43 $ 24.68 $ 24.13 $ 23.50 $ 22.07 $ 23.50
Tangible book value per share (period end) (2) (3) $ 19.26 $ 20.64 $ 21.88 $ 21.39 $ 20.82 $ 19.26 $ 20.82
Dividends declared $ 993 $ 1,000 $ 1,242 $ 978 $ 1,004 $ 1,993 $ 1,920
Dividend yield 2.71 % 2.78 % 3.37 % 2.66 % 2.72 % 2.72 % 2.73 %
Dividend payout ratio 24.28 % 26.09 % 25.68 % 18.79 % 22.69 % 25.16 % 22.35 %
Average shares outstanding – basic 5,851,422 5,879,025 5,951,838 6,136,648 6,297,071 5,865,147 6,331,356
Average shares outstanding – diluted 5,860,098 5,889,836 5,975,333 6,157,181 6,312,230 5,873,823 6,348,345
Period ending shares outstanding 5,810,351 5,873,565 5,888,737 6,054,083 6,215,511 5,810,351 6,215,511
Selected ratios
Return on average assets 1.25 % 1.17 % 1.41 % 1.51 % 1.30 % 1.21 % 1.26 %
Return on average equity 12.30 % 10.75 % 13.17 % 13.95 % 12.10 % 11.49 % 11.88 %
Return on average tangible common equity (2) (4) 14.02 % 12.13 % 14.85 % 15.71 % 13.65 % 13.03 % 13.41 %
Efficiency (1) 61.82 % 62.54 % 56.56 % 54.04 % 57.18 % 62.17 % 57.50 %
Equity to assets at period end 9.91 % 10.40 % 10.92 % 10.69 % 10.74 % 9.91 % 10.74 %
Noninterest expense to average assets 0.65 % 0.62 % 0.58 % 0.58 % 0.58 % 1.27 % 1.18 %
(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
(2) See reconciliation of non-GAAP measures below
(3) Calculated by dividing tangible common equity by shares outstanding
(4) Calculated by dividing annualized net income for each period by average tangible common equity

MIDDLEFIELD BANC CORP.

Consolidated Selected Financial Highlights

(unaudited)

For the Three Months Ended

For the Six Months Ended

June 30, March 31, December 31, September 30, June 30, June 30, June 30,
Yields 2022 2022 2021 2021 2021 2022 2021
Interest-earning assets:
Loans receivable (2) 4.66 % 4.53 % 4.61 % 4.74 % 4.43 % 4.60 % 4.45 %
Investment securities (2) 3.76 % 3.41 % 3.30 % 3.37 % 3.47 % 3.59 % 3.60 %
Interest-earning deposits with other banks 0.77 % 0.23 % 0.20 % 0.21 % 0.18 % 0.48 % 0.19 %
Total interest-earning assets 4.28 % 4.06 % 4.07 % 4.20 % 4.05 % 4.17 % 4.08 %
Deposits:
Interest-bearing demand deposits 0.15 % 0.14 % 0.12 % 0.12 % 0.12 % 0.15 % 0.14 %
Money market deposits 0.49 % 0.47 % 0.47 % 0.46 % 0.46 % 0.48 % 0.47 %
Savings deposits 0.06 % 0.06 % 0.06 % 0.06 % 0.06 % 0.06 % 0.07 %
Certificates of deposit 0.83 % 0.87 % 0.90 % 1.08 % 1.19 % 0.85 % 1.24 %
Total interest-bearing deposits 0.36 % 0.37 % 0.36 % 0.41 % 0.46 % 0.36 % 0.50 %
Non-Deposit Funding:
Borrowings 2.51 % 2.16 % 2.09 % 2.11 % 2.18 % 2.34 % 2.16 %
Total interest-bearing liabilities 0.39 % 0.39 % 0.37 % 0.42 % 0.47 % 0.39 % 0.50 %
Cost of deposits 0.24 % 0.25 % 0.26 % 0.30 % 0.34 % 0.25 % 0.37 %
Cost of funds 0.27 % 0.27 % 0.27 % 0.31 % 0.35 % 0.27 % 0.38 %
Net interest margin (1) 4.02 % 3.80 % 3.82 % 3.91 % 3.72 % 3.91 % 3.71 %
(1) Net interest margin represents net interest income as a percentage of average interest-earning assets.
(2) Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were determined using an effective tax rate of 21%.
For the Three Months Ended

June 30, March 31, December 31, September 30, June 30,
Asset quality data 2022 2022 2021 2021 2021
(Dollar amounts in thousands, unaudited)
Nonperforming loans (1) $ 4,670 $ 4,728 $ 4,859 $ 6,806 $ 7,760
Other real estate owned 6,792 6,992 6,992 7,090 7,090
Nonperforming assets $ 11,462 $ 11,720 $ 11,851 $ 13,896 $ 14,850
Allowance for loan losses $ 14,550 $ 14,492 $ 14,342 $ 14,234 $ 14,200
Allowance for loan losses/total loans 1.49 % 1.48 % 1.46 % 1.41 % 1.34 %
Net (recoveries) charge-offs:
Quarter-to-date $ (58 ) $ (150 ) $ (308 ) $ (34 ) $ 122
Year-to-date (208 ) (150 ) (183 ) 125 159
Net charge-offs to average loans, annualized:
Quarter-to-date -0.02 % -0.06 % -0.12 % -0.01 % 0.05 %
Year-to-date -0.04 % -0.06 % -0.02 % 0.02 % 0.03 %
Nonperforming loans/total loans 0.48 % 0.48 % 0.49 % 0.67 % 0.73 %
Allowance for loan losses/nonperforming loans 311.56 % 306.51 % 295.16 % 209.14 % 182.99 %
Nonperforming assets/total assets 0.89 % 0.89 % 0.89 % 1.02 % 1.09 %
(1) Nonperforming loans exclude troubled debt restructurings that are performing in accordance with their terms over a prescribed period of time.
Reconciliation of Common Stockholders’ Equity to Tangible Common Equity For the Three Months Ended
(Dollar amounts in thousands, unaudited) June 30, March 31, December 31, September 30, June 30,
2022 2022 2021 2021 2021
Stockholders’ Equity $ 128,220 $ 137,644 $ 145,335 $ 146,055 $ 146,044
Less Goodwill and other intangibles 16,320 16,397 16,474 16,555 16,635
Tangible Common Equity $ 111,900 $ 121,247 $ 128,861 $ 129,500 $ 129,409
Shares outstanding 5,810,351 5,873,565 5,888,737 6,054,083 6,215,511
Tangible book value per share $ 19.26 $ 20.64 $ 21.88 $ 21.39 $ 20.82
Reconciliation of Average Equity to Return on Average Tangible Common Equity For the Three Months Ended For the Six Months Ended

June 30, March 31, December 31, September 30, June 30, June 30, June 30,
2022 2022 2021 2021 2021 2022 2021
Average Stockholders’ Equity $ 133,377 $ 144,630 $ 145,716 $ 148,048 $ 146,719 $ 139,003 $ 145,892
Less Average Goodwill and other intangibles 16,357 16,435 16,513 16,594 16,674 16,396 16,714
Average Tangible Common Equity $ 117,020 $ 128,195 $ 129,203 $ 131,454 $ 130,045 $ 122,607 $ 129,178
Net income $ 4,089 $ 3,833 $ 4,837 $ 5,204 $ 4,425 $ 7,922 $ 8,592
Return on average tangible common equity (annualized) 14.02 % 12.13 % 14.85 % 15.71 % 13.65 % 13.03 % 13.41 %
Reconciliation of Pre-Tax Pre-Provision Income (PTPP) For the Three Months Ended For the Six Months Ended
June 30, March 31, December 31, September 30, June 30, June 30, June 30,
2022 2022 2021 2021 2021 2022 2021
Net income $ 4,089 $ 3,833 $ 4,837 $ 5,204 $ 4,425 $ 7,922 $ 8,592
Add Income Taxes 787 772 1,027 1,174 968 1,559 1,864
Add Provision for loan losses (200 ) 200 900
PTPP $ 4,876 $ 4,605 $ 5,664 $ 6,378 $ 5,593 $ 9,481 $ 11,356

MIDDLEFIELD BANC CORP.

Average Balance Sheets

(Dollar amounts in thousands, unaudited)

For the Three Months Ended

June 30,
June 30,
2022
2021
Average Average Average Average
Balance Interest Yield/Cost Balance Interest Yield/Cost
Interest-earning assets:
Loans receivable (3) $ 970,820 $ 11,268 4.66 % $ 1,078,866 $ 11,885 4.43 %
Investment securities (3) 176,138 1,397 3.76 % 135,338 1,012 3.47 %
Interest-earning deposits with other banks (4) 79,924 153 0.77 % 85,245 39 0.18 %
Total interest-earning assets 1,226,882 12,818 4.28 % 1,299,449 12,936 4.05 %
Noninterest-earning assets 89,555 70,692
Total assets $ 1,316,437 $ 1,370,141
Interest-bearing liabilities:
Interest-bearing demand deposits $ 159,779 $ 59 0.15 % $ 207,080 $ 64 0.12 %
Money market deposits 185,711 228 0.49 % 185,728 212 0.46 %
Savings deposits 260,226 40 0.06 % 253,612 38 0.06 %
Certificates of deposit 184,748 382 0.83 % 233,930 696 1.19 %
Short-term borrowings 0.00 % 227 0.00 %
Other borrowings 12,945 81 2.51 % 13,062 71 2.18 %
Total interest-bearing liabilities 803,409 790 0.39 % 893,639 1,081 0.49 %
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits 375,013 323,590
Other liabilities 4,638 6,193
Stockholders’ equity 133,377 146,719
Total liabilities and stockholders’ equity $ 1,316,437 $ 1,370,141
Net interest income $ 12,028 $ 11,855
Interest rate spread (1) 3.89 % 3.56 %
Net interest margin (2) 4.02 % 3.72 %
Ratio of average interest-earning assets to
average interest-bearing liabilities 152.71 % 145.41 %
(1) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
(2) Net interest margin represents net interest income as a percentage of average interest-earning assets.
(3) Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $271 and $179 for the three months ended June 30, 2022 and 2021, respectively
(4) Includes dividends received on restricted stock.
For the Three Months Ended

June 30, March 31,
2022 2022
Average Average Average Average
Balance Interest Yield/Cost Balance Interest Yield/Cost
Interest-earning assets:
Loans receivable (3) $ 970,820 $ 11,268 4.66 % $ 983,853 $ 10,985 4.53 %
Investment securities (3) 176,138 1,397 3.76 % 170,829 1,227 3.41 %
Interest-earning deposits with other banks (4) 79,924 153 0.77 % 91,690 51 0.23 %
Total interest-earning assets 1,226,882 12,818 4.28 % 1,246,372 12,263 4.06 %
Noninterest-earning assets 89,555 85,667
Total assets $ 1,316,437 $ 1,332,039
Interest-bearing liabilities:
Interest-bearing demand deposits $ 159,779 $ 59 0.15 % $ 170,353 $ 60 0.14 %
Money market deposits 185,711 228 0.49 % 184,265 212 0.47 %
Savings deposits 260,226 40 0.06 % 260,162 38 0.06 %
Certificates of deposit 184,748 382 0.83 % 193,657 416 0.87 %
Short-term borrowings 0.00 % 0.00 %
Other borrowings 12,945 81 2.51 % 12,943 69 2.16 %
Total interest-bearing liabilities 803,409 790 0.39 % 821,380 795 0.39 %
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits 375,013 359,656
Other liabilities 4,638 6,373
Stockholders’ equity 133,377 144,630
Total liabilities and stockholders’ equity $ 1,316,437 $ 1,332,039
Net interest income $ 12,028 $ 11,468
Interest rate spread (1) 3.89 % 3.67 %
Net interest margin (2) 4.02 % 3.80 %
Ratio of average interest-earning assets to
average interest-bearing liabilities 152.71 % 151.74 %
(1) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
(2) Net interest margin represents net interest income as a percentage of average interest-earning assets.
(3) Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $271 and $223 for the three months ended June 30, 2022, and March 31, 2022, respectively.
(4) Includes dividends received on restricted stock.
For the Six Months Ended
June 30, June 30,
2022 2021
Average Average Average Average
Balance Interest Yield/Cost Balance Interest Yield/Cost
Interest-earning assets:
Loans receivable (3) $ 977,336 $ 22,253 4.60 % $ 1,091,119 $ 24,052 4.45 %
Investment securities (3) 173,483 2,624 3.59 % 125,924 1,940 3.60 %
Interest-earning deposits with other banks (4) 85,807 204 0.48 % 89,477 86 0.19 %
Total interest-earning assets 1,236,626 25,081 4.17 % 1,306,520 26,078 4.08 %
Noninterest-earning assets 87,382 70,850
Total assets $ 1,324,008 $ 1,377,370
Interest-bearing liabilities:
Interest-bearing demand deposits $ 165,066 $ 119 0.15 % $ 205,063 $ 141 0.14 %
Money market deposits 184,988 440 0.48 % 190,502 441 0.47 %
Savings deposits 260,194 78 0.06 % 254,882 85 0.07 %
Certificates of deposit 189,203 798 0.85 % 251,711 1,548 1.24 %
Short-term borrowings 0.00 % 169 0.00 %
Other borrowings 12,944 150 2.34 % 13,660 146 2.16 %
Total interest-bearing liabilities 812,395 1,585 0.39 % 915,987 2,361 0.52 %
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits 367,334 309,395
Other liabilities 5,276 6,096
Stockholders’ equity 139,003 145,892
Total liabilities and stockholders’ equity $ 1,324,008 $ 1,377,370
Net interest income $ 23,496 $ 23,717
Interest rate spread (1) 3.78 % 3.56 %
Net interest margin (2) 3.91 % 3.71 %
Ratio of average interest-earning assets to
average interest-bearing liabilities 152.22 % 142.64 %
(1) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
(2) Net interest margin represents net interest income as a percentage of average interest-earning assets.
(3) Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $494 and $347 for the six months ended June 30, 2022 and 2021, respectively.
(4) Includes dividends received on restricted stock.
Company Contact: Investor and Media Contact:
James Heslop

President/Chief Executive Officer

Middlefield Banc Corp.

(440) 632-1666 Ext. 3219

JHeslop@middlefieldbank.com
Andrew M. Berger

Managing Director

SM Berger & Company, Inc.

(216) 464-6400

andrew@smberger.com



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