Locate a branch

Middlefield Banc Corp. Reports Financial Results for the 2014 Third Quarter

Middlefield Banc Corp. 2014 Press Releases

Font Size 
Company
Contact:
Thomas G. Caldwell
President/Chief Executive Officer
(440) 632-1666 Ext. 3200
Investor and
Media Contact:
Andrew M. Berger
Managing Director
SM Berger & Company, Inc.
(216) 464-6400
Date: September 5, 2014

Middlefield Banc Corp. (NASDAQ: MBCN) today reported financial results for the three and nine months ended September 30, 2014.

2014 Third Quarter Financial Highlights Include (on a year-over-year basis unless noted)

  • Net interest income increased 1.1% to $5.9 million.
  • Noninterest income grew 22.5% to $1.0 million.
  • Net income up 2.8% to $1.9 million, or $0.93 per diluted share.
  • Tangible stockholders' equity improved 4.3% from 2014 second quarter, and 16.6% from December 31, 2013.
  • Total net loans increased 12.1%.
  • Nonperforming assets declined to $13.1 million from $16.3 million.
  • Tier 1 capital ratio strengthened to 9.50% from 8.70%.

"We ended the 2014 third quarter with a record level of total assets primarily due to a significant increase in total loans outstanding," stated Thomas G. Caldwell, President and Chief Executive Officer. "Since September 30, 2013, our loan portfolio has grown by 11.7%, which was influenced by strong, double-digit improvements across all loan categories. Our asset quality improved during the third quarter as nonperforming assets declined 19.7% over the same period last year. We are dedicated to conservatively managing risk, while continuing to support our communities and expand our loan portfolio."

Net income for the 2014 third quarter was approximately $1.9 million, or $0.93 per diluted share, compared to net income for the 2013 third quarter of nearly $1.9 million, or $0.92 per diluted share. Net income for the nine months ended September 30, 2014 was $5.3 million, or $2.59 per diluted share, compared to net income for the nine months ended September 30, 2013 of $5.2 million, or $2.58 per diluted share.

Annualized returns on average equity ("ROE") and average assets ("ROA") for the 2014 third quarter were 13.55% and 1.13%, respectively, compared with 13.66% and 1.12% for the 2013 third quarter.ROE and ROA were 12.74% and 1.06%, respectively, for the 2014 nine month period, compared with 12.74% and 1.05% for the same period last year.

Mr. Caldwell continued: "We began offering secondary mortgage products at the end of the third quarter, which should improve noninterest income and diversify our sources of income in future quarters. The roll out of our online and mobile banking applications continues and we expect to offer customers the ability to deposit checks from their mobile phones in the fourth quarter. Middlefield has a strong foundation to support its long-term growth objectives and I am pleased with the progress we have made executing our growth strategies. We continue to invest in ongoing programs that are focused on improving the products and services we offer our customers, enhancing the way our customers interact with the bank, growing our banking franchise, and creating shareholder value."

Income Statement

Net interest income for the 2014 third quarter increased slightly to $5.9 million, compared to $5.8 million for the 2013 third quarter.For the 2014 nine month period, net interest income increased 4.3% to $17.8 million, compared to $17.0 million for the same period last year. The third quarter and nine month increases in net interest income were driven by a reduction in funding costs, primarily time deposits. The net interest margin for the 2014 third quarter was 3.99%, compared to 4.05% for the same period of 2013.Year-to-date, the net interest margin was 4.08%, compared to 4.03% for the same period last year.

Noninterest income was up 22.5% for the 2014 third quarter and 2.7% year-to-date. The improvement to noninterest income in the 2014 third quarter was primarily a result of investment gains. Noninterest expense for the 2014 third quarter was $4.4 million, an increase of approximately $0.3 million from the 2013 third quarter, primarily a result of higher operating expenses.

"Noninterest expenses have increased primarily due to higher employee, equipment, and data processing fees to support the company's growth initiatives and compliance costs," said Donald L. Stacy, Chief Financial Officer. "Programs to offset higher costs by leveraging the company's IT infrastructure and reducing professional fees continue.We successfully lowered our costs of deposits 23.3% during the quarter and 24.9% year-to-date, as higher cost deposits mature. Noninterest bearing demand deposits have increased 29.4% year-over-year and represented 17.6% of total deposits at September 30, 2014 versus 14.1% at September 30, 2013, while the cost of interest bearing liabilities fell 24 basis points to 0.80% for the nine months ended September 30, 2014. We remain committed to managing expenses and controlling our cost of funds."

Balance Sheet

Total assets at September 30, 2014 increased 5.1% to $680.3 million, from $647.1 million at December 31, 2013 and 1.8% from $668.3 million at June 30, 2014. Net loans at September 30, 2014 were $460.9 million, compared to $428.7 million at December 31, 2013 and $443.0 million at June 30, 2014. The increase in net loans was a result of double-digit growth across all loan categories.

Total deposits at September 30, 2014 increased 5.5% to $600.0 million from $568.8 million at December 31, 2013. The investment portfolio, which is entirely classified as available for sale, stood at $156.0 million at September 30, 2014, compared to $157.1 million at December 31, 2013.

Stockholders' Equity and Dividends

Tangible stockholders' equity increased 18.9% to $56.8.0 million for the 2014 third quarter, compared to $47.8 million at September 30, 2013. On a per share basis, tangible stockholders' equity increased 17.6% to $27.74 at September 30, 2014 from $23.59 at September 30, 2013. The increase is the result of a higher level of retained earnings and accumulated other comprehensive income, which was offset by cash dividends paid to shareholders.

At September 30, 2014, the company had a Tier 1 leverage ratio of 9.50%, up from 8.70% at September 30, 2013 and 9.31% at June 30, 2014.

During the 2014 third quarter, the company paid cash dividends of $0.26 per share, which equaled the amount paid in the 2013 third quarter. Year-to-date, the company has paid cash dividends of $0.78 per share.

Asset Quality

The provision for loan losses for the 2014 third quarter was less than $0.1 million, compared to approximately $0.2 million for the 2013 third quarter. Year-to-date, the provision for loan losses was $0.4 million, compared to $0.8 million for the same period last year. Net charge-offs for the 2014 nine months was $0.1 million, or 0.04% of average loans, annualized. The allowance for loan losses at September 30, 2014 stood at $7.3 million, or 1.56% of total loans, compared to $7.8 million or 1.87% of total loans at September 30, 2013.

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

    Asset Quality History
    (dollars in thousands)
                               
        9/30/14       12/31/13       9/30/13       12/31/12       12/31/11
                               
Nonperforming loans   $ 10,438   $ 12,290   $ 13,608   $ 14,224   $ 24,546
Real estate owned   2,674   2,698   2,719   1,846   2,196
                                 
Nonperforming assets   $ 13,112   $ 14,988   $ 16,327   $ 16,070   $ 26,742
                                 
Allowance for loan losses   $ 7,288   $ 7,046   $ 7,821   $ 7,779   $ 6,819
                                 
Ratios:                              
                                 
Nonperforming loans to total loans     2.23%     2.82%     3.25%     3.48%     6.12%
                                 
Nonperforming assets to total assets     1.93% 2.32% 2.48%     2.40%     4.09%
                                 
Allowance for loan losses to total loans     1.56%     1.62%     1.87%     1.90%     1.70%
                                 
Allowance for loan losses to nonperforming loans     69.82%     57.33%     57.48%     54.69%     27.78%

Middlefield Banc Corp., headquartered in Middlefield, Ohio, is a bank holding company with total assets of $680.3 million at September 30, 2014. The bank operates 10 full service banking centers and an LPL Financial® brokerage office serving Chardon, Cortland, Dublin, Garrettsville, Mantua, Middlefield, Newbury, Orwell, and Westerville. Additional information is available at www.middlefieldbank.bank.

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, 2014 and 2013 and December 31, 2013
                   
Balance Sheet (period end)   September 30,     December 31,     September 30,      
(Dollar amounts in thousands)   2014     2013     2013      
(unaudited)                    
Assets                    
Cash and due from banks   $21,486     $20,926     $21,124      
Federal funds sold   7,816     5,267     11,069      
Cash and cash equivalents   29,302     26,193   32,193      
Investment securities available for sale   156,021     157,143     180,771      
Loans held for sale, lower of cost or market   201     -     -      
Loans   468,007     435,725     419,060      
Less: allowance for loan and lease losses   7,288     7,046     7,821      
Net loans   460,920     428,679     411,239      
Premises and equipment   9,916     9,828     8,555      
Goodwill   4,559     4,559     4,559      
Core deposit intangible   126     156     161      
Bank-owned life insurance   9,022     8,816     8,745      
Accrued interest receivable and other assets   10,396     11,716     11,918      
Total Assets   $680,262     $647,090   $658,141      
                       
    September 30,     December 31,     September 30,      
    2014     2013     2013      
Liabilities and Stockholders' Equity                      
Noninterest bearing demand deposits   $105,788     $85,905     $81,760      
Interest-bearing demand deposits   62,958     53,741     59,799      
Money market accounts   76,157     77,473     77,118      
Savings deposits   177,408     177,303     179,581      
Time deposits   177,709     174,414     180,964      
Total Deposits   600,020     568,836   579,222      
Short-term borrowings   5,131     10,809     10,575      
Federal funds purchased   -     -     1,639      
Other borrowings   11,105     11,609     12,261      
Other liabilities   2,491     2,363     1,915      
Total Liabilities   618,747     593,617     605,612      
                       
Common equity   35,455     34,979     34,833      
Retained earnings   31,169     27,465     26,123      
Accumulated other comprehensive income (loss)   1,625     (2,237)     (1,693)      
Treasury stock   (6,734)     (6,734)     (6,734)      
Total Stockholders' Equity   61,515     53,473     52,529      
Total Liabilities and Stockholders' Equity   $680,262     $647,090     $658,141      
                     
                     
MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
September 30, 2014 and 2013
(Dollar amounts in thousands)
(unaudited)
             
    For the Three Months Ended     For the Nine Months Ended
    September 30,     September 30,
    2014   2013     2014   2013
INTEREST INCOME                      
Interest and fees on loans   $5,646     $5,754     $16,915     $16,876
Interest-bearing deposits in other institutions   5     6     19     23
Federal funds sold   2     4     11     12
Investment securities                      
Taxable interest   441     610     1,476     1,909
Tax-exempt interest   798     782     2,336     2,259
Dividends on stock   19     18     62     56
Total interest income   6,911   7,174     20,819   21,135
INTEREST EXPENSE                      
Deposits   898     1,170     2,767     3,686
Short-term borrowings   38     41     111     140
Federal funds purchased   -     1     -     1
Other borrowings   30     41     94     131
Trust preferred securities   33     75     93     156
Total interest expense   999     1,328     3,065     4,114
                       
NET INTEREST INCOME   5,912     5,846     17,754     17,021
                       
Provision for loan losses   70     153     370     766
NET INTEREST INCOME AFTER PROVISION                      
FOR LOAN LOSSES   5,842     5,693     17,384     16,255
NONINTEREST INCOME                      
Service charges on deposits   489     510     1,399     1,468
Investment securities gains (losses), net   190     -     248     175
Earnings on bank-owned life insurance   71     66     206     209
Gain on sale of loans   20     -     20     -
Other income   220     232     689     643
Total noninterest income   990     808     2,562     2,495
NONINTEREST EXPENSE                      
Salaries and employee benefits   2,144     1,872     6,428     5,649
Occupancy expense   272     273     868     795
Equipment expense   296     228     710     603
Data processing costs   251     209     689     609
Ohio state franchise tax   93     164     269     467
Federal deposit insurance expense   132     135     361     353
Professional fees   189     316     814     883
Loss (gain) on sale of other real estate owned   49     -35     119     -40
Advertising expense   120     113     367     336
Other real estate expense   91     128     256     324
Directors Fees   99     77     303     315
Other operating expense   649     635     2,028     1,770
Total noninterest expense   4,385     4,115     13,212     12,064
Income before income taxes   2,447 2,386     6,734 6,686
Provision for income taxes   529     521     1,442     1,479
NET INCOME   $1,918     $1,865     $5,292     $5,207
                       
    For the Three Months Ended     For the Nine Months Ended
    September 30,     September 30,
    2014   2013     2014   2013
Per common share data                      
Net income per common share - basic   $0.94     $0.92     $2.60     $2.59
Net income per common share - diluted   $0.93     $0.92     $2.59     $2.58
Dividends declared   $0.26     $0.26     $0.78     $0.78
Book value per share(period end)   $30.02     $25.92     $30.02     $25.92
Tangible book value per share (period end)   $27.74     $23.59     $27.74     $23.59
Dividend payout ratio   27.58%     27.99%     30.01%     30.13%
Average shares outstanding - basic 2,044,124     2,022,490   2,038,972     2,013,217
Average shares outstanding -diluted 2,052,012     2,029,420   2,045,660     2,021,198
Period ending shares outstanding   2,048,807     2,026,569     2,048,807     2,026,569
       
Selected ratios                      
Return on average assets   1.13%     1.12%     1.06%     1.05%
Return on average equity   13.55%     13.66%     12.74%     12.74%
Yield on earning assets   4.62%     4.92%     4.73%     4.93%
Cost of interest bearing liabilities   0.78%     1.01%     0.80%     1.04%
Net interest spread   3.84%     3.91%     3.94%     3.89%
Net interest margin   3.99%     4.05%   4.08%     4.03%
Efficiency (1)   59.96%     58.31%     61.40%     57.31%
Tier 1 capital ratio (holding company) 9.50% 8.70%   9.50% 8.70%
                     
(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.
             
                   
September 30,   September 30,          
2014   2013          
           
Commercial and industrial   $58,874     $50,265          
Real estate - construction 29,287   25,487          
Real estate - mortgage:              
Residential 224,424     203,312          
Commercial 149,488     135,760          
Consumer installment 6,135   4,236          
$468,208     $419,060          
                   
    September 30,     September 30,          
Asset quality data   2014     2013          
(Dollar amounts in thousands)              
Non-accrual loans   8,826     $9,223          
Troubled debt restructuring   1,587     3,621          
90 day past due and accruing   25     764          
Non-performing loans   10,438   13,608          
Other real estate owned   2,674     2,719          
Non-performing assets   13,112     $16,327            
                   
                   
Allowance for loan and lease losses   $7,288     $7,821          
Allowance for loan and lease losses/total loans   1.56%   1.87%          
Net charge-offs:                  
Quarter-to-date   (89)     81          
Year-to-date   128     724          
Net charge-offs to average loans, annualized                
Quarter-to-date   (0.08%)     0.08%          
Year-to-date   0.04%     0.23%          
Nonperforming loans/total loans   2.23%     3.25%          
Allowance for loan and lease losses/nonperforming loans   69.82%     57.48%          
                     

 

Central Ohio Northeast Ohio