Locate a branch

Middlefield Banc Corp. Reports 2017 First Half Financial Results

Middlefield Banc Corp. 2017 Press Releases

Font Size 
Company
Contact:
Thomas G. Caldwell
President/Chief Executive Officer
Middlefield Banc Corp.
(440) 632-1666 Ext. 3200
Investor and
Media Contact:
Andrew M. Berger
Managing Director
SM Berger & Company, Inc.
(216) 464-6400
Date: July 27, 2017

Middlefield Banc Corp. (NASDAQ: MBCN) today reported financial results for the 2017 first half and second quarter ended June 30, 2017.

2017 First Half Financial Highlights versus 2016 First Half (unless noted):

  • Net income was up 35.0% to $4.6 million
  • Earnings per diluted share decreased 6.9% to $1.61 per share, as a result of a 44.6% increase in the average number of diluted shares outstanding
  • Total net loans increased 50.2% to $861.3 million
  • Organic total net loans increased 11.0%
  • Total interest income improved 43.0% to $21.1 million
  • Tier 1 capital ratio remains strong at 9.95%

“Middlefield’s 2017 second quarter and year-to-date financial results reflect the contribution of the Liberty Bank, N.A. acquisition, robust organic loan growth throughout our Central and Northeast Ohio markets, and stable asset quality,” stated Thomas G. Caldwell, President and Chief Executive Officer.  “Year-to-date, total net loans increased 11.0% organically, and over the past three months were up 3.7% organically.  In addition, we ended the second quarter with a robust pipeline of potential new loans.  I am encouraged by recent loan growth and demand trends, which demonstrates Middlefield’s growing banking franchise and stable economic trends within our local geographies.  While total net loans increased 50.2%, our asset quality remains strong as nonperforming loans to total loans has declined to 1.45% at June 30, 2017 from 1.64% for the same period last year.  As a result of Middlefield’s strong year-to-date performance, we expect 2017 will be another good year for the Bank.” 

Income Statement
For the 2017 first half, net interest income increased 42.4% to $18.0 million, compared to $12.7 million for the same period last year.  Year-to-date, the net interest margin was 3.82%, compared to 3.82% for the same period last year.  Net interest income for the 2017 second quarter was $9.3 million, compared to $6.3 million for the 2016 second quarter.  The net interest margin for the 2017 second quarter was 3.80%, compared to 3.78% for the same period of 2016.  The 46.3% increase in net interest income for the 2017 second quarter was largely a result of a 57.0% increase in interest and fees on loans. 

For the 2017 first half, noninterest income was $2.5 million, compared to $2.1 million for the same period last year.  Noninterest income for the 2017 second quarter was $1.0 million, compared to $1.2 million for the same period last year. 

For the 2017 first half, noninterest expense increased 36.3% to $14.0 million, compared to $10.3 million for the same period last year.  Operating costs in the 2017 second quarter increased 36.4% to $6.7 million from $4.9 million for the 2016 second quarter.  During the 2017 second quarter, noninterest expense had approximately $307,000 of one-time merger costs associated with the Liberty merger, and year-to-date the company had one-time merger related costs of approximately $694,000.

Annualized returns on average equity (“ROE”) and average assets (“ROA”) for the 2017 six-month period were 9.05% and 0.89%, respectively, compared with 10.62% and 0.92% for the same period last year.  For the 2017 second quarter, ROE and ROA were 9.34% and 0.94%, respectively, compared with 11.78% and 1.03% for the 2016 second quarter.

“I am pleased with the successful $16.0 million private placement we completed in the second quarter.  The proceeds from this offering were used to retire $12.0 million of higher-cost borrowings, which helped Middlefield reduce its funding costs,” said Donald L. Stacy, Chief Financial Officer.  “Our net loans-to-assets ratio continues to increase and was 80.5% at June 30, 2017, up 400 basis points from year end, and increased 510 basis points from the same period a year ago.  During the 2017 second quarter, the yield on earning assets increased to 4.45% from 4.37% for the same period a year ago, while our cost of interest-bearing liabilities increased to 0.83% from 0.77% for the same period a year ago.  The net effect was a slight increase in the company’s net interest spread, as well as a slight increase in net interest margin, which was 3.80% in the second quarter.  We continue to expect improving profitability as a result of the company’s growing loan portfolio, and achieving cost benefits from the Liberty merger.”

Balance Sheet
Total assets at June 30, 2017 increased 40.8% to approximately $1,070.0 million, from $760.1 million at June 30, 2016, and $787.8 million at December 31, 2016.  Net loans at June 30, 2017 were $861.3 million, compared to $573.4 million at June 30, 2016, and $602.5 million at December 31, 2016.  The 50.2% year-over-year improvement in total net loans was across all loan categories, and was a result of organic growth and the contribution of the Liberty merger. Specifically, commercial mortgage loans increased 64.5%, residential mortgage loans increased 22.6%, commercial and industrial loans increased 60.7%, real estate construction loans increased 121.8%, and consumer installment loans increased 343.5%.

Total deposits at June 30, 2017 increased 34.8% to $846.8 million from $628.0 million at June 30, 2016.  The company continued to proactively manage its cost of funds and control deposit growth.  The investment portfolio, which is entirely classified as available for sale, was $105.0 million June 30, 2017, compared with $129.3 million at June 30, 2016. 

Stockholders’ Equity and Dividends
At June 30, 2017, tangible stockholders’ equity was $98.8 million, an increase of 35.4% from $73.0 million at June 30, 2016.  On a per-share basis, tangible stockholders’ equity decreased to $30.77 at June 30, 2017 from $32.47 at June 30, 2016.  Through the first six months of 2017, the company declared cash dividends of $0.54 per share.  The dividend payout ratio for the 2017 six-month period was 35.2% compared to 32.4% for the same period last year.

At June 30, 2017, the company had a Tier 1 leverage ratio of 9.95%, down from 10.23% at June 30, 2016.

Asset Quality   
The provision for loan losses for the 2017 second quarter was $0.2 million versus $0.1 million for the same period last year.  Nonperforming assets at June 30, 2017 were $13.2 million, compared to $10.6 million at June 30, 2016.  Net charge-offs for the 2017 second quarter were $0.3 million, or 0.13% of average loans, annualized, compared to $0.1 million, or 0.07% of average loans, annualized for the same 2016 period.  Year-to-date net charge-offs were $0.3 million, or 0.08% of average loans, annualized compared to $0.2 million, or 0.08% of average loans, annualized for the same period last year. The allowance for loan losses at June 30, 2017 stood at $6.6 million, or 0.76% of total loans, compared to $6.4 million or 1.10% of total loans at June 30, 2016.  The decline in the allowance ratio is due to the acquisition of Liberty Bank, which increased total loans.  

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

   

Asset Quality History
(dollars in thousands)
6/30/2017 6/30/2016 12/31/2016 12/31/2015 12/31/2014
Nonperforming loans $12,581 $9,491 $7,075 $10,263 $9,048
Real estate owned $650 $1,142 $934 $1,412 $2,590
Nonperforming assets $13,231 $10,633 $8,009 $11,675 $11,638
Allowance for loan losses $6,605 $6,366 $6,598 $6,385 $6,846
Ratios:
Nonperforming loans to total loans 1.45% 1.64% 1.16% 1.92% 1.92%
Nonperforming assets to total assets 1.24% 1.40% 1.02% 1.59% 1.72%
Allowance for loan losses to total loans 0.76% 1.10% 1.08% 1.20% 1.45%
Allowance for loan losses to nonperforming loans 52.50% 67.07% 93.26% 62.21% 75.66%

Middlefield Banc Corp., headquartered in Middlefield, Ohio, is a bank holding company with total assets of $1.1 billion at June 30, 2017.  The bank operates 14 full-service banking centers and an LPL Financial® brokerage office serving Beachwood, Chardon, Cortland, Dublin, Garrettsville, Mantua, Middlefield, Newbury, Orwell, Solon, Sunbury, Twinsburg, and Westerville. The Bank also operates a Loan Production Office in Mentor, Ohio. 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
 
June 30, 2017 and 2016 and December 31, 2016
                 
Balance Sheet (period end)     June 30,     December 31,     June 30,
(Dollar amounts in thousands)     2017     2016     2016
      (unaudited)           (unaudited)
ASSETS                  
Cash and due from banks   $ 37,971   $ 31,395   $ 21,127
Federal funds sold     1,600     1,100     1,000
Cash and cash equivalents     39,571   32,495   22,127
Investment securities available for sale, at fair value     104,951     114,376     129,295
Loans held for sale     9,791     634     496
Loans     867,864     609,140     579,716
Less allowance for loan and lease losses     6,605     6,598     6,366
Net loans     861,259   602,542   573,350
Premises and equipment, net     11,511     11,203     9,727
Goodwill     15,435     4,559     4,559
Core deposit intangibles     2,948     36     56
Bank-owned life insurance     15,432     13,540     13,337
Other real estate owned     650     934     1,142
Accrued interest and other assets     9,528     7,502     6,019
TOTAL ASSETS   $ 1,071,076   $ 787,821   $ 760,108
                   
      June 30,     December 31,     June 30,
      2017     2016     2016
LIABILITIES                  
Deposits:                  
Noninterest-bearing demand   $ 172,199   $ 133,630   $ 126,045
Interest-bearing demand     87,084     59,560     64,361
Money market     160,858     74,940     81,596
Savings     181,259     172,370     173,014
Time     245,383     189,434     183,024
Total deposits 846,783   629,934   628,040
Fed funds purchased     -     -     414
Short-term borrowings     63,388     68,359     41,841
Other borrowings     39,346     9,437     9,825
Accrued interest and other liabilities     4,357     3,131     2,407
TOTAL LIABILITIES     953,874   710,861   682,527
                   
STOCKHOLDERS' EQUITY                  
Common equity     84,587     47,943     47,675
Retained earnings     44,318     41,334     39,545
Accumulated other comprehensive income     1,815     1,201     3,879
Treasury stock     (13,518)     (13,518)     (13,518)
TOTAL STOCKHOLDERS' EQUITY     117,202   76,960   77,581
                   
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 1,071,076   $ 787,821   $ 760,108
                   
                   
                 
MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
June 30, 2017 and 2016
(Dollar amounts in thousands)
(unaudited)
             
      For the Three Months Ended     For the Six Months Ended
      June 30,     June 30,
      2017   2016     2017   2016
INTEREST AND DIVIDEND INCOME                        
Interest and fees on loans   $ 9,916   $ 6,317   $ 19,096   $ 12,490
Interest-bearing deposits in other institutions     92     15     141     27
Federal funds sold     1     5     4     9
Investment securities:                        
Taxable interest     223     290     441     630
Tax-exempt interest     630     750     1,267     1,540
Dividends on stock     40     28     152     57
Total interest and dividend income     10,902   7,405     21,101   14,753
INTEREST EXPENSE                        
Deposits     1,227     889     2,352     1,744
Short-term borrowings     273     115     450     235
Other borrowings     68     20     151     37
Trust preferred securities     57     42     114     75
Total interest expense     1,625     1,066     3,067     2,091
                         
NET INTEREST INCOME     9,277     6,339     18,034     12,662
                         
Provision for loan losses     170     105     335     210
NET INTEREST INCOME AFTER PROVISION                        
FOR LOAN LOSSES     9,107     6,234     17,699     12,452
NONINTEREST INCOME                        
Service charges on deposit accounts     449     491     918     938
Investment securities gains, net     -     252     488     303
Earnings on bank-owned life insurance     98     97     207     196
Gains on sale of loans     231     106     465     193
Other income     211     227     422     452
Total noninterest income     989     1,173     2,500     2,082
NONINTEREST EXPENSE                        
Salaries and employee benefits     3,203     2,283     6,899     5,063
Occupancy expense     433     292     921     627
Equipment expense     266     210     547     479
Data processing costs     588     322     908     594
Ohio state franchise tax     186     162     372     262
Federal deposit insurance expense     135     132     203     264
Professional fees     423     218     796     510
(Gain) loss on other real estate owned     (184)     56     (262)     68
Advertising expense     164     203     412     398
Other real estate expense     199     85     332     131
Directors fees     128     121     240     228
Core deposit intangible amortization     103     10     175     20
Appraiser fees     104     119     206     220
ATM fees     28     98     104     194
Merger expense     307     -     694     -
Other expense     621     604     1,424     1,195
Total noninterest expense     6,704     4,915     13,971     10,253
Income before income taxes     3,392 2,492     6,228 4,281
Income taxes     885     566     1,621     868
NET INCOME   $ 2,507   $ 1,926   $ 4,607   $ 3,413
               
      For the Three Months Ended     For the Six Months Ended
      June 30,     June 30,
      2017   2016     2017   2016
Per common share data                        
Net income per common share - basic   $ 0.84   $ 0.94   $ 1.62   $ 1.74
Net income per common share - diluted   $ 0.83   $ 0.94   $ 1.61   $ 1.73
Dividends declared   $ 0.27   $ 0.27   $ 0.54   $ 0.54
Book value per share (period end)   $ 36.49   $ 34.53   $ 36.49   $ 34.53
Tangible book value per share (period end)   $ 30.77   $ 32.47   $ 30.77   $ 32.47
Dividend payout ratio     34.58%     31.00%     35.23%     32.35%
Average shares outstanding - basic     3,000,451     2,051,137     2,841,019     1,964,657
Average shares outstanding - diluted     3,014,140     2,059,411     2,854,158     1,973,179
Period ending shares outstanding     3,211,748     2,246,904     3,211,748     2,246,904
                         
Selected ratios                        
Return on average assets     0.94%     1.03%     0.89%     0.92%
Return on average equity     9.34%     11.78%     9.05%     10.62%
Yield on earning assets     4.45%     4.37%     4.45%     4.42%
Cost of interest-bearing liabilities     0.83%     0.77%     0.80%     0.76%
Net interest spread     3.62%     3.60%     3.64%     3.66%
Net interest margin     3.80%     3.78%     3.82%     3.82%
Efficiency     63.30%     62.23%     65.94%     65.99%
Tier 1 capital to average assets     9.95%     10.23%     9.95%     10.23%
                         
                         
      June 30,     June 30,            
      2017     2016            
                         
Commercial and industrial   $ 97,160   $ 60,451            
Real estate - construction     35,571   16,039            
Real estate - mortgage:                      
Residential     308,519     251,553            
Commercial     406,670     247,176            
Consumer installment     19,944   4,497            
    $ 867,864   $ 579,716            
                         
      June 30,     June 30,            
Asset quality data     2017     2016            
(Dollar amounts in thousands)                        
Nonaccrual loans   $ 10,213   $ 6,662            
Troubled debt restructuring     2,169     2,829            
Nonperforming loans     12,581   9,491            
Other real estate owned     650     1,142            
Nonperforming assets   $ 13,231   $ 10,633            
                         
                         
Allowance for loan and lease losses   $ 6,605   $ 6,366            
Allowance for loan and lease losses/total loans     0.76%   1.10%            
Net charge-offs:                        
Quarter-to-date     285     96            
Year-to-date     328     229            
Net charge-offs to average loans, annualized                    
Quarter-to-date     0.13%     0.07%            
Year-to-date     0.08%     0.08%            
Nonperforming loans/total loans     1.45%     1.64%            
Allowance for loan and lease losses/nonperforming loans     52.50%     67.07%            
Central Ohio Northeast Ohio