310 0 Kommentare Middlefield Banc Corp. Reports Record Earnings for 2018 Full Year and Fourth Quarter Financial Results

Middlefield Banc Corp. (NASDAQ: MBCN) today reported record financial results for the three and twelve months ended December 31, 2018.

2018 Financial Highlights (on a year-over-year basis unless noted):

Net income increased 31.5% to a record $12.4 million
Earnings per diluted share increased 23.5% to a record $3.83 per share
For the 2018 fourth quarter, return on average equity was 10.52%, compared to 7.72% for the quarter ended December 31, 2017
For the 2018 fourth quarter, return on average tangible common equity⁽¹⁾ was 12.17%, compared to 9.05% for the quarter ended December 31, 2017
For the 2018 fourth quarter, return on average assets was 1.15%, compared to 0.86% for the quarter ended December 31, 2017
Book value per share was up 6.2% to a record $39.54 per share
Tangible book value⁽¹⁾ per share was up 7.7% to a record $34.16 per share
Total net loans increased 7.5% to a record $984.7 million
Total interest income improved 14.5% to $50.4 million
Noninterest expense was up 4.6%
Equity to assets remains strong at 10.28%

“Middlefield achieved multiple financial and operating records during 2018 including assets, deposits, net income and book value per share,” stated Thomas G. Caldwell, President and Chief Executive Officer. “In addition, I am pleased with the continued expansion of returns on average assets, equity, and tangible common equity. Our financial results demonstrate the continued success of our strategic growth plan and the business platform we have created.”

“As we start the new year, we remain focused on executing our growth initiatives, while continuing to maintain strong asset quality. I am encouraged by the prospects to improve our market share in Northeast Ohio, especially in Cuyahoga and Summit counties. In addition, as one of the few community banks in the Central Ohio market, we have a unique opportunity to provide a differentiated banking experience. Over the past two years, we have significantly increased our scale within the Central Ohio market. I am excited by the potential of both markets and expect the productivity of our new Powell and Sunbury locations to increase throughout the year. As you can see, we have a lot of opportunity and we are excited by our growth prospects in 2019 and beyond,” concluded Mr. Caldwell.

Income Statement

For the 2018 full year, net interest income increased 8.3% to $40.4 million, compared to $37.3 million for the same period last year. The net interest margin for the 2018 twelve-month period was 3.77%, compared to 3.82% for the same period last year. Net interest income for the 2018 fourth quarter was $10.5 million, compared to $9.8 million for the 2017 fourth quarter. The net interest margin for the 2018 fourth quarter was 3.76%, compared to 3.84% for the same period of 2017. The 6.7% increase in net interest income for the 2018 fourth quarter was largely a result of a 16.6% increase in interest and fees on loans.

For the 2018 full year, noninterest income was $3.7 million, compared to $4.9 million for the same period last year. Noninterest income for the 2018 fourth quarter was $977 thousand, compared to $918 thousand for the 2017 fourth quarter.

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For the 2018 full year, noninterest expense increased 4.6% to $28.7 million, compared to $27.5 million last year. For the 2018 fourth quarter, noninterest expense was $7.2 million, compared to $6.2 million for the same period last year.

“Asset quality continues to improve and in 2018 Middlefield’s nonperforming assets declined 20.4%, while total loans increased 7.5%,” said Donald L. Stacy, Chief Financial Officer. “As a result, nonperforming loans to total loans were 1.07%, which is the lowest level in over six years. We continue to successfully drive deposit growth and ended the quarter with $1.02 billion in deposits. Over the past twelve months, Middlefield’s total deposits increased by $137.9 million or 15.7%. Our loan-to-deposit ratio was 97.6% at December 31, 2018, compared to 105.1% at December 31, 2017.”

Mr. Stacy continues, “We improved operating leverage throughout the year despite the increased operating cost of our new Powell location. Looking ahead, we believe we can continue to generate an annual efficiency ratio in the low 60% range during 2019 as our new Powell and Sunbury locations mature and we focus on controlled growth, operating leverage and improved profitability.”

Balance Sheet

Total assets at December 31, 2018, increased 12.8% to $1.25 billion, from $1.11 billion at December 31, 2017. Net loans at December 31, 2018, were $984.7 million, compared to $916.0 million at December 31, 2017. The 7.5% year-over-year increase in total net loans was a result of a 20.7% increase in real estate construction loans, a 13.8% increase in commercial mortgage loans, and a 5.8% increase in residential mortgage loans, partially offset by a 17.3% decrease in commercial and industrial loans and a 10.5% decline in consumer installment loans.

Total deposits at December 31, 2018, were $1.02 billion, compared to $878.2 million at December 31, 2017. The 15.7% year-over-year increase in deposits was primarily a result of higher money market and time deposits. The investment portfolio, which is entirely classified as available for sale, was $98.3 million at December 31, 2018, compared with $95.3 million at December 31, 2017.

Stockholders’ Equity and Dividends

At December 31, 2018, stockholders’ equity increased 7.0% to $128.3 million, compared to $119.9 million at December 31, 2017. On a per share basis, shareholders’ equity at December 31, 2018, was $39.54 compared to $37.25 at the same period last year.

At December 31, 2018, tangible stockholders’ equity⁽¹⁾ increased 8.6% to $110.8 million, compared to $102.0 million at December 31, 2017. On a per share basis, tangible stockholders’ equity⁽¹⁾ was $34.16 at December 31, 2018, compared to $31.71 at December 31, 2017.

For the 2018 full year, the company declared cash dividends of $1.17 per share, compared to $1.08 per share for the same period last year. The dividend payout ratio for the 2018 twelve-month period was 30.4% compared to 35.5% for the same period last year.

At December 31, 2018, the company had an equity to assets leverage ratio of 10.28%, compared to 10.83% at December 31, 2017.

Asset Quality

The provision for loan losses for the 2018 fourth quarter was $210,000 versus $430,000 for the same period last year. Nonperforming assets at December 31, 2018, were $10.8 million, compared to $13.6 million at December 31, 2017. Net charge-offs for the 2018 fourth quarter were $276,000, or 0.11% of average loans, annualized, compared to $92,000, or 0.04% of average loans, annualized at December 31, 2017.

For the 2018 twelve-month period, net charge-offs were $602,000, or 0.06% of average loans, compared to $453,000, or 0.05% of average loans for the 2017 twelve-month period. The allowance for loan losses at December 31, 2018, stood at $7.4 million, or 0.75% of total loans, compared to $7.2 million or 0.78% of total loans at December 31, 2017.

Middlefield Banc Corp., headquartered in Middlefield, Ohio, is the bank holding company of The Middlefield Banking Company with total assets of $1.25 billion at December 31, 2018. The bank operates 15 full-service banking centers and an LPL Financial brokerage office serving Beachwood, Chardon, Cortland, Dublin, Garrettsville, Mantua, Middlefield, Newbury, Orwell, 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 and return on average tangible equity, 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.

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
(Dollar amounts in thousands)
		December 31,		September 30,		June 30,		March 31,		December 31,
Balance Sheets (period end)		2018		2018		2018		2018		2017
ASSETS
Cash and due from banks	$	107,933	$	81,951	$	42,451	$	33,258	$	39,886
Federal funds sold		-		-		28,795		-		-
Cash and cash equivalents		107,933		81,951		71,246		33,258		39,886
Equity securities, at fair value		616		671		656		643		-
Investment securities available for sale, at fair value		98,322		99,717		100,028		91,262		95,283
Loans held for sale		597		925		1,132		937		463
Loans		992,109		972,968		943,674		932,374		923,213
Less allowance for loan and lease losses		7,428		7,494		7,502		7,551		7,190
Net loans		984,681		965,474		936,172		924,823		916,023
Premises and equipment, net		13,003		13,002		12,978		12,225		11,853
Goodwill		15,071		15,071		15,071		15,071		15,071
Core deposit intangibles		2,397		2,484		2,571		2,658		2,749
Bank-owned life insurance		16,080		15,970		15,862		15,764		15,652
Other real estate owned		270		257		181		212		212
Accrued interest receivable and other assets		9,428		10,806		10,182		9,911		9,144
TOTAL ASSETS	$	1,248,398	$	1,206,328	$	1,166,079	$	1,106,764	$	1,106,336

		December 31,		September 30,		June 30,		March 31,		December 31,
		2018		2018		2018		2018		2017
LIABILITIES
Deposits:
Noninterest-bearing demand	$	178,386	$	177,833	$	180,073	$	166,869	$	164,424
Interest-bearing demand		117,128		124,089		119,834		123,993		112,004
Money market		196,685		191,261		137,572		149,359		150,277
Savings		222,954		224,704		204,408		221,851		208,502
Time		300,914		295,874		290,359		282,501		242,987
Total deposits		1,016,067		1,013,761		932,246		944,573		878,194
Short-term borrowings		90,398		55,304		87,833		18,671		74,707
Other borrowings		8,803		8,956		18,996		19,028		29,065
Accrued interest payable and other liabilities		4,840		4,074		4,288		4,340		4,507
TOTAL LIABILITIES		1,120,108		1,082,095		1,043,363		986,612		986,473
STOCKHOLDERS' EQUITY
Common equity		85,925		85,687		85,544		85,116		84,859
Retained earnings		56,037		53,520		51,121		48,927		47,431
Accumulated other comprehensive (loss) income		(154)		(1,456)		(431)		(373)		1,091
Treasury stock		(13,518)		(13,518)		(13,518)		(13,518)		(13,518)
TOTAL STOCKHOLDERS' EQUITY		128,290		124,233		122,716		120,152		119,863

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,248,398	$	1,206,328	$	1,166,079	$	1,106,764	$	1,106,336


MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
(Dollar amounts in thousands)
		For the Three Months Ended										For the Twelve Months Ended
		December 31,		September 30,		June 30,		March 31,		December 31,		December 31,		December 31,
Statements of Income		2018		2018		2018		2018		2017		2018		2017

INTEREST AND DIVIDEND INCOME
Interest and fees on loans	$	12,467	$	11,821	$	11,234	$	11,054	$	10,696	$	46,576	$	40,235
Interest-earning deposits in other institutions		146		178		115		119		80		558		328
Federal funds sold		17		8		7		14		6		46		15
Investment securities:
Taxable interest		182		167		170		169		162		688		762
Tax-exempt interest		589		598		550		525		560		2,262		2,406
Dividends on stock		58		57		53		59		60		227		249
Total interest and dividend income		13,459		12,829		12,129		11,940		11,564		50,357		43,995
INTEREST EXPENSE
Deposits		2,828		2,178		1,973		1,640		1,530		8,631		5,350
Short-term borrowings		78		296		192		276		101		842		753
Other borrowings		92		104		118		122		131		436		544
Total interest expense		2,998		2,578		2,283		2,038		1,762		9,909		6,647

NET INTEREST INCOME		10,461		10,251		9,846		9,902		9,802		40,448		37,348

Provision for loan losses		210		210		210		210		430		840		1,045

NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES		10,251		10,041		9,636		9,692		9,372		39,608		36,303
NONINTEREST INCOME
Service charges on deposit accounts		498		491		472		453		478		1,914		1,875
Investment securities gains on sale, net		-		-		-		-		-		-		886
(Loss) gain on equity securities		(55)		15		13		18		-		(9)		-
Earnings on bank-owned life insurance		110		108		98		112		115		428		431
Gains on sale of loans		67		43		117		4		106		231		826
Other income		357		291		305		199		219		1,164		841
Total noninterest income		977		948		1,005		786		918		3,728		4,859

NONINTEREST EXPENSE
Salaries and employee benefits		4,065		3,839		3,866		3,979		3,134		15,749		13,758
Occupancy expense		465		460		472		536		449		1,933		1,846
Equipment expense		273		262		201		233		261		969		1,050
Data processing costs		446		481		402		477		416		1,806		1,792
Ohio state franchise tax		220		244		244		115		186		823		744
Federal deposit insurance expense		100		150		150		150		165		550		533
Professional fees		364		346		327		445		522		1,482		1,752
Advertising expense		227		236		230		228		161		921		821
Software amortization expense		145		155		155		150		134		605		414
Core deposit intangible amortization		87		87		87		91		98		352		374
Merger expense		-		-		-		-		28		-		1,060
Other expense		851		832		929		941		663		3,553		3,341
Total noninterest expense		7,243		7,092		7,063		7,345		6,217		28,743		27,485

Income before income taxes		3,985		3,897		3,578		3,133		4,073		14,593		13,677
Income taxes		560		593		481		528		1,687		2,162		4,222

NET INCOME	$	3,425	$	3,304	$	3,097	$	2,605	$	2,386	$	12,431	$	9,455


MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
(Dollar amounts in thousands, except per share and share amounts)

		For the Three Months Ended										For the Twelve Months Ended
		December 31,		September 30,		June 30,		March 31,		December 31,		December 31,		December 31,
		2018		2018		2018		2018		2017		2018		2017
Per common share data
Net income per common share - basic	$	1.06	$	1.02	$	0.96	$	0.81	$	0.73	$	3.85	$	3.12
Net income per common share - diluted	$	1.05	$	1.02	$	0.96	$	0.80	$	0.73	$	3.83	$	3.10
Dividends declared per share	$	0.28	$	0.28	$	0.28	$	0.33	$	0.27	$	1.17	$	1.08
Book value per share (period end)	$	39.54	$	38.38	$	37.95	$	37.28	$	37.25	$	39.54	$	37.25
Tangible book value per share (period end) (2) (3)	$	34.16	$	32.96	$	32.49	$	31.78	$	31.71	$	34.16	$	31.71
Dividends declared	$	908	$	905	$	903	$	1,063	$	868	$	3,779	$	3,358
Dividend yield		2.62%		2.36%		2.21%		2.69%		2.24%		2.76%		2.24%
Dividend payout ratio		26.51%		27.39%		29.16%		40.81%		36.38%		30.40%		35.52%
Average shares outstanding - basic		3,239,180		3,234,393		3,225,726		3,220,262		3,215,300		3,229,954		3,028,950
Average shares outstanding - diluted		3,250,149		3,248,326		3,240,329		3,238,069		3,231,791		3,243,907		3,052,585
Period ending shares outstanding		3,244,332		3,236,689		3,233,678		3,222,984		3,217,716		3,244,332		3,217,716

Selected ratios
Return on average assets		1.15%		1.13%		1.11%		0.94%		0.86%		1.09%		0.88%
Return on average equity		10.52%		10.33%		10.08%		8.73%		7.72%		9.94%		8.52%
Return on average tangible common equity (2) (4)		12.17%		12.00%		11.77%		10.23%		9.05%		11.57%		10.15%
Efficiency (1)		61.61%		61.65%		63.43%		67.00%		55.58%		63.29%		62.40%
Equity to assets at period end		10.28%		10.30%		10.52%		10.86%		10.83%		10.28%		10.83%

(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
(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

	For the Three Months Ended					For the Twelve Months Ended
	December 31,	September 30,	June 30,	March 31,	December 31,	December 31,	December 31,
	2018	2018	2018	2018	2017	2018	2017
Yields
Interest-earning assets:
Loans receivable ⁽²⁾	5.09%	4.89%	4.84%	4.82%	4.70%	4.91%	4.69%
Investment securities ⁽²⁾	3.73%	3.67%	3.68%	3.61%	4.12%	3.67%	4.22%
Interest-earning deposits with other banks	2.08%	1.95%	1.72%	1.85%	1.42%	1.90%	1.26%
Total interest-earning assets	4.82%	4.65%	4.61%	4.57%	4.51%	4.68%	4.48%
Deposits:
Interest-bearing demand deposits	0.25%	0.30%	0.23%	0.21%	0.25%	0.23%	0.21%
Money market deposits	1.56%	0.99%	0.87%	0.82%	0.75%	1.11%	0.62%
Savings deposits	0.85%	0.68%	0.57%	0.47%	0.41%	0.65%	0.32%
Certificates of deposit	1.99%	1.84%	1.79%	1.65%	1.51%	1.83%	1.46%
Total interest-bearing deposits	1.34%	1.11%	1.03%	0.91%	0.84%	1.11%	0.76%
Non-Deposit Funding:
Borrowings	3.54%	2.30%	2.59%	1.67%	1.14%	2.20%	1.35%
Total interest-bearing liabilities	1.39%	1.21%	1.12%	1.00%	0.87%	1.18%	0.83%
Cost of deposits	1.09%	0.90%	0.84%	0.74%	0.68%	0.90%	0.62%
Cost of funds	1.14%	0.99%	0.92%	0.83%	0.72%	0.97%	0.70%
Net interest margin ⁽¹⁾	3.76%	3.72%	3.76%	3.82%	3.84%	3.77%	3.82%

(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 periods ended in 2018 and 34% for the periods ended in 2017.


	For the Three Months Ended
		December 31,		September 30,		June 30,		March 31,		December 31,
End of Period Loan Balances		2018		2018		2018		2018		2017
Commercial and industrial	$	83,857	$	93,144	$	101,975	$	99,809	$	101,346
Real estate - construction		56,731		48,901		45,647		48,687		47,017
Real estate - mortgage:
Residential		336,487		329,609		320,858		316,856		318,157
Commercial		498,247		483,675		457,050		448,766		437,947
Consumer installment		16,787		17,639		18,144		18,256		18,746
Total	$	992,109	$	972,968	$	943,674	$	932,374	$	923,213

		December 31,		September 30,		June 30,		March 31,		December 31,
Asset quality data		2018		2018		2018		2018		2017
(Dollar amounts in thousands)
Nonaccrual loans	$	6,595	$	7,288	$	8,357	$	8,747	$	8,433
Troubled debt restructuring		3,031		3,241		3,051		9,071		4,982
90 day past due and accruing		945		-		15		-		-
Nonperforming loans		10,571		10,529		11,423		17,818		13,415
Other real estate owned		270		257		181		212		212
Nonperforming assets	$	10,841	$	10,786	$	11,604	$	18,030	$	13,627

Allowance for loan losses	$	7,428	$	7,494	$	7,502	$	7,551	$	7,190
Allowance for loan losses/total loans		0.75%		0.77%		0.79%		0.81%		0.78%
Net charge-offs (recoveries):
Quarter-to-date	$	276	$	218	$	259	$	(151)	$	92
Year-to-date		602		326		108		(151)		453
Net charge-offs to average loans, annualized:
Quarter-to-date		0.11%		0.09%		0.11%		-0.06%		0.04%
Year-to-date		0.06%		0.05%		0.02%		-0.06%		0.05%

Nonperforming loans/total loans		1.07%		1.08%		1.21%		1.91%		1.45%
Allowance for loan losses/nonperforming loans		70.27%		71.17%		65.67%		42.38%		53.60%
Nonperforming assets/total assets		0.87%		0.89%		1.00%		1.63%		1.23%

Reconciliation of Common Stockholders' Equity to Tangible Common Equity	For the Three Months Ended										For the Twelve Months Ended
(Dollar amounts in thousands)		December 31,		September 30,		June 30,		March 31,		December 31,		December 31,		December 31,
		2018		2018		2018		2018		2017		2018		2017

Stockholders' Equity	$	128,290	$	124,233	$	122,716	$	120,152	$	119,863	$	128,290	$	119,863
Less Goodwill and other intangibles		17,468		17,555		17,642		17,729		17,820		17,468		17,820
Tangible Common Equity	$	110,822	$	106,678	$	105,074	$	102,423	$	102,043	$	110,822	$	102,043

Average Stockholders' Equity	$	129,208	$	126,865	$	123,228	$	121,001	$	122,586	$	125,074	$	110,966
Less Average Goodwill and other intangibles		17,510		17,597		17,683		17,773		17,987		17,641		17,818
Average Tangible Common Equity	$	111,698	$	109,268	$	105,545	$	103,228	$	104,599	$	107,433	$	93,148


Reconciliation of Average Equity to Return on Average Tangible Common Equity	For the Three Months Ended
		December 31,		September 30,		June 30,		March 31,		December 31,
		2018		2018		2018		2018		2017
Stockholders' Equity	$	128,290	$	124,233	$	122,716	$	120,152	$	119,863
Less Goodwill and other intangibles		17,468		17,555		17,642		17,729		17,820
Tangible Common Equity	$	110,822	$	106,678	$	105,074	$	102,423	$	102,043
Shares outstanding		3,244,332		3,236,689		3,233,678		3,222,984		3,217,716
Tangible book value per share	$	34.16	$	32.96	$	32.49	$	31.78	$	31.71