EX-99 2 c91364exv99.htm EXHIBIT 99 Exhibit 99
         
EXHIBIT 99
(MIDDLEFIELD BANC CORP LOGO)
15985 East High Street
P. O. Box 35
Middlefield, Ohio 44062
Phone: 440/632-1666     FAX: 440/632-1700
www.middlefieldbank.com
PRESS RELEASE
Contact:    James R. Heslop, 2nd
Executive Vice President/Chief Operating Officer
(440) 632-1666 Ext. 3219
jheslop@middlefieldbank.com
Middlefield Banc Corp. Posts Strong Growth and Third Quarter Earnings
MIDDLEFIELD, OHIO, October 21, 2009 ¨ ¨ ¨ ¨ Middlefield Banc Corp. (Pink Sheets: MBCN), parent of The Middlefield Banking Company and Emerald Bank, today announced the following results for the third quarter ended September 30, 2009.
  •   Total assets increased $50.1 million, or 10.7%, from December 31, 2008
 
  •   Equity to assets stood at 7.24% following an increase in equity of $2.4 million from December 31, 2008
 
  •   Total deposits stood at $447.9 million, an increase of 13.5% from year-end 2008
 
  •   Net interest income increased $1.4 million, or 15.5% from the same nine month period of 2008
 
  •   Diluted earnings per common share for the third quarter were $0.14.
The company reported that earnings for the third quarter ended September 30, 2009, were $213,000 compared to earnings of $704,000 for the same period in the prior year. The reduced earnings were primarily the result of provision charges to increase loan loss reserves and an increase in FDIC premiums due to higher rates for all FDIC insured banks. The same factors contributed to a decrease in nine month earnings from $2,224,000 for the 2008 period to $1,277,000 for the 2009 nine month period.
Annualized returns on average equity (“ROE”) and average assets (“ROA”) for the quarter were 2.34% and 0.17%, respectively, compared with 8.77% and 0.63% for the third quarter of 2008. ROE and ROA were 4.72% and 0.35%, respectively, for the nine-month period of 2009. Comparable results for the 2008 nine-month period were 8.78% and 0.66%, respectively.
“We are pleased to report positive earnings for the quarter and year-to-date periods,” stated Thomas G. Caldwell, President and Chief Executive Officer, “Looking forward, we remain cautiously optimistic. Throughout the credit crisis and recession, we have continued to maintain a “well capitalized” equity position, while diversifying our asset base and improving our core liquidity. While we continue to see

 

 

 

continued improvement in our net interest margin, our focus remains on the successful resolution of our problem assets.”
“Following our acquisition of Emerald Bank, we recognized the need for a change in that affiliate’s management. I am pleased with the effort put forth by our new management team as they continue to identify problem assets within the portfolio, while continuing to prudently grow the bank. While the efforts have led us to take a provision expense of $1.8 million for the first nine months, we are growing comfortable that each credit within the portfolio has been properly reviewed and assessed.”
Asset Quality
The provision for loan losses for the three and nine month periods ended September 30, 2009 increased 620% and 393% to $1,346,000 and $1,760,000 compared to the $187,000 and $357,000, respectively, for the comparable periods of 2008. “The economics of the communities that we serve are reflected in our asset quality numbers,” said Donald L. Stacy, Chief Financial Officer of Middlefield Banc Corp. “In our northeastern Ohio markets, credit issues are tied to owner occupied residential properties and are a reflection of current unemployment rates. Our central Ohio market is reporting delinquencies tied to non-owner occupied residential properties.”
The following table summarizes asset quality and reserve coverage ratios as of the end of the last five quarters.
Asset Quality History
(Dollars in thousands)
                                         
    9/30/2009     6/30/2009     3/31/2009     12/31/2008     9/30/2008  
 
                                        
Nonperforming loans
   $ 14,368     $ 14,023     $ 13,370     $ 8,481     $ 6,749  
Real estate owned
     1,775       1,967       1,331       1,106       1,108  
 
                                        
Nonperforming assets
   $ 16,143     $ 15,991     $ 14,701     $ 9,587     $ 7,857  
 
                                        
Allowance for loan losses
   $ 4,422     $ 3,668     $ 3,621     $ 3,557     $ 3,614  
 
                                        
Ratios
                                        
Nonperforming loans to total loans
     4.15 %     4.18 %     4.16 %     2.64 %     2.11 %
Nonperforming assets to total assets
     3.12 %     3.33 %     3.14 %     2.11 %     1.76 %
Allowance for loan losses to total loans
     1.28 %     1.09 %     1.13 %     1.11 %     1.13 %
Allowance for loan losses to nonperforming loans
     30.78 %     26.16 %     27.08 %     41.94 %     53.55 %
The increased loan loss provision, which has significantly outpaced loan charge-offs, has substantially strengthened the allowance for loan losses. The ratio of the allowance for loan losses to total loans increased to 1.28% of total loans at September 30, 2009 compared to the 1.09% reported at June 30, 2009 and 1.13% at September 30, 2008.

 

 

 

Net Interest Income
Net interest income for the third quarter of 2009 increased $635,000, or 20.1%, to $3,786,000 compared to $3,152,000 in the third quarter of 2008. The net interest margin increased 26 basis points to 3.46% compared to the 3.20% reported for the year-ago quarter. Net interest income for the nine months ended September 30, 2009 increased by $1,390,000, or 15.5%, to $10,370,000 compared to the $8,981,000 for the first nine months of 2008. The net interest margin for the first nine months of 2009 stood at 3.31%, a 23 basis point increase from the 3.08% reported for the nine month period of 2008.
The improvement in net interest income reflects strong core deposit growth and the implementation of new pricing strategies. Total deposits at September 30, 2009 stood at $447.9 million, representing an increase of 13.5% from the year-end 2008 figure. Savings account deposits accounted for growth of $30.4 million, with Money Market deposits increasing $14.2 million.
Non-Interest Income and Operating Expenses
Non-interest income remained relatively flat for both the three and nine month periods. Service charges on deposit accounts decreased $4,500 for the three months of 2009 compared to 2008, and $23,500 for the nine month periods. Earnings on bank-owned life insurance were lower, reflective of the current interest rate environment.
Operating expenses increased by 11.4%, or $310,000 for the quarter and $1,515,000, or 19.4% for the nine month period, when compared to the same periods of 2008. Expense increases in salaries and employee benefits, occupancy expense, and data processing costs are all directly related to the growth of the company. The Middlefield Banking Company opened its Cortland office in June 2008, while Emerald Bank acquired an office in Westerville in November 2008. Both of these actions, while expanding the company’s footprint, contributed to the higher expense levels. The premium for FDIC insurance increased 20.1% in the third quarter of 2009 over the same period of 2008 and 350.8% for the nine month period of 2009 over 2008.
Balance Sheet Growth
The company’s total assets ended the third quarter of 2009 at $517.9 million, an increase of 10.7% over the $467.8 million in total assets reported at December 31, 2008. Net loans at September 30, 2009, were $341.5 million, up $23.5 million, or 7.4%, over the $318.0 million reported at December 31, 2008. Total deposits at September 30, 2009, were $447.9 million, or 13.5% greater than the deposit level of $394.8 million at December 31, 2008.
The investment portfolio, which is entirely classified as available for sale, stood at $116.9 million at September 30, 2009. This figure represented growth within that portfolio of $12.6 million during the nine-month period. Stockholders’ equity at September 30, 2009, was $37.5 million, or 7.24% of total assets. Book value per share as of September 30, 2009 was $24.07.
Dividends
In the first nine months of 2009, Middlefield paid cash dividends of $0.78 per share. This represents only a slight increase over the $0.77 per share paid during the first nine months of 2008.
Middlefield Banc Corp. headquartered in Middlefield, Ohio is a multi-bank holding company with total assets of $517.9 million. The company’s lead bank, The Middlefield Banking Company, operates full

 

 

 

service banking centers and a UVEST Financial Services® brokerage office serving Chardon, Cortland, Garrettsville, Mantua, Middlefield, Newbury, and Orwell. The company also serves the central Ohio market through its Emerald Bank subsidiary, with offices in Dublin and Westerville, Ohio. Additional information is available at www.middlefieldbank.com and www.emeraldbank.com
This press release of Middlefield Banc Corp. and the reports Middlefield Banc Corp. files with the Securities and Exchange Commission often contain “forward-looking statements” relating to present or future trends or factors affecting the banking industry and, specifically, the financial operations, markets and products of Middlefield Banc Corp. These forward-looking statements involve certain risks and uncertainties. There are a number of important factors that could cause Middlefield Banc Corp.’s future results to differ materially from historical performance or projected performance. These factors include, but are not limited to: (1) a significant increase in competitive pressures among financial institutions; (2) changes in the interest rate environment that may reduce interest margins; (3) changes in prepayment speeds, charge-offs and loan loss provisions; (4) less favorable than expected general economic conditions; (5) legislative or regulatory changes that may adversely affect businesses in which Middlefield Banc Corp. is engaged; (6) technological issues which may adversely affect Middlefield Banc Corp.’s financial operations or customers; (7) changes in the securities markets; or (8) risk factors mentioned in the reports and registration statements Middlefield Banc Corp. files with the Securities and Exchange Commission. Middlefield Banc Corp. undertakes no obligation to release revisions to these forward-looking statements or to reflect events or circumstances after the date of this press release.

 

 

 

MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
September 30, 2009 and 2008 and December 31, 2008
                         
    (unaudited)             (unaudited)  
    September 30,     December 31,     September 30,  
Balance Sheet (period end)   2009     2008     2008  
 
Assets
                        
Cash and due from banks
   $ 11,143,127     $ 9,795,248     $ 8,263,756  
Federal funds sold
     19,533,878       7,548,000       4,570,827  
Interest-bearing deposits in other institutions
     120,885       112,215       112,215  
 
                  
Cash and cash equivalents
     30,797,890       17,455,463       12,946,798  
Investment securities available for sale
     116,880,660       104,270,366       96,371,351  
Loans:
     345,918,924       321,575,293       320,151,943  
Less: allowance for loan losses
     4,422,250       3,556,763       3,613,857  
 
                  
Net loans
     341,496,674       318,018,530       316,538,086  
Premises and equipment
     8,256,905       8,448,915       8,018,503  
Goodwill
     4,558,687       4,558,687       4,371,205  
Bank-owned life insurance
     7,637,731       7,440,687       7,371,180  
Accrued interest receivable and other assets
     8,317,212       7,654,287       8,450,812  
 
                  
 
                        
Total Assets
   $ 517,945,759       467,846,935       454,067,935  
 
                  
                         
    September 30,     December 31,     September 30,  
    2009     2008     2008  
Liabilities and Stockholders’ Equity
                        
Non-interest bearing demand deposits
   $ 40,963,722     $ 42,357,154     $ 40,929,373  
Interest bearing demand deposits
     34,877,418       26,404,660       27,409,745  
Money market accounts
     42,078,988       27,845,438       26,831,740  
Savings deposits
     99,322,206       68,968,844       69,835,964  
Time deposits
     230,686,676       229,243,506       214,957,328  
 
                  
Total Deposits
     447,929,010       394,819,602       379,964,150  
Short-term borrowings
     1,667,967       1,886,253       1,693,699  
Other borrowings
     28,772,173       33,903,019       36,687,924  
Other liabilities
     2,097,903       2,178,813       2,340,455  
 
                  
Total Liabilities
     480,467,053       432,787,687       420,686,228  
 
                  
 
                        
Common equity
     27,759,557       27,301,403       27,159,602  
Retained earnings
     14,860,713       14,786,353       14,793,600  
Accumulated other comprehensive income (loss)
     1,592,043       (294,901 )     (1,837,888 )
Treasury stock
     (6,733,607 )     (6,733,607 )     (6,733,607 )
 
                  
Total Stockholders’ Equity
     37,478,706       35,059,248       33,381,707  
 
                  
 
                        
Total Liabilities and Stockholders’ Equity
   $ 517,945,759     $ 467,846,935     $ 454,067,935  
 
                  

 

 

 

MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
September 30, 2009 and 2008
(unaudited)
                                 
    For the Three Months Ended     For the Nine Months Ended  
    September 30,     September 30,  
    2009     2008     2009     2008  
INTEREST INCOME
                                
Interest and fees on loans
   $ 5,175,354     $ 5,425,266     $ 15,079,662     $ 16,273,630  
Interest-bearing deposits in other institutions
     2,293       1,949       11,800       10,790  
Federal funds sold
     3,936       22,181       10,977       124,467  
Investment securities
                                
Taxable interest
     975,580       622,184       2,752,897       1,793,645  
Tax-exempt interest
     474,629       449,351       1,374,847       1,360,226  
Dividends on FHLB Stock
     15,847       29,514       46,611       88,526  
 
                        
Total interest income
     6,647,639       6,550,445       19,276,794       19,651,284  
INTEREST EXPENSE
                                
Deposits
     2,501,502       2,948,998       7,776,369       9,381,666  
Short term borrowings
     4,987       17,610       15,161       34,793  
Other borrowings
     354,769       432,055       1,114,899       1,254,040  
 
                        
Total interest expense
     2,861,258       3,398,663       8,906,429       10,670,499  
 
                        
NET INTEREST INCOME
     3,786,381       3,151,782       10,370,365       8,980,785  
Provision for loan losses
     1,346,000       187,000       1,760,000       357,000  
 
                        
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
     2,440,381       2,964,782       8,610,365       8,623,785  
 
                        
NONINTEREST INCOME
                                
Service charges on deposits
     488,747       493,228       1,394,312       1,417,789  
Net securities gains (losses)
     0       25,728       0       34,508  
Earnings on bank-owned life insurance
     68,413       75,336       197,044       217,798  
Other income
     133,300       85,925       358,775       284,820  
 
                        
Total non-interest income
     690,460       680,247       1,950,131       1,954,915  
NONINTEREST EXPENSE
                                
Salaries and employee benefits
     1,395,388       1,322,026       4,303,972       3,643,199  
Occupancy expense
     215,768       203,298       691,538       643,884  
Equipment expense
     151,742       150,334       425,175       435,770  
Data processing costs
     224,615       193,033       692,362       591,098  
Ohio state franchise tax
     123,300       117,000       369,900       351,000  
FDIC assessment
     86,108       71,702       529,268       117,394  
Other operating expense
     843,030       672,188       2,326,521       2,041,882  
 
                        
Total non-interest expense
     3,039,951       2,729,581       9,338,736       7,824,227  
 
                        
Income before income taxes
     90,890       915,448       1,221,760       2,754,473  
Provision (benefit) for income taxes
     (122,574 )     211,000       (55,574 )     530,000  
 
                        
NET INCOME
   $ 213,464     $ 704,448     $ 1,277,334     $ 2,224,473  
 
                        

 

 

 

                                 
    For the Three Months Ended     For the Nine Months Ended  
    September 30,     September 30,  
    2009     2008     2009     2008  
Per common share data
                                
Net income per common share — basic
   $ 0.14     $ 0.46     $ 0.83     $ 1.45  
Net income per common share — diluted
   $ 0.14     $ 0.46     $ 0.83     $ 1.44  
Dividends declared
   $ 0.26     $ 0.26     $ 0.78     $ 0.77  
Book value per share(period end)
   $ 24.07     $ 21.83     $ 24.07     $ 21.83  
Tangible book value per share (period end)
   $ 21.15     $ 18.97     $ 21.15     $ 18.97  
Dividend payout ratio
     188.77 %     56.19 %     94.18 %     52.95 %
Average shares outstanding — basic
     1,551,056       1,523,044       1,543,577       1,533,741  
Average shares outstanding — diluted
     1,551,056       1,525,373       1,544,704       1,546,400  
Period ending shares outstanding
     1,556,774       1,529,292       1,556,774       1,529,292  
 
                                
Selected ratios
                                
Return on average assets
     0.17 %     0.63 %     0.35 %     0.66 %
Return on average equity
     2.34 %     8.77 %     4.72 %     8.78 %
Yield on earning assets
     5.92 %     6.42 %     5.97 %     6.48 %
Cost of interest bearing liabilities
     2.72 %     3.62 %     2.97 %     3.85 %
Net interest spread
     3.20 %     2.80 %     3.00 %     2.64 %
Net interest margin
     3.46 %     3.20 %     3.31 %     3.08 %
Efficiency (1)
     64.39 %     67.17 %     71.68 %     67.24 %
Equity to assets at period end
     7.24 %     7.35 %     7.24 %     7.35 %
     
(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.
                 
    September 30,     September 30,  
Asset quality data   2009     2008  
 
                
Non-accrual loans
   $ 11,312,822     $ 3,421,782  
90 day past due and accruing
     3,054,951       3,327,162  
 
            
Non-performing loans
     14,367,773       6,748,944  
Other real estate owned
     1,775,082       1,107,547  
 
            
Non-performing assets
   $ 16,142,855     $ 7,856,491  
 
            
 
                
Allowance for loan losses
   $ 4,422,250     $ 3,613,857  
Allowance for loan losses/total loans
     1.28 %     1.13 %
Net charge-offs:
                
Quarter-to-date
   $ 592     $ 8  
Year-to-date
     895       42  
Net charge-offs to average loans
                
Quarter-to-date
     0.17 %     0.00 %
Year-to-date
     0.27 %     0.01 %
Non-performing loans/total loans
     4.15 %     2.11 %
Allowance for loan losses/non-performing loans
     30.78 %     46.00 %