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

January 17, 2019

MIDDLEFIELD, Ohio--(BUSINESS WIRE)--Jan 17, 2019--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.

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.

View source version on businesswire.com:https://www.businesswire.com/news/home/20190117005790/en/

CONTACT: Company Contact:

Thomas G. Caldwell

President/Chief Executive Officer

Middlefield Banc Corp.

(440) 632-1666 Ext. 3200

tcaldwell@middlefieldbank.comInvestor and Media Contact:

Andrew M. Berger

Managing Director

SM Berger & Company, Inc.

(216) 464-6400

andrew@smberger.com

KEYWORD: UNITED STATES NORTH AMERICA OHIO

INDUSTRY KEYWORD: PROFESSIONAL SERVICES BANKING FINANCE OTHER PROFESSIONAL SERVICES

SOURCE: Middlefield Banc Corp.

Copyright Business Wire 2019.

PUB: 01/17/2019 04:15 PM/DISC: 01/17/2019 04:15 PM

http://www.businesswire.com/news/home/20190117005790/en

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