MIDDLEFIELD, Ohio, July 22, 2020 (GLOBE NEWSWIRE) — Middlefield Banc Corp. (NASDAQ: MBCN) today reported financial results for the 2020 first half and second quarter ended June 30, 2020.

2020 First Half Financial Highlights versus 2019 First Half (unless noted):

  • Net interest income up 1.3% to $20.8 million
  • Noninterest income increased 5.7% to $2.6 million
  • Net income totaled $4.0 million and included a $3.4 million increase in the year-to-date provision for loan losses as a result of the COVID-19 crisis
  • Book value per share was up 6.7% to a record $22.09 per share
  • Tangible book value(1) per share was up 7.7% to $19.42 per share
  • Total loans increased 11.2% to $1.11 billion
  • Approved 1,343 PPP applications for $142.7 million during the second quarter
  • Net charge-offs declined 37.1% to $0.3 million
  • Second quarter provision was $1.0 million, compared to $2.7 million for the first quarter
  • Allowance for loan losses to nonperforming loans was 104.2%, compared to 68.1% for the same period last year
  • Equity to assets increased slightly to 10.5%

Thomas G. Caldwell, President and Chief Executive Officer, stated: “We continue to focus on protecting our customers and employees, while helping our communities respond to the unprecedented challenges created by the COVID-19 pandemic.  After temporarily restricting walk-in transactions in our bank lobbies in late March, all our branches reopened for lobby banking during the second quarter.  We have implemented safeguards to ensure we are doing our part to protect the health and well-being of our communities.  This includes requiring all employees to wear masks, limiting the number of customers allowed in our branches at one time, encouraging customers to social distance, installing partitions to limit exposure, offering special lobby hours for at-risk customers, and allowing employees to work from home.  I am extremely pleased with how our team and customers have responded to the operational adjustments we have made because of the pandemic.”

Mr. Caldwell continued, “At the same time we were adapting the Bank to operate safely throughout the COVID-19 pandemic, we quickly implemented our Paycheck Protection Program (“PPP”) process. During the second quarter, we successfully secured $142.7 million for 1,343 small businesses throughout Ohio and protected over 12,000 jobs.  The PPP process has driven significant loan and deposit growth during the quarter, and we are currently adjusting our focus to help customers qualify for forgiveness as permitted under the program.  I am encouraged that approximately 47% of PPP applicants booked were to small businesses without a prior banking relationship demonstrating our ability to serve our communities and the need for local and responsive financial relationships.” 

“For the second quarter, net interest income increased 4.4% reflecting the proactive adjustments we made to increase the yield on investment securities and reduce our cost of funds.  In addition, we were able to offset the operational and financial challenges caused by the COVID-19 crisis and the low rate environment.  Our book value increased 6.7% from the prior year period to a record of $22.09 per share, and noninterest income increased 15.1% to a quarterly record of $1.5 million. While the COVID-19 crisis continues to evolve, we remain dedicated to managing items under our control and maximizing shareholder value by profitably serving our Northeast and Central Ohio communities,” concluded Mr. Caldwell.  

Income Statement
For the 2020 first half, net interest income increased 1.3% to $20.8 million, compared to $20.5 million for the same period last year.  Year-to-date, the net interest margin was 3.56%, compared to 3.67% for the same period last year.  Net interest income for the 2020 second quarter was $10.7 million, compared to $10.3 million for the 2019 second quarter.  The 4.4% increase in net interest income for the 2020 second quarter was largely a result of a 29.6% reduction in interest expense.  The net interest margin for the 2020 second quarter was 3.49%, compared to 3.65% for the same period of 2019. 

For the 2020 first half, noninterest income was $2.6 million, compared to $2.4 million for the same period last year.  Noninterest income for the 2020 second quarter was $1.5 million, compared to $1.3 million for the same period last year. 

For the 2020 first half, noninterest expense decreased 0.3% to $14.9 million, compared to $15.0 million for the same period last year.  Operating costs in the 2020 second quarter increased 2.8% to $7.7 million from $7.5 million for the 2019 second quarter. 

Donald L. Stacy, Chief Financial Officer stated, “We continue to prudently increase our allowance for loan losses and took a $1.0 million provision in the quarter, in addition to the $2.7 million provision incurred during the first quarter.  As a result, our allowance for loan losses to nonperforming loans was 104.2% at June 30, 2020, compared to 68.1% at June 30, 2019.  We continue working on providing temporary relief to our customers and have modified 362 loans.  We continue to believe our asset quality was strong heading into the crisis, and nonperforming assets are down 3.0% from the prior year period, while year-to-date charge-offs have declined 37.1%.”

“As benchmark rates have declined, we have quickly reduced our funding costs and our cost of funds have improved from 1.29% at June 30, 2019 to 0.83% at June 30, 2020.  In addition, we continue to focus on proactively controlling expenses and second quarter noninterest expenses were up less than 3.0% and expenses are down slightly through the first six months of the year.  We believe our focus on asset quality, liquidity, and profitability provides us with the flexibility to navigate the current economic challenges associated with the COVID-19 crisis, while providing local, dedicated and responsive financial services to our communities.”

Net income for the 2020 first half ended June 30, 2020, was $4.0 million, or $0.62 per diluted share, compared to $6.3 million, or $0.97 per diluted share for the same period last year.  The decline in net income for the first half ended June 30, 2020 was primarily due to a $3.4 million increase in the year-to-date provision for loan losses as a result of the COVID-19 crisis.  Net income for the 2020 second quarter ended June 30, 2020, was $3.0 million, or $0.46 per diluted share, compared to $3.3 million, or $0.50 per diluted share for the same period last year.  The 2020 second quarter provision for loan losses increased $0.9 million, from the prior year period. 

Balance Sheet
Total assets at June 30, 2020, increased 4.3% to approximately $1.34 billion from $1.29 billion at June 30, 2019.  Net loans at June 30, 2020, were $1.10 billion, compared to $990.9 million at June 30, 2019, and $977.5 million at December 31, 2019.  The 11.0% year-over-year improvement in net loans was primarily a result of PPP loans originated during the quarter. 

Total deposits at June 30, 2020, were $1.16 billion, compared to $1.05 billion at June 30, 2019.  The 10.2% increase in deposits was driven by PPP deposits and pandemic uncertainty.  The investment portfolio, which is entirely classified as available for sale, was $112.5 million June 30, 2020, compared with $98.8 million at June 30, 2019. 

Stockholders’ Equity and Dividends
At the end of the 2020 second quarter, shareholders’ equity increased 4.8% to $140.7 million compared to $134.3 million at June 30, 2019.  On a per share basis, shareholders’ equity at June 30, 2020, was $22.09 compared to $20.70 at the same period last year. 

Tangible stockholders’ equity(1) increased 5.8% to $123.7 million for the 2020 second quarter, compared to $117.0 million at June 30, 2019.  On a per-share basis, tangible stockholders’ equity(1) was $19.42 at June 30, 2020, compared to $18.04 at June 30, 2019. 

Through the first six months of 2020, the company declared cash dividends of $0.30 per share, compared to $0.28 per share for the same period last year.

At June 30, 2020, the company had an equity to assets leverage ratio of 10.47%, compared to 10.42% at June 30, 2019. 

Asset Quality
The provision for loan losses for the 2020 second quarter was $1.0 million versus $110,000 for the same period last year.  Most of the increased provision is the result of increases to the economic conditions qualitative factors.  Nonperforming assets at June 30, 2020, were $10.5 million, compared to $10.8 million at June 30, 2019. 

Net charge-offs for the 2020 second quarter were $34,000, or 0.01% of average loans, annualized, compared to $12,000, or 0.00% of average loans, annualized at June 30, 2019.  Year-to-date net charge-offs were $298,000, or 0.06% of average loans, annualized compared to $474,000, or 0.10% of average loans, annualized for the same period last year. The allowance for loan losses at June 30, 2020, stood at $10.2 million, or 0.92% of total loans, compared to $7.3 million, or 0.73% of total loans at June 30, 2019. 

COVID-19 Update
The following table provides information with respect to our commercial loans by type at June 30, 2020.

At Risk Loans at June 30, 2020
Loan Type   Number of
Loans
  Balance
(in thousands)
  % of Total
Loans
Retail   270   $   195,550   17.6 %
Multifamily & Residential NOO   354     120,697   10.9 %
Ambulatory Care, Nursing/Rehabilitation and Social Assistance   218     81,491   7.3 %
Hospitality & tourism   58     44,923   4.0 %
Restaurant/food service/bar   136     24,938   2.3 %
Other   219     20,208   1.8 %
  Total   1,255   $   487,807   43.9 %

The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was signed into law on March 27, 2020, and as a qualified SBA lender, we were automatically authorized to originate PPP loans.

As of June 30, 2020, we approved 1,343 applications for up to $142.7 million of loans under the PPP.

As of June 30, 2020, we modified 362 loans aggregating $214.8 million primarily consisting of the deferral of principal and interest payments and the extension of the maturity date.

Details with respect to actual loan modifications are as follows:

Deferrals at June 30, 2020
Loan Type   Number of
Loans
  Balance
(in thousands)
  % of Total
Loans
Retail   58   $   89,438   8.1 %
Multifamily & Residential NOO   16     7,628   0.7 %
Ambulatory Care, Nursing/Rehabilitation and Social Assistance   10     22,456   2.0 %
Hospitality & tourism   23     35,700   3.2 %
Restaurant/food service/bar   10     5,216   0.5 %
Other   245     54,379   4.9 %
  Total   362   $   214,817   19.4 %

About Middlefield Banc Corp.
Middlefield Banc Corp., headquartered in Middlefield, Ohio, is the bank holding company of The Middlefield Banking Company with total assets of $1.34 billion at June 30, 2020.  The bank operates 16 full-service banking centers and an LPL Financial® brokerage office serving Beachwood, Chardon, Cortland, Dublin, Garrettsville, Mantua, Middlefield, Newbury, Orwell, Plain City, 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) the effect of the COVID-19 pandemic, including on our credit quality and business operations, as well as its impact on general economic and financial market conditions; (8) changes in the securities markets; or (9) 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.

Company Contact: Investor and Media Contact:
Thomas G. Caldwell
President/Chief Executive Officer
Middlefield Banc Corp.
(440) 632-1666 Ext. 3200
tcaldwell@middlefieldbank.com
Andrew M. Berger
Managing Director
SM Berger & Company, Inc.
(216) 464-6400
andrew@smberger.com
MIDDLEFIELD BANC CORP. 
Consolidated Selected Financial Highlights 
(Dollar amounts in thousands, unaudited)           
 
    June 30,     March 31,     December 31,     September 30,     June 30,
Balance Sheets (period end)   2020     2020     2019     2019     2019
ASSETS                            
  Cash and due from banks $ 55,741   $ 53,533   $ 35,113   $ 118,956   $ 133,372
  Federal funds sold   2,520     1,800         1,069     2,010
  Cash and cash equivalents   58,261     55,333     35,113     120,025     135,382
  Equity securities, at fair value   581     550     710     628     660
  Investment securities available for sale, at fair value   112,529     102,959     105,733     105,041     98,809
  Loans held for sale   4,151     513     1,220     791     431
  Loans:                            
Commercial real estate:                            
Owner occupied   110,134     113,272     102,386     106,839     109,944
Non-owner occupied   300,577     292,775     302,180     312,049     307,562
Multifamily   37,604     52,276     62,028     70,633     75,252
Residential real estate   227,427     233,900     234,798     236,280     232,168
Commercial and industrial   240,096     106,797     89,527     85,861     85,520
Home equity lines of credit   117,196     114,933     112,248     111,459     113,662
Construction and other   66,015     71,186     66,680     60,957     58,161
Consumer installment   11,210     12,861     14,411     15,204     15,963
Total loans   1,110,259     998,000     984,258     999,282     998,232
Less allowance for loan and lease losses   10,210     9,244     6,768     7,001     7,304
Net loans   1,100,049     988,756     977,490     992,281     990,928
  Premises and equipment, net   18,962     17,653     17,874     17,182     16,788
  Goodwill   15,071     15,071     15,071     15,071     15,071
  Core deposit intangibles   1,890     1,973     2,056     2,141     2,227
  Bank-owned life insurance   16,723     16,618     16,511     16,403     16,294
  Accrued interest receivable and other assets   15,078     14,513     10,697     11,015     11,832
  TOTAL ASSETS $ 1,343,295   $ 1,213,939   $ 1,182,475   $ 1,280,578   $ 1,288,422
                             
    June 30,       March 31,       December 31,       September 30,       June 30,  
    2020        2020        2019        2019        2019   
LIABILITIES                                    
  Deposits:                                    
  Noninterest-bearing demand $ 270,738     $ 206,372     $ 191,370     $ 199,235     $ 198,817  
  Interest-bearing demand   136,722       125,184       107,844       107,033       94,266  
  Money market 168,842       156,556       160,826       155,419       152,885  
  Savings 218,545       175,468       192,003       182,005       194,505  
  Time   363,420       340,130       368,800       390,721       411,034  
  Total deposits 1,158,267       1,003,710       1,020,843       1,034,413       1,051,507  
                                       
  Short-term borrowings   20,417       60,000       5,075       92,000       85,000  
  Other borrowings 17,162       12,662       12,750       12,359       12,449  
  Accrued interest payable and other liabilities   6,779       4,880       6,032       5,893       5,206  
  TOTAL LIABILITIES   1,202,625       1,081,252       1,044,700       1,144,665       1,154,162  
STOCKHOLDERS’ EQUITY *                              
  Common stock, no par value; 10,000,000 shares authorized, 7,298,829                                      
shares issued, 6,369,467 shares outstanding as of June 30, 2020   86,722       86,722       86,617       86,617       86,590  
  Retained earnings   67,125       65,140       65,063       62,886       60,517  
  Accumulated other comprehensive income (loss)   3,761       (2,237     1,842       2,157       1,377  
  Treasury stock, at cost; 929,362 shares as of June 30, 2020   (16,938 )     (16,938 )     (15,747 )     (15,747 )     (14,224 )
  TOTAL STOCKHOLDERS’ EQUITY   140,670       132,687       137,775       135,913       134,260  
                                       
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,343,295     $ 1,213,939     $ 1,182,475     $ 1,280,578     $ 1,288,422  
                                       
* All share and per share information has been adjusted for a two-for-one stock split completed on November 8, 2019 
MIDDLEFIELD BANC CORP. 
Consolidated Selected Financial Highlights 
(Dollar amounts in thousands, unaudited)
    For the Three Months Ended     For the Six Months Ended
    June 30,     March 31,   December 31,   September 30,   June 30,     June 30,     June 30,
Statements of Income   2020     2020   2019   2019   2019     2020     2019
                                         
INTEREST AND DIVIDEND INCOME                                        
  Interest and fees on loans $ 12,281   $ 12,078     $ 12,392   $ 12,804     $ 12,706     $ 24,359     $ 25,194
  Interest-earning deposits in other institutions   7     94       124     193       169       101       356
  Federal funds sold       21       22     24       25       21       32
  Investment securities:                                        
  Taxable interest   206     157       197     206       214       363       393
  Tax-exempt interest   634     629       661     613       553       1,263       1,118
  Dividends on stock   27     30       40     45       53       57       111
  Total interest and dividend income   13,155     13,009       13,436     13,885       13,720       26,164       27,204
INTEREST EXPENSE                                        
  Deposits   2,336     2,865       3,014     3,173       3,277       5,201       6,222
  Short-term borrowings   32     35       34     42       79       67       292
  Other borrowings   62     76       80     92       95       138       191
  Total interest expense   2,430     2,976       3,128     3,307       3,451       5,406       6,705
                                         
NET INTEREST INCOME   10,725     10,033       10,308     10,578       10,269       20,758       20,499
                                         
Provision for loan losses   1,000     2,740       460     80       110       3,740       350
                                         
NET INTEREST INCOME AFTER PROVISION                                          
  FOR LOAN LOSSES   9,725     7,293       9,848     10,498       10,159       17,018       20,149
NONINTEREST INCOME                                        
  Service charges on deposit accounts   566     553       577     571       530       1,119       1,038
  Investment securities gains on sale, net                 4       190             190
  Gain (loss) on equity securities   31     (160 )     82     (32 )     (14 )     (129 )     44
  Earnings on bank-owned life insurance   105     107       108     109       109       212       214
  Gains on sale of loans   381     114       148     128       98       495       157
  Other income   412     460       390     325       386       872       788
  Total noninterest income   1,495     1,074       1,305     1,105       1,299       2,569       2,431
                                         
NONINTEREST EXPENSE                                        
  Salaries and employee benefits   4,076     3,524       4,049     4,272       4,078       7,600       8,202
  Occupancy expense   483     550       580     535       496       1,033       1,049
  Equipment expense   307     273       270     244       291       580       526
  Data processing costs   684     666       614     580       549       1,350       1,014
  Ohio state franchise tax   281     268       262     262       261       549       520
  Federal deposit insurance expense   74     123                 100       197       230
  Professional fees   369     349       448     401       403       718       834
  Advertising expense   217     209       128     202       200       426       403
  Software amortization expense   74     141       159     182       152       215       297
  Core deposit intangible amortization   83     83       85     86       85       166       170
  Other expense   1,041     1,066       783     909       867       2,107       1,737
  Total noninterest expense   7,689     7,252       7,378     7,673       7,482       14,941       14,982
                                         
Income before income taxes   3,531     1,115       3,775     3,930       3,976       4,646       7,598
Income taxes   565     74       634     661       686       639       1,297
                                         
NET INCOME $ 2,966   $ 1,041     $ 3,141   $ 3,269     $ 3,290     $ 4,007     $ 6,301
                                         
MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights 
(Dollar amounts in thousands, except per share and share amounts, unaudited)
    For the Three Months Ended     For the Six Months Ended
    June 30,     March 31,   December 31,
    September 30,
    June 30,     June 30,     June 30,
    2020     2020   2019     2019     2019     2020     2019
Per common share data (5)                                          
Net income per common share – basic $ 0.47     $ 0.16     $ 0.48     $ 0.51     $ 0.51     $ 0.63     $ 0.97  
Net income per common share – diluted $ 0.46     $ 0.16     $ 0.48     $ 0.50     $ 0.50     $ 0.62     $ 0.97  
Dividends declared per share $ 0.15     $ 0.15     $ 0.15     $ 0.14     $ 0.14     $ 0.30     $ 0.28  
Book value per share (period end) $ 22.09     $ 20.83     $ 21.45     $ 21.16     $ 20.70     $ 22.09     $ 20.70  
Tangible book value per share (period end) (2) (3) $ 19.42     $ 18.16     $ 18.78     $ 18.48     $ 18.04     $ 19.42     $ 18.04  
Dividends declared $ 956     $ 964     $ 964     $ 900     $ 912     $ 1,920     $ 1,821  
Dividend yield   2.91 %     3.82 %     2.28 %     2.37 %     2.74 %     2.91 %     2.75 %
Dividend payout ratio   32.23 %     92.60 %     30.69 %     27.53 %     27.72 %     47.92 %     28.90 %
Average shares outstanding – basic   6,369,467       6,417,109       6,423,543       6,458,258       6,502,508       6,393,288       6,500,406  
Average shares outstanding – diluted   6,388,118       6,429,443       6,455,387       6,479,066       6,514,946       6,412,585       6,513,050  
Period ending shares outstanding   6,369,467       6,369,467       6,423,630       6,423,130       6,485,170       6,369,467       6,485,170  
                                         
Selected ratios                                        
Return on average assets   0.90 %     0.35 %     1.04 %     1.07 %     1.09 %     0.78 %     1.05 %
Return on average equity   8.56 %     3.01 %     8.87 %     9.41 %     9.79 %     5.79 %     9.58 %
Return on average tangible common equity (2) (4)   9.76 %     3.43 %     10.11 %     10.76 %     11.23 %     6.59 %     11.02 %
Efficiency (1)   61.29 %     63.47 %     61.75 %     63.93 %     63.03 %     62.33 %     63.66 %
Equity to assets at period end   10.47 %     10.93 %     11.65 %     10.61 %     10.42 %     10.47 %     10.42 %
Noninterest expense to average assets   0.58 %     0.61 %     0.61 %     0.64 %     0.62 %     1.44 %     1.24 %
                                         
(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 
(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 
(5) All share and per share information has been adjusted for the two-for-one stock split completed on November 8, 2019 
                                         
MIDDLEFIELD BANC CORP. 
Consolidated Selected Financial Highlights 
(unaudited) 
    For the Three Months Ended     For the Six Months Ended
    June 30,     March 31,   December 31,   September 30,   June 30,     June 30,     June 30,
Yields    2020     2020   2019   2019   2019      2020     2019
Interest-earning assets:                                          
  Loans receivable (2)   4.53 %     4.95 %     4.97 %     5.09 %     5.09 %     4.73 %     5.08 %
  Investment securities (2)   3.76 %     3.62 %     3.94 %     3.80 %     3.70 %     3.69 %     3.71 %
  Interest-earning deposits with other banks   0.23 %     1.40 %     1.65 %     2.31 %     2.21 %     0.72 %     2.24 %
Total interest-earning assets   4.27 %     4.69 %     4.75 %     4.86 %     4.86 %     4.47 %     4.85 %
Deposits:                                        
  Interest-bearing demand deposits   0.35 %     0.42 %     0.41 %     0.39 %     0.36 %     0.38 %     0.33 %
  Money market deposits   0.93 %     1.41 %     1.41 %     1.43 %     1.40 %     1.17 %     1.50 %
  Savings deposits   0.21 %     0.50 %     0.62 %     0.68 %     0.69 %     0.35 %     0.75 %
  Certificates of deposit   2.00 %     2.12 %     2.18 %     2.18 %     2.35 %     2.06 %     2.27 %
Total interest-bearing deposits   1.11 %     1.39 %     1.43 %     1.48 %     1.56 %     1.25 %     1.51 %
Non-Deposit Funding:                                          
  Borrowings   0.53 %     1.62 %     2.52 %     3.03 %     2.70 %     0.83 %     2.57 %
Total interest-bearing liabilities   1.07 %     1.40 %     1.46 %     1.51 %     1.59 %     1.23 %     1.56 %
Cost of deposits   0.85 %     1.13 %     1.15 %     1.20 %     1.26 %     0.98 %     1.22 %
Cost of funds   0.83 %     1.14 %     1.17 %     1.23 %     1.29 %     0.98 %     1.27 %
Net interest margin (1)   3.49 %     3.63 %     3.66 %     3.72 %     3.65 %     3.56 %     3.67 %
                                         
(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 Three Months Ended
    June 30,     March 31,   December 31,   September 30,   June 30,
Asset quality data   2020     2020   2019   2019   2019
(Dollar amounts in thousands)                              
Nonaccrual loans $ 9,803     $ 8,405     $ 8,879     $ 10,053     $ 10,671  
Troubled debt restructuring                              
90 day past due and accruing                           58  
Nonperforming loans (1)   9,803       8,405       8,879       10,053       10,729  
Other real estate owned   687       456       155       89       89  
Nonperforming assets $ 10,490     $ 8,861     $ 9,034     $ 10,142     $ 10,818  
                             
Allowance for loan losses $ 10,210     $ 9,244     $ 6,768     $ 7,001     $ 7,304  
Allowance for loan losses/total loans   0.92 %     0.93 %     0.69 %     0.70 %     0.73 %
Net charge-offs:                            
  Quarter-to-date $ 34     $ 264     $ 693     $ 383     $ 12  
  Year-to-date   298       264       1,550       857       474  
Net charge-offs to average loans, annualized:                              
  Quarter-to-date   0.01 %     0.11 %     0.28 %     0.15 %     0.00 %
  Year-to-date   0.06 %     0.11 %     0.16 %     0.11 %     0.10 %
                             
Nonperforming loans/total loans   0.88 %     0.84 %     0.90 %     1.01 %     1.07 %
Allowance for loan losses/nonperforming loans   104.15 %     109.98 %     76.22 %     69.64 %     68.08 %
Nonperforming assets/total assets   0.78 %     0.73 %     0.76 %     0.79 %     0.84 %
(1) Nonperforming loans exclude troubled debt restructurings that are performing in accordance with their terms over a prescribed period of time.
                                         
Reconciliation of Common Stockholders’ Equity to Tangible Common Equity *                                        
For the Three Months Ended     For the Six Months Ended
(Dollar amounts in thousands)   June 30,     March 31,   December 31,   September 30,   June 30,     June 30,     June 30,
    2020     2020   2019   2019   2019     2020     2019
                                         
Stockholders’ Equity $ 140,670     $ 132,687     $ 137,775     $ 135,913     $ 134,260     $ 140,670     $ 134,260  
Less Goodwill and other intangibles   16,961       17,044       17,127       17,212       17,298       16,961       17,298  
Tangible Common Equity $ 123,709     $ 115,643     $ 120,648     $ 118,701     $ 116,962     $ 123,709     $ 116,962  
                                         
Shares outstanding   6,369,467       6,369,467       6,423,630       6,423,130       6,485,170       6,369,467       6,485,170  
Tangible book value per share $ 19.42     $ 18.16     $ 18.78     $ 18.48     $ 18.04     $ 19.42     $ 18.04  
                                         
Reconciliation of Average Equity to Return on Average Tangible Common Equity                                        
For the Three Months Ended     For the Six Months Ended
                                         
    June 30,     March 31,   December 31,   September 30,   June 30,     June 30,     June 30,
    2020     2020   2019   2019   2019     2020     2019
                                         
Average Stockholders’ Equity $ 139,287     $ 139,208     $ 140,475     $ 137,843     $ 134,836     $ 139,287     $ 132,643  
Less Average Goodwill and other intangibles   17,002       17,085       17,169       17,254       17,339       17,043       17,381  
Average Tangible Common Equity $ 122,285     $ 122,123     $ 123,306     $ 120,589     $ 117,497     $ 122,244     $ 115,262  
                                         
Net income $ 2,966     $ 1,041     $ 3,141     $ 3,269     $ 3,290     $ 4,007     $ 6,301  
Return on average tangible common equity (annualized)   9.76 %     3.43 %     10.11 %     10.76 %     11.23 %     6.59 %     11.02 %
* All share and per share information has been adjusted for a two-for-one stock split completed on November 8, 2019 
MIDDLEFIELD BANC CORP.
Average Balance Sheets 
(Dollar amounts in thousands, unaudited) 
    For the Three Months Ended
    June 30,     June 30,
      2020         2019  
    Average           Average     Average           Average
    Balance     Interest     Yield/Cost     Balance     Interest     Yield/Cost
Interest-earning assets:                                    
Loans receivable (3)   $ 1,092,095     $ 12,281     4.53 %     $ 1,002,346     $ 12,706     5.09 %
Investment securities (3)     107,765       840     3.76 %       99,022       767     3.70 %
Interest-earning deposits with other banks (4)     58,541       34     0.23 %       44,747       247     2.21 %
Total interest-earning assets     1,258,401       13,155     4.27 %       1,146,115       13,720     4.86 %
Noninterest-earning assets     62,976                   61,267            
Total assets   $ 1,321,377                 $ 1,207,382            
Interest-bearing liabilities:                                    
  Interest-bearing demand deposits   $ 129,917     $ 112     0.35 %     $ 98,929     $ 88     0.36 %
  Money market deposits     164,434       381     0.93 %       159,705       558     1.40 %
  Savings deposits     198,967       104     0.21 %       195,451       336     0.69 %
  Certificates of deposit     350,298       1,739     2.00 %       390,997       2,295     2.35 %
  Short-term borrowings     55,973       32     0.23 %       13,354       79     2.37 %
  Other borrowings     15,615       62     1.60 %       12,489       95     3.05 %
Total interest-bearing liabilities     915,204       2,430     1.07 %       870,925       3,451     1.59 %
Noninterest-bearing liabilities:                                    
  Noninterest-bearing demand deposits     262,575                   198,234            
  Other liabilities     4,311                   3,387            
Stockholders’ equity     139,287                   134,836            
Total liabilities and stockholders’ equity   $ 1,321,377                 $ 1,207,382            
Net interest income         $ 10,725                 $ 10,269      
Interest rate spread (1)                 3.20 %                 3.27 %
Net interest margin (2)                 3.49 %                 3.65 %
Ratio of average interest-earning assets to                                    
  average interest-bearing liabilities                 137.50 %                 131.60 %
                                   
(1) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities. 
(2) Net interest margin represents net interest income as a percentage of average interest-earning assets. 
(3) Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $190 and $168 for the three months ended June 30, 2020 and 2019, respectively.
(4) Includes dividends received on restricted stock. 
                                   
    For the Three Months Ended
    June 30,     March 31,
      2020         2020  
    Average           Average     Average           Average
    Balance     Interest     Yield/Cost     Balance     Interest     Yield/Cost
Interest-earning assets:                              
Loans receivable (3)   $ 1,092,095     $ 12,281     4.53 %     $ 984,034     $ 12,078     4.95 %
Investment securities (3)     107,765       840     3.76 %       105,894       786     3.62 %
Interest-earning deposits with other banks (4)     58,541       34     0.23 %       41,717       145     1.40 %
Total interest-earning assets     1,258,401       13,155     4.27 %       1,131,645       13,009     4.69 %
Noninterest-earning assets     62,976                   65,003            
Total assets   $ 1,321,377                 $ 1,196,648            
Interest-bearing liabilities:                                    
  Interest-bearing demand deposits   $ 129,917     $ 112     0.35 %     $ 113,691     $ 119     0.42 %
  Money market deposits     164,434       381     0.93 %       158,008       552     1.41 %
  Savings deposits     198,967       104     0.21 %       183,137       226     0.50 %
  Certificates of deposit     350,298       1,739     2.00 %       373,866       1,968     2.12 %
  Short-term borrowings     55,973       32     0.23 %       14,808       35     0.95 %
  Other borrowings     15,615       62     1.60 %       12,703       76     2.41 %
Total interest-bearing liabilities     915,204       2,430     1.07 %       856,213       2,976     1.40 %
Noninterest-bearing liabilities:                                    
  Noninterest-bearing demand deposits     262,575                   195,411            
  Other liabilities     4,311                   5,816            
Stockholders’ equity     139,287                   139,208            
Total liabilities and stockholders’ equity   $ 1,321,377                 $ 1,196,648            
Net interest income         $ 10,725                 $ 10,033      
Interest rate spread (1)                 3.20 %                 3.29 %
Net interest margin (2)                 3.49 %                 3.63 %
Ratio of average interest-earning assets to                                    
  average interest-bearing liabilities                 137.50 %                 132.17 %
                                   
(1) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities. 
(2) Net interest margin represents net interest income as a percentage of average interest-earning assets. 
(3) Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $190 and $189 for the three months ended June 30, 2020 and March 31, 2020, respectively.
(4) Includes dividends received on restricted stock. 
                                   
    For the Six Months Ended
    June 30,     June 30,
      2020         2019  
    Average           Average     Average           Average
    Balance     Interest     Yield/Cost     Balance     Interest     Yield/Cost
Interest-earning assets:                                    
Loans receivable (3)   $ 1,038,064     $ 24,359     4.73 %     $ 1,001,344     $ 25,194     5.08 %
Investment securities (3)     106,829       1,626     3.69 %       98,253       1,511     3.71 %
Interest-earning deposits with other banks (4)     50,129       179     0.72 %       45,015       499     2.24 %
Total interest-earning assets     1,195,022       26,164     4.47 %       1,144,612       27,204     4.85 %
Noninterest-earning assets     63,990                   60,912            
Total assets   $ 1,259,012                 $ 1,205,524            
Interest-bearing liabilities:                                    
  Interest-bearing demand deposits   $ 121,804     $ 229     0.38 %     $ 96,594     $ 160     0.33 %
  Money market deposits     161,221       934     1.17 %       176,970       1,313     1.50 %
  Savings deposits     191,052       331     0.35 %       201,650       753     0.75 %
  Certificates of deposit     362,082       3,707     2.06 %       355,620       3,996     2.27 %
  Short-term borrowings     35,390       67     0.38 %       24,372       292     2.42 %
  Other borrowings     14,159       138     1.96 %       13,473       191     2.86 %
Total interest-bearing liabilities     885,708       5,406     1.23 %       868,679       6,705     1.56 %
Noninterest-bearing liabilities:                                    
  Noninterest-bearing demand deposits     228,993                   199,332            
  Other liabilities     5,024                   4,870            
Stockholders’ equity     139,287                   132,643            
Total liabilities and stockholders’ equity   $ 1,259,012                 $ 1,205,524            
Net interest income         $ 20,758                 $ 20,499      
Interest rate spread (1)                 3.24 %                 3.29 %
Net interest margin (2)                 3.56 %                 3.67 %
Ratio of average interest-earning assets to                                    
  average interest-bearing liabilities                 134.92 %                 131.76 %
                                   
(1) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities. 
(2) Net interest margin represents net interest income as a percentage of average interest-earning assets. 
(3) Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $379 and $338 for the six months ended June 30, 2020 and 2019, respectively.
(4) Includes dividends received on restricted stock. 



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