• Middlefield Banc Corp. Reports 2022 Full Year Financial Results

    Source: Nasdaq GlobeNewswire / 27 Jan 2023 07:00:05   America/Chicago

    MIDDLEFIELD, Ohio, Jan. 27, 2023 (GLOBE NEWSWIRE) -- Middlefield Banc Corp. (NASDAQ: MBCN) today reported financial results for the three and twelve-months ended December 31, 2022.

    2022 Financial Highlights (on a year-over-year basis unless noted):

    • Returned $11.6 million of capital to shareholders through cash dividends and the repurchase of 229,420 shares at an average price of $26.67 per share
    • Net income was $15.7 million, or $2.59 per diluted share, compared to $18.6 million, or $3.00 per diluted share
    • Non-GAAP(1) net income, adjusted for certain one-time items and expenses associated with the Liberty Bancshares, Inc. merger, was $18.3 million, or $3.03 per diluted share, compared to $18.5 million, or $2.98 per diluted share
    • Non-GAAP(1) ROAE and ROATE, adjusted for certain one-time items and expenses associated with the Liberty Bancshares, Inc. merger, was 13.15% and 15.12%, respectively, compared to 12.65% and 14.27%, respectively
    • Twelve-month pre-tax income benefited from $1.2 million of net fees associated with the Paycheck Protection Program (“PPP”), compared to $1.1 million in the 2021 full year
    • Net interest margin improved by 30 basis points to 4.08%, compared to 3.78%
    • Total loans were $1.35 billion, compared to $981.7 million at December 31, 2021
    • Total loans increased organically by $91.4 million, or 9.6% from December 31, 2021, without the impact of PPP loan forgiveness and the Liberty Bancshares, Inc. merger
    • Strong asset quality with nonperforming loans to total loans of 0.52%, compared to 0.49%
    • Allowance for loan losses was 1.07% of total loans, compared to 1.46%

    “Middlefield experienced another excellent year of core earnings driven by a 4.08% net interest margin, a 9.6% increase in organic loans, and robust asset quality. These results reflect the execution of our strategic plan, the dedication of our skilled team members, and the value we provide our local communities. In addition, we completed the Liberty Bancshares merger during the 2022 fourth quarter, which increased our scale and exposure in the Central and Northwest Ohio regions. We are delighted to bring our common philosophies to customers within these markets. Over the next several months, we will focus on integrating Liberty into Middlefield’s organization,” stated James R. Heslop, II, Chief Executive Officer.

    “Our performance during 2022 was encouraging as we overcame the Federal Reserve’s rapid increase in interest rates, growing competition for deposits and increased economic uncertainty. While we expect these trends to continue throughout 2023, we are well-positioned to navigate a more challenging landscape due to our strong capital position, excellent asset quality and favorable net interest margin. Most importantly, our solid financial position allows us to support our local communities during an increasingly complex operating environment while continuing to focus on creating value and returning capital to our shareholders,” concluded Mr. Heslop.

    Income Statement

    Net interest income for the twelve-months ended December 31, 2022, was $50.2 million, an increase of $2.1 million or 4.2%, compared to $48.1 million last year. The net interest margin for the 2022 twelve-month period was 4.08%, compared to 3.78% for the same period the previous year. Net interest income for the 2022 fourth quarter was $14.1 million, compared to $12.0 million for the 2021 fourth quarter. The 17.7% increase in net interest income for the 2022 fourth quarter from the same period in 2021 was primarily a result of higher interest income. The net interest margin for the 2022 fourth quarter was 4.23%, compared to 3.81% for the same period of 2021.

    For the 2022 twelve-month period, noninterest income was $6.7 million, compared to $7.2 million, a decrease of $460,000 or 6.4%, for the same period last year. Noninterest income for 2022 benefitted from $951,000 of gross rental income related to leasing other real estate owned, mostly offset by $686,000 of related gross rental expense. Noninterest income for the 2022 fourth quarter was $2.4 million, compared to $1.5 million for the same period last year.

    For the 2022 twelve-month period, noninterest expense increased $6.1 million, or 19.0%, to $38.0 million, compared to $31.9 million for the same period last year. Operating costs in the 2022 fourth quarter increased 57.6% to $12.3 million from $7.8 million for the 2021 fourth quarter. The Company incurred $1.4 million of additional operating expenses associated with the Liberty Bancshares, Inc. merger during the 2022 fourth quarter and $2.4 million during the 2022 twelve-month period. In addition, the Company incurred a net loss on other real estate owned of $1.7 million during the 2022 fourth quarter mostly due to the write-down of an other real estate asset.

    Net income for the 2022 twelve-month period was $15.7 million, or $2.59 per diluted share, compared to $18.6 million, or $3.00 per diluted share, for the same period last year. Non-GAAP(1) net income, adjusted for certain one-time items and expenses associated with the Liberty Bancshares, Inc. merger, was $18.3 million, or $3.03 per diluted share for the 2022 twelve-month period, compared to $18.5 million, or $2.98 per diluted share for the same period last year.

    Net income for the 2022 fourth quarter was $3.5 million, or $0.53 per diluted share, compared to $4.8 million, or $0.81 per diluted share, for the same period last year. Non-GAAP(1) net income, adjusted for certain one-time items and expenses associated with the Liberty Bancshares, Inc. merger, was $5.2 million, or $0.79 per diluted share for the 2022 fourth quarter, compared to $4.8 million, or $0.80 per diluted share for the same period last year.

    Balance Sheet

    Total assets at December 31, 2022, increased to approximately $1.69 billion from $1.33 billion at December 31, 2021. The $356.6 million, or 26.8%, year-over-year increase in total assets was primarily due to the Liberty Bancshares, Inc. merger. Net loans at December 31, 2022, increased 38.4% to $1.34 billion, compared to $967.3 million at December 31, 2021. On an organic basis, without the impact of PPP loan forgiveness and the Liberty Bancshares, Inc. merger, total loans at December 31, 2022, increased 9.6%, compared to December 31, 2021.

    Since 2020, Middlefield has helped customers receive $211.8 million of forgiveness payments under the terms of the Paycheck Protection Program, including processing $33.4 million of forgiveness payments for the 2022 full year. The balance of PPP loans outstanding at December 31, 2022, was $0.7 million.

    Total deposits at December 31, 2022, were $1.40 billion, compared to $1.17 billion at December 31, 2021. The 20.2% increase in deposits was primarily due to the Liberty Bancshares, Inc. merger. On an organic basis, total deposits at December 31, 2022, decreased 7.8% compared to December 31, 2021. The investment portfolio was $165.0 million at December 31, 2022, compared with $170.2 million at December 31, 2021.

    Donald L. Stacy, Chief Financial Officer, stated, “While we expect an increase in the cost of funds to pressure net interest margin in future quarters, we entered this period with the highest net interest margin since 2000. Asset quality remains strong across our portfolio, as nonperforming loans to total loans were just 0.52% at December 31, 2022, compared to 0.49% at December 31, 2021.”

    Mr. Stacy continued, “With a net loan-to-deposit ratio of 95.5%, $53.8 million in cash and cash equivalents, and $165.0 million in investment securities at December 31, 2022, we believe we have ample liquidity and capital levels to support our long-term growth strategies, dividend payment, and share repurchase program. Since January 2019, we have repurchased 898,901 shares, representing 13.9% of the outstanding shares prior to our repurchase program. This includes 229,420 shares repurchased during 2022 at an average of $26.67 per share.”

    Stockholders’ Equity and Dividends

    At December 31, 2022, stockholders’ equity was $197.7 million compared to $145.3 million at December 31, 2021. The 36.0% year-over-year increase in stockholders’ equity was primarily due to the Liberty Bancshares, Inc. merger, partially offset by an increase in the unrealized loss on the available-for-sale investment portfolio and the Company’s stock repurchase program. On a per-share basis, shareholders’ equity at December 31, 2022, was $23.98 compared to $24.68 at December 31, 2021.

    Tangible stockholders’ equity(1) was $158.3 million for December 31, 2022, compared to $128.9 million at December 31, 2021. On a per-share basis, tangible stockholders’ equity(1) at December 31, 2022, was $19.19, compared to $21.88 at December 31, 2021.

    For the 2022 full year, cash dividends declared per share increased 17.4% to $0.81 totaling $5.5 million, compared to $0.69 per share or $4.2 million for the same period last year. Dividends in 2022 included a $0.10 per share one-time dividend payment declared in the fourth quarter.

    At December 31, 2022, the Company had an equity-to-assets leverage ratio of 11.71%, compared to 10.92% at December 31, 2021. The year-over-year increase in the Company’s equity-to-assets leverage ratio occurred even as Middlefield invested $6.1 million in its share repurchase program.

    Asset Quality

    No provision for loan losses was recorded for the 2022 fourth quarter, compared to a net loan loss recovery of $200,000 for the 2021 fourth quarter. There was no provision for loan losses for the 2022 full year period versus a $700,000 provision for loan losses for the same period last year.

    Net charge-offs were $94,000, or 0.03% of average loans, annualized, during the 2022 fourth quarter, compared to net recoveries of $308,000 for the same quarter last year. For the 2022 full year, net recoveries were $96,000, or 0.01% of average loans, compared to net recoveries of $183,000, or 0.02% of average loans for the full year ended December 31, 2021.

    Nonperforming assets at December 31, 2022, were $12.8 million, compared to $11.9 million at December 31, 2021. Nonperforming loans at December 31, 2022, were $7.0 million, compared to $4.9 million at December 31, 2021 primarily due to the Liberty Bancshares, Inc. merger. The allowance for loan losses at December 31, 2022, stood at $14.4 million, or 1.07% of total loans, compared to $14.3 million, or 1.46% of total loans at December 31, 2021.

    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 $1.69 billion at December 31, 2022. The Bank operates 22 full-service banking centers and an LPL Financial® brokerage office serving Ada, Beachwood, Bellefontaine, Chardon, Cortland, Dublin, Garrettsville, Kenton, Mantua, Marysville, 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)NON-GAAP FINANCIAL MEASURES

    This press release includes disclosure of Middlefield Banc Corp.’s tangible book value per share, return on average tangible equity, and pre-tax, pre-provision for loan losses income, 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.

    FORWARD-LOOKING STATEMENTS

    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, unaudited)

      December 31,  September 30,  June 30,  March 31,  December 31,
    Balance Sheets (period end) 2022  2022  2022  2022  2021
    ASSETS              
    Cash and due from banks$51,404 $119,777 $60,114 $78,804 $97,172
    Federal funds sold 2,405  8,800  19,039  29,474  22,322
    Cash and cash equivalents 53,809  128,577  79,153  108,278  119,494
    Equity securities, at fair value 915  972  779  851  818
    Investment securities available for sale, at fair value 164,967  162,064  171,958  175,216  170,199
    Loans held for sale -  -  -  9  1,051
    Loans:              
    Commercial real estate:              
    Owner occupied 191,748  120,912  120,771  113,590  111,470
    Non-owner occupied 380,580  285,419  288,334  293,745  283,618
    Multifamily 58,251  38,063  29,152  29,385  31,189
    Residential real estate 296,308  247,612  246,453  244,747  240,089
    Commercial and industrial 195,602  146,987  137,398  131,683  148,812
    Home equity lines of credit 128,065  114,344  111,730  106,300  104,355
    Construction and other 94,199  33,748  35,988  50,152  54,148
    Consumer installment 8,119  8,110  8,171  8,118  8,010
    Total loans 1,352,872  995,195  977,997  977,720  981,691
    Less allowance for loan and lease losses 14,438  14,532  14,550  14,492  14,342
    Net loans 1,338,434  980,663  963,447  963,228  967,349
    Premises and equipment, net 21,961  16,215  17,030  17,142  17,272
    Goodwill 31,735  15,071  15,071  15,071  15,071
    Core deposit intangibles 7,701  1,171  1,249  1,326  1,403
    Bank-owned life insurance 33,811  17,382  17,274  17,166  17,060
    Other real estate owned 5,821  6,792  6,792  6,992  6,992
    Accrued interest receivable and other assets 28,528  22,104  20,624  18,019  14,297
    TOTAL ASSETS$1,687,682 $1,351,011 $1,293,377 $1,323,298 $1,331,006
                   
      December 31,  September 30,  June 30,  March 31,  December 31,
      2022  2022  2022  2022  2021
    LIABILITIES              
    Deposits:              
    Noninterest-bearing demand$503,907 $383,675 $379,872 $361,251 $334,171
    Interest-bearing demand 164,677  160,112  154,788  162,010  196,308
    Money market 187,498  162,052  185,494  187,807  177,281
    Savings 307,917  247,466  252,179  264,784  260,125
    Time 238,020  177,182  174,833  191,320  198,725
    Total deposits 1,402,019  1,130,487  1,147,166  1,167,172  1,166,610
                   
    Short-term borrowings 65,000  80,000  -  -  -
    Other borrowings 12,059  12,107  12,910  12,975  12,901
    Accrued interest payable and other liabilities 10,913  5,562  5,081  5,507  6,160
    TOTAL LIABILITIES 1,489,991  1,228,156  1,165,157  1,185,654  1,185,671
    STOCKHOLDERS' EQUITY              
    Common stock, no par value; 10,000,000 shares authorized, 9,916,466              
    shares issued, 8,245,235 shares outstanding as of December 31, 2022 161,029  87,640  87,562  87,562  87,131
    Retained earnings 94,154  93,166  89,900  86,804  83,971
    Accumulated other comprehensive (loss) income (22,144)  (25,080)  (17,591)  (6,674)  3,462
    Treasury stock, at cost; 1,671,231 shares as of December 31, 2022 (35,348)  (32,871)  (31,651)  (30,048)  (29,229)
    TOTAL STOCKHOLDERS' EQUITY 197,691  122,855  128,220  137,644  145,335
                   
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$1,687,682 $1,351,011 $1,293,377 $1,323,298 $1,331,006

    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 Twelve Months Ended
      December 31,   September 30,  June 30,  March 31,   December 31,   December 31,   December 31, 
    Statements of Income 2022  2022  2022  2022  2021  2022  2021
                         
    INTEREST AND DIVIDEND INCOME                    
    Interest and fees on loans$14,368 $11,892 $11,268 $10,985 $11,586 $48,513 $47,896
    Interest-earning deposits in other institutions 240  134  74  24  30  472  90
    Federal funds sold 119  51  46  3  1  219  3
    Investment securities:                    
    Taxable interest 477  449  442  443  438  1,811  1,679
    Tax-exempt interest 986  982  955  784  732  3,707  2,565
    Dividends on stock 68  59  33  24  23  184  102
    Total interest and dividend income 16,258  13,567  12,818  12,263  12,810  54,906  52,335
    INTEREST EXPENSE                    
    Deposits 1,771  812  709  726  783  4,018  3,913
    Short-term borrowings 263  44  -  -  -  307  -
    Other borrowings 142  112  81  69  67  404  282
    Total interest expense 2,176  968  790  795  850  4,729  4,195
                         
    NET INTEREST INCOME 14,082  12,599  12,028  11,468  11,960  50,177  48,140
                         
    Provision for loan losses -  -  -  -  (200)  -  700
                         
    NET INTEREST INCOME AFTER PROVISION                    
    FOR LOAN LOSSES 14,082  12,599  12,028  11,468  12,160  50,177  47,440
    NONINTEREST INCOME                    
    Service charges on deposit accounts 976  1,004  956  914  906  3,850  3,425
    (Losses) gains on equity securities (77)  (57)  (72)  33  (14)  (173)  209
    Earnings on bank-owned life insurance 137  108  108  106  106  459  546
    (Losses) gains on sale of loans (4)  7  18  3  118  24  1,240
    Revenue from investment services 147  233  153  141  198  674  727
    Other income 1,235  251  220  206  221  1,912  1,059
    Total noninterest income 2,414  1,546  1,383  1,403  1,535  6,746  7,206
                         
    NONINTEREST EXPENSE                    
    Salaries and employee benefits 4,886  4,491  3,785  4,386  4,088  17,548  17,151
    Occupancy expense 487  458  583  505  542  2,033  2,048
    Equipment expense 252  233  274  315  358  1,074  1,361
    Data processing costs 1,050  985  822  844  851  3,701  3,298
    Ohio state franchise tax 279  293  292  293  285  1,157  1,144
    Federal deposit insurance expense 105  84  90  50  50  329  494
    Professional fees 382  280  383  455  435  1,500  1,313
    Net loss (gain) on other real estate owned 1,692  1  206  8  (66)  1,907  11
    Advertising expense 308  268  229  228  221  1,033  885
    Software amortization expense 28  27  40  48  119  143  361
    Core deposit intangible amortization 140  78  77  77  80  372  321
    Merger-related costs 1,413  390  579  -  -  2,382  -
    Other expense 1,321  1,298  1,175  1,057  868  4,851  3,561
    Total noninterest expense 12,343  8,886  8,535  8,266  7,831  38,030  31,948
                         
    Income before income taxes 4,153  5,259  4,876  4,605  5,864  18,893  22,698
    Income taxes 651  1,010  787  772  1,027  3,220  4,065
                         
    NET INCOME$3,502 $4,249 $4,089 $3,833 $4,837 $15,673 $18,633
                         
    PTPP (1)$4,153 $5,259 $4,876 $4,605 $5,664 $18,893 $23,398
                         
    (1)  The pre-tax pre-provision (PTPP) is the income before income taxes before provision for loan losses considerations, for reconciliation of non-GAAP measures.


    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 Twelve Months Ended
      December 31,  September 30,  June 30,  March 31,  December 31,  December 31,  December 31,
      2022  2022  2022  2022  2021  2022  2021
    Per common share data                    
    Net income per common share - basic$0.53 $0.73 $0.70 $0.65 $0.81 $2.60 $3.01
    Net income per common share - diluted$0.53 $0.73 $0.70 $0.65 $0.81 $2.59 $3.00
    Dividends declared per share$0.30 $0.17 $0.17 $0.17 $0.21 $0.81 $0.69
    Book value per share (period end)$23.98 $21.30 $22.07 $23.43 $24.68 $23.98 $24.68
    Tangible book value per share (period end) (2) (3)$19.19 $18.48 $19.26 $20.64 $21.88 $19.19 $21.88
    Dividends declared$2,514 $983 $993 $1,000 $1,242 $5,490 $4,240
    Dividend yield 4.34%  2.49%  2.71%  2.78%  3.37%  2.96%  2.79%
    Dividend payout ratio 71.79%  23.13%  24.28%  26.09%  25.68%  35.03%  22.76%
    Average shares outstanding - basic 6,593,616  5,792,773  5,851,422  5,879,025  5,951,838  6,027,091  6,186,666
    Average shares outstanding - diluted 6,610,907  5,805,799  5,860,098  5,889,836  5,975,333  6,044,382  6,211,076
    Period ending shares outstanding 8,245,235  5,767,803  5,810,351  5,873,565  5,888,737  8,245,235  5,888,737
                         
    Selected ratios                    
    Return on average assets 0.97%  1.32%  1.25%  1.17%  1.41%  1.17%  1.36%
    Return on average equity 9.35%  12.94%  12.30%  10.75%  13.17%  11.25%  12.74%
    Return on average tangible common equity (2) (4) 11.13%  14.79%  14.02%  12.13%  14.85%  12.95%  14.38%
    Efficiency (1) 72.75%  61.07%  61.83%  62.54%  56.56%  64.96%  56.38%
    Equity to assets at period end 11.71%  9.09%  9.91%  10.40%  10.92%  11.71%  10.92%
    Noninterest expense to average assets 0.86%  0.69%  0.65%  0.62%  0.58%  2.84%  2.33%
                         
    (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

    MIDDLEFIELD BANC CORP.
    Consolidated Selected Financial Highlights
    (unaudited)

      For the Three Months Ended  For the Twelve Months Ended
      December 31,   September 30,  June 30,  March 31,   December 31,   December 31,   December 31, 
    Yields 2022  2022  2022  2022  2021  2022  2021
    Interest-earning assets:                    
    Loans receivable (2) 5.11%  4.78%  4.66%  4.53%  4.61%  4.79%  4.56%
    Investment securities (2) 3.83%  3.90%  3.76%  3.41%  3.30%  3.73%  3.45%
    Interest-earning deposits with other banks 3.42%  2.06%  0.77%  0.23%  0.20%  1.31%  0.20%
    Total interest-earning assets 4.88%  4.55%  4.28%  4.06%  4.07%  4.45%  4.11%
    Deposits:                    
    Interest-bearing demand deposits 0.83%  0.22%  0.15%  0.14%  0.12%  0.34%  0.13%
    Money market deposits 1.00%  0.46%  0.49%  0.47%  0.47%  0.61%  0.47%
    Savings deposits 0.49%  0.19%  0.06%  0.06%  0.06%  0.20%  0.06%
    Certificates of deposit 1.30%  0.96%  0.83%  0.87%  0.90%  1.00%  1.13%
    Total interest-bearing deposits 0.87%  0.43%  0.36%  0.37%  0.36%  0.51%  0.44%
    Non-Deposit Funding:                    
    Borrowings 4.25%  2.94%  2.51%  2.16%  2.09%  3.35%  2.10%
    Total interest-bearing liabilities 1.02%  0.50%  0.39%  0.39%  0.37%  0.59%  0.47%
    Cost of deposits 0.57%  0.29%  0.24%  0.25%  0.26%  0.34%  0.32%
    Cost of funds 0.68%  0.34%  0.27%  0.27%  0.27%  0.40%  0.34%
    Net interest margin (1) 4.23%  4.23%  4.02%  3.80%  3.81%  4.08%  3.78%
                         
    (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
      December 31,   September 30,  June 30,  March 31,   December 31, 
    Asset quality data 2022  2022  2022  2022  2021
    (Dollar amounts in thousands, unaudited)              
    Nonperforming loans (1)$7,013 $3,692 $4,670 $4,728 $4,859
    Other real estate owned 5,821  6,792  6,792  6,992  6,992
    Nonperforming assets$12,834 $10,484 $11,462 $11,720 $11,851
                   
    Allowance for loan losses$14,438 $14,532 $14,550 $14,492 $14,342
    Allowance for loan losses/total loans 1.07%  1.46%  1.49%  1.48%  1.46%
    Net charge-offs (recoveries):              
    Quarter-to-date$94 $18 $(58) $(150) $(308)
    Year-to-date (96)  (190)  (208)  (150)  (183)
    Net charge-offs (recoveries) to average loans, annualized:              
    Quarter-to-date 0.03%  0.01%  -0.02%  -0.06%  -0.12%
    Year-to-date -0.01%  -0.02%  -0.04%  -0.06%  -0.02%
                   
    Nonperforming loans/total loans 0.52%  0.37%  0.48%  0.48%  0.49%
    Allowance for loan losses/nonperforming loans 205.87%  393.61%  311.56%  306.51%  295.16%
    Nonperforming assets/total assets 0.76%  0.78%  0.89%  0.89%  0.89%
    (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 Period Ended
    (Dollar amounts in thousands, unaudited) December 31,   September 30,  June 30,  March 31,   December 31, 
      2022  2022  2022  2022  2021
                   
    Stockholders' Equity$197,691 $122,855 $128,220 $137,644 $145,335
    Less Goodwill and other intangibles 39,436  16,242  16,320  16,397  16,474
    Tangible Common Equity$158,255 $106,613 $111,900 $121,247 $128,861
                   
    Shares outstanding 8,245,235  5,767,803  5,810,351  5,873,565  5,888,737
    Tangible book value per share$19.19 $18.48 $19.26 $20.64 $21.88


    Reconciliation of Average Equity to Return on Average Tangible Common Equity
     For the Three Months Ended  For the Twelve Months Ended
                         
      December 31,   September 30,  June 30,  March 31,   December 31,   December 31,   December 31, 
      2022  2022  2022  2022  2021  2022  2021
                         
    Average Stockholders' Equity$148,616 $130,263 $133,377 $144,630 $145,716 $139,270 $146,237
    Less Average Goodwill and other intangibles 23,731  16,280  16,357  16,435  16,513  18,200  16,634
    Average Tangible Common Equity$124,885 $113,983 $117,020 $128,195 $129,203 $121,070 $129,603
                         
    Net income$3,502 $4,249 $4,089 $3,833 $4,837 $15,673 $18,633
    Return on average tangible common equity (annualized) 11.13%  14.79%  14.02%  12.13%  14.85%  12.95%  14.38%
                         


    Reconciliation of Pre-Tax Pre-Provision Income (PTPP)
     For the Three Months Ended  For the Twelve Months Ended
                         
      December 31,   September 30,  June 30,  March 31,   December 31,   December 31,   December 31, 
      2022  2022  2022  2022  2021  2022  2021
                         
    Net income$3,502 $4,249 $4,089 $3,833 $4,837 $15,673 $18,633
    Add Income Taxes 651  1,010  787  772  1,027  3,220  4,065
    Add Provision for loan losses -  -  -  -  (200)  -  700
    PTPP$4,153 $5,259 $4,876 $4,605 $5,664 $18,893 $23,398
                         


    Reconciliation of Net Income, Less Merger and Certain Items 
     For the Three Months Ended For the Twelve Months Ended
                   
      December 31,  September 30, June 30, March 31,  December 31,  December 31,  December 31, 
      2022 2022 2022 2022 2021 2022 2021
                   
    Net Income$3,502$4,249$4,089$3,833$4,837$15,673$18,633
    Acquisition related costs- after tax 1,116 308 457 - - 1,882 -
    Net loss (gain) on other real estate owned - after tax (1)585 1 163 6 (52) 755 (134)
    Net Income- Adjusted$5,203$4,558$4,709$3,839$4,785$18,310$18,499
                   
    Diluted EPS excluding merger and one-time items$0.79$0.79$0.80$0.65$0.80$3.03$2.98
    Return on average assets excluding merger and one-time items (annualized) 1.44% 1.41% 1.43% 1.17% 1.40% 1.37% 1.35%
    Return on average equity excluding merger and one-time items (annualized) 13.89% 13.88% 14.16% 10.77% 13.03% 13.15% 12.65%
    Return on average tangible common equity excluding merger and one-time items (annualized) 16.53% 15.86% 16.14% 12.15% 14.69% 15.12% 14.27%
                   
    (1)   This includes net rental income earned on other real estate owned.
                   

    MIDDLEFIELD BANC CORP.
    Average Balance Sheets
    (Dollar amounts in thousands, unaudited)

     For the Three Months Ended
     December 31,   December 31, 
     2022  2021
     Average     Average  Average     Average
     Balance  Interest  Yield/Cost  Balance  Interest  Yield/Cost
    Interest-earning assets:                
    Loans receivable (3)$1,117,221  $14,368  5.11%  $999,229  $11,586  4.61%
    Investment securities (3)178,772  1,463  3.83%  164,254  1,170  3.30%
    Interest-earning deposits with other banks (4)49,569  427  3.42%  104,804  54  0.20%
    Total interest-earning assets1,345,562  16,258  4.88%  1,268,287  12,810  4.07%
    Noninterest-earning assets89,740        90,556      
    Total assets$1,435,302        $1,358,843      
    Interest-bearing liabilities:                
    Interest-bearing demand deposits$165,267  $344  0.83%  $212,861  $66  0.12%
    Money market deposits172,437  435  1.00%  180,201  214  0.47%
    Savings deposits266,613  330  0.49%  257,344  39  0.06%
    Certificates of deposit201,972  662  1.30%  204,904  464  0.90%
    Short-term borrowings25,750  263  4.05%  -  -  0.00%
    Other borrowings12,086  142  4.66%  12,934  67  2.06%
    Total interest-bearing liabilities844,125  2,176  1.02%  868,244  850  0.39%
    Noninterest-bearing liabilities:                
    Noninterest-bearing demand deposits428,155        337,900      
    Other liabilities14,406        6,983      
    Stockholders' equity148,616        145,716      
    Total liabilities and stockholders' equity$1,435,302        $1,358,843      
    Net interest income   $14,082        $11,960   
    Interest rate spread (1)      3.86%        3.68%
    Net interest margin (2)      4.23%        3.81%
    Ratio of average interest-earning assets to                
    average interest-bearing liabilities      159.40%        146.07%
                     
    (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 $278 and $210 for the three months ended December 31, 2022 and 2021, respectively
    (4) Includes dividends received on restricted stock.


     For the Three Months Ended
     December 31,   September 30,
     2022  2022
     Average     Average  Average     Average
     Balance  Interest   Yield/Cost  Balance  Interest   Yield/Cost
    Interest-earning assets:                
      Loans receivable (3)$          1,117,221  $               14,368  5.11%  $             987,689  $               11,892  4.78%
      Investment securities (3)               178,772                     1,463  3.83%                 172,316  1,431  3.90%
      Interest-earning deposits with other banks (4)                 49,569                        427  3.42%                   46,938  244  2.06%
    Total interest-earning assets            1,345,562                   16,258  4.88%              1,206,943                   13,567  4.55%
    Noninterest-earning assets                 89,740                         73,753      
    Total assets$          1,435,302        $          1,280,696      
    Interest-bearing liabilities:                
      Interest-bearing demand deposits$             165,267  $                    344  0.83%  $             162,878  $                      91  0.22%
      Money market deposits               172,437                        435  1.00%                 155,095                        180  0.46%
      Savings deposits               266,613                        330  0.49%                 249,898                        119  0.19%
      Certificates of deposit               201,972                        662  1.30%                 174,091                        422  0.96%
      Short-term borrowings                 25,750                        263  4.05%                     8,554                          44  2.04%
      Other borrowings                 12,086                        142  4.66%                   12,530                        112  3.55%
    Total interest-bearing liabilities               844,125                     2,176  1.02%                 763,046                        968  0.50%
    Noninterest-bearing liabilities:                
      Noninterest-bearing demand deposits               428,155                       382,351      
      Other liabilities                 14,406                           5,036      
    Stockholders' equity               148,616                       130,263      
    Total liabilities and stockholders' equity$          1,435,302        $          1,280,696      
    Net interest income   $               14,082        $               12,599   
    Interest rate spread (1)      3.86%        4.05%
    Net interest margin (2)      4.23%        4.23%
    Ratio of average interest-earning assets to                
      average interest-bearing liabilities      159.40%        158.17%
                     
    (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 $278 and $277 for the three months ended December 31, 2022 and September 30, 2022, respectively
    (4) Includes dividends received on restricted stock.  


     For the Twelve Months Ended
     December 31,   December 31, 
     2022  2021
     Average     Average  Average     Average
     Balance  Interest  Yield/Cost  Balance  Interest  Yield/Cost
    Interest-earning assets:                
    Loans receivable (3)$1,014,896  $48,513  4.79%  $1,052,351  $47,896  4.56%
    Investment securities (3)174,514  5,518  3.73%  142,705  4,244  3.45%
    Interest-earning deposits with other banks (4)67,030  875  1.31%  97,417  195  0.20%
    Total interest-earning assets1,256,440  54,906  4.45%  1,292,473  52,335  4.11%
    Noninterest-earning assets84,484        78,802      
    Total assets$1,340,924        $1,371,275      
    Interest-bearing liabilities:                
    Interest-bearing demand deposits$164,569  $554  0.34%  $212,063  $274  0.13%
    Money market deposits174,377  1,055  0.61%  186,009  869  0.47%
    Savings deposits259,225  527  0.20%  255,267  162  0.06%
    Certificates of deposit188,617  1,882  1.00%  231,662  2,608  1.13%
    Short-term borrowings8,576  307  3.58%  85  -  0.00%
    Other borrowings12,626  404  3.20%  13,313  282  2.12%
    Total interest-bearing liabilities807,990  4,729  0.59%  898,399  4,065  0.47%
    Noninterest-bearing liabilities:                
    Noninterest-bearing demand deposits386,296        320,104      
    Other liabilities7,368        6,535      
    Stockholders' equity139,270        146,237      
    Total liabilities and stockholders' equity$1,340,924        $1,371,275      
    Net interest income   $50,177        $48,270   
    Interest rate spread (1)      3.86%        3.64%
    Net interest margin (2)      4.08%        3.78%
    Ratio of average interest-earning assets to                
    average interest-bearing liabilities      155.50%        143.86%
                     
    (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 $1,046 and $752, for 2022 and 2021, respectively.
    (4) Includes dividends received on restricted stock.


    Company Contact:Investor and Media Contact:
    James R. Heslop, II
    Chief Executive Officer
    Middlefield Banc Corp.
    (440) 632-1666 Ext. 3219
    JHeslop@middlefieldbank.com
    Andrew M. Berger
    Managing Director
    SM Berger & Company, Inc.
    (216) 464-6400
    andrew@smberger.com


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