MIDDLEFIELD, Ohio, April 30, 2024 (GLOBE NEWSWIRE) -- Middlefield Banc Corp. (NASDAQ:MBCN) today reported financial results for the three months ended March 31, 2024. 2024 First Quarter Financial Highlights (on a year-over-year basis unless noted): Net income was $4.2 million, compared to $4.9 million for the quarter ended March 31, 2023, and $3.5 million for the quarter ended December 31, 2023 Earnings were $0.51 per diluted share, compared to $0.60 per diluted share for the quarter ended March 31, 2023, and $0.44 per diluted share for the quarter ended December 31, 2023 Net interest income after the provision for credit losses was $15.1 million, compared to $16.0 million Noninterest income increased 6.9% to $1.8 million Total loans increased 7.8% to a record $1.49 billion Total deposits were $1.45 billion, compared to $1.43 billion Return on average assets annualized was 0.92%, compared to 0.78% for the quarter ended December 31, 2023 Return on average equity annualized was 8.16%, compared to 7.13% for the quarter ended December 31, 2023 Return on average tangible common equity(1) was 10.30%, compared to 9.11% for the quarter ended December 31, 2023 Excellent asset quality with nonperforming assets to total assets of 0.60%, compared to 0.73% Allowance for credit losses was 1.41% of total loans, compared to 1.46% Equity to assets remained strong at 11.32%, compared to 11.30% Book value increased 5.6% to $25.48 per share(1) See non-GAAP reconciliation under the section "GAAP to Non-GAAP Reconciliations" Ronald L. Zimmerly, Jr., President and Chief Executive Officer, stated, "2024 is off to a solid start. Over the past three months, our pre-tax, pre-provision income(1) stabilized, reflecting positive loan growth, strong asset quality, higher noninterest income, and controlled operating expenses. During this period, our ROAA, ROAE, and ROATCE increased due to improved profitability. In addition, we ended the quarter with record total loans as our expanded Commercial, Business, and Consumer Banking teams capitalized on favorable demand trends across our Northeast, Central, and Western Ohio markets." "While we expect uncertainty about FOMC monetary policies and their impact on national economic conditions in 2024 to continue, economic activity and employment within our Ohio markets are stable. In addition, our asset quality remains excellent, and nonperforming assets at the end of the first quarter improved slightly from the fourth quarter and were down 14.5% from last year's first quarter. Our first quarter performance is encouraging and reflects our teams' hard work and contributions across our three Ohio markets. As we look to the remainder of the year, we are focused on pursuing our multi-year strategic growth goals: increasing revenue opportunities, improving our customer experience, and advancing operational performance to create lasting value for our shareholders," concluded Mr. Zimmerly. Income StatementNet interest income for the 2024 first quarter decreased 9.3% to $15.0 million, compared to $16.5 million for the same period last year. The net interest margin for the 2024 first quarter was 3.53%, compared to 4.19% last year. For the 2024 first quarter, noninterest income increased 6.9% to $1.8 million, compared to $1.7 million for the same period of 2023. Noninterest expense for the 2024 first quarter was $12.0 million, compared to $11.8 million for the 2023 first quarter. Net income for the 2024 first quarter ended March 31, 2024, was $4.2 million, or $0.51 per diluted share, compared to $4.9 million, or $0.60 per diluted share, for the same period last year. For the 2024 first quarter, pre-tax, pre-provision net income was $4.8 million, compared to $6.4 million last year. (See non-GAAP reconciliation under the section "GAAP to Non-GAAP Reconciliations"). Balance SheetTotal assets at March 31, 2024, increased 5.1% to $1.82 billion, compared to $1.73 billion at March 31, 2023. Total loans at March 31, 2024, were $1.49 billion, compared to $1.38 billion at March 31, 2023. The 7.8% year-over-year increase in total loans was primarily due to higher commercial and industrial, residential real estate, commercial real estate, and construction and other loans. Total liabilities at March 31, 2024, increased 5.1% to $1.61 billion, compared to $1.53 billion at March 31, 2023. Total deposits at March 31, 2024, were $1.45 billion, compared to $1.43 billion at March 31, 2023. The 1.5% year-over-year increase in deposits was primarily due to growth in money market, interest-bearing demand, and time deposits, partially offset by declines in noninterest-bearing demand and savings accounts. Noninterest-bearing demand deposits were 27.0% of total deposits at March 31, 2024, compared to 33.3% at March 31, 2023. At March 31, 2024, the Company had brokered deposits of $90.4 million, compared to $5.0 million at March 31, 2023. The investment securities available for sale portfolio was $167.9 million at March 31, 2024, compared with $169.6 million at March 31, 2023. Michael Ranttila, Chief Financial Officer, stated, "Asset quality improved on both a sequential and year-over-year basis, reflecting our conservative underwriting standards and balanced portfolio composition. Nonperforming loans at March 31, 2024, included one self-storage loan in the Southwest Ohio market totaling $3.6 million. We believe this issue is isolated to this borrower and does not indicate a trend in the market, our portfolio, or an issue in underwriting." Mr. Ranttila continued, "We also remain focused on identifying opportunities to improve our cost of funds, pay down higher cost capital, and grow core deposits to support loan demand. Over the past three months, total deposits increased 1.4%, while our Federal Home Loan Bank advances decreased by nearly 16.0%. With sufficient liquidity, stabilizing profitability, and excellent asset quality, I am pleased to report that during the first quarter, we repurchased 43,858 shares of our common stock at an average price of $24.00 per share, reflecting our long-standing commitment to return excess capital to shareholders." Middlefield's CRE portfolio included the following categories at March 31, 2024: CRE Category   Balance(in thousands)   Percent of CREPortfolio   Percent of LoanPortfolio Multi-Family   $ 81,691     12.4%   5.5% Office Space   $ 78,789     12.0%   5.3% Shopping Plazas   $ 73,250     11.1%   4.9% Self-Storage   $ 61,525     9.3%   4.1% Hospitality   $ 39,779     6.0%   2.7% Senior Living   $ 26,545     4.0%   1.8% Other   $ 297,500     45.2%   19.9% Total CRE   $ 659,079     100.0%   44.2%                   Stockholders' Equity and DividendsAt March 31, 2024, stockholders' equity was $205.6 million compared to $195.2 million at March 31, 2023. The 5.3% year-over-year increase in stockholders' equity was primarily due to higher retained earnings and an improvement in the unrealized losses on the available-for-sale investment portfolio, partially offset by the Company's stock repurchase program. On a per-share basis, shareholders' equity at March 31, 2024, was $25.48 compared to $24.13 at March 31, 2023. At March 31, 2024, tangible stockholders' equity(1) was $162.8 million, compared to $156.0 million at March 31, 2023. On a per-share basis, tangible stockholders' equity(1) was $20.18 at March 31, 2024, compared to $19.29 at March 31, 2023. (1)See non-GAAP reconciliation under the section "GAAP to Non-GAAP Reconciliations". For the 2024 first quarter, the Company declared cash dividends of $0.20 per share, totaling $1.6 million. At March 31, 2024, the Company's equity-to-assets ratio was 11.32%, compared to 11.30% at March 31, 2023. Asset QualityFor the 2024 first quarter, the Company recorded a recovery of credit losses of $100,000 versus a provision for credit losses of $500,000 for the same period last year. Net recoveries were $68,000, or 0.02% of average loans, annualized, during the first quarter of 2024, compared to net recoveries of $8,000, or 0.00% of average loans, annualized, at March 31, 2023. Nonperforming loans at March 31, 2024, were $10.8 million, compared to $6.9 million at March 31, 2023. Nonperforming assets at March 31, 2024, were $10.8 million, compared to $12.7 million at March 31, 2023. The allowance for credit losses at March 31, 2024, stood at $21.1 million, or 1.41% of total loans, compared to $20.2 million, or 1.46% of total loans at March 31, 2023.   The decrease in the allowance for credit losses as a percentage of total loans was mainly due to changes in projected loss drivers, prepayment assumptions, and curtailment expectations over the reasonable and supportable forecast period.  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 $1.82 billion at March 31, 2024. The Bank operates 21 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 NON-GAAP FINANCIAL MEASURESThis 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 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 following Consolidated Financial Highlights tables below. FORWARD-LOOKING STATEMENTSThis 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 several 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)                               March 31,   December 31,   September 30,   June 30,   March 31,     Balance Sheets (period end)     2024       2023       2023       2023       2023       ASSETS                         Cash and due from banks   $ 44,816     $ 56,397     $ 56,228     $ 49,422     $ 59,609       Federal funds sold     1,438       4,439       9,274       9,654       7,048       Cash and cash equivalents     46,254       60,836       65,502       59,076       66,657       Investment securities available for sale, at fair value     167,890       170,779       159,414       167,209       169,605       Other investments     907       955       958       711       777       Loans held for sale     -       -       632       171       104       Loans:                         Commercial real estate:                         Owner occupied     178,543       183,545       185,593       187,919       185,661       Non-owner occupied     398,845       401,580       382,676       385,846       400,314       Multifamily     81,691       82,506       82,578       58,579       63,892       Residential real estate     331,480       328,854       321,331       312,196       306,179       Commercial and industrial     227,433       221,508       214,334       209,349       195,024       Home equity lines of credit     129,287       127,818       127,494       126,894       126,555       Construction and other     135,716       125,105       127,106       118,851       97,406       Consumer installment     7,131       7,214       7,481       9,801       7,816       Total loans     1,490,126       1,478,130       1,448,593       1,409,435       1,382,847       Less allowance for credit losses     21,069       21,693       20,986       20,591       20,162       Net loans     1,469,057       1,456,437       1,427,607       1,388,844       1,362,685       Premises and equipment, net     21,035       21,339       21,708       21,629       21,775       Goodwill     36,356       36,356       36,197       36,197       31,735       Core deposit intangibles     6,384       6,642       6,906       7,171       7,436       Bank-owned life insurance     34,575       34,349       34,153       34,235       34,015       Other real estate owned     -       -       5,792       5,792       5,792       Accrued interest receivable and other assets     34,210       35,190       34,551       30,472       27,258       TOTAL ASSETS   $ 1,816,668     $ 1,822,883     $ 1,793,420     $ 1,751,507     $ 1,727,839                                     March 31,   December 31,   September 30,   June 30,   March 31,           2024       2023       2023       2023       2023       LIABILITIES                         Deposits:                         Noninterest-bearing demand   $ 390,185     $ 401,384     $ 424,055     $ 441,102     $ 474,977       Interest-bearing demand     209,015       205,582       243,973       229,633       196,086       Money market     318,823       274,682       275,766       241,537       221,723       Savings     196,721       210,639       216,453       231,508       287,859       Time     332,165       334,315       296,732       287,861       244,962       Total deposits     1,446,909       1,426,602       1,456,979       1,431,641       1,425,607       Federal Home Loan Bank advances     137,000       163,000       118,000       100,000       85,000       Other borrowings     11,812       11,862       11,912       11,961       12,010       Accrued interest payable and other liabilities     15,372       15,738       12,780       10,678       10,057       TOTAL LIABILITIES     1,611,093       1,617,202       1,599,671       1,554,280       1,532,674       STOCKHOLDERS' EQUITY                         Common stock, no par value; 25,000,000 shares authorized, 9,946,454 shares issued, 8,067,144 shares outstanding as of March 31, 2024     161,823       161,388       161,312       161,211       161,248       Retained earnings     102,791       100,237       98,717       96,500       93,024       Accumulated other comprehensive loss     (18,130 )     (16,090 )     (26,426 )     (20,630 )     (19,253 )     Treasury stock, at cost; 1,879,310 shares as of March 31, 2024     (40,909 )     (39,854 )     (39,854 )     (39,854 )     (39,854 )     TOTAL STOCKHOLDERS' EQUITY     205,575       205,681       193,749       197,227       195,165                                 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 1,816,668     $ 1,822,883     $ 1,793,420     $ 1,751,507     $ 1,727,839                                                           MIDDLEFIELD BANC CORP. Consolidated Selected Financial Highlights (Dollar amounts in thousands, unaudited)                               For the Three Months Ended         March 31,   December 31,   September 30,   June 30,   March 31,     Statements of Income     2024       2023       2023       2023       2023                                 INTEREST AND DIVIDEND INCOME                         Interest and fees on loans   $ 22,395     $ 22,027     $ 20,899     $ 20,762     $ 18,275       Interest-earning deposits in other institutions     437       370       300       369       250       Federal funds sold     152       94       266       158       253       Investment securities:                         Taxable interest     467       479       477       479       458       Tax-exempt interest     972       976       980       978       980       Dividends on stock     189       144       148       91       88       Total interest and dividend income     24,612       24,090       23,070       22,837       20,304       INTEREST EXPENSE                         Deposits     7,466       6,522       5,632       3,851       2,990       Short-term borrowings     1,993       2,013       1,258       1,462