MIDDLEFIELD, OHIO, July 18, 2024 (GLOBE NEWSWIRE) -- Middlefield Banc Corp. (NASDAQ:MBCN) today reported financial results for the six months ended June 30, 2024. 2024 Six-Month Financial Highlights (on a year-over-year basis): Net income was $8.3 million, compared to $10.0 million Pre-tax, pre-provision net income(1) was $9.7 million, compared to $13.3 million   Earnings were $1.03 per diluted share, compared to $1.23 per diluted share Net interest income after the provision for credit losses was $30.1 million, compared to $32.5 million Noninterest income increased 8.7% to $3.6 million, compared to $3.3 million Total loans increased 6.3% to a record  $1.50 billion, compared to $1.41 billion Total deposits increased 2.6% to a record $1.47 billion, compared to $1.43 billion Return on average assets annualized was 0.91%, compared to 1.16% Return on average equity annualized was 8.16%, compared to 9.64% Return on average tangible common equity(1) was 10.30%, compared to 11.92% Asset quality remains at historically low levels with nonperforming assets to total assets of 0.87%, compared to 0.74% Allowance for credit losses was 1.46% of total loans, compared to 1.46% Equity to assets remained strong at 11.31%, compared to 11.26% Book value increased 5.1% to $25.63 from $24.38 per share   Tangible book value(1) increased 7.1% to $20.37 from $19.02 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, "Throughout our Central, Western and Northeast Ohio markets, Middlefield's team members are dedicated to providing leading community-oriented financial services to our customers. This long-standing commitment supports the financial success of our local communities, which is especially important as uncertainty about FOMC monetary policies and economic conditions has increased. Despite these macro trends, we remain focused on supporting our communities, managing expenses, and maintaining a strong balance sheet. I am pleased with the progress we are making as total loans at June 30, 2024, increased 6.3% year-over-year to a record $1.50 billion, year-to-date noninterest expense is in line with the prior year period, and we remain extremely ‘well-capitalized' under applicable banking requirements." "We also continue to pursue our multi-year strategic growth goals, which are focused on increasing revenue opportunities, improving our customer experience, and advancing operational performance to create lasting value for our shareholders.  For the 2024 second quarter, noninterest income increased 10.6% over the same period a year ago, and total deposits were up 2.6% over the past year to a record $1.47 billion, as we successfully diversify our revenue and increase our market share.  In addition, our tangible book value(1) has grown 7.1% to $20.37 per share, reflecting stable profitability, limited accumulated other comprehensive income (AOCI) impacts, and asset quality in line with historical performance. While we expect the near-term banking environment to remain challenging, we continue to focus on supporting our communities, strategically allocating capital, maintaining disciplined underwriting standards, and prudently managing expenses," concluded Mr. Zimmerly. (1)See non-GAAP reconciliation under the section "GAAP to Non-GAAP Reconciliations". Income StatementNet interest income for the 2024 first half decreased $3.8 million to $30.1 million, compared to $33.9 million for the same period last year. The net interest margin for the 2024 first half was 3.53%, compared to 4.23% last year. For the 2024 first half, noninterest income increased $0.3 million to $3.6 million, compared to $3.3 million for the same period in 2023. Noninterest expense for the 2024 first half was $23.9 million, compared to $23.8 million for the 2023 first half. Net income for the six months ended June 30, 2024, was $8.3 million, or $1.03 per diluted share, compared to $10.0 million, or $1.23 per diluted share, for the same period last year. For the 2024 first half, pre-tax, pre-provision net income was $9.7 million, compared to $13.3 million last year. (See non-GAAP reconciliation under the section "GAAP to Non-GAAP Reconciliations".) Balance SheetTotal assets at June 30, 2024, increased 4.4% to $1.83 billion, compared to $1.75 billion at June 30, 2023. Total loans at June 30, 2024, were $1.50 billion, compared to $1.41 billion at June 30, 2023. The 6.3% year-over-year increase in total loans was primarily due to higher commercial and industrial, residential real estate, and multifamily loans. Total liabilities at June 30, 2024, increased 4.3% to $1.62 billion, compared to $1.55 billion at June 30, 2023. Total deposits at June 30, 2024, were $1.47 billion, compared to $1.43 billion at June 30, 2023. The 2.6% year-over-year increase in deposits was primarily due to growth in money market and time deposits, partially offset by declines in noninterest-bearing and interest-bearing demand and savings accounts. Noninterest-bearing demand deposits were 26.3% of total deposits at June 30, 2024, compared to 30.8% at June 30, 2023. At June 30, 2024, the Company had brokered deposits of $90.4 million, compared to $90.3 million at June 30, 2023. The investment securities available for sale portfolio was $166.4 million at June 30, 2024, compared with $167.2 million at June 30, 2023. Michael Ranttila, Chief Financial Officer, stated, "Asset quality remains stable.  We have achieved four consecutive quarters with net quarter-to-date recoveries, and nonperforming assets to total assets at June 30, 2024, were 0.87%, compared to 0.74% at June 30, 2023.  The slight uptick in nonperforming assets to total assets was due primarily to two relationships in the freight and industrial segments that moved to nonaccrual in the second quarter. We believe these relationships do not indicate a trend in the markets we serve, our portfolio, or underwriting standards. Despite this increase, we remain well reserved for potential credit losses with an allowance for credit losses to total loans of 1.46% at June 30, 2024, which was in line with the same period a year ago, and up slightly from the quarter ended March 31, 2024." 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. Year-to-date, total deposits increased 3.0%, while our Federal Home Loan Bank (FHLB) advances decreased by 23.3%. At June 30, 2024, additional borrowing capacity at the FHLB was $440.3 million, with the potential to acquire additional brokered deposits of approximately $187.8 million. The combination of high levels of potentially liquid assets, cash flows from operations, and additional borrowing capacity provides us with excellent liquidity levels to support our long-term growth strategies and our legacy of returning excess capital to shareholders." Middlefield's CRE portfolio included the following categories at June 30, 2024:     Balance     Percent of     Percent of   CRE Category   (in thousands)     CRE Portfolio     Loan Portfolio   Multi-Family   $ 86,951       13.3 %     5.8 % Office Space     76,341       11.6 %     5.1 % Shopping Plazas     70,556       10.9 %     4.7 % Self-Storage     55,267       8.4 %     3.7 % Hospitality     39,540       6.0 %     2.6 % Senior Living     28,911       4.4 %     1.9 % Other     297,842       45.4 %     19.9 % Total CRE   $ 655,408       100.0 %     43.7 % Stockholders' Equity and DividendsAt June 30, 2024, stockholders' equity was $206.8 million compared to $197.2 million at June 30, 2023. The 4.8% 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 stock acquired under the Company's stock repurchase program. On a per-share basis, shareholders' equity at June 30, 2024, was $25.63 compared to $24.38 at June 30, 2023. At June 30, 2024, tangible stockholders' equity(1) was $164.3 million, compared to $153.9 million at June 30, 2023. On a per-share basis, tangible stockholders' equity(1) was $20.37 at June 30, 2024, compared to $19.02 at June 30, 2023. (1)See non-GAAP reconciliation under the section "GAAP to Non-GAAP Reconciliations". For the 2024 first half, the Company declared cash dividends of $0.40 per share, totaling $3.2 million.  For the 2024 first half, the Company repurchased 43,858 shares of its common stock, at an average price of $24.00 per share. There were no repurchases during the second quarter of 2024. At June 30, 2024, the Company's equity-to-assets ratio was 11.31%, compared to 11.26% at June 30, 2023. Asset QualityFor the 2024 first half, the Company recorded a recovery of credit losses of $49,000 versus a provision for credit losses of $1.3 million for the same period last year. Net recoveries were $97,000, or (0.01%) of average loans, annualized, during the first half of 2024, compared to net charge-offs of $103,000, or 0.01% of average loans, annualized, at June 30, 2023. Nonperforming loans at June 30, 2024, were $16.0 million, compared to $7.1 million at June 30, 2023. Nonperforming assets at June 30, 2024, were $16.0 million, compared to $12.9 million at June 30, 2023. The allowance for credit losses at June 30, 2024, stood at $21.8 million, or 1.46% of total loans, compared to $20.6 million, or 1.46% of total loans at June 30, 2023. The increase in the allowance for credit losses was mainly due to changes in projected loss drivers, prepayment assumptions, and curtailment expectations over the reasonable and supportable forecast period as well as an overall increase in total loans. 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 $1.83 billion at June 30, 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)           June 30,     March 31,     December 31,     September 30,     June 30,   Balance Sheets (period end)   2024     2024     2023     2023     2023   ASSETS                                         Cash and due from banks   $ 50,496     $ 44,816     $ 56,397     $ 56,228     $ 49,422   Federal funds sold     1,762       1,438       4,439       9,274       9,654   Cash and cash equivalents     52,258       46,254       60,836       65,502       59,076   Investment securities available for sale, at fair value     166,424       167,890       170,779       159,414       167,209   Other investments     881       907       955       958       711   Loans held for sale     -       -       -       632       171   Loans:                                         Commercial real estate:                                         Owner occupied     182,809       178,543       183,545       185,593       187,919   Non-owner occupied     385,648       398,845       401,580       382,676       385,846   Multifamily     86,951       81,691       82,506       82,578       58,579   Residential real estate     337,121       331,480       328,854       321,331       312,196   Commercial and industrial     234,702       227,433       221,508       214,334       209,349   Home equity lines of credit     131,047       129,287       127,818       127,494       126,894   Construction and other     132,530       135,716       125,105       127,106       118,851   Consumer installment     6,896       7,131       7,214       7,481       9,801   Total loans     1,497,704       1,490,126       1,478,130       1,448,593       1,409,435   Less allowance for credit losses     21,795       21,069       21,693       20,986       20,591   Net loans     1,475,909       1,469,057       1,456,437       1,427,607       1,388,844   Premises and equipment, net     20,744       21,035       21,339       21,708       21,629   Goodwill     36,356       36,356       36,356       36,197       36,197   Core deposit intangibles     6,126       6,384       6,642       6,906       7,171   Bank-owned life insurance     34,802       34,575       34,349       34,153       34,235   Other real estate owned     -       -       -       5,792       5,792   Accrued interest receivable and other assets     34,686       34,210       35,190       34,551       30,472   TOTAL ASSETS   $ 1,828,186     $ 1,816,668     $ 1,822,883     $ 1,793,420     $ 1,751,507       June 30,     March 31,     December 31,     September 30,     June 30,       2024     2024     2023     2023     2023   LIABILITIES                                         Deposits:                                         Noninterest-bearing demand   $ 387,024     $ 390,185     $ 401,384     $ 424,055     $ 441,102   Interest-bearing demand     206,542       209,015       205,582       243,973       229,633   Money market     355,630       318,823       274,682       275,766       241,537   Savings     192,472       196,721       210,639       216,453       231,508   Time     327,876       332,165       334,315       296,732       287,861   Total deposits     1,469,544       1,446,909       1,426,602       1,456,979       1,431,641   Federal Home Loan Bank advances     125,000       137,000       163,000       118,000       100,000   Other borrowings     11,762       11,812       11,862       11,912       11,961   Accrued interest payable and other liabilities     15,092       15,372       15,738       12,780       10,678   TOTAL LIABILITIES     1,621,398       1,611,093       1,617,202       1,599,671       1,554,280   STOCKHOLDERS' EQUITY                                         Common stock, no par value; 25,000,000 shares authorized, 9,946,454                                         shares issued, 8,067,144 shares outstanding as of June 30, 2024     161,823       161,823       161,388       161,312       161,211   Retained earnings     105,342       102,791       100,237       98,717       96,500   Accumulated other comprehensive loss     (19,468 )     (18,130 )     (16,090 )     (26,426 )     (20,630 ) Treasury stock, at cost; 1,879,310 shares as of June 30, 2024     (40,909 )     (40,909 )     (39,854 )     (39,854 )     (39,854 ) TOTAL STOCKHOLDERS' EQUITY     206,788       205,575       205,681       193,749       197,227   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 1,828,186     $ 1,816,668     $ 1,822,883     $ 1,793,420     $ 1,751,507       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   2024     2024     2023     2023     2023     2024     2023   INTEREST AND DIVIDEND INCOME                                                         Interest and fees on loans   $ 23,422     $ 22,395     $ 22,027     $ 20,899     $ 20,762     $ 45,817     $ 39,037   Interest-earning deposits in other institutions     386       437       370       300       369       823       620   Federal funds sold     122       152       94       266       158       274       411   Investment securities:                                                         Taxable interest     505       467       479       477       479       972       937   Tax-exempt interest     966       972       976       980       978       1,938       1,958   Dividends on stock     198       189       144       148       91       387       179   Total interest and dividend income     25,599       24,612       24,090       23,070       22,837       50,211       43,142   INTEREST EXPENSE                                                         Deposits     8,423       7,466       6,522       5,632       3,851       15,889       6,841   Short-term borrowings     1,920       1,993       2,013       1,258       1,462       3,913       2,114   Other borrowings     173       184       179       213       170       357       326   Total interest expense     10,516       9,643       8,714       7,103       5,483       20,159       9,281   NET INTEREST INCOME     15,083       14,969       15,376       15,967       17,354       30,052       33,861   Provision (Recovery of) for credit losses     87       (136 )     554       1,127       814       (49 )     1,321   NET INTEREST INCOME AFTER PROVISION                                                         (RECOVERY OF) FOR CREDIT LOSSES     14,996       15,105       14,822       14,840       16,540       30,101       32,540   NONINTEREST INCOME