Middlefield Banc Corp. Reports Earnings for Second Quarter and Year-to-Date 2013

MIDDLEFIELD, Ohio, July 31, 2013 /PRNewswire/ -- Middlefield Banc Corp. (OTCQB:  MBCN) reported net income for the second quarter of 2013 of $1.69 million, or $0.83 per diluted share.  Net income for the second quarter of 2012 was $1.64 million, or $0.85 per diluted share.  Net income for the first six months of 2013 was $3.34 million, or $1.66 per diluted share.  For the same period of 2012, net income of $3.16 million equated to $1.72 per diluted share.

Annualized returns on average equity ("ROE") and average assets ("ROA") for the 2013 second quarter were 12.47% and 1.02%, respectively, compared with 13.22% and 1.01% for the second quarter of 2012.  ROE and ROA were 12.32% and 1.02%, respectively, for the six month period of 2013.  Comparable results for the 2012 six month period were 13.02% and 0.97%, respectively.

"We are pleased to report stable earnings for the second quarter and first half of 2013," stated Thomas G. Caldwell, President and Chief Executive Officer, "To have been able to achieve these results during a period of continued economic and regulatory uncertainty is testament to our strong staff and keen community banking focus."

"We have continued to see improvement in our asset quality figures.  This has permitted us to maintain a strong allowance relative to the portfolio, while reducing the provision expense relative to last year.  As we move forward in 2013, we will continue to remain firmly focused on delivering excellent customer service, increasing value to our shareholders, and operating our company under safe and sound banking principles," Caldwell concluded.

Net Interest Income

Net interest income for the second quarter of 2013 was relatively flat when compared to the second quarter of 2012.  For the six month periods of 2013 and 2012, the same was true.  The 2013 six month period saw net interest income of $11.18 million as compared to $11.12 million for the same period of 2012.  The net interest margin decreased 5 basis points to 3.88% compared to the 3.93% reported for the year-ago quarter.  The net interest margin for the 2013 six month period was 3.90%, a 1 basis point decrease from the 3.91% reported for 2012.

"The Fed's policy, now in its fifth year, of holding interest rates at historic lows continues to have an impact on the net interest margin.  We are finding extremely aggressive pricing on both new loans as well as on refinancing opportunities.  We have chosen to control our growth so as to maximize profitability, while not becoming locked in to long-term, low-rate assets.  Further, we fully recognize the community-based focus of our funding sources and have continued our efforts to control the costs of our liabilities," commented Donald L. Stacy, Chief Financial Officer. 

Noninterest Income and Operating Expenses

Noninterest income decreased for both the three and six month periods.  The company experienced increases in revenue from deposit services charges and in other income which was offset by a decrease in the recognized gains on investment securities.  During the second quarter of 2012, a gain of $296,000 related to the sale of certain investment securities was recognized.  In 2013, a loss on securities of $10,000 was booked during the second quarter, with the six month figure reflecting a gain of $175,000. 

Noninterest expense for the second quarter of 2013 totaled $3.95 million, a decrease of $93,000 from the same period in the prior year.  Increases in salaries and employee benefits, occupancy, franchise tax and professional fees were nearly equally matched by reductions in Federal deposit insurance premiums, equipment expense, and the recognition of a gain on the disposition of other real estate owned.  For the first half of 2013, total noninterest expense of $7.95 million was $126,000 more than the 2012 comparable period.  The primary factors were nearly consistent with those of the second quarter.    

Balance Sheet

The company's total assets at mid-year 2013 stood at $657.8 million, a decrease of $12.5 million, or 1.9%, from the figure reported at December 31, 2012.  Net loans at June 30, 2013 were $404.7 million, up $4.0 million, or 1.0%, over the year-end 2012 position.  Total deposits stood at $585.4 million as of June 30, 2013.  This figure represents a decrease of $7.9 million, or 1.3%, from year-end 2012.  The investment portfolio, which is entirely classified as available for sale, stood at $179.8 million at June 30, 2013.  This reflects a decrease of $14.7 million from December 31, 2012, with the funds being utilized for loan growth and deposit run-off. 

Shareholders' Equity and Dividends

At June 30, 2013, shareholders' equity totaled $52.6 million, a decrease of $600,000, or 1.1%, from the $53.2 million reported at June 30, 2012.  This change primarily results from certain mark-to-market adjustments in securities available for sale due to increases in long-term interest rates, offset by an increase in retained earnings.  Tangible book value per share at June 30, 2013 was $23.66.  The comparable figure at June 30, 2012, was $24.47.  The decrease in tangible book value per share was also the result of the aforementioned mark-to-market adjustments in securities available for sale.  Shareholders received a cash dividend of $0.26 per share in both the second quarter of 2013 and 2012.   

Asset Quality    

For the three months ended June 30, 2013, management added $300,000 to the allowance for loan losses, which compares to $450,000 for the same period of 2012.  The comparable six months figures are $613,000 for 2013 and $1,050,000 for 2012.  Net charge-offs for the first six months of 2013 were $643,000, or 0.16% of average loans.  The allowance for loan losses at June 30, 2013 stood at $7.75 million, or 1.88% of total loans.  At June 30, 2012, the allowance for loan losses was $7.75 million, representing 1.89% of total loans. 

The following table provides a summary of asset quality and reserve coverage ratios.

Middlefield Banc Corp. headquartered in Middlefield, Ohio is a multi-bank holding company with total assets of $657.8 million.  The company's lead bank, The Middlefield Banking Company, operates full service banking centers and a LPL Financial® brokerage office serving Chardon, Cortland, Garrettsville, Mantua, Middlefield, Newbury, and Orwell.  The company also serves the central Ohio market through its Emerald Bank subsidiary, with offices in Dublin and Westerville, Ohio.  Additional information is available at www.middlefieldbank.com and www.emeraldbank.com

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.   

SOURCE Middlefield Banc Corp.