Middlefield Banc Corp. Reports Third Quarter 2012 Earnings of $0.93 Per Share

MIDDLEFIELD, Ohio, Oct. 25, 2012 /PRNewswire/ -- Middlefield Banc Corp. (OTCQB: MBCN), parent company of The Middlefield Banking Company and Emerald Bank, announced net income for the third quarter of 2012 of $1,849,000, or $0.93 per diluted share.  Net income for the third quarter of 2011 was $1,079,000, or $0.63 per diluted share.  Annualized returns on average equity ("ROE") and average assets ("ROA") for the third quarter of 2012 were 16.57% and 1.12%, respectively. 

For the first nine months of 2012 net income was $5,012,000, or $2.65 per diluted share.  For the same period of 2011, net income of $2,801,000 equated to $1.69 per diluted share.  ROE and ROA were 15.26% and 1.02%, respectively, for the nine month period of 2012.  Comparable results for the 2011 nine month period were 9.82% and 0.59%, respectively.

"We are pleased to report continued strong financial results for the third quarter and year-to-date periods of 2012," stated Thomas G. Caldwell, President and Chief Executive Officer. "Our performance reflects our ongoing focus on core banking fundamentals even as the slow growth economic recovery and historically low interest rate environment continue."

"Although we have seen many positive trends in our operations during the year, we are concerned with the interest rate environment, which the Fed has chosen to maintain.  With all indications being that we are faced with this level until mid-2015, we fully anticipate that our net interest margin will begin to be flat or down moving forward.  Our team has been keenly attentive to effectively managing the margin as evidenced by our positive performance with a year-to-date margin of 3.95%," said Caldwell.

"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 third quarter of 2012 increased $346,000, or 6.4%, to $5,740,000 compared to $5,394,000 in the comparable quarter of 2011.  The net interest margin increased 27 basis points to 4.02% compared to the 3.75% reported for the year-ago quarter.  Net interest income for the first nine months of 2012 increased by $1,334,000, or 8.6%, to $16,863,000.  For the same period of 2011, net interest income was $15,529,000.  The net interest margin for the 2012 nine month period was 3.95%, a 26 basis point increase from the 3.69% reported for the 2011 period.

"Our performance this year has benefited by the continued improvement in our asset quality.  This has permitted us to lower our provision expense significantly," commented Donald L. Stacy, Chief Financial Officer.  "Additionally, we have re-positioned our investment portfolio, recognizing gains in the process."

Stacy continued, "In addition to the potential of a shrinking net interest margin, our primary concern as we look at 2013 is the continued increase in our costs to address regulatory mandates.  The continued cost of compliance with an ever-increasing level of regulations and rules has the potential to have a significant negative impact upon the earnings capacity of all within the industry."

Non-Interest Income and Operating Expenses

Non-interest income increased for both the three and nine month periods.  During the third quarter, the company recorded a gain of $152,000 related to the sale of certain investment securities.  For the year-to-date period, the company has recognized gains on the sale of investment securities in the aggregate of $448,000.  During 2011, a loss on securities of $16,000 was booked for the nine month period.  Fees related to debit card usage and income from investment services also saw positive gains year over year. 

Noninterest expense for the third quarter of 2012 totaled $4,122,000, an increase of $216,000 from the same period last year.  The two largest components of this increase were higher professional fees, which were up $89,000, and Federal deposit insurance, which was up $74,000.  For the first nine months of 2012, total non-interest expense of $11,945,000 was $42,000, or 0.4%, higher than the 2011 comparable period.  Lower costs related to salaries/benefits, occupancy expense, and loss on other real estate owned, were offset by higher levels of professional fees, Federal deposit insurance, and franchise tax expenses. 

Balance Sheet

The company's total assets at the end of the third quarter of 2012 stood at $664.2 million, an increase of $9.6 million, or 1.5%, from the figure reported at December 31, 2011.  Net loans at September 30, 2012 were $402.0 million, up $6.9 million, or 1.8%, over the year-end 2011 figure.  Total deposits stood at $584.7 million as of September 30, 2012.  This figure represents an increase of $3.8 million, or 0.6%, from year-end 2011.  The investment portfolio, which is entirely classified as available for sale, stood at $179.1 million at September 30, 2012.  This reflects a decrease of $14.8 million from December 31, 2011.  Stockholders' equity at September 30, 2012, was $55.1 million, while tangible book value per share was $25.37. 

Asset Quality    

For the three months ended September 30, 2012, management added $143,000 to the allowance for loan losses, which compares to $920,000 for the same period of 2011.  The comparable nine months figures are $1,193,000 for 2012 and $2,485,000 for 2011.  The lower loan loss provision was related to a lower level of charge-offs and a decrease in the total of non-performing assets.  Net charge-offs for the first nine months of 2012 were $839,000, or 0.21% of average loans.  The comparable period of 2011 saw net charge-offs of $1,132,000, or 0.30% of average loans.  The allowance for loan losses at September 30, 2012 stood at $7,173,000, or 1.75% of total loans.  At September 30, 2011, the allowance for loan losses was $7,574,000, representing 1.95% of total loans. 

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

Dividends   

During the third quarter of both 2012 and 2011, Middlefield paid cash dividends of $0.26 per share.

Middlefield Banc Corp. headquartered in Middlefield, Ohio is a multi-bank holding company with total assets of $664.2 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.   

Contact: James R. Heslop, 2nd
Executive Vice President/Chief Operating Officer
(440) 632-1666 Ext. 3219
[email protected]

SOURCE Middlefield Banc Corp.