Form 8-K - Current report

MIDDLEFIELD BANC CORP.

Date: January 26, 2024

/s/ Ronald L. Zimmerly, Jr

President and Chief Executive Officer

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

January 26, 2024

(Date of Report: Date of earliest event reported)

Middlefield Banc Corp.

(Exact name of registrant as specified in its charter)

Ohio

(State or other jurisdiction of incorporation)

001-36613

(Commission File Number)

34-1585111

(I.R.S. Employer Identification Number)

15985 East High Street

Middlefield, Ohio 44062

(Address of principal executive offices, including zip code)

(440) 632-1666

(Registrant’s telephone number, including area code)

(not applicable)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

Common Stock, no par value

MBCN

The NASDAQ Stock Market, LLC

(NASDAQ Capital Market)

ITEM 2.02

RESULTS OF OPERATIONS AND FINANCIAL CONDITION

The following information is furnished under Item 2.02. On January 26, 2024, Middlefield Banc Corp. issued a press release announcing financial results for the three-month and twelve-month periods ended December 31, 2023. A copy of the press release is attached hereto as Exhibit 99 and is incorporated herein by this reference.

The information contained or incorporated by reference in this current report on Form 8-K may contain forward-looking statements, including certain plans, expectations, goals, and projections, which are subject to numerous assumptions, risks, and uncertainties. Actual results could differ materially from those contained or implied by such statements for a variety of factors, including: changes in economic conditions; movements in interest rates; competitive pressures on product pricing and services; success and timing of business strategies; the nature, extent, and timing of governmental actions and reforms; and extended disruption of vital infrastructure. All forward-looking statements included in this current report on Form 8-K are based on information available at the time of the report. Middlefield Banc Corp. assumes no obligation to update any forward-looking statement.

ITEM 9.01

FINANCIAL STATEMENTS AND EXHIBITS

(c)

Exhibits.

The following exhibits are furnished herewith:

EXHIBITS


99		January 26, 2024 press release of Middlefield Banc Corp.

104		Cover Page Interactive File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Exhibit 99

LOGO

15985 East High Street

P. O. Box 35

Middlefield, Ohio 44062

Phone: 440/632-1666 FAX: 440/632-1700

www.middlefieldbank.bank

PRESS RELEASE

Company Contact:

Investor and Media Contact:

Ronald L. Zimmerly, Jr.

President and Chief Executive Officer

Middlefield Banc Corp.

(419) 673-1217

rzimmerly@middlefieldbank.com

Andrew M. Berger

Managing Director

SM Berger & Company, Inc.

(216) 464-6400

andrew@smberger.com

Middlefield Banc Corp. Reports 2023 Full-Year Financial Results

MIDDLEFIELD, OHIO, January 26, 2024 ◆◆◆◆ Middlefield Banc Corp. (NASDAQ: MBCN) today reported financial results for the three and twelve-months ended December 31, 2023.

2023 Financial Highlights (on a year-over-year basis unless noted):

•

Net income increased 10.8% to a record $17.4 million

•

Earnings were $2.14 per diluted share compared to $2.59 per diluted share, reflecting a 34.5% increase in the average diluted shares outstanding related to the Liberty Bancshares, Inc. merger

•

Pre-tax, pre-provision net income increased 25.7% to a record $23.8 million⁽¹⁾

•

Net interest income increased 29.9% to a record $65.2 million, supported by a strong net interest margin of 4.04%

•

Total loans were a record $1.48 billion, compared to $1.35 billion at December 31, 2022

•

Total deposits were $1.43 billion, compared to $1.40 billion at December 31, 2022

•

Return on average assets was 0.99%, compared to 1.17%

•

Return on average equity was 8.83%, compared to 11.25%

•

Return on average tangible common equity⁽¹⁾ was 11.20%, compared to 12.95%

•

Strong asset quality continues with nonperforming assets to total assets of 0.60% at year end

•

Allowance for credit losses was 1.47% of total loans, compared to 1.07%

•

Equity to assets remained strong at 11.28%

•

Book value increased 6.0% to $25.41 per share

•

Declared $0.85 per share in dividends, a 4.9% increase

(1)	See non-GAAP reconciliation under the section “GAAP to Non-GAAP Reconciliations”

Ronald L. Zimmerly, Jr., President and Chief Executive Officer, stated, “By many accounts, 2023 was a historic year for Middlefield as we successfully integrated the Liberty Bancshares, Inc. (“Liberty”) merger and ended the year with record total assets, stockholders’ equity, and annual net income. Through the Liberty merger, we expanded Middlefield’s footprint into Western Ohio and deepened our exposure in Central Ohio – creating one of the leading independent community banks in the state. In addition, we enhanced our management team and added seasoned Ohio bankers with deep expertise across Commercial, Business, and Consumer Banking as we remain focused on developing talent from within the Company and attracting leading bankers from outside our organization. Finally, we added new resources to drive deposit growth in a more competitive environment, enhanced our small business lending capabilities, and made strategic adjustments to our operating structure to provide more value to our retail customers. These actions have significantly enhanced our infrastructure, which we believe will allow us to serve our communities better, provide our team members more opportunities, and support Middlefield’s growth.”

“As we look to 2024, we are focused on executing against our long-term strategic plan, benefiting from the synergies of the Liberty merger, and realizing the value from the investments we have made across our business this past year. While we expect uncertainty about FOMC monetary policies and their impact on national economic conditions in 2024, economic activity and employment within our Ohio markets remain stable. We believe 2024 will be another good year of balance sheet growth and profitability, and we remain committed to creating long-term value for our customers, communities, team members, and shareholders,” concluded Mr. Zimmerly.

Income Statement

Net interest income for the 2023 twelve-month period increased 29.9% to $65.2 million, compared to $50.2 million for the same period last year. For the full year, the net interest margin was 4.04%, compared to 4.08% last year. Net interest income for the 2023 fourth quarter increased 9.2% to $15.4 million, compared to $14.1 million for the 2022 fourth quarter. The net interest margin for the 2023 fourth quarter was 3.70%, compared to 4.23% for the same period of 2022.

Pre-tax income for the 2022 twelve-month period benefited from $1.2 million of accelerated net fees associated with the Paycheck Protection Program (“PPP”).

For the 2023 twelve-month period, noninterest income was $6.7 million, compared to $6.7 million for the same period last year. Noninterest income for the 2023 fourth quarter was $1.6 million, compared to $2.4 million for the same period the previous year.

For the 2023 twelve-month period, noninterest expense was $48.1 million, compared to $38.0 million for the same period last year. Higher year-over-year expenses for the year ended December 31, 2023, were primarily associated with the Liberty merger and higher personnel expenses, partially offset by a decrease in merger-related costs. Noninterest expense in the 2023 fourth quarter was $12.2 million, compared to $12.3 million for the 2022 fourth quarter.

Net income for the 2023 twelve-month period ended December 31, 2023, was $17.4 million, or $2.14 per diluted share, compared to $15.7 million, or $2.59 per diluted share for the same period last year. Net income for the 2023 fourth quarter ended December 31, 2023, was $3.5 million, or $0.44 per diluted share, compared to $3.5 million, or $0.53 per diluted share, for the same period last year.

Pre-tax, pre-provision net income for the 2023 twelve-months was $23.8 million, an increase of 25.7% from $18.9 million last year. For the 2023 fourth quarter, pre-tax, pre-provision net income was $4.8 million, an increase of 15.7% from $4.2 million last year. (See non-GAAP reconciliation under the section “GAAP to Non-GAAP Reconciliations”).

Balance Sheet

Total assets at December 31, 2023, increased 8.0% to $1.82 billion, compared to $1.69 billion at December 31, 2022. Total loans at December 31, 2023, were $1.48 billion, compared to $1.35 billion at December 31, 2022. The 9.3% 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 December 31, 2023, increased 8.5% to $1.62 billion, compared to $1.49 billion at December 31, 2022. Total deposits at December 31, 2023, were $1.43 billion, compared to $1.40 billion at December 31, 2022. The 1.8% 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 28.1% of total deposits at December 31, 2023, compared to 35.9% at December 31, 2022. At December 31, 2023, the Company had brokered deposits of $90.3 million, compared to $5.0 million at December 31, 2022.

The investment securities available for sale portfolio was $170.8 million at December 31, 2023, compared with $165.0 million at December 31, 2022.

Michael Ranttila, Chief Financial Officer, stated, “Asset quality remains historically strong due to our conservative underwriting standards and balanced portfolio composition, as well as steady economic trends across our Central, Western, and Northeast Ohio markets. During the fourth quarter, we sold an other real estate owned property that was on our balance sheet for $5.8 million for a loss of $173,000. In addition, during the fourth quarter, we downgraded one self-storage loan in the Southwest Ohio market, which resulted in an approximately $3.2 million increase in nonperforming loans since the 2023 third quarter. The 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 ended the quarter with $60.8 million in cash and cash equivalents, $170.8 million in available for sale investment securities, and $618.1 million of maximum borrowing capacity at the Federal Home Loan Bank, demonstrating ample liquidity. In addition, market values associated with our securities available for sale improved during 2023, resulting in a lower level of unrealized losses, which were 7.8% of total stockholders’ equity at December 31, 2023, compared to 11.2% at December 31, 2022. We remain confident that we have sufficient liquidity to navigate a more complex economic environment while continuing to support our growth strategies and capital allocation priorities and maintain the available for sale investment portfolio.”

Middlefield’s CRE portfolio included the following categories at December 31, 2023:


CRE Category	Balance (in thousands)		Percent of CRE Portfolio			Percent of Loan Portfolio
Multi-Family	$	82,506		12.4	%		5.6	%
Office Space	$	81,032		12.1	%		5.5	%
Shopping Plazas	$	75,024		11.3	%		5.1	%
Self-Storage	$	60,233		9.0	%		4.1	%
Hospitality	$	40,155		6.0	%		2.7	%
Senior Living	$	37,543		5.6	%		2.5	%
Other	$	291,138		43.6	%		19.7	%

Total CRE	$	667,631		100.0	%		45.2	%

Stockholders’ Equity and Dividends

At December 31, 2023, stockholders’ equity was $205.7 million compared to $197.7 million at December 31, 2022. The 4.0% 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 acquisition of stock under the Company’s stock repurchase program. On a per-share basis, shareholders’ equity at December 31, 2023, was $25.41 compared to $23.98 at December 31, 2022.

At December 31, 2023, tangible stockholders’ equity⁽¹⁾ was $162.7 million, compared to $158.3 million at December 31, 2022. On a per-share basis, tangible stockholders’ equity⁽¹⁾ was $20.10 at December 31, 2023, compared to $19.19 at December 31, 2022. ⁽¹⁾See non-GAAP reconciliation under the section “GAAP to Non-GAAP Reconciliations”.

For the 2023 full year, the Company declared cash dividends of $0.85 per share, a 4.9% increase from $0.81 per share for the same period last year. In the 2023 fourth quarter, the Company declared a $0.05 special cash dividend in addition to its regular cash dividend payment of $0.20. The Company declared a $0.10 special cash dividend in the 2022 fourth quarter.

At December 31, 2023, the Company had an equity-to-assets ratio of 11.28%, compared to 11.71% at December 31, 2022.

Asset Quality

For the 2023 twelve-month period and fourth quarter, the Company recorded provisions for credit losses of $3.0 million and $0.6 million, respectively, versus no provisions for credit losses for the same periods last year. The increase is due to the January 1, 2023 adoption of ASU 2016-13, Financial Instruments – Credit Losses – Topic (326): Measurement of Credit Losses on Financial Instruments. Upon adoption, the reserve for credit losses increased by $5.4 million.

For the year ended December 31, 2023, the Company had net recoveries of $31,000, or 0.00% of average loans, annualized, compared to net recoveries of $96,000, or 0.01% of average loans, annualized, for the year ended December 31, 2022. Net recoveries were $117,000 or 0.03% of average loans, annualized, during the 2023 fourth quarter, compared to net charge-offs of $94,000, or 0.03% of average loans, annualized, at December 31, 2022.

Nonperforming loans at December 31, 2023, were $10.9 million, compared to $2.1 million at December 31, 2022. Nonperforming assets at December 31, 2023, were $10.9 million, compared to $7.9 million at December 31, 2022. The allowance for credit losses at December 31, 2023, stood at $21.7 million, or 1.47% of total loans, compared to $14.4 million, or 1.07% of total loans at December 31, 2022.

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 December 31, 2023. 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 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)	2023			2023			2023			2023			2022
ASSETS
Cash and due from banks	$	56,397		$	56,228		$	49,422		$	59,609		$	51,404
Federal funds sold		4,439			9,274			9,654			7,048			2,405

Cash and cash equivalents		60,836			65,502			59,076			66,657			53,809
Investment securities available for sale, at fair value		170,779			159,414			167,209			169,605			164,967
Other investments		955			958			711			777			915
Loans held for sale		—			632			171			104			—
Loans:
Commercial real estate:
Owner occupied		183,545			185,593			187,919			185,661			191,748
Non-owner occupied		401,580			382,676			385,846			400,314			380,580
Multifamily		82,506			82,578			58,579			63,892			58,251
Residential real estate		328,854			321,331			312,196			306,179			296,308
Commercial and industrial		221,508			214,334			209,349			195,024			195,602
Home equity lines of credit		127,818			127,494			126,894			126,555			128,065
Construction and other		125,105			127,106			118,851			97,406			94,199
Consumer installment		7,214			7,481			9,801			7,816			8,119

Total loans		1,478,130			1,448,593			1,409,435			1,382,847			1,352,872
Less allowance for credit losses		21,693			20,986			20,591			20,162			14,438

Net loans		1,456,437			1,427,607			1,388,844			1,362,685			1,338,434
Premises and equipment, net		21,339			21,708			21,629			21,775			21,961
Goodwill		36,356			36,197			36,197			31,735			31,735
Core deposit intangibles		6,642			6,906			7,171			7,436			7,701
Bank-owned life insurance		34,349			34,153			34,235			34,015			33,811
Other real estate owned		—			5,792			5,792			5,792			5,821
Accrued interest receivable and other assets		35,190			34,551			30,472			27,258			28,528

TOTAL ASSETS	$	1,822,883		$	1,793,420		$	1,751,507		$	1,727,839		$	1,687,682


	December 31,			September 30,			June 30,			March 31,			December 31,
	2023			2023			2023			2023			2022
LIABILITIES
Deposits:
Noninterest-bearing demand	$	401,384		$	424,055		$	441,102		$	474,977		$	503,907
Interest-bearing demand		205,582			243,973			229,633			196,086			164,677
Money market		274,682			275,766			241,537			221,723			187,498
Savings		210,639			216,453			231,508			287,859			307,917
Time		334,315			296,732			287,861			244,962			238,020

Total deposits		1,426,602			1,456,979			1,431,641			1,425,607			1,402,019
Federal Home Loan Bank advances		163,000			118,000			100,000			85,000			65,000
Other borrowings		11,862			11,912			11,961			12,010			12,059
Accrued interest payable and other liabilities		15,738			12,780			10,678			10,057			10,913

TOTAL LIABILITIES		1,617,202			1,599,671			1,554,280			1,532,674			1,489,991

STOCKHOLDERS’ EQUITY
Common stock, no par value; 25,000,000 shares authorized, 9,930,704 shares issued, 8,095,252 shares outstanding as of December 31, 2023		161,388			161,312			161,211			161,248			161,029
Retained earnings		100,237			98,717			96,500			93,024			94,154
Accumulated other comprehensive loss		(16,090	)		(26,426	)		(20,630	)		(19,253	)		(22,144	)
Treasury stock, at cost; 1,835,452 shares as of December 31, 2023		(39,854	)		(39,854	)		(39,854	)		(39,854	)		(35,348	)

TOTAL STOCKHOLDERS’ EQUITY		205,681			193,749			197,227			195,165			197,691

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,822,883		$	1,793,420		$	1,751,507		$	1,727,839		$	1,687,682

MIDDLEFIELD BANC CORP.

Consolidated Selected Financial Highlights

(Dollar amounts in thousands, unaudited)


	For the Three Months Ended														For the Twelve Months Ended
Statements of Income	December 31, 2023			September 30, 2023		June 30, 2023			March 31, 2023			December 31, 2022			December 31, 2023			December 31, 2022
INTEREST AND DIVIDEND INCOME
Interest and fees on loans	$	22,027		$	20,899	$	20,762		$	18,275		$	14,368		$	81,963		$	48,513
Interest-earning deposits in other institutions		370			300		369			250			240			1,289			472
Federal funds sold		94			266		158			253			119			771			219
Investment securities:
Taxable interest		479			477		479			458			477			1,893			1,811
Tax-exempt interest		976			980		978			980			986			3,914			3,707
Dividends on stock		144			148		91			88			68			471			184

Total interest and dividend income		24,090			23,070		22,837			20,304			16,258			90,301			54,906

INTEREST EXPENSE
Deposits		6,522			5,632		3,851			2,990			1,771			18,995			4,018
Short-term borrowings		2,013			1,258		1,462			653			263			5,386			307
Other borrowings		179			213		170			155			142			717			404

Total interest expense		8,714			7,103		5,483			3,798			2,176			25,098			4,729

NET INTEREST INCOME		15,376			15,967		17,354			16,506			14,082			65,203			50,177
Provision for credit losses		554			1,127		814			507			—			3,002			—

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		14,822			14,840		16,540			15,999			14,082			62,201			50,177

NONINTEREST INCOME
Service charges on deposit accounts		997			954		940			987			976			3,878			3,850
(Loss) gain on equity securities		(4	)		48		(67	)		(138	)		(77	)		(161	)		(173	)
(Loss) gain on other real estate owned		(172	)		—		—			2			—			(170	)		—
Earnings on bank-owned life insurance		196			207		220			200			137			823			459
Gain (loss) on sale of loans		23			45		6			23			(4	)		97			24
Revenue from investment services		193			190		174			186			147			743			674
Gross rental income		132			110		77			102			951			421			951
Other income		237			263		242			318			284			1,060			961

Total noninterest income		1,602			1,817		1,592			1,680			2,414			6,691			6,746

NONINTEREST EXPENSE
Salaries and employee benefits		6,646			5,994		6,019			5,852			4,886			24,511			17,548
Occupancy expense		512			699		659			696			487			2,566			2,033
Equipment expense		273			297		354			317			252			1,241			1,074
Data processing costs		1,348			1,209		1,137			1,070			1,050			4,764			3,701
Ohio state franchise tax		397			398		398			385			279			1,578			1,157
Federal deposit insurance expense		285			207		249			120			105			861			329
Professional fees		660			545		550			538			382			2,293			1,500
Other real estate owned writedowns		—			—		—			—			1,000			—			1,200
Advertising expense		162			414		415			486			308			1,477			1,033
Software amortization expense		22			24		23			26			28			95			143
Core deposit intangible amortization		264			265		265			265			140			1,059			372
Gross other real estate owned expenses		120			195		63			132			692			510			707
Merger-related costs		0			22		206			245			1,413			473			2,382
Other expense		1,483			1,849		1,716			1,661			1,321			6,709			4,851

Total noninterest expense		12,172			12,118		12,054			11,793			12,343			48,137			38,030

Income before income taxes		4,252			4,539		6,078			5,886			4,153			20,755			18,893
Income taxes		709			703		986			989			651			3,387			3,220

NET INCOME	$	3,543		$	3,836	$	5,092		$	4,897		$	3,502		$	17,368		$	15,673

PTPP (1)	$	4,806		$	5,666	$	6,892		$	6,393		$	4,153		$	23,757		$	18,893

(1)	See section “GAAP to Non-GAAP Reconciliations” for the reconciliation of GAAP performance measures to 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,
	2023			2023			2023			2023			2022			2023			2022
Per common share data
Net income per common share - basic	$	0.44		$	0.47		$	0.63		$	0.60		$	0.53		$	2.14		$	2.60
Net income per common share - diluted	$	0.44		$	0.47		$	0.63		$	0.60		$	0.53		$	2.14		$	2.59
Dividends declared per share	$	0.25		$	0.20		$	0.20		$	0.20		$	0.30		$	0.85		$	0.81
Book value per share (period end)	$	25.41		$	23.94		$	24.38		$	24.13		$	23.98		$	25.41		$	23.98
Tangible book value per share (period end) (1) (2)	$	20.10		$	18.62		$	19.02		$	19.29		$	19.19		$	20.10		$	19.19
Dividends declared	$	2,023		$	1,619		$	1,616		$	1,605		$	2,514		$	6,864		$	5,490
Dividend yield		3.06	%		3.12	%		2.99	%		2.89	%		4.34	%		2.63	%		2.96	%
Dividend payout ratio		57.10	%		42.21	%		31.74	%		32.78	%		71.79	%		39.52	%		37.23	%
Average shares outstanding - basic		8,093,478			8,092,494			8,088,793			8,138,771			6,593,616			8,103,230			6,027,091
Average shares outstanding - diluted		8,116,609			8,101,306			8,101,984			8,152,629			6,610,907			8,126,361			6,044,382
Period ending shares outstanding		8,095,252			8,092,576			8,088,793			8,088,793			8,245,235			8,095,252			8,245,235
Selected ratios
Return on average assets (Annualized)		0.78	%		0.86	%		1.17	%		1.16	%		0.97	%		0.99	%		1.17	%
Return on average equity (Annualized)		7.13	%		7.73	%		10.41	%		10.19	%		9.35	%		8.83	%		11.25	%
Return on average tangible common equity (1) (3)		9.11	%		9.91	%		13.12	%		12.77	%		11.13	%		11.20	%		12.95	%
Efficiency (4)		68.99	%		65.65	%		61.27	%		62.44	%		72.75	%		64.49	%		64.96	%
Equity to assets at period end		11.28	%		10.80	%		11.26	%		11.30	%		11.71	%		11.28	%		11.71	%
Noninterest expense to average assets		0.68	%		0.68	%		0.69	%		0.69	%		0.86	%		2.74	%		2.84	%

(1) See section “GAAP to Non-GAAP Reconciliations” for the reconciliation of GAAP performance measures to non-GAAP measures. (2) Calculated by dividing tangible common equity by shares outstanding. (3) Calculated by dividing annualized net income for each period by average tangible common equity. (4) 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. 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	2023			2023			2023			2023			2022			2023			2022
Interest-earning assets:
Loans receivable (1)		6.01	%		5.82	%		5.96	%		5.45	%		5.11	%		5.82	%		4.79	%
Investment securities (1)		4.26	%		4.09	%		4.08	%		4.11	%		3.83	%		4.13	%		3.73	%
Interest-earning deposits with other banks		3.71	%		4.13	%		3.98	%		3.46	%		3.42	%		3.82	%		1.31	%
Total interest-earning assets		5.76	%		5.58	%		5.69	%		5.22	%		4.88	%		5.57	%		4.45	%
Deposits:
Interest-bearing demand deposits		1.67	%		1.51	%		1.11	%		0.83	%		0.83	%		1.32	%		0.34	%
Money market deposits		3.58	%		2.94	%		2.21	%		1.52	%		1.00	%		2.65	%		0.61	%
Savings deposits		0.59	%		0.58	%		0.73	%		1.03	%		0.49	%		0.76	%		0.20	%
Certificates of deposit		3.68	%		3.27	%		2.35	%		1.71	%		1.30	%		2.83	%		1.00	%
Total interest-bearing deposits		2.56	%		2.16	%		1.60	%		1.28	%		0.87	%		1.92	%		0.51	%
Non-Deposit Funding:
Borrowings		5.57	%		5.66	%		5.26	%		4.78	%		4.25	%		5.40	%		3.35	%
Total interest-bearing liabilities		2.96	%		2.48	%		2.02	%		1.52	%		1.02	%		2.28	%		0.59	%
Cost of deposits		1.81	%		1.53	%		1.09	%		0.84	%		0.57	%		1.32	%		0.34	%
Cost of funds		2.18	%		1.80	%		1.43	%		1.02	%		0.68	%		1.62	%		0.40	%
Net interest margin (2)		3.70	%		3.88	%		4.34	%		4.26	%		4.23	%		4.04	%		4.08	%

(1) Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were determined using an effective tax rate of 21%. (2) Net interest margin represents net interest income as a percentage of average interest-earning assets.



	For the Three Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
Asset quality data	2023			2023			2023			2023			2022
(Dollar amounts in thousands, unaudited)
Nonperforming loans (1)	$	10,877		$	7,717		$	7,116		$	6,882		$	2,111
Other real estate owned		—			5,792			5,792			5,792			5,821

Nonperforming assets	$	10,877		$	13,509		$	12,908		$	12,674		$	7,932

Allowance for credit losses	$	21,693		$	20,986		$	20,591		$	20,162		$	14,438
Allowance for credit losses/total loans		1.47	%		1.45	%		1.46	%		1.46	%		1.07	%
Net charge-offs (recoveries):
Quarter-to-date	$	(117	)	$	(16	)	$	111		$	(8	)	$	94
Year-to-date		(31	)		87			103			(8	)		(96	)
Net charge-offs (recoveries) to average loans, annualized:
Quarter-to-date		(0.03	%)		0.00	%		0.03	%		0.00	%		0.03	%
Year-to-date		0.00	%		0.01	%		0.01	%		0.00	%		(0.01	%)
Nonperforming loans/total loans		0.74	%		0.53	%		0.50	%		0.50	%		0.16	%
Allowance for credit losses/nonperforming loans		199.44	%		271.95	%		289.36	%		292.97	%		683.94	%
Nonperforming assets/total assets		0.60	%		0.75	%		0.74	%		0.73	%		0.47	%

(1)

On January 1, 2023, the Company adopted ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. As a result, nonperforming loans for the periods after January 1, 2023, include certain loans which were modified to borrowers experiencing financial difficulty. Amounts prior to January 1, 2023, exclude nonperforming troubled debt restructurings that were performing in according with their terms over a prescribed period of time, for which accounting guidance was eliminated upon adoption of ASU 2022-02.

MIDDLEFIELD BANC CORP.

GAAP to Non-GAAP Reconciliations


Reconciliation of Common Stockholders’ Equity to Tangible Common Equity	For the Three Months Ended
(Dollar amounts in thousands, unaudited)	December 31,		September 30,		June 30,		March 31,		December 31,
	2023		2023		2023		2023		2022
Stockholders’ equity	$	205,681	$	193,749	$	197,227	$	195,165	$	197,691
Less goodwill and other intangibles		42,998		43,103		43,368		39,171		39,436

Tangible common equity	$	162,683	$	150,646	$	153,859	$	155,994	$	158,255

Shares outstanding		8,095,252		8,092,576		8,088,793		8,088,793		8,245,235

Tangible book value per share	$	20.10	$	18.62	$	19.02	$	19.29	$	19.19


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,
	2023			2023			2023			2023			2022			2023			2022
Average stockholders’ equity	$	197,208		$	196,795		$	196,183		$	194,814		$	148,616		$	196,602		$	139,270
Less average goodwill and other intangibles		42,972			43,232			40,522			39,300			23,731			41,507			18,200

Average tangible common equity	$	154,236		$	153,563		$	155,661		$	155,514		$	124,885		$	155,095		$	121,070

Net income	$	3,543		$	3,836		$	5,092		$	4,897		$	3,502		$	17,368		$	15,673

Return on average tangible common equity (annualized)		9.11	%		9.91	%		13.12	%		12.77	%		11.13	%		11.20	%		12.95	%


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,
	2023			2023			2023			2023			2022			2023			2022
Net income	$	3,543		$	3,836		$	5,092		$	4,897		$	3,502		$	17,368		$	15,673
Add income taxes		709			703			986			989			651			3,387			3,220
Add provision for credit losses		554			1,127			814			507			—			3,002			—

PTPP	$	4,806		$	5,666		$	6,892		$	6,393		$	4,153		$	23,757		$	18,893

MIDDLEFIELD BANC CORP.

Average Balance Sheets

(Dollar amounts in thousands, unaudited)


	For the Three Months Ended
	December 31, 2023							December 31, 2022
	Average Balance		Interest		Average Yield/Cost			Average Balance		Interest		Average Yield/Cost
Interest-earning assets:
Loans receivable (1)	$	1,454,688	$	22,027		6.01	%	$	1,117,221	$	14,368		5.11	%
Investment securities (1)		159,493		1,455		4.26	%		178,772		1,463		3.83	%
Interest-earning deposits with other banks (2)		64,989		608		3.71	%		49,569		427		3.42	%

Total interest-earning assets		1,679,170		24,090		5.76	%		1,345,562		16,258		4.88	%

Noninterest-earning assets		116,160							89,740

Total assets	$	1,795,330						$	1,435,302

Interest-bearing liabilities:
Interest-bearing demand deposits	$	222,517	$	935		1.67	%	$	165,267	$	344		0.83	%
Money market deposits		276,354		2,493		3.58	%		172,437		435		1.00	%
Savings deposits		211,997		317		0.59	%		266,613		330		0.49	%
Certificates of deposit		299,427		2,777		3.68	%		201,972		662		1.30	%
Short-term borrowings		144,344		2,013		5.54	%		25,750		263		4.05	%
Other borrowings		11,890		179		5.94	%		12,086		142		4.66	%

Total interest-bearing liabilities		1,166,529		8,714		2.96	%		844,125		2,176		1.02	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		422,151							428,155
Other liabilities		9,442							14,406
Stockholders’ equity		197,208							148,616

Total liabilities and stockholders’ equity	$	1,795,330						$	1,435,302

Net interest income			$	15,376						$	14,082

Interest rate spread (3)						2.80	%						3.86	%
Net interest margin (4)						3.70	%						4.23	%
Ratio of average interest-earning assets to average interest-bearing liabilities						143.95	%						159.40	%

(1) Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $282 and $278 for the three months ended December 31, 2023 and 2022, respectively. (2) Includes dividends received on restricted stock. (3) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities. (4) Net interest margin represents net interest income as a percentage of average interest-earning assets.

	For the Three Months Ended
	December 31, 2023							September 30, 2023
	Average				Average			Average				Average
	Balance		Interest		Yield/Cost			Balance		Interest		Yield/Cost
Interest-earning assets:
Loans receivable (1)	$	1,454,688	$	22,027		6.01	%	$	1,425,375	$	20,899		5.82	%
Investment securities (1)		159,493		1,455		4.26	%		166,671		1,457		4.09	%
Interest-earning deposits with other banks (2)		64,989		608		3.71	%		68,587		714		4.13	%

Total interest-earning assets		1,679,170		24,090		5.76	%		1,660,633		23,070		5.58	%

Noninterest-earning assets		116,160							115,353

Total assets	$	1,795,330						$	1,775,986

Interest-bearing liabilities:
Interest-bearing demand deposits	$	222,517	$	935		1.67	%	$	256,153	$	975		1.51	%
Money market deposits		276,354		2,493		3.58	%		259,802		1,928		2.94	%
Savings deposits		211,997		317		0.59	%		225,216		327		0.58	%
Certificates of deposit		299,427		2,777		3.68	%		291,409		2,402		3.27	%
Short-term borrowings		144,344		2,013		5.54	%		91,201		1,258		5.47	%
Other borrowings		11,890		179		5.94	%		11,940		213		7.08	%

Total interest-bearing liabilities		1,166,529		8,714		2.96	%		1,135,721		7,103		2.48	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		422,151							431,775
Other liabilities		9,442							11,695
Stockholders’ equity		197,208							196,795

Total liabilities and stockholders’ equity	$	1,795,330						$	1,775,986

Net interest income			$	15,376						$	15,967

Interest rate spread (3)						2.80	%						3.10	%
Net interest margin (4)						3.70	%						3.88	%
Ratio of average interest-earning assets to average interest-bearing liabilities						143.95	%						146.22	%

(1)	Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $282 and $270 for the three months ended December 31, 2023 and September 30, 2023, respectively.

(2)	Includes dividends received on restricted stock.

(3)	Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

(4)	Net interest margin represents net interest income as a percentage of average interest-earning assets.


	For the Twelve Months Ended
			December 31,							December 31,
	2023							2022
	Average				Average			Average				Average
	Balance		Interest		Yield/Cost			Balance		Interest		Yield/Cost
Interest-earning assets:
Loans receivable (1)	$	1,410,251	$	81,963		5.82	%	$	1,014,896	$	48,513		4.79	%
Investment securities (1)		165,910		5,807		4.13	%		174,514		5,518		3.73	%
Interest-earning deposits with other banks (2)		66,295		2,531		3.82	%		67,030		875		1.31	%

Total interest-earning assets		1,642,456		90,301		5.57	%		1,256,440		54,906		4.45	%

Noninterest-earning assets		116,459							84,484

Total assets	$	1,758,915						$	1,340,924

Interest-bearing liabilities:
Interest-bearing demand deposits	$	217,662	$	2,870		1.32	%	$	164,569	$	554		0.34	%
Money market deposits		244,765		6,498		2.65	%		174,377		1,055		0.61	%
Savings deposits		253,962		1,925		0.76	%		259,225		527		0.20	%
Certificates of deposit		272,443		7,702		2.83	%		188,617		1,882		1.00	%
Short-term borrowings		101,088		5,386		5.33	%		8,576		307		3.58	%
Other borrowings		11,965		717		5.99	%		12,626		404		3.20	%

Total interest-bearing liabilities		1,101,885		25,098		2.28	%		807,990		4,729		0.59	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		449,102							386,296
Other liabilities		11,326							7,368
Stockholders’ equity		196,602							139,270

Total liabilities and stockholders’ equity	$	1,758,915						$	1,340,924

Net interest income			$	65,203						$	50,177

Interest rate spread (3)						3.29	%						3.86	%
Net interest margin (4)						4.04	%						4.08	%
Ratio of average interest-earning assets to average interest-bearing liabilities						149.06	%						155.50	%

(1)	Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $1,106 and $1,046 for the twelve months ended December 31, 2023 and 2022, respectively.

(2)	Includes dividends received on restricted stock.

(3)	Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

(4)	Net interest margin represents net interest income as a percentage of average interest-earning assets.

Document and Entity Information	Jan. 26, 2024
Cover [Abstract]
Entity Registrant Name	MIDDLEFIELD BANC CORP
Amendment Flag	false
Entity Central Index Key	0000836147
Document Type	8-K
Document Period End Date	Jan. 26, 2024
Entity Incorporation State Country Code	OH
Entity File Number	001-36613
Entity Tax Identification Number	34-1585111
Entity Address, Address Line One	15985 East High Street
Entity Address, City or Town	Middlefield
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	44062
City Area Code	(440)
Local Phone Number	632-1666
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Security 12b Title	Common Stock, no par value
Trading Symbol	MBCN
Security Exchange Name	NASDAQ