MBCN Middlefield Banc Corporation

Middlefield Banc Corp. (NASDAQ: MBCN) reported financial results for the 2023 first half and second quarter ended June 30, 2023.

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

• Net income increased 26.1% to a record $10.0 million
• Earnings were $1.23 per diluted share compared to $1.35 per diluted share, reflecting a 38.4% increase in the average diluted shares outstanding related to the Liberty Bancshares, Inc. merger
• Pre-tax, pre-provision net income increased 40.1% to a record $13.3 million
• Net interest margin improved by 39 basis points to 4.30%, compared to 3.91%, and reflects five consecutive quarters of a net interest margin above 4%
• Total loans were a record $1.41 billion, compared to $1.35 billion at December 31, 2022
• Total deposits were a record $1.43 billion, compared to $1.40 billion at December 31, 2022
• Uninsured deposits to total assets were approximately 20%, and approximately 25% of total deposits at June 30, 2023
• Return on average assets was 1.16%, compared to 1.21%
• Return on average equity was 9.64%, compared to 11.49%
• Return on average tangible common equity(1) was 11.92%, compared to 13.03%
• Strong asset quality with nonperforming assets to total assets of 0.74%, compared to 0.89%
• Allowance for credit losses was 1.46% of total loans, compared to 1.49%
• Equity to assets increased to 11.26% from 9.91%

"I'm proud to report that Middlefield achieved record second-quarter and year-to-date results, including net income, assets, loans, and deposits. These results are especially encouraging as we successfully navigate the rapid rise in interest rates over the past 12 months, significant competition for deposits, and an increasingly fluid business environment. Our ability to withstand these macro-level headwinds is reflected in our strong balance sheet, robust asset quality, and diverse core deposit base, as well as the benefits and added scale of the Liberty Bancshares, Inc. merger. Most importantly, our success through the first six months of 2023 is a direct result of the dedication and expertise of our team members and the value we provide our local communities," stated James R. Heslop, II, Chief Executive Officer.

"As we look towards the second half of 2023, we expect higher rates and competition for deposits will increase our cost of funds in the coming quarters. Despite these trends, we believe our compelling net interest margin and larger loan portfolio will support strong levels of interest income throughout the remainder of the year. Middlefield's strong balance sheet and highly profitable financial model provides us with the flexibility to capitalize on opportunities for organic growth, embrace new technologies, and expand our team with top talent. We understand the importance of maintaining a prudent focus on asset quality and managing expenses, and we are committed to upholding these principles as we navigate the evolving landscape," concluded Mr. Heslop.

Income StatementNet interest income for the 2023 first half increased 44.1% to $33.9 million, compared to $23.5 million for the same period last year. Year-to-date, the net interest margin was 4.30%, compared to 3.91% for the same period last year. Net interest income for the 2023 second quarter increased 44.3% to $17.4 million, compared to $12.0 million for the 2022 second quarter. Net interest income for the 2023 second quarter benefited from a one-time $539,000 purchase accounting adjustment for loan valuations associated with the Liberty Bancshares, Inc. merger. The net interest margin for the 2023 second quarter was 4.34%, compared to 4.02% for the same period of 2022.

Pre-tax income during last year's first half and second quarter benefited from $1.2 million and $580,000, respectively, of accelerated net fees associated with the Paycheck Protection Program ("PPP").

For the 2023 first half, noninterest income was $3.3 million, compared to $2.8 million for the same period last year. Noninterest income for the 2023 second quarter was $1.6 million, compared to $1.4 million for the same period last year.

For the 2023 first half, noninterest expense was $23.8 million, compared to $16.8 million for the same period last year. Operating costs in the 2023 second quarter were $12.1 million from $8.5 million for the 2022 second quarter. Higher second-quarter and first-half expenses were primarily associated with the Liberty Bancshares, Inc. merger. The Company's efficiency ratio for the 2023 first half was 62.73%, compared to 62.17% for the same period last year, and for the 2023 second quarter was 61.27%, compared to 61.83% for last year's second quarter.

Net income for the 2023 first half ended June 30, 2023, was $10.0 million, or $1.23 per diluted share, compared to $7.9 million, or $1.35 per diluted share for the same period last year. Net income for the 2023 second quarter ended June 30, 2023, was $5.1 million, or $0.63 per diluted share, compared to $4.1 million, or $0.70 per diluted share, for the same period last year.

Pre-tax, pre-provision net income was $13.3 million, an increase of 40.1% from $9.5 million last year. Pre-tax, pre-provision net income was a quarterly record of $6.9 million, an increase of 41.3% from $4.9 million last year.

Balance SheetTotal assets at June 30, 2023, increased 35.4% to $1.75 billion, compared to $1.29 billion at June 30, 2022. Net loans at June 30, 2023, increased 44.2% to $1.39 billion, compared to $963.4 million at June 30, 2022. The 44.2% increase in net loans was primarily due to the Liberty Bancshares, Inc. merger.

Total deposits at June 30, 2023, were $1.43 billion, compared to $1.15 billion at June 30, 2022. The 24.8% increase in deposits was primarily due to the Liberty Bancshares, Inc. merger. At June 30, 2023, the Company had brokered deposits of $53.5 million, compared to $5.0 million at June 30, 2022. The investment portfolio was $167.2 million at June 30, 2023, compared with $172.0 million at June 30, 2022.

Michael Ranttila, Chief Financial Officer, stated, "Our legacy of maintaining a robust balance sheet continues to produce strong financial results while elevating our position as a trusted and stable financial institution. We ended the quarter with $59.1 million in cash and cash equivalents, $167.2 million in investment securities, and $582.9 million of maximum borrowing capacity at the Federal Home Loan Bank. In addition, we maintain a modest level of unrealized losses on all securities, which was 10.5% of total capital at June 30, 2023. We believe we have ample liquidity to navigate a more complex economic environment while supporting our growth and capital allocation strategies."

Middlefield's CRE portfolio included the following categories at June 30, 2023:

CRE Category		Balance(in thousands)				Percent of CREPortfolio		Percent of LoanPortfolio
Shopping Plazas		$	80,690			12.8%		5.7%
Office Space		$	73,230			11.6%		5.2%
Multi-Family		$	58,579			9.3%		4.2%
Self-Storage		$	58,234			9.2%		4.1%
Senior Living		$	40,318			6.4%		2.9%
Hospitality		$	33,701			5.3%		2.4%
Other		$	287,592			45.5%		20.4%
Total CRE		$	632,344			100.0%		44.9%

Middlefield's commercial real estate office credit exposure represented 5.2% of the Company's total loan portfolio at June 30, 2023, with a weighted average loan-to-value of approximately 53% and an average loan of $1.2 million. In addition, Middlefield's office exposure was within Ohio, with approximately 96% of the Company's office portfolio in suburban markets.

Stockholders' Equity and DividendsAt June 30, 2023, stockholders' equity was $197.2 million compared to $128.2 million at June 30, 2022. The 53.8% year-over-year increase in stockholders' equity was primarily due to the Liberty Bancshares, Inc. merger, partially offset by an increase in the unrealized loss on the available-for-sale investment portfolio and the Company's stock repurchase program. On a per-share basis, shareholders' equity at June 30, 2023, was $24.38 compared to $22.07 at June 30, 2022.

At June 30, 2023, tangible stockholders' equity(1) was $153.9 million, compared to $111.9 million at June 30, 2022. On a per-share basis, tangible stockholders' equity(1) was $19.02 at June 30, 2023, compared to $19.26 at June 30, 2022.

Through the 2023 first half, the Company declared cash dividends of $0.40 per share, a 17.6% increase from $0.34 per share for the same period last year.

At June 30, 2023, the Company had an equity-to-assets ratio of 11.26%, compared to 9.91% at June 30, 2022.

Asset QualityFor the 2023 first half and second quarter, the Company recorded provisions for credit losses of $1.3 million and $814,000, respectively, versus no provisions for credit losses for the same periods last year.

Net charge-offs were $111,000 or 0.03% of average loans, annualized, during the 2023 second quarter, compared to net recoveries of $58,000, or 0.02% of average loans, annualized, at June 30, 2022. Year-to-date net charge-offs were $103,000, or 0.01% of average loans, annualized, compared to net recoveries of $208,000, or 0.04% of average loans, annualized for the six-months ended June 30, 2022.

Nonperforming loans at June 30, 2023, were $7.1 million, compared to $4.7 million at June 30, 2022. Nonperforming assets at June 30, 2023, were $12.9 million, compared to $11.5 million at June 30, 2022. The allowance for credit losses at June 30, 2023, stood at $20.6 million, or 1.46% of total loans, compared to $14.6 million, or 1.49% of total loans at June 30, 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 $1.75 billion at June 30, 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

(1) 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 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 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 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)
		June 30,				March 31,				December 31,				September 30,				June 30,
Balance Sheets (period end)		2023				2023				2022				2022				2022
ASSETS
Cash and due from banks	$	49,422			$	59,609			$	51,404			$	119,777			$	60,114
Federal funds sold		9,654				7,048				2,405				8,800				19,039
Cash and cash equivalents		59,076				66,657				53,809				128,577				79,153
Equity securities, at fair value		711				777				915				972				779
Investment securities available for sale, at fair value		167,209				169,605				164,967				162,064				171,958
Loans held for sale		171				104				-				-				-
Loans:
Commercial real estate:
Owner occupied		187,919				185,661				191,748				120,912				120,771
Non-owner occupied		385,846				400,314				380,580				285,419				288,334
Multifamily		58,579				63,892				58,251				38,063				29,152
Residential real estate		312,196				306,179				296,308				247,612				246,453
Commercial and industrial		209,349				195,024				195,602				146,987				137,398
Home equity lines of credit		126,894				126,555				128,065				114,344				111,730
Construction and other		118,851				97,406				94,199				33,748				35,988
Consumer installment		9,801				7,816				8,119				8,110				8,171
Total loans		1,409,435				1,382,847				1,352,872				995,195				977,997
Less allowance for credit losses		20,591				20,162				14,438				14,532				14,550
Net loans		1,388,844				1,362,685				1,338,434				980,663				963,447
Premises and equipment, net		21,629				21,775				21,961				16,215				17,030
Goodwill		36,197				31,735				31,735				15,071				15,071
Core deposit intangibles		7,171				7,436				7,701				1,171				1,249
Bank-owned life insurance		34,235				34,015				33,811				17,382				17,274
Other real estate owned		5,792				5,792				5,821				6,792				6,792
Accrued interest receivable and other assets		30,472				27,258				28,528				22,104				20,624
TOTAL ASSETS	$	1,751,507			$	1,727,839			$	1,687,682			$	1,351,011			$	1,293,377
		June 30,				March 31,				December 31,				September 30,				June 30,
		2023				2023				2022				2022				2022
LIABILITIES
Deposits:
Noninterest-bearing demand	$	441,102			$	474,977			$	503,907			$	383,675			$	379,872
Interest-bearing demand		229,633				196,086				164,677				160,112				154,788
Money market		241,537				221,723				187,498				162,052				185,494
Savings		231,508				287,859				307,917				247,466				252,179
Time		287,861				244,962				238,020				177,182				174,833
Total deposits		1,431,641				1,425,607				1,402,019				1,130,487				1,147,166
Short-term borrowings		100,000				85,000				65,000				80,000				-
Other borrowings		11,961				12,010				12,059				12,107				12,910
Accrued interest payable and other liabilities		10,678				10,057				10,913				5,562				5,081
TOTAL LIABILITIES		1,554,280				1,532,674				1,489,991				1,228,156				1,165,157
STOCKHOLDERS' EQUITY
Common stock, no par value; 25,000,000 shares authorized, 9,924,245 shares issued, 8,088,793 shares outstanding as of June 30, 2023		161,211				161,248				161,029				87,640				87,562
Retained earnings		96,500				93,024				94,154				93,166				89,900
Accumulated other comprehensive loss		(20,630	)			(19,253	)			(22,144	)			(25,080	)			(17,591	)
Treasury stock, at cost; 1,835,452 shares as of June 30, 2023		(39,854	)			(39,854	)			(35,348	)			(32,871	)			(31,651	)
TOTAL STOCKHOLDERS' EQUITY		197,227				195,165				197,691				122,855				128,220
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,751,507			$	1,727,839			$	1,687,682			$	1,351,011			$	1,293,377

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,				30-Jun				30-Jun
Statements of Income		2023				2023				2022				2022				2022				2023				2022
INTEREST AND DIVIDEND INCOME
Interest and fees on loans	$	20,762			$	18,275			$	14,368			$	11,892			$	11,268			$	39,037			$	22,253
Interest-earning deposits in other institutions		369				250				240				134				74				620				98
Federal funds sold		158				253				119				51				46				411				49
Investment securities:
Taxable interest		479				458				477				449				442				937				885
Tax-exempt interest		978				980				986				982				955				1,958				1,739
Dividends on stock		91				88				68				59				33				179				57
Total interest and dividend income		22,837				20,304				16,258				13,567				12,818				43,142				25,081
INTEREST EXPENSE
Deposits		3,851				2,990				1,771				812				709				6,841				1,435
Short-term borrowings		1,462				653				263				44				-				2,114				-
Other borrowings		170				155				142				112				81				326				150
Total interest expense		5,483				3,798				2,176				968				790				9,281				1,585
NET INTEREST INCOME		17,354				16,506				14,082				12,599				12,028				33,861				23,496
Provision for credit losses		814				507				-				-				-				1,321				-
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		16,540				15,999				14,082				12,599				12,028				32,540				23,496
NONINTEREST INCOME
Service charges on deposit accounts		940				987				976				1,004				956				1,926				1,870
Loss on equity securities		(67	)			(138	)			(77	)			(57	)			(72	)			(205	)			(39	)
Gain on other real estate owned		-				2				-				-				-				2				-
Earnings on bank-owned life insurance		220				200				137				108				108				420				214
Gain on sale of loans		6				23				(4	)			7				18				29				21
Revenue from investment services		174				186				147				233				153				359				294
Gross rental income		77				102				951				-				-				179				-
Other income		242				318				284				251				220				560				426
Total noninterest income		1,592				1,680				2,414				1,546				1,383				3,270				2,786
NONINTEREST EXPENSE
Salaries and employee benefits		6,019				5,852				4,886				4,491				3,785				11,871				8,171
Occupancy expense		659				696				487				458				583				1,355				1,088
Equipment expense		354				317				252				233				274				672				589
Data processing costs		1,137				1,070				1,050				985				822				2,207				1,665
Ohio state franchise tax		398				385				279				293				292				783				585
Federal deposit insurance expense		249				120				105				84				90				369				140
Professional fees		550				538				382				280				383				1,088				838
Other real estate owned writedowns		-				-				1,000				-				200				-				214
Advertising expense		415				486				308				268				229				901				457
Software amortization expense		23				26				28				27				40				49				88
Core deposit intangible amortization		265				265				140				78				77				529				154
Gross other real estate owned expenses		63				132				692				1				6				195				-
Merger-related costs		206				245				1,413				390				579				449				579
Other expense		1,716				1,661				1,321				1,298				1,175				3,378				2,233
Total noninterest expense		12,054				11,793				12,343				8,886				8,535				23,846				16,801
Income before income taxes		6,078				5,886				4,153				5,259				4,876				11,964				9,481
Income taxes		986				989				651				1,010				787				1,975				1,559
NET INCOME	$	5,092			$	4,897			$	3,502			$	4,249			$	4,089			$	9,989			$	7,922
PTPP (1)	$	6,892			$	6,393			$	4,153			$	5,259			$	4,876			$	13,285			$	9,481
(1) The pre-tax pre-provision (PTPP) is the income before income taxes before provision for credit losses considerations, for reconciliation of 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 Six Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,				June 30,				June 30,
		2023				2023				2022				2022				2022				2023				2022
Per common share data
Net income per common share - basic	$	0.63			$	0.60			$	0.53			$	0.73			$	0.70			$	1.23			$	1.35
Net income per common share - diluted	$	0.63			$	0.60			$	0.53			$	0.73			$	0.70			$	1.23			$	1.35
Dividends declared per share	$	0.20			$	0.20			$	0.30			$	0.17			$	0.17			$	0.40			$	0.34
Book value per share (period end)	$	24.38			$	24.13			$	23.98			$	21.30			$	22.07			$	24.38			$	22.07
Tangible book value per share (period end) (2) (3)	$	19.02			$	19.29			$	19.19			$	18.48			$	19.26			$	19.02			$	19.26
Dividends declared	$	1,619			$	1,605			$	2,514			$	983			$	993			$	3,223			$	1,993
Dividend yield		2.99%				2.89%				4.34%				2.49%				2.71%				3.01%				2.72%
Dividend payout ratio		31.79%				32.78%				71.79%				23.13%				24.28%				32.27%				25.16%
Average shares outstanding - basic		8,088,793				8,138,771				6,593,616				5,792,773				5,851,422				8,113,645				5,865,147
Average shares outstanding - diluted		8,101,984				8,152,629				6,610,907				5,805,799				5,860,098				8,126,836				5,873,823
Period ending shares outstanding		8,088,793				8,088,793				8,245,235				5,767,803				5,810,351				8,088,793				5,810,351
Selected ratios
Return on average assets		1.17%				1.16%				0.97%				1.32%				1.25%				1.16%				1.21%
Return on average equity		9.54%				10.19%				9.35%				12.94%				12.30%				9.64%				11.49%
Return on average tangible common equity (2) (4)		11.76%				12.77%				11.13%				14.79%				14.02%				11.92%				13.03%
Efficiency (1)		61.27%				62.44%				72.75%				61.07%				61.83%				62.73%				62.17%
Equity to assets at period end		11.26%				11.30%				11.71%				9.09%				9.91%				11.26%				9.91%
Noninterest expense to average assets		0.69%				0.69%				0.86%				0.69%				0.65%				1.38%				1.27%
(1) 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
(2) See reconciliation of non-GAAP measures below
(3) Calculated by dividing tangible common equity by shares outstanding
(4) Calculated by dividing annualized net income for each period by average tangible common equity

MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
(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,
Yields		2023				2023				2022				2022				2022				2023				2022
Interest-earning assets:
Loans receivable (2)		5.96%				5.45%				5.11%				4.78%				4.66%				5.71%				4.60%
Investment securities (2)		4.08%				4.11%				3.83%				3.90%				3.76%				4.08%				3.59%
Interest-earning deposits with other banks		3.98%				3.46%				3.42%				2.06%				0.77%				3.71%				0.48%
Total interest-earning assets		5.69%				5.22%				4.88%				4.55%				4.28%				5.46%				4.17%
Deposits:
Interest-bearing demand deposits		1.11%				0.83%				0.83%				0.22%				0.15%				0.99%				0.15%
Money market deposits		2.21%				1.52%				1.00%				0.46%				0.49%				1.89%				0.48%
Savings deposits		0.73%				1.03%				0.49%				0.19%				0.06%				0.89%				0.06%
Certificates of deposit		2.35%				1.71%				1.30%				0.96%				0.83%				2.04%				0.85%
Total interest-bearing deposits		1.60%				1.28%				0.87%				0.43%				0.36%				1.44%				0.36%
Non-Deposit Funding:
Borrowings		5.26%				4.78%				4.25%				2.94%				2.51%				5.10%				2.34%
Total interest-bearing liabilities		2.02%				1.52%				1.02%				0.50%				0.39%				1.78%				0.39%
Cost of deposits		1.09%				0.84%				0.57%				0.29%				0.24%				0.97%				0.25%
Cost of funds		1.43%				1.02%				0.68%				0.34%				0.27%				1.23%				0.27%
Net interest margin (1)		4.34%				4.26%				4.23%				4.23%				4.02%				4.30%				3.91%
(1) Net interest margin represents net interest income as a percentage of average interest-earning assets.
(2) Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were determined using an effective tax rate of 21%.
		For the Three Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,
Asset quality data		2023				2023				2022				2022				2022
(Dollar amounts in thousands, unaudited)
Nonperforming loans (1)	$	7,116			$	6,882			$	2,111			$	3,692			$	4,670
Other real estate owned		5,792				5,792				5,821				6,792				6,792
Nonperforming assets	$	12,908			$	12,674			$	7,932			$	10,484			$	11,462
Allowance for credit losses	$	20,591			$	20,162			$	14,438			$	14,532			$	14,550
Allowance for credit losses/total loans		1.46%				1.46%				1.07%				1.46%				1.49%
Net charge-offs (recoveries):
Quarter-to-date	$	111			$	(8	)		$	94			$	18			$	(58	)
Year-to-date		103				(8	)			(96	)			(190	)			(208	)
Net charge-offs (recoveries) to average loans, annualized:
Quarter-to-date		0.03%				0.00%				0.03%				0.01%				-0.02	%
Year-to-date		0.01%				0.00%				-0.01	%			-0.02	%			-0.04	%
Nonperforming loans/total loans		0.50%				0.50%				0.16%				0.37%				0.48%
Allowance for credit losses/nonperforming loans		289.36%				292.97%				683.94%				393.61%				311.56%
Nonperforming assets/total assets		0.74%				0.73%				0.47%				0.78%				0.89%
(1) Nonperforming loans exclude troubled debt restructurings that are performing in accordance with their terms over a prescribed period of time.
Reconciliation of Common Stockholders' Equity to Tangible Common Equity	For the Three Months Ended
(Dollar amounts in thousands, unaudited)		June 30,				March 31,				December 31,				September 30,				June 30,
		2023				2023				2022				2022				2022
Stockholders' Equity	$	197,227			$	195,165			$	197,691			$	122,855			$	128,220
Less Goodwill and other intangibles		43,368				39,171				39,436				16,242				16,320
Tangible Common Equity	$	153,859			$	155,994			$	158,255			$	106,613			$	111,900
Shares outstanding		8,088,793				8,088,793				8,245,235				5,767,803				5,810,351
Tangible book value per share	$	19.02			$	19.29			$	19.19			$	18.48			$	19.26
Reconciliation of Average Equity to Return on Average Tangible Common Equity	For the Three Months Ended																					For the Six Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,				June 30,				June 30,
		2023				2023				2022				2022				2022				2023				2022
Average Stockholders' Equity	$	214,161			$	194,814			$	148,616			$	130,263			$	133,377			$	208,930			$	139,003
Less Average Goodwill and other intangibles		40,522				39,300				23,731				16,280				16,357				39,911				16,396
Average Tangible Common Equity	$	173,639			$	155,514			$	124,885			$	113,983			$	117,020			$	169,019			$	122,607
Net income	$	5,092			$	4,897			$	4,896			$	3,502			$	4,249			$	9,989			$	7,922
Return on average tangible common equity (annualized)		11.76%				12.77%				11.13%				14.79%				14.02%				11.92%				13.03%
Reconciliation of Pre-Tax Pre-Provision Income (PTPP)	For the Three Months Ended																					For the Six Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,				June 30,				June 30,
		2023				2023				2022				2022				2022				2023				2022
Net income	$	5,092			$	4,897			$	3,502			$	4,249			$	4,089			$	9,989			$	7,922
Add Income Taxes		986				989				651				1,010				787				1,975				1,559
Add Provision for credit losses		814				507				-				-				-				1,321				-
PTPP	$	6,892			$	6,393			$	4,153			$	5,259			$	4,876			$	13,285			$	9,481

MIDDLEFIELD BANC CORP.
Average Balance Sheets
(Dollar amounts in thousands, unaudited)
		For the Three Months Ended
		June 30,													June 30,
			2023													2022
		Average									Average				Average								Average
		Balance					Interest				Yield/Cost				Balance				Interest				Yield/Cost
Interest-earning assets:
Loans receivable (3)		$	1,400,074				$	20,762			5.96	%			$	970,820			$	11,268			4.66	%
Investment securities (3)			168,890					1,457			4.08	%				176,138				1,397			3.76	%
Interest-earning deposits with other banks (4)			62,296					618			3.98	%				79,924				153			0.77	%
Total interest-earning assets			1,631,260					22,837			5.69	%				1,226,882				12,818			4.28	%
Noninterest-earning assets			114,120													89,555
Total assets		$	1,745,380												$	1,316,437
Interest-bearing liabilities:
Interest-bearing demand deposits		$	214,045				$	595			1.11	%			$	159,779			$	59			0.15	%
Money market deposits			234,497					1,294			2.21	%				185,711				228			0.49	%
Savings deposits			263,587					478			0.73	%				260,226				40			0.06	%
Certificates of deposit			252,785					1,484			2.35	%				184,748				382			0.83	%
Short-term borrowings			112,349					1,462			5.22	%				-				-			0.00	%
Other borrowings			11,992					170			5.69	%				12,945				81			2.51	%
Total interest-bearing liabilities			1,089,255					5,483			2.02	%				803,409				790			0.39	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			450,835													375,013
Other liabilities			(8,871	)												4,638
Stockholders' equity			214,161													133,377
Total liabilities and stockholders' equity		$	1,745,380												$	1,316,437
Net interest income							$	17,354											$	12,028
Interest rate spread (1)											3.67	%											3.89	%
Net interest margin (2)											4.34	%											4.02	%
Ratio of average interest-earning assets to
average interest-bearing liabilities											149.76	%											152.71	%
(1) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
(2) Net interest margin represents net interest income as a percentage of average interest-earning assets.
(3) Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $294 and $271 for the three months ended June 30, 2023 and 2022, respectively.
(4) Includes dividends received on restricted stock.
		For the Three Months Ended
		June 30,													March 31,
			2023													2023
		Average									Average				Average								Average
		Balance					Interest				Yield/Cost				Balance				Interest				Yield/Cost
Interest-earning assets:
Loans receivable (3)		$	1,400,074				$	20,762			5.96	%			$	1,360,866			$	18,275			5.45	%
Investment securities (3)			168,890					1,457			4.08	%				167,674				1,438			4.11	%
Interest-earning deposits with other banks (4)			62,296					618			3.98	%				69,308				591			3.46	%
Total interest-earning assets			1,631,260					22,837			5.69	%				1,597,848				20,304			5.22	%
Noninterest-earning assets			114,120													115,515
Total assets		$	1,745,380												$	1,713,363
Interest-bearing liabilities:
Interest-bearing demand deposits		$	214,045				$	595			1.11	%			$	177,935			$	364			0.83	%
Money market deposits			234,497					1,294			2.21	%				208,408				783			1.52	%
Savings deposits			263,587					478			0.73	%				315,049				804			1.03	%
Certificates of deposit			252,785					1,484			2.35	%				246,151				1,039			1.71	%
Short-term borrowings			112,349					1,462			5.22	%				56,459				653			4.69	%
Other borrowings			11,992					170			5.69	%				12,038				155			5.22	%
Total interest-bearing liabilities			1,089,255					5,483			2.02	%				1,016,040				3,798			1.52	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			450,835													491,649
Other liabilities			(8,871	)												10,860
Stockholders' equity			214,161													194,814
Total liabilities and stockholders' equity		$	1,745,380												$	1,713,363
Net interest income							$	17,354											$	16,506
Interest rate spread (1)											3.67	%											3.70	%
Net interest margin (2)											4.34	%											4.26	%
Ratio of average interest-earning assets to
average interest-bearing liabilities											149.76	%											157.26	%
(1) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
(2) Net interest margin represents net interest income as a percentage of average interest-earning assets.
(3) Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $294 and $271 for the three months ended June 30, 2023 and 2022, respectively.
(4) Includes dividends received on restricted stock.
		For the Six Months Ended
		June 30,													June 30,
			2023													2022
		Average									Average				Average								Average
		Balance					Interest				Yield/Cost				Balance				Interest				Yield/Cost
Interest-earning assets:
Loans receivable (3)		$	1,380,470				$	39,037			5.71	%			$	977,336			$	22,253			4.60	%
Investment securities (3)			168,738					2,895			4.08	%				173,483				2,624			3.59	%
Interest-earning deposits with other banks (4)			65,802					1,210			3.71	%				85,807				204			0.48	%
Total interest-earning assets			1,615,010					43,142			5.46	%				1,236,626				25,081			4.17	%
Noninterest-earning assets			114,951													87,382
Total assets		$	1,729,961												$	1,324,008
Interest-bearing liabilities:
Interest-bearing demand deposits		$	195,990				$	960			0.99	%			$	165,066			$	119			0.15	%
Money market deposits			221,452					2,077			1.89	%				184,988				440			0.48	%
Savings deposits			289,318					1,281			0.89	%				260,194				78			0.06	%
Certificates of deposit			249,468					2,523			2.04	%				189,203				798			0.85	%
Short-term borrowings			84,404					2,114			5.05	%				-				-			0.00	%
Other borrowings			12,015					326			5.47	%				12,944				150			2.34	%
Total interest-bearing liabilities			1,052,647					9,281			1.78	%				812,395				1,585			0.39	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			471,242													367,334
Other liabilities			(2,858	)												5,276
Stockholders' equity			208,930													139,003
Total liabilities and stockholders' equity		$	1,729,961												$	1,324,008
Net interest income							$	33,861											$	23,496
Interest rate spread (1)											3.68	%											3.78	%
Net interest margin (2)											4.30	%											3.91	%
Ratio of average interest-earning assets to
average interest-bearing liabilities											153.42	%											152.22	%
(1) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
(2) Net interest margin represents net interest income as a percentage of average interest-earning assets.
(3) Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $572 and $492 for the six months ended June 30, 2023 and 2022, respectively.
(4) Includes dividends received on restricted stock.

Company Contact:	Investor and Media Contact:
James R. Heslop IIChief Executive OfficerMiddlefield Banc Corp.(440) 632-1666 Ext. 3219JHeslop@middlefieldbank.com	Andrew M. BergerManaging DirectorSM Berger & Company, Inc. (216) 464-6400andrew@smberger.com