Form 8-K - Current report

MIDDLEFIELD BANC CORP.

Date: October 23, 2023

/s/ James R. Heslop, II

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

October 23, 2023

(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 October 23, 2023, Middlefield Banc Corp. issued a press release announcing financial results for the three month and nine month periods ended September 30, 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		October 23, 2023 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:

James R. Heslop II

Chief Executive Officer

Middlefield Banc Corp.

(440) 632-1666 Ext. 3219

JHeslop@middlefieldbank.com

Andrew M. Berger

Managing Director

SM Berger & Company, Inc.

(216) 464-6400

andrew@smberger.com

Middlefield Banc Corp. Reports 2023 Nine-Month Financial Results

MIDDLEFIELD, OHIO, October 23, 2023 ◆◆◆◆ Middlefield Banc Corp. (NASDAQ: MBCN) today reported financial results for the three and nine months ended September 30, 2023.

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

•

Net income increased 13.6% to a record $13.8 million

•

Earnings were $1.70 per diluted share compared to $2.08 per diluted share, reflecting a 38.6% increase in the average diluted shares outstanding related to the Liberty Bancshares, Inc. merger

•

Pre-tax, pre-provision net income increased 28.6% to a record $19.0 million⁽¹⁾

•

Net interest income increased 38.0% to a record $49.8 million

•

Net interest margin improved by 13 basis points to 4.15%, compared to 4.02%

•

Noninterest income increased 17.5% to $5.1 million

•

Total loans were a record $1.45 billion, compared to $1.35 billion at December 31, 2022

•

Total deposits were a record $1.46 billion, compared to $1.40 billion at December 31, 2022

•

Return on average assets was 1.06%, compared to 1.24%

•

Return on average equity was 9.43%, compared to 11.96%

•

Return on average tangible common equity⁽¹⁾ was 11.92%, compared to 13.59%

•

Strong asset quality with nonperforming assets to total assets of 0.75%, compared to 0.78%

•

Allowance for credit losses was 1.45% of total loans, compared to 1.46%

•

Equity to assets increased to 10.80% from 9.09%

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

“Our third quarter performance reflects record loans, stable asset quality, and controlled operating expenses. Throughout the year, we have added proven executives to our leadership team to help support our growth. We have also added experienced lenders and treasury management professionals to grow Middlefield’s brand and drive loan and deposit growth across our Northeast, Central, and Western Ohio markets. As a result of our team’s efforts, we ended the third quarter with record total loans and assets and a 103-basis point year-over-year increase in our yield on earning assets. While this has produced strong levels of interest income, the higher rate environment and significant competition for deposits increased our funding costs at a faster rate and pressured net interest income during the quarter. We expect increased competition for deposits and higher funding costs to continue throughout 2023 and into 2024,” stated James R. Heslop, II, Chief Executive Officer.

“We continue prudently managing our balance sheet and closely monitoring our loan portfolio. Despite the higher rate environment, economic activity remains stable across our Ohio markets, supported by low unemployment and large-scale, multi-year economic development projects. Our local presence in attractive Ohio markets, combined with $840 million in maximum borrowing capacity and a proven team of banking professionals, allows us to support the local needs of our communities while continuing to invest in our long-term growth initiatives,” concluded Mr. Heslop.

Income Statement

Net interest income for the 2023 nine-month period increased 38.0% to $49.8 million, compared to $36.1 million for the same period last year. Year-to-date, the net interest margin was 4.15%, compared to 4.02% for the same period last year. Net interest income for the 2023 third quarter increased 26.7% to $16.0 million, compared to $12.6 million for the 2022 third quarter. The net interest margin for the 2023 third quarter was 3.88%, compared to 4.23% for the same period of 2022.

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

For the 2023 nine-month period, noninterest income was $5.1 million, compared to $4.3 million for the same period last year. Noninterest income for the 2023 third quarter was $1.8 million, compared to $1.5 million for the same period the previous year.

For the 2023 nine-month period, noninterest expense was $36.0 million, compared to $25.7 million for the same period last year. Noninterest expense in the 2023 third quarter were $12.1 million, compared to $8.9 million for the 2022 third quarter. Higher 2023 third-quarter and year-to-date expenses were primarily associated with the Liberty Bancshares, Inc. merger.

Net income for the 2023 nine-month period ended September 30, 2023, was $13.8 million, or $1.70 per diluted share, compared to $12.2 million, or $2.08 per diluted share for the same period last year. Net income for the 2023 third quarter ended September 30, 2023, was $3.8 million, or $0.47 per diluted share, compared to $4.2 million, or $0.73 per diluted share, for the same period last year.

Pre-tax, pre-provision net income for the 2023 nine-months was $19.0 million, an increase of 28.6% from $14.7 million last year. For the 2023 third quarter, pre-tax, pre-provision net income was $5.7 million, an increase of 7.7% from $5.3 million last year. (See non-GAAP reconciliation under the section “GAAP to Non-GAAP Reconciliations”).

Balance Sheet

Total assets at September 30, 2023, increased 32.7% to $1.79 billion, compared to $1.35 billion at September 30, 2022. Total loans at September 30, 2023, increased 45.6% to $1.45 billion, compared to $995.2 million at September 30, 2022. The 45.6% year-over-year increase in total loans was due to the Liberty Bancshares, Inc. merger and organic loan growth. At September 30, 2023, total loans have increased organically by approximately 9.4% on an annualized basis.

Total deposits at September 30, 2023, were $1.46 billion, compared to $1.13 billion at September 30, 2022. The 28.9% year-over-year increase in deposits was primarily due to the Liberty Bancshares, Inc. merger. Noninterest-bearing deposits were 29.1% of total deposits at September 30, 2023, compared to 33.9% at September 30, 2022. At September 30, 2023, the Company had brokered deposits of $53.5 million, compared to $5.0 million at September 30, 2022.

The investment securities portfolio was $159.4 million at September 30, 2023, compared with $162.1 million at September 30, 2022.

Michael Ranttila, Chief Financial Officer, stated, “Our balance sheet remains strong, and during the quarter, we continued to benefit from stable asset quality, ample capital levels, and limited exposure to unrealized losses within our investment portfolio. Reflecting the stability of our loan portfolio, at September 30, 2023, nonperforming assets to total assets were 0.75%, compared to 0.78% at September 30, 2022. In addition, we ended the quarter with $65.5 million in cash and cash equivalents, $159.4 million in available for sale investment securities and $570.8 million of maximum borrowing capacity at the Federal Home Loan Bank, demonstrating ample liquidity levels. Finally, we maintained a modest level of unrealized losses on all securities, which was 13.6% of total capital at September 30, 2023, compared to 20.4% at September 30, 2022. We are confident we have sufficient liquidity to navigate a more complex economic environment while supporting our growth strategies and capital allocation priorities.”

Middlefield’s CRE portfolio included the following categories at September 30, 2023:


CRE Category	Balance (in thousands)		Percent of CRE Portfolio			Percent of Loan Portfolio
Office Space	$	76,048		11.7	%		5.3	%
Shopping Plazas	$	76,036		11.7	%		5.3	%
Multi-Family	$	82,578		12.7	%		5.7	%
Self-Storage	$	59,734		9.2	%		4.1	%
Hospitality	$	40,450		6.2	%		2.8	%
Senior Living	$	23,629		3.6	%		1.6	%
Other	$	292,372		44.9	%		20.2	%

Total CRE	$	650,847		100.0	%		45.0	%

Middlefield’s commercial real estate office credit exposure represented 5.3% of the Company’s total loan portfolio at September 30, 2023, with a weighted average loan-to-value of approximately 53%.

Stockholders’ Equity and Dividends

At September 30, 2023, stockholders’ equity was $193.7 million compared to $122.9 million at September 30, 2022. The 57.7% 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 acquisition of stock under the Company’s stock repurchase program. On a per-share basis, shareholders’ equity at September 30, 2023, was $23.94 compared to $21.30 at September 30, 2022.

At September 30, 2023, tangible stockholders’ equity⁽¹⁾ was $150.6 million, compared to $106.6 million at September 30, 2022. On a per-share basis, tangible stockholders’ equity⁽¹⁾ was $18.62 at September 30, 2023, compared to $18.48 at September 30, 2022. (See non-GAAP reconciliation under the section “GAAP to Non-GAAP Reconciliations”).

Through the 2023 nine-month period, the Company declared cash dividends of $0.60 per share, a 17.6% increase from $0.51 per share for the same period last year.

At September 30, 2023, the Company had an equity-to-assets ratio of 10.80%, compared to 9.09% at September 30, 2022.

Asset Quality

For the 2023 nine-month period and third quarter, the Company recorded provisions for credit losses of $2.4 million and $1.1 million, respectively, versus no provisions for credit losses for the same periods last year. The increase is largely due to growth in unfunded commitments.

Net recoveries were $16,000 or 0.00% of average loans, annualized, during the 2023 third quarter, compared to net charge-offs of $18,000, or 0.01% of average loans, annualized, at September 30, 2022. Year-to-date net charge-offs were $87,000, or 0.01% of average loans, annualized, compared to net recoveries of $190,000, or 0.02% of average loans, annualized, for the nine-months ended September 30, 2022.

Nonperforming loans at September 30, 2023, were $7.7 million, compared to $3.7 million at September 30, 2022. Nonperforming assets at September 30, 2023, were $13.5 million, compared to $10.5 million at September 30, 2022. The allowance for credit losses at September 30, 2023, stood at $21.0 million, or 1.45% of total loans, compared to $14.5 million, or 1.46% of total loans at September 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 $1.79 billion at September 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

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)


	September 30,			June 30,			March 31,			December 31,			September 30,
Balance Sheets (period end)	2023			2023			2023			2022			2022
ASSETS
Cash and due from banks	$	56,228		$	49,422		$	59,609		$	51,404		$	119,777
Federal funds sold		9,274			9,654			7,048			2,405			8,800

Cash and cash equivalents		65,502			59,076			66,657			53,809			128,577
Investment securities available for sale, at fair value		159,414			167,209			169,605			164,967			162,064
Other investments		958			711			777			915			972
Loans held for sale		632			171			104			—			—
Loans:
Commercial real estate:
Owner occupied		185,593			187,919			185,661			191,748			120,912
Non-owner occupied		382,676			385,846			400,314			380,580			285,419
Multifamily		82,578			58,579			63,892			58,251			38,063
Residential real estate		321,331			312,196			306,179			296,308			247,612
Commercial and industrial		214,334			209,349			195,024			195,602			146,987
Home equity lines of credit		127,494			126,894			126,555			128,065			114,344
Construction and other		127,106			118,851			97,406			94,199			33,748
Consumer installment		7,481			9,801			7,816			8,119			8,110

Total loans		1,448,593			1,409,435			1,382,847			1,352,872			995,195
Less allowance for credit losses		20,986			20,591			20,162			14,438			14,532

Net loans		1,427,607			1,388,844			1,362,685			1,338,434			980,663
Premises and equipment, net		21,708			21,629			21,775			21,961			16,215
Goodwill		36,197			36,197			31,735			31,735			15,071
Core deposit intangibles		6,906			7,171			7,436			7,701			1,171
Bank-owned life insurance		34,153			34,235			34,015			33,811			17,382
Other real estate owned		5,792			5,792			5,792			5,821			6,792
Accrued interest receivable and other assets		34,551			30,472			27,258			28,528			22,104

TOTAL ASSETS	$	1,793,420		$	1,751,507		$	1,727,839		$	1,687,682		$	1,351,011


	September 30,			June 30,			March 31,			December 31,			September 30,
	2023			2023			2023			2022			2022
LIABILITIES
Deposits:
Noninterest-bearing demand	$	424,055		$	441,102		$	474,977		$	503,907		$	383,675
Interest-bearing demand		243,973			229,633			196,086			164,677			160,112
Money market		275,766			241,537			221,723			187,498			162,052
Savings		216,453			231,508			287,859			307,917			247,466
Time		296,732			287,861			244,962			238,020			177,182

Total deposits		1,456,979			1,431,641			1,425,607			1,402,019			1,130,487
Short-term borrowings:
Federal Home Loan Bank advances		118,000			100,000			85,000			65,000			80,000
Other borrowings		11,912			11,961			12,010			12,059			12,107
Accrued interest payable and other liabilities		12,780			10,678			10,057			10,913			5,562

TOTAL LIABILITIES		1,599,671			1,554,280			1,532,674			1,489,991			1,228,156

STOCKHOLDERS’ EQUITY
Common stock, no par value; 25,000,000 shares authorized, 9,928,028 shares issued, 8,092,576 shares outstanding as of September 30, 2023		161,312			161,211			161,248			161,029			87,640
Retained earnings		98,717			96,500			93,024			94,154			93,166
Accumulated other comprehensive loss		(26,426	)		(20,630	)		(19,253	)		(22,144	)		(25,080	)
Treasury stock, at cost; 1,835,452 shares as of September 30, 2023		(39,854	)		(39,854	)		(39,854	)		(35,348	)		(32,871	)

TOTAL STOCKHOLDERS’ EQUITY		193,749			197,227			195,165			197,691			122,855

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,793,420		$	1,751,507		$	1,727,839		$	1,687,682		$	1,351,011

MIDDLEFIELD BANC CORP.

Consolidated Selected Financial Highlights

(Dollar amounts in thousands, unaudited)


	For the Three Months Ended														For the Nine Months Ended
Statements of Income	September 30, 2023		June 30, 2023			March 31, 2023			December 31, 2022			September 30, 2022			September 30, 2023			September 30, 2022
INTEREST AND DIVIDEND INCOME
Interest and fees on loans	$	20,899	$	20,762		$	18,275		$	14,368		$	11,892		$	59,935		$	34,145
Interest-earning deposits in other institutions		300		369			250			240			134			920			232
Federal funds sold		266		158			253			119			51			678			100
Investment securities:
Taxable interest		477		479			458			477			449			1,415			1,334
Tax-exempt interest		980		978			980			986			982			2,938			2,721
Dividends on stock		148		91			88			68			59			326			116

Total interest and dividend income		23,070		22,837			20,304			16,258			13,567			66,212			38,648

INTEREST EXPENSE
Deposits		5,632		3,851			2,990			1,771			812			12,472			2,247
Short-term borrowings		1,258		1,462			653			263			44			3,373			44
Other borrowings		213		170			155			142			112			539			262

Total interest expense		7,103		5,483			3,798			2,176			968			16,384			2,553

NET INTEREST INCOME		15,967		17,354			16,506			14,082			12,599			49,828			36,095
Provision for credit losses		1,127		814			507			—			—			2,449			—

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		14,840		16,540			15,999			14,082			12,599			47,379			36,095

NONINTEREST INCOME
Service charges on deposit accounts		954		940			987			976			1,004			2,880			2,874
Gain (loss) on equity		48		(67	)		(138	)		(77	)		(57	)		(157	)		(96	)
Gain on other real estate owned		—		—			2			—			—			2			—
Earnings on bank-owned life insurance		207		220			200			137			108			627			322
Gain (loss) on sale of loans		45		6			23			(4	)		7			74			28
Revenue from investment services		190		174			186			147			233			550			527
Gross rental income		110		77			102			951			—			290			—
Other income		263		242			318			284			251			822			677

Total noninterest income		1,817		1,592			1,680			2,414			1,546			5,088			4,332

NONINTEREST EXPENSE
Salaries and employee benefits		5,994		6,019			5,852			4,886			4,491			17,865			12,662
Occupancy expense		699		659			696			487			458			2,054			1,546
Equipment expense		297		354			317			252			233			969			822
Data processing costs		1,209		1,137			1,070			1,050			985			3,587			2,650
Ohio state franchise tax		398		398			385			279			293			1,180			878
Federal deposit insurance expense		207		249			120			105			84			576			224
Professional fees		545		550			538			382			280			1,633			1,118
Other real estate owned writedowns		—		—			—			1,000			—			—			215
Advertising expense		414		415			486			308			268			1,315			725
Software amortization expense		24		23			26			28			27			73			115
Core deposit intangible amortization		265		265			265			140			78			794			232
Gross other real estate owned expenses		195		63			132			692			1			390			—
Merger-related costs		22		206			245			1,413			390			300			969
Other expense		1,849		1,716			1,661			1,321			1,298			5,228			3,531

Total noninterest expense		12,118		12,054			11,793			12,343			8,886			35,964			25,687

Income before income taxes		4,539		6,078			5,886			4,153			5,259			16,503			14,740
Income taxes		703		986			989			651			1,010			2,678			2,569

NET INCOME	$	3,836	$	5,092		$	4,897		$	3,502		$	4,249		$	13,825		$	12,171

PTPP (1)	$	5,666	$	6,892		$	6,393		$	4,153		$	5,259		$	18,952		$	14,740

(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 Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
	2023			2023			2023			2022			2022			2023			2022
Per common share data
Net income per common share - basic	$	0.47		$	0.63		$	0.60		$	0.53		$	0.73		$	1.71		$	2.08
Net income per common share - diluted	$	0.47		$	0.63		$	0.60		$	0.53		$	0.73		$	1.70		$	2.08
Dividends declared per share	$	0.20		$	0.20		$	0.20		$	0.30		$	0.17		$	0.60		$	0.51
Book value per share (period end)	$	23.94		$	24.38		$	24.13		$	23.98		$	21.30		$	23.94		$	21.30
Tangible book value per share (period end) ^(1) (2)	$	18.62		$	19.02		$	19.29		$	19.19		$	18.48		$	18.62		$	18.48
Dividends declared	$	1,619		$	1,616		$	1,605		$	2,514		$	983		$	4,841		$	2,976
Dividend yield		3.12	%		2.99	%		2.89	%		4.34	%		2.49	%		3.16	%		2.52	%
Dividend payout ratio		42.21	%		31.74	%		32.78	%		71.79	%		23.13	%		35.02	%		24.45	%
Average shares outstanding - basic		8,092,494			8,088,793			8,138,771			6,593,616			5,792,773			8,106,517			5,840,757
Average shares outstanding - diluted		8,101,306			8,101,984			8,152,629			6,610,907			5,805,799			8,115,329			5,853,783
Period ending shares outstanding		8,092,576			8,088,793			8,088,793			8,245,235			5,767,803			8,092,576			5,767,803
Selected ratios
Return on average assets (Annualized)		0.86	%		1.17	%		1.16	%		0.97	%		1.32	%		1.06	%		1.24	%
Return on average equity (Annualized)		7.73	%		10.41	%		10.19	%		9.35	%		12.94	%		9.43	%		11.96	%
Return on average tangible common equity ^(1) (3)		9.91	%		13.12	%		12.77	%		11.13	%		14.79	%		11.92	%		13.59	%
Efficiency ⁽⁴⁾		65.65	%		61.27	%		62.44	%		72.75	%		61.07	%		63.10	%		61.79	%
Equity to assets at period end		10.80	%		11.26	%		11.30	%		11.71	%		9.09	%		10.80	%		9.09	%
Noninterest expense to average assets		0.68	%		0.69	%		0.69	%		0.86	%		0.69	%		2.06	%		1.96	%

(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 Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
Yields	2023			2023			2023			2022			2022			2023			2022
Interest-earning assets:
Loans receivable (1)		5.82	%		5.96	%		5.45	%		5.11	%		4.78	%		5.75	%		4.66	%
Investment securities (1)		4.09	%		4.08	%		4.11	%		3.83	%		3.90	%		4.08	%		3.69	%
Interest-earning deposits with other banks		4.13	%		3.98	%		3.46	%		3.42	%		2.06	%		3.85	%		0.82	%
Total interest-earning assets		5.58	%		5.69	%		5.22	%		4.88	%		4.55	%		5.50	%		4.30	%
Deposits:
Interest-bearing demand deposits		1.51	%		1.11	%		0.83	%		0.83	%		0.22	%		1.20	%		0.17	%
Money market deposits		2.94	%		2.21	%		1.52	%		1.00	%		0.46	%		2.29	%		0.47	%
Savings deposits		0.58	%		0.73	%		1.03	%		0.49	%		0.19	%		0.80	%		0.10	%
Certificates of deposit		3.27	%		2.35	%		1.71	%		1.30	%		0.96	%		2.50	%		0.89	%
Total interest-bearing deposits		2.16	%		1.60	%		1.28	%		0.87	%		0.43	%		1.70	%		0.39	%
Non-Deposit Funding:
Borrowings		5.66	%		5.26	%		4.78	%		4.25	%		2.94	%		5.30	%		2.61	%
Total interest-bearing liabilities		2.48	%		2.02	%		1.52	%		1.02	%		0.50	%		2.03	%		0.43	%
Cost of deposits		1.53	%		1.09	%		0.84	%		0.57	%		0.29	%		1.16	%		0.26	%
Cost of funds		1.80	%		1.43	%		1.02	%		0.68	%		0.34	%		1.42	%		0.29	%
Net interest margin (2)		3.88	%		4.34	%		4.26	%		4.23	%		4.23	%		4.15	%		4.02	%

(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
	September 30,			June 30,			March 31,			December 31,			September 30,
Asset quality data	2023			2023			2023			2022			2022
(Dollar amounts in thousands, unaudited)
Nonperforming loans ⁽¹⁾	$	7,717		$	7,116		$	6,882		$	2,111		$	3,692
Other real estate owned		5,792			5,792			5,792			5,821			6,792

Nonperforming assets	$	13,509		$	12,908		$	12,674		$	7,932		$	10,484

Allowance for credit losses	$	20,986		$	20,591		$	20,162		$	14,438		$	14,532
Allowance for credit losses/total loans		1.45	%		1.46	%		1.46	%		1.07	%		1.46	%
Net charge-offs (recoveries):
Quarter-to-date	$	(16	)	$	111		$	(8	)	$	94		$	18
Year-to-date		87			103			(8	)		(96	)		(190	)
Net charge-offs (recoveries) to average loans, annualized:
Quarter-to-date		0.00	%		0.03	%		0.00	%		0.03	%		0.01	%
Year-to-date		0.01	%		0.01	%		0.00	%		(0.01	%)		(0.02	%)
Nonperforming loans/total loans		0.53	%		0.50	%		0.50	%		0.16	%		0.37	%
Allowance for credit losses/nonperforming loans		271.95	%		289.36	%		292.97	%		683.94	%		393.61	%
Nonperforming assets/total assets		0.75	%		0.74	%		0.73	%		0.47	%		0.78	%

(1)	Nonperforming loans exclude troubled debt restructurings that are performing in accordance with their terms over a prescribed period of time.

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)	September 30,		June 30,		March 31,		December 31,		September 30,
	2023		2023		2023		2022		2022
Stockholders’ equity	$	193,749	$	197,227	$	195,165	$	197,691	$	122,855
Less goodwill and other intangibles		43,103		43,368		39,171		39,436		16,242

Tangible common equity	$	150,646	$	153,859	$	155,994	$	158,255	$	106,613

Shares outstanding		8,092,576		8,088,793		8,088,793		8,245,235		5,767,803

Tangible book value per share	$	18.62	$	19.02	$	19.29	$	19.19	$	18.48


Reconciliation of Average Equity to Return on Average Tangible Common Equity	For the Three Months Ended															For the Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
	2023			2023			2023			2022			2022			2023			2022
Average stockholders’ equity	$	196,795		$	196,183		$	194,814		$	148,616		$	130,263		$	196,074		$	136,090
Less average goodwill and other intangibles		43,232			40,522			39,300			23,731			16,280			41,018			16,357

Average tangible common equity	$	153,563		$	155,661		$	155,514		$	124,885		$	113,983		$	155,056		$	119,733

Net income	$	3,836		$	5,092		$	4,897		$	4,896		$	3,502		$	13,825		$	12,171

Return on average tangible common equity (annualized)		9.91	%		13.12	%		12.77	%		11.13	%		14.79	%		11.92	%		13.59	%


Reconciliation of Pre-Tax Pre-Provision Income (PTPP)	For the Three Months Ended										For the Nine Months Ended
	September 30,		June 30,		March 31,		December 31,		September 30,		September 30,		September 30,
	2023		2023		2023		2022		2022		2023		2022
Net income	$	3,836	$	5,092	$	4,897	$	3,502	$	4,249	$	13,825	$	12,171
Add income taxes		703		986		989		651		1,010		2,678		2,569
Add provision for credit losses		1,127		814		507		—		—		2,449		—

PTPP	$	5,666	$	6,892	$	6,393	$	4,153	$	5,259	$	18,952	$	14,740

MIDDLEFIELD BANC CORP.

Average Balance Sheets

(Dollar amounts in thousands, unaudited)


	For the Three Months Ended
	September 30, 2023							September 30, 2022
	Average Balance		Interest		Average Yield/Cost			Average Balance		Interest		Average Yield/Cost
Interest-earning assets:
Loans Receivable (1)	$	1,425,375	$	20,899		5.82	%	$	987,689	$	11,892		4.78	%
Investment securities (1)		166,671		1,457		4.09	%		172,316		1,431		3.90	%
Interest-earning deposits with other banks (2)		68,587		714		4.13	%		46,938		244		2.06	%

Total interest-earning assets		1,660,633		23,070		5.58	%		1,206,943		13,567		4.55	%

Noninterest-earning assets		115,353							73,753

Total assets	$	1,775,986						$	1,280,696

Interest-bearing liabilities:
Interest-bearing demand deposits	$	256,153	$	975		1.51	%	$	162,878	$	91		0.22	%
Money market deposits		259,802		1,928		2.94	%		155,095		180		0.46	%
Savings deposits		225,216		327		0.58	%		249,898		119		0.19	%
Certificates of deposit		291,409		2,402		3.27	%		174,091		422		0.96	%
Short-term borrowings		91,201		1,258		5.47	%		8,554		44		2.04	%
Other borrowings		11,940		213		7.08	%		12,530		112		3.55	%

Total interest-bearing liabilities		1,135,721		7,103		2.48	%		763,046		968		0.50	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		431,775							382,351
Other liabilities		11,695							5,036
Stockholders’ equity		196,795							130,263

Total liabilities and stockholders’ equity	$	1,775,986						$	1,280,696

Net interest income			$	15,967						$	12,599

Interest rate spread (3)						3.10	%						4.05	%
Net interest margin (4)						3.88	%						4.23	%
Ratio of average interest-earning assets to average interest-bearing liabilities						146.22	%						158.17	%

(1)	Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $270 and $277 for the three months ended September 30, 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)	Includes dividends received on restricted stock.


	For the Three Months Ended
	September 30, 2023							June 30, 2023
	Average				Average			Average				Average
	Balance		Interest		Yield/Cost			Balance		Interest		Yield/Cost
Interest-earning assets:
Loans Receivable (1)	$	1,425,375	$	20,899		5.82	%	$	1,400,074	$	20,762		5.96	%
Investment securities (1)		166,671		1,457		4.09	%		168,890		1,457		4.08	%
Interest-earning deposits with other banks (2)		68,587		714		4.13	%		62,296		618		3.98	%

Total interest-earning assets		1,660,633		23,070		5.58	%		1,631,260		22,837		5.69	%

Noninterest-earning assets		115,353							114,120

Total assets	$	1,775,986						$	1,745,380

Interest-bearing liabilities:
Interest-bearing demand deposits	$	256,153	$	975		1.51	%	$	214,045	$	595		1.11	%
Money market deposits		259,802		1,928		2.94	%		234,497		1,294		2.21	%
Savings deposits		225,216		327		0.58	%		263,587		478		0.73	%
Certificates of deposit		291,409		2,402		3.27	%		252,785		1,484		2.35	%
Short-term borrowings		91,201		1,258		5.47	%		112,349		1,462		5.22	%
Other borrowings		11,940		213		7.08	%		11,992		170		5.69	%

Total interest-bearing liabilities		1,135,721		7,103		2.48	%		1,089,255		5,483		2.02	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		431,775							450,835
Other liabilities		11,695							9,107
Stockholders’ equity		196,795							196,183

Total liabilities and stockholders’ equity	$	1,775,986						$	1,745,380

Net interest income			$	15,967						$	17,354

Interest rate spread (3)						3.10	%						3.67	%
Net interest margin (4)						3.88	%						4.34	%
Ratio of average interest-earning assets to average interest-bearing liabilities						146.22	%						149.76	%

(1)	Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $270 and $294 for the three months ended September 30, 2023 and June 30, 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)	Includes dividends received on restricted stock.


	For the Nine Months Ended
	September 30,							September 30,
	2023							2022
	Average				Average			Average				Average
	Balance		Interest		Yield/Cost			Balance		Interest		Yield/Cost
Interest-earning assets:
Loans Receivable (1)	$	1,395,438	$	59,935		5.75	%	$	980,787	$	34,145		4.66	%
Investment securities (1)		168,049		4,353		4.08	%		173,094		4,055		3.69	%
Interest-earning deposits with other banks (2)		66,730		1,924		3.85	%		72,851		448		0.82	%

Total interest-earning assets		1,630,217		66,212		5.50	%		1,226,732		38,648		4.30	%

Noninterest-earning assets		115,627							82,733

Total assets	$	1,745,844						$	1,309,465

Interest-bearing liabilities:
Interest-bearing demand deposits	$	216,044	$	1,934		1.20	%	$	164,337	$	210		0.17	%
Money market deposits		234,236		4,005		2.29	%		175,024		620		0.47	%
Savings deposits		267,951		1,608		0.80	%		256,762		197		0.10	%
Certificates of deposit		263,448		4,925		2.50	%		184,165		1,220		0.89	%
Short-term borrowings		86,670		3,373		5.20	%		2,851		44		2.06	%
Other borrowings		11,990		539		6.01	%		12,806		262		2.74	%

Total interest-bearing liabilities		1,080,339		16,384		2.03	%		795,945		2,553		0.43	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		458,086							372,343
Other liabilities		11,345							5,087
Stockholders’ equity		196,074							136,090

Total liabilities and stockholders’ equity	$	1,745,844						$	1,309,465

Net interest income			$	49,828						$	36,095

Interest rate spread (3)						3.47	%						3.87	%
Net interest margin (4)						4.15	%						4.02	%
Ratio of average interest-earning assets to average interest-bearing liabilities						150.90	%						154.12	%

(1)	Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $824 and $768 for the nine months ended September 30, 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	Oct. 23, 2023
Cover [Abstract]
Entity Registrant Name	MIDDLEFIELD BANC CORP
Amendment Flag	false
Entity Central Index Key	0000836147
Document Type	8-K
Document Period End Date	Oct. 23, 2023
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