Middlefield Banc Corp. Reports 2024 Nine-Month Financial Results
MIDDLEFIELD, Ohio, Oct. 17, 2024 (GLOBE NEWSWIRE) -- Middlefield Banc Corp. (NASDAQ:MBCN) today reported financial results for the nine months ended September 30, 2024.
2024 Nine-Month Financial Highlights (on a year-over-year basis):
Net income was $10.7 million, compared to $13.8 million
Pre-tax, pre-provision net income(1) was $14.7 million, compared to $19.0 million
Earnings were $1.32 per diluted share, compared to $1.70 per diluted share
Net interest income after the provision for credit losses was $42.9 million, compared to $47.4 million
Noninterest income increased 4.1% to $5.3 million, compared to $5.1 million
Total loans increased 3.9% to a record $1.50 billion, compared to $1.45 billion
Total deposits increased 3.8% to a record $1.51 billion, compared to $1.46 billion
Return on average assets annualized was 0.77%, compared to 1.06%
Return on average equity annualized was 6.90%, compared to 9.43%
Return on average tangible common equity(1) was 8.68%, compared to 11.92%
Nonperforming assets to total assets increased to 1.62% from 0.75%
Allowance for credit losses was 1.50% of total loans, compared to 1.45%
Equity to assets strengthened to 11.34%, compared to 10.80%
Book value increased 9.1% to $26.11 from $23.94 per share
Tangible book value(1) increased 12.1% to $20.87 from $18.62 per share
(1) See non-GAAP reconciliation under the section "GAAP to Non-GAAP Reconciliations"
Ronald L. Zimmerly, Jr., President and Chief Executive Officer, stated, "We ended the third quarter of 2024 with record total assets and deposits, as well as a record book value per share. These results reflect our team's dedication and commitment to serve customers throughout our Central, Western and Northeast Ohio markets. We ended the quarter with higher charge-offs and non-performing loans, associated with one customer. As a result, the provision for credit losses increased during the third quarter and reduced after tax earnings by $0.12 per diluted share. Despite these one-time impacts, we produced strong levels of core profitability, including the highest level of pre-tax pre-provision income in the past four quarters."
"I am pleased with the progress we are making maintaining appropriate funding costs and controlling noninterest expense, as our quarterly cost of funds declined sequentially for the first time in ten quarters, and noninterest expense was at the lowest level in six quarters. We expect the economic environment will remain fluid over the near-term, and as we look to 2025, we will continue to focus on supporting our communities, strategically allocating capital, maintaining disciplined underwriting standards, and prudently managing expenses," concluded Mr. Zimmerly.
Income StatementNet interest income for the nine months ended September 30, 2024, decreased $4.7 million to $45.1 million, compared to $49.8 million for the same period last year. The net interest margin for the nine months ended September 30, 2024, was 3.50%, compared to 4.09% last year. Net interest income for the 2024 third quarter decreased $894,000 to $15.1 million, compared to $16.0 million for the 2023 third quarter. The net interest margin for the 2024 third quarter was 3.46%, compared to 3.82% for the same period of 2023.
For the nine months ended September 30, 2024, noninterest income increased $211,000 to $5.3 million, compared to $5.1 million for the same period in 2023. Noninterest income for the 2024 third quarter was $1.7 million, compared to $1.8 million for the same period the previous year.
Noninterest expense for the nine months ended September 30, 2024, was $35.7 million, compared to $36.0 million for the same period in 2023. For the 2024 third quarter, noninterest expense was $11.9 million, compared to $12.1 million for the 2023 third quarter.
Net income for the nine months ended September 30, 2024, was $10.7 million, or $1.32 per diluted share, compared to $13.8 million, or $1.70 per diluted share, for the same period last year. Net income for the 2024 third quarter was $2.3 million, or $0.29 per diluted share, compared to $3.8 million, or $0.47 per diluted share, for the same period last year.
For the nine months ended September 30, 2024, pre-tax, pre-provision net income was $14.7 million, compared to $19.0 million last year. For the 2024 third quarter, pre-tax, pre-provision net income was $4.9 million, compared to $5.7 million for the same period of 2023. (See non-GAAP reconciliation under the section "GAAP to Non-GAAP Reconciliations".)
Balance SheetTotal assets at September 30, 2024, increased 3.6% to $1.86 billion, compared to $1.79 billion at September 30, 2023. Total loans at September 30, 2024, were $1.50 billion, compared to $1.45 billion at September 30, 2023. The 3.9% year-over-year increase in total loans was primarily due to higher non-owner occupied and residential real estate loans.
Total liabilities at September 30, 2024, increased 3.0% to $1.65 billion, compared to $1.60 billion at September 30, 2023. Total deposits at September 30, 2024, were $1.51 billion, compared to $1.46 billion at September 30, 2023. The 3.8% year-over-year increase in deposits was primarily due to growth in money market and time deposits, partially offset by declines in noninterest-bearing and interest-bearing demand and savings accounts. Noninterest-bearing demand deposits were 25.8% of total deposits at September 30, 2024, compared to 29.1% at September 30, 2023. At September 30, 2024, the Company had brokered deposits of $86.5 million, compared to $53.5 million at September 30, 2023.
The investment securities available-for-sale portfolio was $169.9 million at September 30, 2024, compared with $159.4 million at September 30, 2023.
Mr. Ranttila, Chief Financial Officer, stated, "We continue to look at opportunities to proactively strengthen our balance sheet and improve our cost of funds. In addition, since December 31, 2023, deposits have increased 6.0%, while our Federal Home Loan Bank ("FHLB") advances have decreased by 35.0%. This is the lowest level of FHLB advances in over a year. In addition, during the quarter, we received approval to use the Federal Reserve Board's discount window, adding a new and efficient liquidity provider. The combination of high levels of potentially liquid assets, cash flows from operations, and additional borrowing capacity continues to provide us with excellent liquidity levels to support our long-term growth strategies and our legacy of returning excess capital to shareholders."
Middlefield's CRE portfolio included the following categories at September 30, 2024:
Balance
Percent of
Percent of
CRE Category
(in thousands)
CRE Portfolio
Loan Portfolio
Multi-Family
$
94,798
13.8
%
6.3
%
Office Space
75,149
10.9
%
5.0
%
Shopping Plazas
69,762
10.1
%
4.6
%
Self-Storage
56,041
8.1
%
3.7
%
Hospitality
39,840
5.8
%
2.6
%
Senior Living
23,069
3.3
%
1.5
%
Other
330,611
48.0
%
22.0
%
Total CRE
$
689,270
100.0
%
45.7
%
Stockholders' Equity and DividendsAt September 30, 2024, stockholders' equity was $210.7 million, compared to $193.7 million at September 30, 2023. The 8.8% year-over-year increase in stockholders' equity was primarily from higher retained earnings and an improvement in the unrealized losses on the available-for-sale investment portfolio, partially offset by stock acquired under the Company's stock repurchase program. On a per-share basis, shareholders' equity at September 30, 2024, was $26.11, compared to $23.94 at September 30, 2023.
At September 30, 2024, tangible stockholders' equity(1) was $168.5 million, compared to $150.6 million at September 30, 2023. On a per-share basis, tangible stockholders' equity(1) was $20.87 at September 30, 2024, compared to $18.62 at September 30, 2023. (1)See non-GAAP reconciliation under the section "GAAP to Non-GAAP Reconciliations".
For the nine months ended September 30, 2024, the Company declared cash dividends of $0.60 per share, totaling $4.8 million.
For the nine months ended September 30, 2024, the Company repurchased 43,858 shares of its common stock, at an average price of $24.00 per share. There were no repurchases during the third quarter of 2024.
At September 30, 2024, the Company's equity-to-assets ratio was 11.34%, compared to 10.80% at September 30, 2023.
Asset Quality
For the nine months ended September 30, 2024, the Company recorded a provision for credit losses of $2.2 million, versus a provision for credit losses of $2.4 million for the same period last year. For the 2024 third quarter, the Company recorded a provision for credit losses of $2.2 million, compared to a provision for credit losses of $1.1 million for the same period of 2023.
Net charge-offs were $1.3 million, or 0.11% of average loans, annualized, for the nine months ended September 30, 2024, compared to net charge-offs of $87,000, or 0.01% of average loans, annualized, for the same period last year. Net charge-offs were $1.4 million, or 0.36% of average loans, annualized, for the 2024 third quarter, compared to net recoveries of $16,000, or 0.00% of average loans, annualized, for the same period of 2023. The higher net charge-offs were due to the partial charge-off of one loan during the 2024 third quarter.
Nonperforming loans at September 30, 2024, were $30.1 million, compared to $7.7 million at September 30, 2023. Nonperforming assets at September 30, 2024, were $30.1 million, compared to $13.5 million at September 30, 2023. The increase in nonperforming assets is primarily the result of a $13.5 million loan moved to nonaccrual in the 2024 third quarter, subsequent to the partial charge-off noted in the previous paragraph. The allowance for credit losses at September 30, 2024, stood at $22.5 million, or 1.50% of total loans, compared to $21.0 million, or 1.45% of total loans at September 30, 2023. The increase in the allowance for credit losses was mainly from changes in projected loss drivers, prepayment assumptions, curtailment expectations over the reasonable and supportable forecast period, and geographic footprint of unemployment data, as well as an overall increase in total loans.
Michael Ranttila stated, "Nonperforming assets during the third quarter were impacted by a $13.5 million loan. Combined with the two previously disclosed relationships that moved to nonaccrual in the second quarter of 2024, these three customers accounted for $20.2 million of nonperforming assets at September 30, 2024. We believe these relationships do not indicate a trend in the markets we serve, our portfolio, or underwriting standards. Despite this increase, we remain well reserved for potential credit losses with an allowance for credit losses to total loans of 1.50% at September 30, 2024, which was up slightly from both the same period a year ago, and the quarter ended June 30, 2024."
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 $1.86 billion at September 30, 2024. 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 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 following Consolidated Financial Highlights tables 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 several 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.
Company Contact:
Investor and Media Contact:
Ronald L. Zimmerly, Jr.President and Chief Executive OfficerMiddlefield Banc Corp.(419)
Andrew M. BergerManaging DirectorSM Berger & Company, Inc.(216)
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)
2024
2024
2024
2023
2023
ASSETS
Cash and due from banks
$
61,851
$
50,496
$
44,816
$
56,397
$
56,228
Federal funds sold
12,022
1,762
1,438
4,439
9,274
Cash and cash equivalents
73,873
52,258
46,254
60,836
65,502
Investment securities available for sale, at fair value
169,895
166,424
167,890
170,779
159,414
Other investments
895
881
907
955
958
Loans held for sale
249
-
-
-
632
Loans:
Commercial real estate:
Owner occupied
187,313
182,809
178,543
183,545
185,593
Non-owner occupied
407,159
385,648
398,845
401,580
382,676
Multifamily
94,798
86,951
81,691
82,506
82,578
Residential real estate
345,748
337,121
331,480
328,854
321,331
Commercial and industrial
213,172
234,702
227,433
221,508
214,334
Home equity lines of credit
137,761
131,047
129,287
127,818
127,494
Construction and other
111,550
132,530
135,716
125,105
127,106
Consumer installment
7,030
6,896
7,131
7,214
7,481
Total loans
1,504,531
1,497,704
1,490,126
1,478,130
1,448,593
Less allowance for credit losses
22,526
21,795
21,069
21,693
20,986
Net loans
1,482,005
1,475,909
1,469,057
1,456,437
1,427,607
Premises and equipment, net
20,528
20,744
21,035
21,339
21,708
Goodwill
36,356
36,356
36,356
36,356
36,197
Core deposit intangibles
5,869
6,126
6,384
6,642
6,906
Bank-owned life insurance
35,049
34,802
34,575
34,349
34,153
Other real estate owned
-
-
-
-
5,792
Accrued interest receivable and other assets
32,916
34,686
34,210
35,190
34,551
TOTAL ASSETS
$
1,857,635
$
1,828,186
$
1,816,668
$
1,822,883
$
1,793,420
September 30,
June 30,
March 31,
December 31,
September 30,
2024
2024
2024
2023
2023
LIABILITIES
Deposits:
Noninterest-bearing demand
$
390,933
$
387,024
$
390,185
$
401,384
$
424,055
Interest-bearing demand
218,002
206,542
209,015
205,582
243,973
Money market
376,619
355,630
318,823
274,682
275,766
Savings
199,984
192,472
196,721
210,639
216,453
Time
327,231
327,876
332,165
334,315
296,732
Total deposits
1,512,769
1,469,544
1,446,909
1,426,602
1,456,979
Federal Home Loan Bank advances
106,000
125,000
137,000
163,000
118,000
Other borrowings
11,711
11,762
11,812
11,862
11,912
Accrued interest payable and other liabilities
16,450
15,092
15,372
15,738
12,780
TOTAL LIABILITIES
1,646,930
1,621,398
1,611,093
1,617,202
1,599,671
STOCKHOLDERS' EQUITY
Common stock, no par value; 25,000,000 shares authorized, 9,950,342
shares issued, 8,071,032 shares outstanding as of September 30, 2024
161,916
161,823
161,823
161,388
161,312
Additional paid-in capital
108
-
-
-
-
Retained earnings
106,067
105,342
102,791
100,237
98,717
Accumulated other comprehensive loss
(16,477
)
(19,468
)
(18,130
)
(16,090
)
(26,426
)
Treasury stock, at cost; 1,879,310 shares as of September 30, 2024
(40,909
)
(40,909
)
(40,909
)
(39,854
)
(39,854
)
TOTAL STOCKHOLDERS' EQUITY
210,705
206,788
205,575
205,681
193,749
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
1,857,635
$
1,828,186
$
1,816,668
$
1,822,883
$
1,793,420
MIDDLEFIELD BANC CORP.Consolidated Selected Financial Highlights(Dollar amounts in thousands, 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,
Statements of Income
2024
2024
2024
2023
2023
2024
2023
INTEREST AND DIVIDEND INCOME
Interest and fees on loans
$
23,441
$
23,422
$
22,395
$
22,027
$
20,899
$
69,258
$
59,935
Interest-earning deposits in other institutions
348
386
437
370
300
1,171
920
Federal funds sold
143
122
152
94
266
417
678
Investment securities:
Taxable interest
528
505
467
479
477
1,500
1,415
Tax-exempt interest
962
966
972
976
980
2,900
2,938
Dividends on stock
191
198
189
144
148
578
326
Total interest and dividend income
25,613
25,599
24,612
24,090
23,070
75,824
66,212
INTEREST EXPENSE
Deposits
8,792
8,423
7,466
6,522
5,632
24,681
12,472
Short-term borrowings
1,575
1,920
1,993
2,013
1,258
5,488
3,373
Other borrowings
173
173
184
179
213
530
539
Total interest expense
10,540
10,516
9,643
8,714
7,103
30,699
16,384
NET INTEREST INCOME
15,073
15,083
14,969
15,376
15,967
45,125
49,828
Provision (Recovery of) for credit losses
2,234
87
(136
)
554
1,127
2,185
2,449
NET INTEREST INCOME AFTER PROVISION
(RECOVERY OF) FOR CREDIT LOSSES
