Middlefield Banc Corp.
07/22/2014 | Press release | Archived content
Middlefield Banc Corp. Reports Financial Results for the 2014 Second Quarter
MIDDLEFIELD, Ohio--(BUSINESS WIRE)-- Middlefield Banc Corp. (OTCQB: MBCN) today reported financial results for the three and six months ended June 30, 2014.
2014 Second Quarter Financial Highlights Include:
- Net interest income increased 5.3% to $5.9 million from $5.6 million for the 2013 second quarter.
- The net interest margin improved to 4.04%, compared to 3.88% for the same period of 2013.
- Tangible stockholders' equity improved 4.8% from 2014 first quarter, and 11.6% from December 31, 2013.
- Total net loans increased 9.5% from the 2013 second quarter and 1.4% compared to the 2014 first quarter.
- Nonperforming assets declined to $12.9 million from $15.2 million for the 2013 second quarter.
- Tier 1 capital ratio strengthened to 9.31% from 8.49% at June 30, 2013.
"We continue to report strong financial results despite higher operating and regulatory costs," stated Thomas G. Caldwell, President and Chief Executive Officer. "Throughout 2014 we will be making investments in our business by enhancing our operations, products, and services, and adding senior managers to assist with our growth objectives. These activities may impact the level of profitability over the near term but will have a positive effect on our financial results and customer experience in the coming quarters. Our customers are already experiencing the benefits from the investments we have made in our new website, enhanced on-line banking services, and new mobile banking capabilities."
Net income for the 2014 second quarter was $1.6 million, or $0.79 per diluted share, compared to net income for the 2013 second quarter of $1.7 million, or $0.83 per diluted share. Net income for the six months ended June 30, 2014 was $3.4 million, or $1.65 per diluted share, compared to net income for the six months ended June 30, 2013 of $3.3 million, or $1.66 per diluted share.
Annualized returns on average equity ("ROE") and average assets ("ROA") for the 2014 second quarter were 11.58% and 0.96%, respectively, compared with 12.47% and 1.02% for the 2013 second quarter. ROE and ROA were 12.33% and 1.02%, respectively, for the 2014 six month period, compared with 12.32% and 1.02% for the same period last year.
Mr. Caldwell continued: "As we enter the second half of 2014, we are well positioned to grow our banking franchise. By the end of the third quarter, we will enter the secondary mortgage market, which will enhance our product offerings and increase our noninterest income. While we are excited about our growth opportunities, we remain committed to delivering excellent customer service, increasing value to our shareholders, and managing the company under safe and sound banking principles."
Income Statement
Net interest income for the 2014 second quarter increased 5.3% to $5.9 million, compared to $5.6 million for the 2013 second quarter. For the 2014 first half, net interest income increased 6.0% to $11.8 million, compared to $11.2 million for the same period last year. The second quarter and first half increases in net interest income were driven by a reduction in funding costs, primarily time deposits. The net interest margin for the 2014 second quarter was 4.04%, compared to 3.88% for the same period of 2013. Year-to-date, the net interest margin was 4.12%, compared to 3.90% for the same period last year.
Noninterest income was up slightly for the 2014 second quarter and down year-to-date. The improvement in the 2014 second quarter was a result of investment securities gains and other income, partially offset by lower service charges on deposits and earnings on bank-owned life insurance.
Noninterest expense for the 2014 second quarter was $4.6 million, an increase of approximately $0.7 million from the 2013 second quarter, primarily a result of higher operating expenses.
"We are proactively investing in our future to diversify our sources of income and offset the impact of historically low interest rates and higher regulatory costs," said Donald L. Stacy, Chief Financial Officer. "The result will be higher near-term expenses as our growth strategies take time to develop. We are working hard to offset a portion of these higher costs through prudent expense management and proactively controlling our cost of funds."
Balance Sheet
Total assets at June 30, 2014 increased 3.3% to $668.3 million, from $647.1 million at December 31, 2013. Net loans at June 30, 2014 were approximately $443.0 million, compared to $428.7 million at December 31, 2013. The 3.3% year-to-date increase in net loans was a result of growth across all loan categories led by a 4.2% increase in residential mortgage loans.
Total deposits at June 30, 2014 increased 3.5% to $588.8 million from $568.8 million at December 31, 2013. The investment portfolio, which is entirely classified as available for sale, stood at $165.5 million at June 30, 2014, compared to $157.1 million at December 31, 2013. The increase in investment securities available for sale is primarily a result of the growth in the Bank's tax-free municipal securities portfolio of $8.0 million.
Stockholders' Equity and Dividends
Tangible stockholders' equity increased 13.8% to $54.6 million for the 2014 second quarter, compared to $48.0 million for the 2013 second quarter. On a per share basis, tangible stockholders' equity increased 12.7% to $26.67 at June 30, 2014 from $23.66 at June 30, 2013. The increase is the result of a higher level of retained earnings and accumulated other comprehensive income, which was offset by cash dividends paid to shareholders.
At June 30, 2014, the company had a Tier 1 leverage ratio of 9.31%, up from 8.49% at June 30, 2013 and 9.15% at March 31, 2014.
During the 2014 second quarter, the company paid cash dividends of $0.26 per share, which equaled the amount paid in the 2013 second quarter. Year-to-date, the company has paid cash dividends of $0.52 per share.
Asset Quality
The provision for loan losses for the 2014 second quarter was $0.1 million, compared to the $0.3 million for the 2013 second quarter. The provision for loan losses for the six months ended June 30, 2014 was $0.3 million, compared to $0.6 million for the same period last year. Net charge-offs for the 2014 six months was $0.2 million, or 0.10% of average loans, annualized. The allowance for loan losses at June 30, 2014 stood at $7.1 million, or 1.58% of total loans, compared to $7.7 million or 1.88% of total loans at June 30, 2013.
The following table provides a summary of asset quality and reserve coverage ratios.
| Asset Quality History | |||||||||||||
| (dollars in thousands) | |||||||||||||
| 6/30/2014 | 12/31/2013 | 6/30/2013 | 12/31/2012 | 12/31/2011 | |||||||||
| Nonperforming loans | $ | 10,506 | $ | 12,290 | $ | 12,869 | $ | 14,224 | $ | 24,546 | |||
| Real estate owned | 2,392 | 2,698 | 2,361 | 1,846 | 2,196 | ||||||||
| Nonperforming assets | $ | 12,898 | $ | 14,988 | $ | 15,230 | $ | 16,070 | $ | 26,742 | |||
| Allowance for loan losses | $ | 7,129 | $ | 7,046 | $ | 7,749 | $ | 7,779 | $ | 6,819 | |||
| Ratios: | |||||||||||||
|
Nonperforming loans to total loans |
2.33 | % | 2.82 | % | 3.12 | % | 3.48 | % | 6.12 | % | |||
|
Nonperforming assets to total assets |
1.93 | % | 2.32 | % | 2.32 | % | 2.40 | % | 4.09 | % | |||
|
Allowance for loan losses to total loans |
1.58 | % | 1.62 | % | 1.88 | % | 1.90 | % | 1.70 | % | |||
|
Allowance for loan losses to nonperforming loans |
67.85 | % | 57.33 | % | 60.21 | % | 54.69 | % | 27.78 | % | |||
Middlefield Banc Corp., headquartered in Middlefield, Ohio, is a bank holding company with total assets of $668.3 million at June 30, 2014. On January 20, 2014, the company consolidated its Emerald Bank subsidiary into the company's lead bank, The Middlefield Banking Company. The bank operates 10 full service banking centers and an LPL Financial® brokerage office serving Chardon, Cortland, Dublin, Garrettsville, Mantua, Middlefield, Newbury, Orwell, and Westerville. Additional information is available at www.middlefieldbank.com.
This press release of Middlefield Banc Corp. and the reports Middlefield Banc Corp. files with the Securities and Exchange Commission often contain "forward-looking statements" relating to present or future trends or factors affecting the banking industry and, specifically, the financial operations, markets and products of Middlefield Banc Corp.These forward-looking statements involve certain risks and uncertainties.There are a number of important factors that could cause Middlefield Banc Corp.'s future results to differ materially from historical performance or projected performance.These factors include, but are not limited to: (1) a significant increase in competitive pressures among financial institutions; (2) changes in the interest rate environment that may reduce interest margins; (3) changes in prepayment speeds, charge-offs and loan loss provisions; (4) less favorable than expected general economic conditions; (5) legislative or regulatory changes that may adversely affect businesses in which Middlefield Banc Corp. is engaged; (6) technological issues which may adversely affect Middlefield Banc Corp.'s financial operations or customers; (7) changes in the securities markets; or (8) risk factors mentioned in the reports and registration statements Middlefield Banc Corp. files with the Securities and Exchange Commission.Middlefield Banc Corp. undertakes no obligation to release revisions to these forward-looking statements or to reflect events or circumstances after the date of this press release.
| MIDDLEFIELD BANC CORP. | |||||||||
| Consolidated Selected Financial Highlights | |||||||||
| June 30, 2014 and 2013 and December 31, 2013 | |||||||||
| Balance Sheet (period end) | June 30, | December 31, | June 30, | ||||||
| (Dollar amounts in thousands) | 2014 | 2013 | 2013 | ||||||
| (unaudited) | |||||||||
| Assets | |||||||||
| Cash and due from banks | $ | 19,821 | $ | 20,926 | $ | 22,052 | |||
| Federal funds sold | 5,756 | 5,267 | 18,377 | ||||||
| Cash and cash equivalents | 25,577 | 26,193 | 40,429 | ||||||
| Investment securities available for sale | 165,506 | 157,143 | 179,757 | ||||||
| Loans | 450,119 | 435,725 | 412,399 | ||||||
| Less: allowance for loan and lease losses | 7,129 | 7,046 | 7,749 | ||||||
| Net loans | 442,990 | 428,679 | 404,650 | ||||||
| Premises and equipment | 9,927 | 9,828 | 8,583 | ||||||
| Goodwill | 4,559 | 4,559 | 4,559 | ||||||
| Core deposit intangible | 136 | 156 | 173 | ||||||
| Bank-owned life insurance | 8,951 | 8,816 | 8,675 | ||||||
| Accrued interest receivable and other assets | 10,623 | 11,716 | 10,966 | ||||||
| Total Assets | $ | 668,269 | $ | 647,090 | $ | 657,792 | |||
| June 30, | December 31, | June 30, | |||||||
| 2014 | 2013 | 2013 | |||||||
| Liabilities and Stockholders' Equity | |||||||||
| Noninterest bearing demand deposits | $ | 96,209 | $ | 85,905 | $ | 83,095 | |||
| Interest-bearing demand deposits | 58,366 | 53,741 | 58,238 | ||||||
| Money market accounts | 73,619 | 77,473 | 77,563 | ||||||
| Savings deposits | 178,602 | 177,303 | 180,875 | ||||||
| Time deposits | 181,997 | 174,414 | 185,648 | ||||||
| Total Deposits | 588,793 | 568,836 | 585,419 | ||||||
| Short-term borrowings | 6,939 | 10,809 | 5,407 | ||||||
| Other borrowings | 11,362 | 11,609 | 12,635 | ||||||
| Other liabilities | 2,004 | 2,363 | 1,781 | ||||||
| Total Liabilities | 609,098 | 593,617 | 605,242 | ||||||
| Common equity | 35,266 | 34,979 | 34,694 | ||||||
| Retained earnings | 29,780 | 27,465 | 24,780 | ||||||
| Accumulated other comprehensive income (loss) | 859 | (2,237 | ) | (190 | ) | ||||
| Treasury stock | (6,734 | ) | (6,734 | ) | (6,734 | ) | |||
| Total Stockholders' Equity | 59,171 | 53,473 | 52,550 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 668,269 | $ | 647,090 | $ | 657,792 | |||
| MIDDLEFIELD BANC CORP. | ||||||||||||
| Consolidated Selected Financial Highlights | ||||||||||||
| June 30, 2014 and 2013 | ||||||||||||
| (Dollar amounts in thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| For the Three Months Ended | For the Six Months Ended | |||||||||||
| June 30, | June 30, | |||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||
| INTEREST INCOME | ||||||||||||
| Interest and fees on loans | $ | 5,575 | $ | 5,550 | $ | 11,269 | $ | 11,122 | ||||
| Interest-bearing deposits in other institutions | 9 | 9 | 14 | 17 | ||||||||
| Federal funds sold | 6 | 4 | 9 | 8 | ||||||||
| Investment securities | ||||||||||||
| Taxable interest | 526 | 625 | 1,035 | 1,299 | ||||||||
| Tax-exempt interest | 783 | 744 | 1,538 | 1,477 | ||||||||
| Dividends on stock | 20 | 15 | 43 | 38 | ||||||||
| Total interest income | 6,919 | 6,947 | 13,908 | 13,961 | ||||||||
| INTEREST EXPENSE | ||||||||||||
| Deposits | 929 | 1,219 | 1,869 | 2,516 | ||||||||
| Short-term borrowings | 38 | 47 | 73 | 99 | ||||||||
| Other borrowings | 32 | 44 | 64 | 90 | ||||||||
| Trust preferred securities | 34 | 47 | 60 | 81 | ||||||||
| Total interest expense | 1,033 | 1,357 | 2,066 | 2,786 | ||||||||
| NET INTEREST INCOME | 5,886 | 5,590 | 11,842 | 11,175 | ||||||||
| Provision for loan losses | 120 | 300 | 300 | 613 | ||||||||
| NET INTEREST INCOME AFTER PROVISION | ||||||||||||
| FOR LOAN LOSSES | 5,766 | 5,290 | 11,542 | 10,562 | ||||||||
| NONINTEREST INCOME | ||||||||||||
| Service charges on deposits | 469 | 511 | 910 | 958 | ||||||||
| Investment securities gains (losses), net | 64 | (10 | ) | 58 | 175 | |||||||
| Earnings on bank-owned life insurance | 68 | 75 | 135 | 143 | ||||||||
| Other income | 256 | 243 | 469 | 411 | ||||||||
| Total noninterest income | 857 | 819 | 1,572 | 1,687 | ||||||||
| NONINTEREST EXPENSE | ||||||||||||
| Salaries and employee benefits | 2,268 | 1,906 | 4,284 | 3,777 | ||||||||
| Occupancy expense | 275 | 248 | 596 | 522 | ||||||||
| Equipment expense | 194 | 186 | 414 | 375 | ||||||||
| Data processing costs | 224 | 187 | 438 | 400 | ||||||||
| Ohio state franchise tax | 93 | 149 | 176 | 303 | ||||||||
| Federal deposit insurance expense | 97 | 64 | 229 | 218 | ||||||||
| Professional fees | 338 | 291 | 625 | 567 | ||||||||
| Loss (gain) on sale of other real estate owned | 75 | (13 | ) | 70 | (5 | ) | ||||||
| Advertising expense | 124 | 111 | 247 | 223 | ||||||||
| Other real estate expense | 102 | 90 | 165 | 196 | ||||||||
| Directors Fees | 118 | 133 | 204 | 238 | ||||||||
| Other operating expense | 690 | 596 | 1,379 | 1,135 | ||||||||
| Total noninterest expense | 4,598 | 3,948 | 8,827 | 7,949 | ||||||||
| Income before income taxes | 2,025 | 2,161 | 4,287 | 4,300 | ||||||||
| Provision for income taxes | 414 | 476 | 913 | 958 | ||||||||
| NET INCOME | $ | 1,611 | $ | 1,685 | $ | 3,374 | $ | 3,342 | ||||
| For the Three Months Ended | For the Six Months Ended | |||||||||||
| June 30, | June 30, | |||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||
| Per common share data | ||||||||||||
| Net income per common share - basic | $ | 0.79 | $ | 0.84 | $ | 1.66 | $ | 1.66 | ||||
| Net income per common share - diluted | $ | 0.79 | $ | 0.83 | $ | 1.65 | $ | 1.66 | ||||
| Dividends declared | $ | 0.26 | $ | 0.26 | $ | 0.52 | $ | 0.52 | ||||
| Book value per share (period end) | $ | 28.97 | $ | 26.00 | $ | 28.97 | $ | 26.00 | ||||
| Tangible book value per share (period end) | $ | 26.67 | $ | 23.66 | $ | 26.67 | $ | 23.66 | ||||
| Dividend payout ratio | 32.90 | % | 31.28 | % | 31.39 | % | 31.33 | % | ||||
| Average shares outstanding - basic | 2,038,026 | 2,017,264 | 2,036,025 | 2,008,503 | ||||||||
| Average shares outstanding - diluted | 2,044,564 | 2,023,961 | 2,042,181 | 2,017,060 | ||||||||
| Period ending shares outstanding | 2,042,753 | 2,021,292 | 2,042,753 | 2,021,292 | ||||||||
| Selected ratios | ||||||||||||
| Return on average assets | 0.96 | % | 1.02 | % | 1.02 | % | 1.02 | % | ||||
| Return on average equity | 11.58 | % | 12.47 | % | 12.33 | % | 12.32 | % | ||||
| Yield on earning assets | 4.45 | % | 4.77 | % | 4.79 | % | 4.81 | % | ||||
| Cost of interest-bearing liabilities | 0.80 | % | 1.04 | % | 0.81 | % | 1.06 | % | ||||
| Net interest spread | 3.65 | % | 3.73 | % | 3.99 | % | 3.75 | % | ||||
| Net interest margin | 4.04 | % | 3.88 | % | 4.12 | % | 3.90 | % | ||||
| Efficiency (1) | 64.34 | % | 58.12 | % | 62.13 | % | 58.35 | % | ||||
| Tier 1 capital ratio (holding company) | 9.31 | % | 8.49 | % | 9.31 | % | 8.49 | % | ||||
(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.
| June 30, | June 30, | |||||
| 2014 | 2013 | |||||
| Commercial and industrial | $ | 55,577 | $ | 49,898 | ||
| Real estate - construction | 26,615 | 24,084 | ||||
| Real estate - mortgage: | ||||||
| Residential | 219,229 | 199,250 | ||||
| Commercial | 142,505 | 135,006 | ||||
| Consumer installment | 6,193 | 4,161 | ||||
| $ | 450,119 | $ | 412,399 | |||
| June 30, | June 30, | |||||
| Asset quality data | 2014 | 2013 | ||||
| (Dollar amounts in thousands) | ||||||
| Nonaccrual loans | $ | 8,646 | $ | 9,162 | ||
| Troubled debt restructuring | 1,743 | 3,166 | ||||
| 90 day past due and accruing | 117 | 541 | ||||
| Nonperforming loans | 10,506 | 12,869 | ||||
| Other real estate owned | 2,392 | 2,361 | ||||
| Nonperforming assets | $ | 12,898 | $ | 15,230 | ||
| Allowance for loan and lease losses | $ | 7,129 | $ | 7,749 | ||
| Allowance for loan and lease losses/total loans | 1.58 | % | 1.88 | % | ||
| Net charge-offs: | ||||||
| Quarter-to-date | 6 | 283 | ||||
| Year-to-date | 217 | 643 | ||||
| Net charge-offs to average loans, annualized | ||||||
| Quarter-to-date | 0.01 | % | 0.28 | % | ||
| Year-to-date | 0.10 | % | 0.32 | % | ||
| Nonperforming loans/total loans | 2.33 | % | 3.12 | % | ||
| Allowance for loan and lease losses/nonperforming loans | 67.85 | % | 60.21 | % | ||
Company Contact:
Middlefield Banc Corp.
Thomas G. Caldwell, President/Chief Executive Officer, 440-632-1666 Ext. 3200
[email protected]
or
Investor and Media Contact:
SM Berger & Company, Inc.
Andrew M. Berger, Managing Director, 216-464-6400
[email protected]
Source: Middlefield Banc Corp.