Middlefield Banc Corp.
10/21/2014 | Press release | Archived content
Middlefield Banc Corp. Reports Financial Results for the 2014 Third Quarter
MIDDLEFIELD, Ohio--(BUSINESS WIRE)-- Middlefield Banc Corp. (NASDAQ: MBCN) today reported financial results for the three and nine months ended September 30, 2014.
2014 Third Quarter Financial Highlights Include (on a year-over-year basis unless noted):
- Net interest income increased 1.1% to $5.9 million.
- Noninterest income grew 22.5% to $1.0 million.
- Net income up 2.8% to $1.9 million, or $0.93 per diluted share.
- Tangible stockholders' equity improved 4.3% from 2014 second quarter, and 16.6% from December 31, 2013.
- Total net loans increased 12.1%.
- Nonperforming assets declined to $13.1 million from $16.3 million.
- Tier 1 capital ratio strengthened to 9.50% from 8.70%.
"We ended the 2014 third quarter with a record level of total assets primarily due to a significant increase in total loans outstanding," stated Thomas G. Caldwell, President and Chief Executive Officer. "Since September 30, 2013, our loan portfolio has grown by 11.7%, which was influenced by strong, double-digit improvements across all loan categories. Our asset quality improved during the third quarter as nonperforming assets declined 19.7% over the same period last year. We are dedicated to conservatively managing risk, while continuing to support our communities and expand our loan portfolio."
Net income for the 2014 third quarter was approximately $1.9 million, or $0.93 per diluted share, compared to net income for the 2013 third quarter of nearly $1.9 million, or $0.92 per diluted share. Net income for the nine months ended September 30, 2014 was $5.3 million, or $2.59 per diluted share, compared to net income for the nine months ended September 30, 2013 of $5.2 million, or $2.58 per diluted share.
Annualized returns on average equity ("ROE") and average assets ("ROA") for the 2014 third quarter were 13.55% and 1.13%, respectively, compared with 13.66% and 1.12% for the 2013 third quarter. ROE and ROA were 12.74% and 1.06%, respectively, for the 2014 nine month period, compared with 12.74% and 1.05% for the same period last year.
Mr. Caldwell continued: "We began offering secondary mortgage products at the end of the third quarter, which should improve noninterest income and diversify our sources of income in future quarters. The roll out of our online and mobile banking applications continues and we expect to offer customers the ability to deposit checks from their mobile phones in the fourth quarter. Middlefield has a strong foundation to support its long-term growth objectives and I am pleased with the progress we have made executing our growth strategies. We continue to invest in ongoing programs that are focused on improving the products and services we offer our customers, enhancing the way our customers interact with the bank, growing our banking franchise, and creating shareholder value."
Income Statement
Net interest income for the 2014 third quarter increased slightly to $5.9 million, compared to $5.8 million for the 2013 third quarter. For the 2014 nine month period, net interest income increased 4.3% to $17.8 million, compared to $17.0 million for the same period last year. The third quarter and nine month increases in net interest income were driven by a reduction in funding costs, primarily time deposits. The net interest margin for the 2014 third quarter was 3.99%, compared to 4.05% for the same period of 2013. Year-to-date, the net interest margin was 4.08%, compared to 4.03% for the same period last year.
Noninterest income was up 22.5% for the 2014 third quarter and 2.7% year-to-date. The improvement to noninterest income in the 2014 third quarter was primarily a result of investment gains. Noninterest expense for the 2014 third quarter was $4.4 million, an increase of approximately $0.3 million from the 2013 third quarter, primarily a result of higher operating expenses.
"Noninterest expenses have increased primarily due to higher employee, equipment, and data processing fees to support the company's growth initiatives and compliance costs," said Donald L. Stacy, Chief Financial Officer. "Programs to offset higher costs by leveraging the company's IT infrastructure and reducing professional fees continue. We successfully lowered our costs of deposits 23.3% during the quarter and 24.9% year-to-date, as higher cost deposits mature. Noninterest bearing demand deposits have increased 29.4% year-over-year and represented 17.6% of total deposits at September 30, 2014 versus 14.1% at September 30, 2013, while the cost of interest bearing liabilities fell 24 basis points to 0.80% for the nine months ended September 30, 2014. We remain committed to managing expenses and controlling our cost of funds."
Balance Sheet
Total assets at September 30, 2014 increased 5.1% to $680.3 million, from $647.1 million at December 31, 2013 and 1.8% from $668.3 million at June 30, 2014. Net loans at September 30, 2014 were $460.9 million, compared to $428.7 million at December 31, 2013 and $443.0 million at June 30, 2014. The increase in net loans was a result of double-digit growth across all loan categories.
Total deposits at September 30, 2014 increased 5.5% to $600.0 million from $568.8 million at December 31, 2013. The investment portfolio, which is entirely classified as available for sale, stood at $156.0 million at September 30, 2014, compared to $157.1 million at December 31, 2013.
Stockholders' Equity and Dividends
Tangible stockholders' equity increased 18.9% to $56.8.0 million for the 2014 third quarter, compared to $47.8 million at September 30, 2013. On a per share basis, tangible stockholders' equity increased 17.6% to $27.74 at September 30, 2014 from $23.59 at September 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 September 30, 2014, the company had a Tier 1 leverage ratio of 9.50%, up from 8.70% at September 30, 2013 and 9.31% at June 30, 2014.
During the 2014 third quarter, the company paid cash dividends of $0.26 per share, which equaled the amount paid in the 2013 third quarter. Year-to-date, the company has paid cash dividends of $0.78 per share.
Asset Quality
The provision for loan losses for the 2014 third quarter was less than $0.1 million, compared to approximately $0.2 million for the 2013 third quarter. Year-to-date, the provision for loan losses was $0.4 million, compared to $0.8 million for the same period last year. Net charge-offs for the 2014 nine months was $0.1 million, or 0.04% of average loans, annualized. The allowance for loan losses at September 30, 2014 stood at $7.3 million, or 1.56% of total loans, compared to $7.8 million or 1.87% of total loans at September 30, 2013.
The following table provides a summary of asset quality and reserve coverage ratios.
| Asset Quality History | |||||||||||||
| (dollars in thousands) | |||||||||||||
| 9/30/2014 | 12/31/2013 | 9/30/2013 | 12/31/2012 | 12/31/2011 | |||||||||
| Nonperforming loans | $ | 10,438 | $ | 12,290 | $ | 13,608 | $ | 14,224 | $ | 24,546 | |||
| Real estate owned | 2,674 | 2,698 | 2,719 | 1,846 | 2,196 | ||||||||
| Nonperforming assets | $ | 13,112 | $ | 14,988 | $ | 16,327 | $ | 16,070 | $ | 26,742 | |||
| Allowance for loan losses | $ | 7,288 | $ | 7,046 | $ | 7,821 | $ | 7,779 | $ | 6,819 | |||
| Ratios: | |||||||||||||
|
Nonperforming loans to total loans |
2.23% | 2.82% | 3.25% | 3.48% | 6.12% | ||||||||
|
Nonperforming assets to total assets |
1.93% | 2.32% | 2.48% | 2.40% | 4.09% | ||||||||
|
Allowance for loan losses to total loans |
1.56% | 1.62% | 1.87% | 1.90% | 1.70% | ||||||||
|
Allowance for loan losses to nonperforming loans |
69.82% | 57.33% | 57.48% | 54.69% | 27.78% | ||||||||
Middlefield Banc Corp., headquartered in Middlefield, Ohio, is a bank holding company with total assets of $680.3 million at September 30, 2014. 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 | ||||||||||||
| September 30, 2014 and 2013 and December 31, 2013 | ||||||||||||
| Balance Sheet (period end) | September 30, | December 31, | September 30, | |||||||||
| (Dollar amounts in thousands) | 2014 | 2013 | 2013 | |||||||||
| (unaudited) | ||||||||||||
| Assets | ||||||||||||
| Cash and due from banks | $ | 21,486 | $ | 20,926 | $ | 21,124 | ||||||
| Federal funds sold | 7,816 | 5,267 | 11,069 | |||||||||
| Cash and cash equivalents | 29,302 | 26,193 | 32,193 | |||||||||
| Investment securities available for sale | 156,021 | 157,143 | 180,771 | |||||||||
| Loans held for sale, lower of cost or market | 201 | - | - | |||||||||
| Loans | 468,007 | 435,725 | 419,060 | |||||||||
| Less: allowance for loan and lease losses | 7,288 | 7,046 | 7,821 | |||||||||
| Net loans | 460,920 | 428,679 | 411,239 | |||||||||
| Premises and equipment | 9,916 | 9,828 | 8,555 | |||||||||
| Goodwill | 4,559 | 4,559 | 4,559 | |||||||||
| Core deposit intangible | 126 | 156 | 161 | |||||||||
| Bank-owned life insurance | 9,022 | 8,816 | 8,745 | |||||||||
| Accrued interest receivable and other assets | 10,396 | 11,716 | 11,918 | |||||||||
| Total Assets | $ | 680,262 | $ | 647,090 | $ | 658,141 | ||||||
| September 30, | December 31, | September 30, | ||||||||||
| 2014 | 2013 | 2013 | ||||||||||
| Liabilities and Stockholders' Equity | ||||||||||||
| Noninterest bearing demand deposits | $ | 105,788 | $ | 85,905 | $ | 81,760 | ||||||
| Interest-bearing demand deposits | 62,958 | 53,741 | 59,799 | |||||||||
| Money market accounts | 76,157 | 77,473 | 77,118 | |||||||||
| Savings deposits | 177,408 | 177,303 | 179,581 | |||||||||
| Time deposits | 177,709 | 174,414 | 180,964 | |||||||||
| Total Deposits | 600,020 | 568,836 | 579,222 | |||||||||
| Short-term borrowings | 5,131 | 10,809 | 10,575 | |||||||||
| Federal funds purchased | - | - | 1,639 | |||||||||
| Other borrowings | 11,105 | 11,609 | 12,261 | |||||||||
| Other liabilities | 2,491 | 2,363 | 1,915 | |||||||||
| Total Liabilities | 618,747 | 593,617 | 605,612 | |||||||||
| Common equity | 35,455 | 34,979 | 34,833 | |||||||||
| Retained earnings | 31,169 | 27,465 | 26,123 | |||||||||
| Accumulated other comprehensive income (loss) | 1,625 | (2,237 | ) | (1,693 | ) | |||||||
| Treasury stock | (6,734 | ) | (6,734 | ) | (6,734 | ) | ||||||
| Total Stockholders' Equity | 61,515 | 53,473 | 52,529 | |||||||||
| Total Liabilities and Stockholders' Equity | $ | 680,262 | $ | 647,090 | $ | 658,141 | ||||||
| MIDDLEFIELD BANC CORP. | ||||||||||||
| Consolidated Selected Financial Highlights | ||||||||||||
| September 30, 2014 and 2013 | ||||||||||||
| (Dollar amounts in thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| For the Three Months Ended | For the Nine Months Ended | |||||||||||
| September 30, | September 30, | |||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||
| INTEREST INCOME | ||||||||||||
| Interest and fees on loans | $ | 5,646 | $ | 5,754 | $ | 16,915 | $ | 16,876 | ||||
| Interest-bearing deposits in other institutions | 5 | 6 | 19 | 23 | ||||||||
| Federal funds sold | 2 | 4 | 11 | 12 | ||||||||
| Investment securities | ||||||||||||
| Taxable interest | 441 | 610 | 1,476 | 1,909 | ||||||||
| Tax-exempt interest | 798 | 782 | 2,336 | 2,259 | ||||||||
| Dividends on stock | 19 | 18 | 62 | 56 | ||||||||
| Total interest income | 6,911 | 7,174 | 20,819 | 21,135 | ||||||||
| INTEREST EXPENSE | ||||||||||||
| Deposits | 898 | 1,170 | 2,767 | 3,686 | ||||||||
| Short-term borrowings | 38 | 41 | 111 | 140 | ||||||||
| Federal funds purchased | - | 1 | - | 1 | ||||||||
| Other borrowings | 30 | 41 | 94 | 131 | ||||||||
| Trust preferred securities | 33 | 75 | 93 | 156 | ||||||||
| Total interest expense | 999 | 1,328 | 3,065 | 4,114 | ||||||||
| NET INTEREST INCOME | 5,912 | 5,846 | 17,754 | 17,021 | ||||||||
| Provision for loan losses | 70 | 153 | 370 | 766 | ||||||||
|
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |
5,842 | 5,693 | 17,384 | 16,255 | ||||||||
| NONINTEREST INCOME | ||||||||||||
| Service charges on deposits | 489 | 510 | 1,399 | 1,468 | ||||||||
| Investment securities gains (losses), net | 190 | - | 248 | 175 | ||||||||
| Earnings on bank-owned life insurance | 71 | 66 | 206 | 209 | ||||||||
| Gain on sale of loans | 20 | - | 20 | - | ||||||||
| Other income | 220 | 232 | 689 | 643 | ||||||||
| Total noninterest income | 990 | 808 | 2,562 | 2,495 | ||||||||
| NONINTEREST EXPENSE | ||||||||||||
| Salaries and employee benefits | 2,144 | 1,872 | 6,428 | 5,649 | ||||||||
| Occupancy expense | 272 | 273 | 868 | 795 | ||||||||
| Equipment expense | 296 | 228 | 710 | 603 | ||||||||
| Data processing costs | 251 | 209 | 689 | 609 | ||||||||
| Ohio state franchise tax | 93 | 164 | 269 | 467 | ||||||||
| Federal deposit insurance expense | 132 | 135 | 361 | 353 | ||||||||
| Professional fees | 189 | 316 | 814 | 883 | ||||||||
| Loss (gain) on sale of other real estate owned | 49 | (35 | ) | 119 | (40 | ) | ||||||
| Advertising expense | 120 | 113 | 367 | 336 | ||||||||
| Other real estate expense | 91 | 128 | 256 | 324 | ||||||||
| Directors Fees | 99 | 77 | 303 | 315 | ||||||||
| Other operating expense | 649 | 635 | 2,028 | 1,770 | ||||||||
| Total noninterest expense | 4,385 | 4,115 | 13,212 | 12,064 | ||||||||
| Income before income taxes | 2,447 | 2,386 | 6,734 | 6,686 | ||||||||
| Provision for income taxes | 529 | 521 | 1,442 | 1,479 | ||||||||
| NET INCOME | $ | 1,918 | $ | 1,865 | $ | 5,292 | $ | 5,207 | ||||
| For the Three Months Ended | For the Nine Months Ended | |||||||||||
| September 30, | September 30, | |||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||
| Per common share data | ||||||||||||
| Net income per common share - basic | $ | 0.94 | $ | 0.92 | $ | 2.60 | $ | 2.59 | ||||
| Net income per common share - diluted | $ | 0.93 | $ | 0.92 | $ | 2.59 | $ | 2.58 | ||||
| Dividends declared | $ | 0.26 | $ | 0.26 | $ | 0.78 | $ | 0.78 | ||||
| Book value per share(period end) | $ | 30.02 | $ | 25.92 | $ | 30.02 | $ | 25.92 | ||||
| Tangible book value per share (period end) | $ | 27.74 | $ | 23.59 | $ | 27.74 | $ | 23.59 | ||||
| Dividend payout ratio | 27.58 | % | 27.99 | % | 30.01 | % | 30.13 | % | ||||
| Average shares outstanding - basic | 2,044,124 | 2,022,490 | 2,038,972 | 2,013,217 | ||||||||
| Average shares outstanding -diluted | 2,052,012 | 2,029,420 | 2,045,660 | 2,021,198 | ||||||||
| Period ending shares outstanding | 2,048,807 | 2,026,569 | 2,048,807 | 2,026,569 | ||||||||
| Selected ratios | ||||||||||||
| Return on average assets | 1.13 | % | 1.12 | % | 1.06 | % | 1.05 | % | ||||
| Return on average equity | 13.55 | % | 13.66 | % | 12.74 | % | 12.74 | % | ||||
| Yield on earning assets | 4.62 | % | 4.92 | % | 4.73 | % | 4.93 | % | ||||
| Cost of interest bearing liabilities | 0.78 | % | 1.01 | % | 0.80 | % | 1.04 | % | ||||
| Net interest spread | 3.84 | % | 3.91 | % | 3.94 | % | 3.89 | % | ||||
| Net interest margin | 3.99 | % | 4.05 | % | 4.08 | % | 4.03 | % | ||||
| Efficiency (1) | 59.96 | % | 58.31 | % | 61.40 | % | 57.31 | % | ||||
| Tier 1 capital ratio (holding company) | 9.50 | % | 8.70 | % | 9.50 | % | 8.70 | % | ||||
|
(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. |
||||||||||||
| September 30, | September 30, | |||||||||||
| 2014 | 2013 | |||||||||||
| Commercial and industrial | $ | 58,874 | $ | 50,265 | ||||||||
| Real estate - construction | 29,287 | 25,487 | ||||||||||
| Real estate - mortgage: | ||||||||||||
| Residential | 224,424 | 203,312 | ||||||||||
| Commercial | 149,488 | 135,760 | ||||||||||
| Consumer installment | 6,135 | 4,236 | ||||||||||
| $ | 468,208 | $ | 419,060 | |||||||||
| September 30, | September 30, | |||||||||||
| Asset quality data | 2014 | 2013 | ||||||||||
| (Dollar amounts in thousands) | ||||||||||||
| Non-accrual loans | 8,826 | $ | 9,223 | |||||||||
| Troubled debt restructuring | 1,587 | 3,621 | ||||||||||
| 90 day past due and accruing | 25 | 764 | ||||||||||
| Non-performing loans | 10,438 | 13,608 | ||||||||||
| Other real estate owned | 2,674 | 2,719 | ||||||||||
| Non-performing assets | 13,112 | $ | 16,327 | |||||||||
| Allowance for loan and lease losses | $ | 7,288 | $ | 7,821 | ||||||||
| Allowance for loan and lease losses/total loans | 1.56 | % | 1.87 | % | ||||||||
| Net charge-offs: | ||||||||||||
| Quarter-to-date | (89 | ) | 81 | |||||||||
| Year-to-date | 128 | 724 | ||||||||||
| Net charge-offs to average loans, annualized | ||||||||||||
| Quarter-to-date | (0.08 | %) | 0.08 | % | ||||||||
| Year-to-date | 0.04 | % | 0.23 | % | ||||||||
| Nonperforming loans/total loans | 2.23 | % | 3.25 | % | ||||||||
| Allowance for loan and lease losses/nonperforming loans | 69.82 | % | 57.48 | % | ||||||||
Company Contact:
Middlefield Banc Corp.
Thomas G. Caldwell, 440-632-1666 Ext. 3200
President/Chief Executive Officer
[email protected]
or
Investor and Media Contact:
SM Berger & Company, Inc.
Andrew M. Berger, 216-464-6400
Managing Director
[email protected]
Source: Middlefield Banc Corp.