Middlefield Banc Corp. Reports 2023 Full-Year Financial Results

Middlefield Banc Corp.

MIDDLEFIELD, Ohio, Jan. 26, 2024 (GLOBE NEWSWIRE) -- Middlefield Banc Corp. (NASDAQ: MBCN) today reported financial results for the three and twelve-months ended December 31, 2023.

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

• Net income increased 10.8% to a record $17.4 million

• Earnings were $2.14 per diluted share compared to $2.59 per diluted share, reflecting a 34.5% increase in the average diluted shares outstanding related to the Liberty Bancshares, Inc. merger

• Pre-tax, pre-provision net income increased 25.7% to a record $23.8 million⁽¹⁾

• Net interest income increased 29.9% to a record $65.2 million, supported by a strong net interest margin of 4.04%

• Total loans were a record $1.48 billion, compared to $1.35 billion at December 31, 2022

• Total deposits were $1.43 billion, compared to $1.40 billion at December 31, 2022

• Return on average assets was 0.99%, compared to 1.17%

• Return on average equity was 8.83%, compared to 11.25%

• Return on average tangible common equity⁽¹⁾ was 11.20%, compared to 12.95%

• Strong asset quality continues with nonperforming assets to total assets of 0.60% at year end

• Allowance for credit losses was 1.47% of total loans, compared to 1.07%

• Equity to assets remained strong at 11.28%

• Book value increased 6.0% to $25.41 per share

• Declared $0.85 per share in dividends, a 4.9% increase

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

Ronald L. Zimmerly, Jr., President and Chief Executive Officer, stated, "By many accounts, 2023 was a historic year for Middlefield as we successfully integrated the Liberty Bancshares, Inc. (“Liberty”) merger and ended the year with record total assets, stockholders’ equity, and annual net income. Through the Liberty merger, we expanded Middlefield’s footprint into Western Ohio and deepened our exposure in Central Ohio – creating one of the leading independent community banks in the state. In addition, we enhanced our management team and added seasoned Ohio bankers with deep expertise across Commercial, Business, and Consumer Banking as we remain focused on developing talent from within the Company and attracting leading bankers from outside our organization. Finally, we added new resources to drive deposit growth in a more competitive environment, enhanced our small business lending capabilities, and made strategic adjustments to our operating structure to provide more value to our retail customers. These actions have significantly enhanced our infrastructure, which we believe will allow us to serve our communities better, provide our team members more opportunities, and support Middlefield’s growth."

"As we look to 2024, we are focused on executing against our long-term strategic plan, benefiting from the synergies of the Liberty merger, and realizing the value from the investments we have made across our business this past year. While we expect uncertainty about FOMC monetary policies and their impact on national economic conditions in 2024, economic activity and employment within our Ohio markets remain stable. We believe 2024 will be another good year of balance sheet growth and profitability, and we remain committed to creating long-term value for our customers, communities, team members, and shareholders," concluded Mr. Zimmerly.

Income Statement
Net interest income for the 2023 twelve-month period increased 29.9% to $65.2 million, compared to $50.2 million for the same period last year. For the full year, the net interest margin was 4.04%, compared to 4.08% last year. Net interest income for the 2023 fourth quarter increased 9.2% to $15.4 million, compared to $14.1 million for the 2022 fourth quarter. The net interest margin for the 2023 fourth quarter was 3.70%, compared to 4.23% for the same period of 2022.

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

For the 2023 twelve-month period, noninterest income was $6.7 million, compared to $6.7 million for the same period last year. Noninterest income for the 2023 fourth quarter was $1.6 million, compared to $2.4 million for the same period the previous year.

For the 2023 twelve-month period, noninterest expense was $48.1 million, compared to $38.0 million for the same period last year. Higher year-over-year expenses for the year ended December 31, 2023, were primarily associated with the Liberty merger and higher personnel expenses, partially offset by a decrease in merger-related costs. Noninterest expense in the 2023 fourth quarter was $12.2 million, compared to $12.3 million for the 2022 fourth quarter.

Net income for the 2023 twelve-month period ended December 31, 2023, was $17.4 million, or $2.14 per diluted share, compared to $15.7 million, or $2.59 per diluted share for the same period last year. Net income for the 2023 fourth quarter ended December 31, 2023, was $3.5 million, or $0.44 per diluted share, compared to $3.5 million, or $0.53 per diluted share, for the same period last year.

Pre-tax, pre-provision net income for the 2023 twelve-months was $23.8 million, an increase of 25.7% from $18.9 million last year. For the 2023 fourth quarter, pre-tax, pre-provision net income was $4.8 million, an increase of 15.7% from $4.2 million last year. (See non-GAAP reconciliation under the section “GAAP to Non-GAAP Reconciliations”).

Balance Sheet
Total assets at December 31, 2023, increased 8.0% to $1.82 billion, compared to $1.69 billion at December 31, 2022. Total loans at December 31, 2023, were $1.48 billion, compared to $1.35 billion at December 31, 2022. The 9.3% year-over-year increase in total loans was primarily due to higher commercial and industrial, residential real estate, commercial real estate, and construction and other loans.

Total liabilities at December 31, 2023, increased 8.5% to $1.62 billion, compared to $1.49 billion at December 31, 2022.   Total deposits at December 31, 2023, were $1.43 billion, compared to $1.40 billion at December 31, 2022. The 1.8% year-over-year increase in deposits was primarily due to growth in money market, interest-bearing demand, and time deposits, partially offset by declines in noninterest-bearing demand and savings accounts. Noninterest-bearing demand deposits were 28.1% of total deposits at December 31, 2023, compared to 35.9% at December 31, 2022. At December 31, 2023, the Company had brokered deposits of $90.3 million, compared to $5.0 million at December 31, 2022.

The investment securities available for sale portfolio was $170.8 million at December 31, 2023, compared with $165.0 million at December 31, 2022.

Michael Ranttila, Chief Financial Officer, stated, “Asset quality remains historically strong due to our conservative underwriting standards and balanced portfolio composition, as well as steady economic trends across our Central, Western, and Northeast Ohio markets. During the fourth quarter, we sold an other real estate owned property that was on our balance sheet for $5.8 million for a loss of $173,000. In addition, during the fourth quarter, we downgraded one self-storage loan in the Southwest Ohio market, which resulted in an approximately $3.2 million increase in nonperforming loans since the 2023 third quarter. The issue is isolated to this borrower and does not indicate a trend in the market, our portfolio, or an issue in underwriting.”

Mr. Ranttila continued, "We ended the quarter with $60.8 million in cash and cash equivalents, $170.8 million in available for sale investment securities, and $618.1 million of maximum borrowing capacity at the Federal Home Loan Bank, demonstrating ample liquidity. In addition, market values associated with our securities available for sale improved during 2023, resulting in a lower level of unrealized losses, which were 7.8% of total stockholders’ equity at December 31, 2023, compared to 11.2% at December 31, 2022. We remain confident that we have sufficient liquidity to navigate a more complex economic environment while continuing to support our growth strategies and capital allocation priorities and maintain the available for sale investment portfolio."

Middlefield's CRE portfolio included the following categories at December 31, 2023:

CRE Category		Balance (in thousands)			Percent of CRE Portfolio			Percent of Loan Portfolio
Multi-Family		$	82,506		12.4	%		5.6	%
Office Space		$	81,032		12.1	%		5.5	%
Shopping Plazas		$	75,024		11.3	%		5.1	%
Self-Storage		$	60,233		9.0	%		4.1	%
Hospitality		$	40,155		6.0	%		2.7	%
Senior Living		$	37,543		5.6	%		2.5	%
Other		$	291,138		43.6	%		19.7	%
Total CRE		$	667,631		100.0	%		45.2	%

Stockholders' Equity and Dividends
At December 31, 2023, stockholders' equity was $205.7 million compared to $197.7 million at December 31, 2022. The 4.0% year-over-year increase in stockholders' equity was primarily due to higher retained earnings and an improvement in the unrealized losses on the available-for-sale investment portfolio, partially offset by acquisition of stock under the Company's stock repurchase program. On a per-share basis, shareholders' equity at December 31, 2023, was $25.41 compared to $23.98 at December 31, 2022.

At December 31, 2023, tangible stockholders' equity⁽¹⁾ was $162.7 million, compared to $158.3 million at December 31, 2022. On a per-share basis, tangible stockholders' equity⁽¹⁾ was $20.10 at December 31, 2023, compared to $19.19 at December 31, 2022. ⁽¹⁾See non-GAAP reconciliation under the section “GAAP to Non-GAAP Reconciliations”.

For the 2023 full year, the Company declared cash dividends of $0.85 per share, a 4.9% increase from $0.81 per share for the same period last year. In the 2023 fourth quarter, the Company declared a $0.05 special cash dividend in addition to its regular cash dividend payment of $0.20. The Company declared a $0.10 special cash dividend in the 2022 fourth quarter.

At December 31, 2023, the Company had an equity-to-assets ratio of 11.28%, compared to 11.71% at December 31, 2022.

Asset Quality

For the 2023 twelve-month period and fourth quarter, the Company recorded provisions for credit losses of $3.0 million and $0.6 million, respectively, versus no provisions for credit losses for the same periods last year. The increase is due to the January 1, 2023 adoption of ASU 2016-13, Financial Instruments – Credit Losses – Topic (326): Measurement of Credit Losses on Financial Instruments. Upon adoption, the reserve for credit losses increased by $5.4 million.

For the year ended December 31, 2023, the Company had net recoveries of $31,000, or 0.00% of average loans, annualized, compared to net recoveries of $96,000, or 0.01% of average loans, annualized, for the year ended December 31, 2022. Net recoveries were $117,000 or 0.03% of average loans, annualized, during the 2023 fourth quarter, compared to net charge-offs of $94,000, or 0.03% of average loans, annualized, at December 31, 2022.

Nonperforming loans at December 31, 2023, were $10.9 million, compared to $2.1 million at December 31, 2022. Nonperforming assets at December 31, 2023, were $10.9 million, compared to $7.9 million at December 31, 2022. The allowance for credit losses at December 31, 2023, stood at $21.7 million, or 1.47% of total loans, compared to $14.4 million, or 1.07% of total loans at December 31, 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 $1.82 billion at December 31, 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)
		December 31,				September 30,				June 30,				March 31,				December 31,
Balance Sheets (period end)			2023				2023				2023				2023				2022
ASSETS
Cash and due from banks		$	56,397			$	56,228			$	49,422			$	59,609			$	51,404
Federal funds sold			4,439				9,274				9,654				7,048				2,405
Cash and cash equivalents			60,836				65,502				59,076				66,657				53,809
Investment securities available for sale, at fair value			170,779				159,414				167,209				169,605				164,967
Other investments			955				958				711				777				915
Loans held for sale			-				632				171				104				-
Loans:
Commercial real estate:
Owner occupied			183,545				185,593				187,919				185,661				191,748
Non-owner occupied			401,580				382,676				385,846				400,314				380,580
Multifamily			82,506				82,578				58,579				63,892				58,251
Residential real estate			328,854				321,331				312,196				306,179				296,308
Commercial and industrial			221,508				214,334				209,349				195,024				195,602
Home equity lines of credit			127,818				127,494				126,894				126,555				128,065
Construction and other			125,105				127,106				118,851				97,406				94,199
Consumer installment			7,214				7,481				9,801				7,816				8,119
Total loans			1,478,130				1,448,593				1,409,435				1,382,847				1,352,872
Less allowance for credit losses			21,693				20,986				20,591				20,162				14,438
Net loans			1,456,437				1,427,607				1,388,844				1,362,685				1,338,434
Premises and equipment, net			21,339				21,708				21,629				21,775				21,961
Goodwill			36,356				36,197				36,197				31,735				31,735
Core deposit intangibles			6,642				6,906				7,171				7,436				7,701
Bank-owned life insurance			34,349				34,153				34,235				34,015				33,811
Other real estate owned			-				5,792				5,792				5,792				5,821
Accrued interest receivable and other assets			35,190				34,551				30,472				27,258				28,528
TOTAL ASSETS		$	1,822,883			$	1,793,420			$	1,751,507			$	1,727,839			$	1,687,682
		December 31,				September 30,				June 30,				March 31,				December 31,
			2023				2023				2023				2023				2022
LIABILITIES
Deposits:
Noninterest-bearing demand		$	401,384			$	424,055			$	441,102			$	474,977			$	503,907
Interest-bearing demand			205,582				243,973				229,633				196,086				164,677
Money market			274,682				275,766				241,537				221,723				187,498
Savings			210,639				216,453				231,508				287,859				307,917
Time			334,315				296,732				287,861				244,962				238,020
Total deposits			1,426,602				1,456,979				1,431,641				1,425,607				1,402,019
Federal Home Loan Bank advances			163,000				118,000				100,000				85,000				65,000
Other borrowings			11,862				11,912				11,961				12,010				12,059
Accrued interest payable and other liabilities			15,738				12,780				10,678				10,057				10,913
TOTAL LIABILITIES			1,617,202				1,599,671				1,554,280				1,532,674				1,489,991
STOCKHOLDERS' EQUITY
Common stock, no par value; 25,000,000 shares authorized, 9,930,704
shares issued, 8,095,252 shares outstanding as of December 31, 2023			161,388				161,312				161,211				161,248				161,029
Retained earnings			100,237				98,717				96,500				93,024				94,154
Accumulated other comprehensive loss			(16,090	)			(26,426	)			(20,630	)			(19,253	)			(22,144	)
Treasury stock, at cost; 1,835,452 shares as of December 31, 2023			(39,854	)			(39,854	)			(39,854	)			(39,854	)			(35,348	)
TOTAL STOCKHOLDERS' EQUITY			205,681				193,749				197,227				195,165				197,691
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	1,822,883			$	1,793,420			$	1,751,507			$	1,727,839			$	1,687,682
MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
(Dollar amounts in thousands, unaudited)
		For the Three Months Ended																				For the Twelve Months Ended
		December 31,				September 30,				June 30,				March 31,				December 31,				December 31,				December 31,
Statements of Income			2023				2023				2023				2023				2022				2023				2022
INTEREST AND DIVIDEND INCOME
Interest and fees on loans		$	22,027			$	20,899			$	20,762			$	18,275			$	14,368			$	81,963			$	48,513
Interest-earning deposits in other institutions			370				300				369				250				240				1,289				472
Federal funds sold			94				266				158				253				119				771				219
Investment securities:
Taxable interest			479				477				479				458				477				1,893				1,811
Tax-exempt interest			976				980				978				980				986				3,914				3,707
Dividends on stock			144				148				91				88				68				471				184
Total interest and dividend income			24,090				23,070				22,837				20,304				16,258				90,301				54,906
INTEREST EXPENSE
Deposits			6,522				5,632				3,851				2,990				1,771				18,995				4,018
Short-term borrowings			2,013				1,258				1,462				653				263				5,386				307
Other borrowings			179				213				170				155				142				717				404
Total interest expense			8,714				7,103				5,483				3,798				2,176				25,098				4,729
NET INTEREST INCOME			15,376				15,967				17,354				16,506				14,082				65,203				50,177
Provision for credit losses			554				1,127				814				507				-				3,002				-
NET INTEREST INCOME AFTER PROVISION
FOR CREDIT LOSSES			14,822				14,840				16,540				15,999				14,082				62,201				50,177
NONINTEREST INCOME
Service charges on deposit accounts			997				954				940				987				976				3,878				3,850
Loss on equity securities			(4	)			48				(67	)			(138	)			(77	)			(161	)			(173	)
(Loss) gain on other real estate owned			(172	)			-				-				2				-				(170	)			-
Earnings on bank-owned life insurance			196				207				220				200				137				823				459
Gain (loss) on sale of loans			23				45				6				23				(4	)			97				24
Revenue from investment services			193				190				174				186				147				743				674
Gross rental income			132				110				77				102				951				421				951
Other income			237				263				242				318				284				1,060				961
Total noninterest income			1,602				1,817				1,592				1,680				2,414				6,691				6,746
NONINTEREST EXPENSE
Salaries and employee benefits			6,646				5,994				6,019				5,852				4,886				24,511				17,548
Occupancy expense			512				699				659				696				487				2,566				2,033
Equipment expense			273				297				354				317				252				1,241				1,074
Data processing costs			1,348				1,209				1,137				1,070				1,050				4,764				3,701
Ohio state franchise tax			397				398				398				385				279				1,578				1,157
Federal deposit insurance expense			285				207				249				120				105				861				329
Professional fees			660				545				550				538				382				2,293				1,500
Other real estate owned writedowns			-				-				-				-				1,000				-				1,200
Advertising expense			162				414				415				486				308				1,477				1,033
Software amortization expense			22				24				23				26				28				95				143
Core deposit intangible amortization			264				265				265				265				140				1,059				372
Gross other real estate owned expenses			120				195				63				132				692				510				707
Merger-related costs			-				22				206				245				1,413				473				2,382
Other expense			1,483				1,849				1,716				1,661				1,321				6,709				4,851
Total noninterest expense			12,172				12,118				12,054				11,793				12,343				48,137				38,030
Income before income taxes			4,252				4,539				6,078				5,886				4,153				20,755				18,893
Income taxes			709				703				986				989				651				3,387				3,220
NET INCOME		$	3,543			$	3,836			$	5,092			$	4,897			$	3,502			$	17,368			$	15,673
PTPP(1)		$	4,806			$	5,666			$	6,892			$	6,393			$	4,153			$	23,757			$	18,893
(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 Twelve Months Ended
		December 31,				September 30,				June 30,				March 31,				December 31,				December 31,				December 31,
			2023				2023				2023				2023				2022				2023				2022
Per common share data
Net income per common share - basic		$	0.44			$	0.47			$	0.63			$	0.60			$	0.53			$	2.14			$	2.60
Net income per common share - diluted		$	0.44			$	0.47			$	0.63			$	0.60			$	0.53			$	2.14			$	2.59
Dividends declared per share		$	0.25			$	0.20			$	0.20			$	0.20			$	0.30			$	0.85			$	0.81
Book value per share (period end)		$	25.41			$	23.94			$	24.38			$	24.13			$	23.98			$	25.41			$	23.98
Tangible book value per share (period end)(1) (2)		$	20.10			$	18.62			$	19.02			$	19.29			$	19.19			$	20.10			$	19.19
Dividends declared		$	2,023			$	1,619			$	1,616			$	1,605			$	2,514			$	6,864			$	5,490
Dividend yield			3.06	%			3.12	%			2.99	%			2.89	%			4.34	%			2.63	%			2.96	%
Dividend payout ratio			57.10	%			42.21	%			31.74	%			32.78	%			71.79	%			39.52	%			37.23	%
Average shares outstanding - basic			8,093,478				8,092,494				8,088,793				8,138,771				6,593,616				8,103,230				6,027,091
Average shares outstanding - diluted			8,116,609				8,101,306				8,101,984				8,152,629				6,610,907				8,126,361				6,044,382
Period ending shares outstanding			8,095,252				8,092,576				8,088,793				8,088,793				8,245,235				8,095,252				8,245,235
Selected ratios
Return on average assets (Annualized)			0.78	%			0.86	%			1.17	%			1.16	%			0.97	%			0.99	%			1.17	%
Return on average equity (Annualized)			7.13	%			7.73	%			10.41	%			10.19	%			9.35	%			8.83	%			11.25	%
Return on average tangible common equity(1) (3)			9.11	%			9.91	%			13.12	%			12.77	%			11.13	%			11.20	%			12.95	%
Efficiency(4)			68.99	%			65.65	%			61.27	%			62.44	%			72.75	%			64.49	%			64.96	%
Equity to assets at period end			11.28	%			10.80	%			11.26	%			11.30	%			11.71	%			11.28	%			11.71	%
Noninterest expense to average assets			0.68	%			0.68	%			0.69	%			0.69	%			0.86	%			2.74	%			2.84	%
(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 Twelve Months Ended
		December 31,				September 30,				June 30,				March 31,				December 31,				December 31,				December 31,
Yields			2023				2023				2023				2023				2022				2023				2022
Interest-earning assets:
Loans receivable(1)			6.01	%			5.82	%			5.96	%			5.45	%			5.11	%			5.82	%			4.79	%
Investment securities(1)			4.26	%			4.09	%			4.08	%			4.11	%			3.83	%			4.13	%			3.73	%
Interest-earning deposits with other banks			3.71	%			4.13	%			3.98	%			3.46	%			3.42	%			3.82	%			1.31	%
Total interest-earning assets			5.76	%			5.58	%			5.69	%			5.22	%			4.88	%			5.57	%			4.45	%
Deposits:
Interest-bearing demand deposits			1.67	%			1.51	%			1.11	%			0.83	%			0.83	%			1.32	%			0.34	%
Money market deposits			3.58	%			2.94	%			2.21	%			1.52	%			1.00	%			2.65	%			0.61	%
Savings deposits			0.59	%			0.58	%			0.73	%			1.03	%			0.49	%			0.76	%			0.20	%
Certificates of deposit			3.68	%			3.27	%			2.35	%			1.71	%			1.30	%			2.83	%			1.00	%
Total interest-bearing deposits			2.56	%			2.16	%			1.60	%			1.28	%			0.87	%			1.92	%			0.51	%
Non-Deposit Funding:
Borrowings			5.57	%			5.66	%			5.26	%			4.78	%			4.25	%			5.40	%			3.35	%
Total interest-bearing liabilities			2.96	%			2.48	%			2.02	%			1.52	%			1.02	%			2.28	%			0.59	%
Cost of deposits			1.81	%			1.53	%			1.09	%			0.84	%			0.57	%			1.32	%			0.34	%
Cost of funds			2.18	%			1.80	%			1.43	%			1.02	%			0.68	%			1.62	%			0.40	%
Net interest margin(2)			3.70	%			3.88	%			4.34	%			4.26	%			4.23	%			4.04	%			4.08	%
(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
		December 31,				September 30,				June 30,				March 31,				December 31,
Asset quality data			2023				2023				2023				2023				2022
(Dollar amounts in thousands, unaudited)
Nonperforming loans(1)		$	10,877			$	7,717			$	7,116			$	6,882			$	2,111
Other real estate owned			-				5,792				5,792				5,792				5,821
Nonperforming assets		$	10,877			$	13,509			$	12,908			$	12,674			$	7,932
Allowance for credit losses		$	21,693			$	20,986			$	20,591			$	20,162			$	14,438
Allowance for credit losses/total loans			1.47	%			1.45	%			1.46	%			1.46	%			1.07	%
Net charge-offs (recoveries):
Quarter-to-date		$	(117	)		$	(16	)		$	111			$	(8	)		$	94
Year-to-date			(31	)			87				103				(8	)			(96	)
Net charge-offs (recoveries) to average loans, annualized:
Quarter-to-date			(0.03	%)			0.00	%			0.03	%			0.00	%			0.03	%
Year-to-date			0.00	%			0.01	%			0.01	%			0.00	%			(0.01	%)
Nonperforming loans/total loans			0.74	%			0.53	%			0.50	%			0.50	%			0.16	%
Allowance for credit losses/nonperforming loans			199.44	%			271.95	%			289.36	%			292.97	%			683.94	%
Nonperforming assets/total assets			0.60	%			0.75	%			0.74	%			0.73	%			0.47	%
(1)On January 1, 2023, the Company adopted ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. As a result, nonperforming loans for the periods after January 1, 2023, include certain loans which were modified to borrowers experiencing financial difficulty. Amounts prior to January 1, 2023, exclude nonperforming troubled debt restructurings that were performing in according with their terms over a prescribed period of time, for which accounting guidance was eliminated upon adoption of ASU 2022-02.
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)		December 31,				September 30,				June 30,				March 31,				December 31,
			2023				2023				2023				2023				2022
Stockholders' equity		$	205,681			$	193,749			$	197,227			$	195,165			$	197,691
Less goodwill and other intangibles			42,998				43,103				43,368				39,171				39,436
Tangible common equity		$	162,683			$	150,646			$	153,859			$	155,994			$	158,255
Shares outstanding			8,095,252				8,092,576				8,088,793				8,088,793				8,245,235
Tangible book value per share		$	20.10			$	18.62			$	19.02			$	19.29			$	19.19										0
Reconciliation of Average Equity to Return on Average Tangible Common Equity
	For the Three Months Ended																					For the Twelve Months Ended
		December 31,				September 30,				June 30,				March 31,				December 31,				December 31,				December 31,
			2023				2023				2023				2023				2022				2023				2022
Average stockholders' equity		$	197,208			$	196,795			$	196,183			$	194,814			$	148,616			$	196,602			$	139,270
Less average goodwill and other intangibles			42,972				43,232				40,522				39,300				23,731				41,507				18,200
Average tangible common equity		$	154,236			$	153,563			$	155,661			$	155,514			$	124,885			$	155,095			$	121,070
Net income		$	3,543			$	3,836			$	5,092			$	4,897			$	3,502			$	17,368			$	15,673
Return on average tangible common equity (annualized)			9.11	%			9.91	%			13.12	%			12.77	%			11.13	%			11.20	%			12.95	%
Reconciliation of Pre-Tax Pre-Provision Income (PTPP)
	For the Three Months Ended																					For the Twelve Months Ended
		December 31,				September 30,				June 30,				March 31,				December 31,				December 31,				December 31,
			2023				2023				2023				2023				2022				2023				2022
Net income		$	3,543			$	3,836			$	5,092			$	4,897			$	3,502			$	17,368			$	15,673
Add income taxes			709				703				986				989				651				3,387				3,220
Add provision for credit losses			554				1,127				814				507				-				3,002				-
PTPP		$	4,806			$	5,666			$	6,892			$	6,393			$	4,153			$	23,757			$	18,893
MIDDLEFIELD BANC CORP.
Average Balance Sheets
(Dollar amounts in thousands, unaudited)
		For the Three Months Ended
		December 31,												December 31,
			2023												2022
		Average								Average				Average								Average
		Balance				Interest				Yield/Cost				Balance				Interest				Yield/Cost
Interest-earning assets:
Loans receivable ⁽¹⁾		$	1,454,688			$	22,027				6.01	%		$	1,117,221			$	14,368				5.11	%
Investment securities ⁽¹⁾			159,493				1,455				4.26	%			178,772				1,463				3.83	%
Interest-earning deposits with other banks ⁽²⁾			64,989				608				3.71	%			49,569				427				3.42	%
Total interest-earning assets			1,679,170				24,090				5.76	%			1,345,562				16,258				4.88	%
Noninterest-earning assets			116,160												89,740
Total assets		$	1,795,330											$	1,435,302
Interest-bearing liabilities:
Interest-bearing demand deposits		$	222,517			$	935				1.67	%		$	165,267			$	344				0.83	%
Money market deposits			276,354				2,493				3.58	%			172,437				435				1.00	%
Savings deposits			211,997				317				0.59	%			266,613				330				0.49	%
Certificates of deposit			299,427				2,777				3.68	%			201,972				662				1.30	%
Short-term borrowings			144,344				2,013				5.53	%			25,750				263				4.05	%
Other borrowings			11,890				179				5.97	%			12,086				142				4.66	%
Total interest-bearing liabilities			1,166,529				8,714				2.96	%			844,125				2,176				1.02	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			422,151												428,155
Other liabilities			9,442												14,406
Stockholders' equity			197,208												148,616
Total liabilities and stockholders' equity		$	1,795,330											$	1,435,302
Net interest income						$	15,376											$	14,082
Interest rate spread ⁽³⁾											2.80	%											3.86	%
Net interest margin ⁽⁴⁾											3.70	%											4.23	%
Ratio of average interest-earning assets to average interest-bearing liabilities											143.95	%											159.40	%
(1)Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $282 and $278 for the three months ended December 31, 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.
		For the Three Months Ended
		December 31,												September 30,
			2023												2023
		Average								Average				Average								Average
		Balance				Interest				Yield/Cost				Balance				Interest				Yield/Cost
Interest-earning assets:
Loans receivable ⁽¹⁾		$	1,454,688			$	22,027				6.01	%		$	1,425,375			$	20,899				5.82	%
Investment securities ⁽¹⁾			159,493				1,455				4.26	%			166,671				1,457				4.09	%
Interest-earning deposits with other banks ⁽²⁾			64,989				608				3.71	%			68,587				714				4.13	%
Total interest-earning assets			1,679,170				24,090				5.76	%			1,660,633				23,070				5.58	%
Noninterest-earning assets			116,160												115,353
Total assets		$	1,795,330											$	1,775,986
Interest-bearing liabilities:
Interest-bearing demand deposits		$	222,517			$	935				1.67	%		$	256,153			$	975				1.51	%
Money market deposits			276,354				2,493				3.58	%			259,802				1,928				2.94	%
Savings deposits			211,997				317				0.59	%			225,216				327				0.58	%
Certificates of deposit			299,427				2,777				3.68	%			291,409				2,402				3.27	%
Short-term borrowings			144,344				2,013				5.53	%			91,201				1,258				5.47	%
Other borrowings			11,890				179				5.97	%			11,940				213				7.08	%
Total interest-bearing liabilities			1,166,529				8,714				2.96	%			1,135,721				7,103				2.48	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			422,151												431,775
Other liabilities			9,442												11,695
Stockholders' equity			197,208												196,795
Total liabilities and stockholders' equity		$	1,795,330											$	1,775,986
Net interest income						$	15,376											$	15,967
Interest rate spread ⁽³⁾											2.80	%											3.10	%
Net interest margin ⁽⁴⁾											3.70	%											3.88	%
Ratio of average interest-earning assets to average interest-bearing liabilities											143.95	%											146.22	%
(1)Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $282 and $270 for the three months ended December 31, 2023 and September 30, 2023, 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.
		For the Twelve Months Ended
		December 31,												December 31,
			2023												2022
		Average								Average				Average								Average
		Balance				Interest				Yield/Cost				Balance				Interest				Yield/Cost
Interest-earning assets:
Loans receivable ⁽¹⁾		$	1,410,251			$	81,963				5.82	%		$	1,014,896			$	48,513				4.79	%
Investment securities ⁽¹⁾			165,910				5,807				4.13	%			174,514				5,518				3.73	%
Interest-earning deposits with other banks ⁽²⁾			66,295				2,531				3.82	%			67,030				875				1.31	%
Total interest-earning assets			1,642,456				90,301				5.57	%			1,256,440				54,906				4.45	%
Noninterest-earning assets			116,459												84,484
Total assets		$	1,758,915											$	1,340,924
Interest-bearing liabilities:
Interest-bearing demand deposits		$	217,662			$	2,870				1.32	%		$	164,569			$	554				0.34	%
Money market deposits			244,765				6,498				2.65	%			174,377				1,055				0.61	%
Savings deposits			253,962				1,925				0.76	%			259,225				527				0.20	%
Certificates of deposit			272,443				7,702				2.83	%			188,617				1,882				1.00	%
Short-term borrowings			101,088				5,386				5.33	%			8,576				307				3.58	%
Other borrowings			11,965				717				5.99	%			12,626				404				3.20	%
Total interest-bearing liabilities			1,101,885				25,098				2.28	%			807,990				4,729				0.59	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			449,102												386,296
Other liabilities			11,326												7,368
Stockholders' equity			196,602												139,270
Total liabilities and stockholders' equity		$	1,758,915											$	1,340,924
Net interest income						$	65,203											$	50,177
Interest rate spread ⁽³⁾											3.29	%											3.86	%
Net interest margin ⁽⁴⁾											4.04	%											4.08	%
Ratio of average interest-earning assets to average interest-bearing liabilities											149.06	%											155.50	%
(1)Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $1,106 and $1,046 for the twelve months ended December 31, 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.

Company Contact:	Investor and Media Contact:
Ronald L. Zimmerly, Jr. President and Chief Executive Officer Middlefield Banc Corp. (419) 673-1217 rzimmerly@middlefieldbank.com	Andrew M. Berger Managing Director SM Berger & Company, Inc. (216) 464-6400 andrew@smberger.com