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Middlefield Banc Corp. Reports 2022 Full Year Financial Results

/EIN News/ -- MIDDLEFIELD, Ohio, Jan. 27, 2023 (GLOBE NEWSWIRE) -- Middlefield Banc Corp. (NASDAQ: MBCN) today reported financial results for the three and twelve-months ended December 31, 2022.

2022 Financial Highlights (on a year-over-year basis unless noted):

Returned $11.6 million of capital to shareholders through cash dividends and the repurchase of 229,420 shares at an average price of $26.67 per share
Net income was $15.7 million, or $2.59 per diluted share, compared to $18.6 million, or $3.00 per diluted share
Non-GAAP⁽¹⁾ net income, adjusted for certain one-time items and expenses associated with the Liberty Bancshares, Inc. merger, was $18.3 million, or $3.03 per diluted share, compared to $18.5 million, or $2.98 per diluted share
Non-GAAP⁽¹⁾ ROAE and ROATE, adjusted for certain one-time items and expenses associated with the Liberty Bancshares, Inc. merger, was 13.15% and 15.12%, respectively, compared to 12.65% and 14.27%, respectively
Twelve-month pre-tax income benefited from $1.2 million of net fees associated with the Paycheck Protection Program (“PPP”), compared to $1.1 million in the 2021 full year
Net interest margin improved by 30 basis points to 4.08%, compared to 3.78%
Total loans were $1.35 billion, compared to $981.7 million at December 31, 2021
Total loans increased organically by $91.4 million, or 9.6% from December 31, 2021, without the impact of PPP loan forgiveness and the Liberty Bancshares, Inc. merger
Strong asset quality with nonperforming loans to total loans of 0.52%, compared to 0.49%
Allowance for loan losses was 1.07% of total loans, compared to 1.46%

“Middlefield experienced another excellent year of core earnings driven by a 4.08% net interest margin, a 9.6% increase in organic loans, and robust asset quality. These results reflect the execution of our strategic plan, the dedication of our skilled team members, and the value we provide our local communities. In addition, we completed the Liberty Bancshares merger during the 2022 fourth quarter, which increased our scale and exposure in the Central and Northwest Ohio regions. We are delighted to bring our common philosophies to customers within these markets. Over the next several months, we will focus on integrating Liberty into Middlefield’s organization,” stated James R. Heslop, II, Chief Executive Officer.

“Our performance during 2022 was encouraging as we overcame the Federal Reserve’s rapid increase in interest rates, growing competition for deposits and increased economic uncertainty. While we expect these trends to continue throughout 2023, we are well-positioned to navigate a more challenging landscape due to our strong capital position, excellent asset quality and favorable net interest margin. Most importantly, our solid financial position allows us to support our local communities during an increasingly complex operating environment while continuing to focus on creating value and returning capital to our shareholders,” concluded Mr. Heslop.

Income Statement

Net interest income for the twelve-months ended December 31, 2022, was $50.2 million, an increase of $2.1 million or 4.2%, compared to $48.1 million last year. The net interest margin for the 2022 twelve-month period was 4.08%, compared to 3.78% for the same period the previous year. Net interest income for the 2022 fourth quarter was $14.1 million, compared to $12.0 million for the 2021 fourth quarter. The 17.7% increase in net interest income for the 2022 fourth quarter from the same period in 2021 was primarily a result of higher interest income. The net interest margin for the 2022 fourth quarter was 4.23%, compared to 3.81% for the same period of 2021.

For the 2022 twelve-month period, noninterest income was $6.7 million, compared to $7.2 million, a decrease of $460,000 or 6.4%, for the same period last year. Noninterest income for 2022 benefitted from $951,000 of gross rental income related to leasing other real estate owned, mostly offset by $686,000 of related gross rental expense. Noninterest income for the 2022 fourth quarter was $2.4 million, compared to $1.5 million for the same period last year.

For the 2022 twelve-month period, noninterest expense increased $6.1 million, or 19.0%, to $38.0 million, compared to $31.9 million for the same period last year. Operating costs in the 2022 fourth quarter increased 57.6% to $12.3 million from $7.8 million for the 2021 fourth quarter. The Company incurred $1.4 million of additional operating expenses associated with the Liberty Bancshares, Inc. merger during the 2022 fourth quarter and $2.4 million during the 2022 twelve-month period. In addition, the Company incurred a net loss on other real estate owned of $1.7 million during the 2022 fourth quarter mostly due to the write-down of an other real estate asset.

Net income for the 2022 twelve-month period was $15.7 million, or $2.59 per diluted share, compared to $18.6 million, or $3.00 per diluted share, for the same period last year. Non-GAAP⁽¹⁾ net income, adjusted for certain one-time items and expenses associated with the Liberty Bancshares, Inc. merger, was $18.3 million, or $3.03 per diluted share for the 2022 twelve-month period, compared to $18.5 million, or $2.98 per diluted share for the same period last year.

Net income for the 2022 fourth quarter was $3.5 million, or $0.53 per diluted share, compared to $4.8 million, or $0.81 per diluted share, for the same period last year. Non-GAAP⁽¹⁾ net income, adjusted for certain one-time items and expenses associated with the Liberty Bancshares, Inc. merger, was $5.2 million, or $0.79 per diluted share for the 2022 fourth quarter, compared to $4.8 million, or $0.80 per diluted share for the same period last year.

Balance Sheet

Total assets at December 31, 2022, increased to approximately $1.69 billion from $1.33 billion at December 31, 2021. The $356.6 million, or 26.8%, year-over-year increase in total assets was primarily due to the Liberty Bancshares, Inc. merger. Net loans at December 31, 2022, increased 38.4% to $1.34 billion, compared to $967.3 million at December 31, 2021. On an organic basis, without the impact of PPP loan forgiveness and the Liberty Bancshares, Inc. merger, total loans at December 31, 2022, increased 9.6%, compared to December 31, 2021.

Since 2020, Middlefield has helped customers receive $211.8 million of forgiveness payments under the terms of the Paycheck Protection Program, including processing $33.4 million of forgiveness payments for the 2022 full year. The balance of PPP loans outstanding at December 31, 2022, was $0.7 million.

Total deposits at December 31, 2022, were $1.40 billion, compared to $1.17 billion at December 31, 2021. The 20.2% increase in deposits was primarily due to the Liberty Bancshares, Inc. merger. On an organic basis, total deposits at December 31, 2022, decreased 7.8% compared to December 31, 2021. The investment portfolio was $165.0 million at December 31, 2022, compared with $170.2 million at December 31, 2021.

Donald L. Stacy, Chief Financial Officer, stated, “While we expect an increase in the cost of funds to pressure net interest margin in future quarters, we entered this period with the highest net interest margin since 2000. Asset quality remains strong across our portfolio, as nonperforming loans to total loans were just 0.52% at December 31, 2022, compared to 0.49% at December 31, 2021.”

Mr. Stacy continued, “With a net loan-to-deposit ratio of 95.5%, $53.8 million in cash and cash equivalents, and $165.0 million in investment securities at December 31, 2022, we believe we have ample liquidity and capital levels to support our long-term growth strategies, dividend payment, and share repurchase program. Since January 2019, we have repurchased 898,901 shares, representing 13.9% of the outstanding shares prior to our repurchase program. This includes 229,420 shares repurchased during 2022 at an average of $26.67 per share.”

Stockholders’ Equity and Dividends

At December 31, 2022, stockholders’ equity was $197.7 million compared to $145.3 million at December 31, 2021. The 36.0% year-over-year increase in stockholders’ equity was primarily due to the Liberty Bancshares, Inc. merger, partially offset by an increase in the unrealized loss on the available-for-sale investment portfolio and the Company’s stock repurchase program. On a per-share basis, shareholders’ equity at December 31, 2022, was $23.98 compared to $24.68 at December 31, 2021.

Tangible stockholders’ equity⁽¹⁾ was $158.3 million for December 31, 2022, compared to $128.9 million at December 31, 2021. On a per-share basis, tangible stockholders’ equity⁽¹⁾ at December 31, 2022, was $19.19, compared to $21.88 at December 31, 2021.

For the 2022 full year, cash dividends declared per share increased 17.4% to $0.81 totaling $5.5 million, compared to $0.69 per share or $4.2 million for the same period last year. Dividends in 2022 included a $0.10 per share one-time dividend payment declared in the fourth quarter.

At December 31, 2022, the Company had an equity-to-assets leverage ratio of 11.71%, compared to 10.92% at December 31, 2021. The year-over-year increase in the Company’s equity-to-assets leverage ratio occurred even as Middlefield invested $6.1 million in its share repurchase program.

Asset Quality

No provision for loan losses was recorded for the 2022 fourth quarter, compared to a net loan loss recovery of $200,000 for the 2021 fourth quarter. There was no provision for loan losses for the 2022 full year period versus a $700,000 provision for loan losses for the same period last year.

Net charge-offs were $94,000, or 0.03% of average loans, annualized, during the 2022 fourth quarter, compared to net recoveries of $308,000 for the same quarter last year. For the 2022 full year, net recoveries were $96,000, or 0.01% of average loans, compared to net recoveries of $183,000, or 0.02% of average loans for the full year ended December 31, 2021.

Nonperforming assets at December 31, 2022, were $12.8 million, compared to $11.9 million at December 31, 2021. Nonperforming loans at December 31, 2022, were $7.0 million, compared to $4.9 million at December 31, 2021 primarily due to the Liberty Bancshares, Inc. merger. The allowance for loan losses at December 31, 2022, stood at $14.4 million, or 1.07% of total loans, compared to $14.3 million, or 1.46% of total loans at December 31, 2021.

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 $1.69 billion at December 31, 2022. The Bank operates 22 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

⁽¹⁾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)		2022		2022		2022		2022		2021
ASSETS
Cash and due from banks	$	51,404	$	119,777	$	60,114	$	78,804	$	97,172
Federal funds sold		2,405		8,800		19,039		29,474		22,322
Cash and cash equivalents		53,809		128,577		79,153		108,278		119,494
Equity securities, at fair value		915		972		779		851		818
Investment securities available for sale, at fair value		164,967		162,064		171,958		175,216		170,199
Loans held for sale		-		-		-		9		1,051
Loans:
Commercial real estate:
Owner occupied		191,748		120,912		120,771		113,590		111,470
Non-owner occupied		380,580		285,419		288,334		293,745		283,618
Multifamily		58,251		38,063		29,152		29,385		31,189
Residential real estate		296,308		247,612		246,453		244,747		240,089
Commercial and industrial		195,602		146,987		137,398		131,683		148,812
Home equity lines of credit		128,065		114,344		111,730		106,300		104,355
Construction and other		94,199		33,748		35,988		50,152		54,148
Consumer installment		8,119		8,110		8,171		8,118		8,010
Total loans		1,352,872		995,195		977,997		977,720		981,691
Less allowance for loan and lease losses		14,438		14,532		14,550		14,492		14,342
Net loans		1,338,434		980,663		963,447		963,228		967,349
Premises and equipment, net		21,961		16,215		17,030		17,142		17,272
Goodwill		31,735		15,071		15,071		15,071		15,071
Core deposit intangibles		7,701		1,171		1,249		1,326		1,403
Bank-owned life insurance		33,811		17,382		17,274		17,166		17,060
Other real estate owned		5,821		6,792		6,792		6,992		6,992
Accrued interest receivable and other assets		28,528		22,104		20,624		18,019		14,297
TOTAL ASSETS	$	1,687,682	$	1,351,011	$	1,293,377	$	1,323,298	$	1,331,006

		December 31,		September 30,		June 30,		March 31,		December 31,
		2022		2022		2022		2022		2021
LIABILITIES
Deposits:
Noninterest-bearing demand	$	503,907	$	383,675	$	379,872	$	361,251	$	334,171
Interest-bearing demand		164,677		160,112		154,788		162,010		196,308
Money market		187,498		162,052		185,494		187,807		177,281
Savings		307,917		247,466		252,179		264,784		260,125
Time		238,020		177,182		174,833		191,320		198,725
Total deposits		1,402,019		1,130,487		1,147,166		1,167,172		1,166,610

Short-term borrowings		65,000		80,000		-		-		-
Other borrowings		12,059		12,107		12,910		12,975		12,901
Accrued interest payable and other liabilities		10,913		5,562		5,081		5,507		6,160
TOTAL LIABILITIES		1,489,991		1,228,156		1,165,157		1,185,654		1,185,671
STOCKHOLDERS' EQUITY
Common stock, no par value; 10,000,000 shares authorized, 9,916,466
shares issued, 8,245,235 shares outstanding as of December 31, 2022		161,029		87,640		87,562		87,562		87,131
Retained earnings		94,154		93,166		89,900		86,804		83,971
Accumulated other comprehensive (loss) income		(22,144)		(25,080)		(17,591)		(6,674)		3,462
Treasury stock, at cost; 1,671,231 shares as of December 31, 2022		(35,348)		(32,871)		(31,651)		(30,048)		(29,229)
TOTAL STOCKHOLDERS' EQUITY		197,691		122,855		128,220		137,644		145,335

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,687,682	$	1,351,011	$	1,293,377	$	1,323,298	$	1,331,006

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,
Statements of Income		2022		2022		2022		2022		2021		2022		2021

INTEREST AND DIVIDEND INCOME
Interest and fees on loans	$	14,368	$	11,892	$	11,268	$	10,985	$	11,586	$	48,513	$	47,896
Interest-earning deposits in other institutions		240		134		74		24		30		472		90
Federal funds sold		119		51		46		3		1		219		3
Investment securities:
Taxable interest		477		449		442		443		438		1,811		1,679
Tax-exempt interest		986		982		955		784		732		3,707		2,565
Dividends on stock		68		59		33		24		23		184		102
Total interest and dividend income		16,258		13,567		12,818		12,263		12,810		54,906		52,335
INTEREST EXPENSE
Deposits		1,771		812		709		726		783		4,018		3,913
Short-term borrowings		263		44		-		-		-		307		-
Other borrowings		142		112		81		69		67		404		282
Total interest expense		2,176		968		790		795		850		4,729		4,195

NET INTEREST INCOME		14,082		12,599		12,028		11,468		11,960		50,177		48,140

Provision for loan losses		-		-		-		-		(200)		-		700

NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES		14,082		12,599		12,028		11,468		12,160		50,177		47,440
NONINTEREST INCOME
Service charges on deposit accounts		976		1,004		956		914		906		3,850		3,425
(Losses) gains on equity securities		(77)		(57)		(72)		33		(14)		(173)		209
Earnings on bank-owned life insurance		137		108		108		106		106		459		546
(Losses) gains on sale of loans		(4)		7		18		3		118		24		1,240
Revenue from investment services		147		233		153		141		198		674		727
Other income		1,235		251		220		206		221		1,912		1,059
Total noninterest income		2,414		1,546		1,383		1,403		1,535		6,746		7,206

NONINTEREST EXPENSE
Salaries and employee benefits		4,886		4,491		3,785		4,386		4,088		17,548		17,151
Occupancy expense		487		458		583		505		542		2,033		2,048
Equipment expense		252		233		274		315		358		1,074		1,361
Data processing costs		1,050		985		822		844		851		3,701		3,298
Ohio state franchise tax		279		293		292		293		285		1,157		1,144
Federal deposit insurance expense		105		84		90		50		50		329		494
Professional fees		382		280		383		455		435		1,500		1,313
Net loss (gain) on other real estate owned		1,692		1		206		8		(66)		1,907		11
Advertising expense		308		268		229		228		221		1,033		885
Software amortization expense		28		27		40		48		119		143		361
Core deposit intangible amortization		140		78		77		77		80		372		321
Merger-related costs		1,413		390		579		-		-		2,382		-
Other expense		1,321		1,298		1,175		1,057		868		4,851		3,561
Total noninterest expense		12,343		8,886		8,535		8,266		7,831		38,030		31,948

Income before income taxes		4,153		5,259		4,876		4,605		5,864		18,893		22,698
Income taxes		651		1,010		787		772		1,027		3,220		4,065

NET INCOME	$	3,502	$	4,249	$	4,089	$	3,833	$	4,837	$	15,673	$	18,633

PTPP ⁽¹⁾	$	4,153	$	5,259	$	4,876	$	4,605	$	5,664	$	18,893	$	23,398

(1) The pre-tax pre-provision (PTPP) is the income before income taxes before provision for loan losses considerations, for reconciliation of 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,
		2022		2022		2022		2022		2021		2022		2021
Per common share data
Net income per common share - basic	$	0.53	$	0.73	$	0.70	$	0.65	$	0.81	$	2.60	$	3.01
Net income per common share - diluted	$	0.53	$	0.73	$	0.70	$	0.65	$	0.81	$	2.59	$	3.00
Dividends declared per share	$	0.30	$	0.17	$	0.17	$	0.17	$	0.21	$	0.81	$	0.69
Book value per share (period end)	$	23.98	$	21.30	$	22.07	$	23.43	$	24.68	$	23.98	$	24.68
Tangible book value per share (period end) ^{(2) (3)}	$	19.19	$	18.48	$	19.26	$	20.64	$	21.88	$	19.19	$	21.88
Dividends declared	$	2,514	$	983	$	993	$	1,000	$	1,242	$	5,490	$	4,240
Dividend yield		4.34%		2.49%		2.71%		2.78%		3.37%		2.96%		2.79%
Dividend payout ratio		71.79%		23.13%		24.28%		26.09%		25.68%		35.03%		22.76%
Average shares outstanding - basic		6,593,616		5,792,773		5,851,422		5,879,025		5,951,838		6,027,091		6,186,666
Average shares outstanding - diluted		6,610,907		5,805,799		5,860,098		5,889,836		5,975,333		6,044,382		6,211,076
Period ending shares outstanding		8,245,235		5,767,803		5,810,351		5,873,565		5,888,737		8,245,235		5,888,737

Selected ratios
Return on average assets		0.97%		1.32%		1.25%		1.17%		1.41%		1.17%		1.36%
Return on average equity		9.35%		12.94%		12.30%		10.75%		13.17%		11.25%		12.74%
Return on average tangible common equity ^{(2) (4)}		11.13%		14.79%		14.02%		12.13%		14.85%		12.95%		14.38%
Efficiency ⁽¹⁾		72.75%		61.07%		61.83%		62.54%		56.56%		64.96%		56.38%
Equity to assets at period end		11.71%		9.09%		9.91%		10.40%		10.92%		11.71%		10.92%
Noninterest expense to average assets		0.86%		0.69%		0.65%		0.62%		0.58%		2.84%		2.33%

(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
(2) See reconciliation of non-GAAP measures below
(3) Calculated by dividing tangible common equity by shares outstanding
(4) Calculated by dividing annualized net income for each period by average tangible common equity

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	2022	2022	2022	2022	2021	2022	2021
Interest-earning assets:
Loans receivable ⁽²⁾	5.11%	4.78%	4.66%	4.53%	4.61%	4.79%	4.56%
Investment securities ⁽²⁾	3.83%	3.90%	3.76%	3.41%	3.30%	3.73%	3.45%
Interest-earning deposits with other banks	3.42%	2.06%	0.77%	0.23%	0.20%	1.31%	0.20%
Total interest-earning assets	4.88%	4.55%	4.28%	4.06%	4.07%	4.45%	4.11%
Deposits:
Interest-bearing demand deposits	0.83%	0.22%	0.15%	0.14%	0.12%	0.34%	0.13%
Money market deposits	1.00%	0.46%	0.49%	0.47%	0.47%	0.61%	0.47%
Savings deposits	0.49%	0.19%	0.06%	0.06%	0.06%	0.20%	0.06%
Certificates of deposit	1.30%	0.96%	0.83%	0.87%	0.90%	1.00%	1.13%
Total interest-bearing deposits	0.87%	0.43%	0.36%	0.37%	0.36%	0.51%	0.44%
Non-Deposit Funding:
Borrowings	4.25%	2.94%	2.51%	2.16%	2.09%	3.35%	2.10%
Total interest-bearing liabilities	1.02%	0.50%	0.39%	0.39%	0.37%	0.59%	0.47%
Cost of deposits	0.57%	0.29%	0.24%	0.25%	0.26%	0.34%	0.32%
Cost of funds	0.68%	0.34%	0.27%	0.27%	0.27%	0.40%	0.34%
Net interest margin ⁽¹⁾	4.23%	4.23%	4.02%	3.80%	3.81%	4.08%	3.78%

(1) Net interest margin represents net interest income as a percentage of average interest-earning assets.
(2) Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were determined using an effective tax rate of 21%.

		For the Three Months Ended
		December 31,		September 30,		June 30,		March 31,		December 31,
Asset quality data		2022		2022		2022		2022		2021
(Dollar amounts in thousands, unaudited)
Nonperforming loans ⁽¹⁾	$	7,013	$	3,692	$	4,670	$	4,728	$	4,859
Other real estate owned		5,821		6,792		6,792		6,992		6,992
Nonperforming assets	$	12,834	$	10,484	$	11,462	$	11,720	$	11,851

Allowance for loan losses	$	14,438	$	14,532	$	14,550	$	14,492	$	14,342
Allowance for loan losses/total loans		1.07%		1.46%		1.49%		1.48%		1.46%
Net charge-offs (recoveries):
Quarter-to-date	$	94	$	18	$	(58)	$	(150)	$	(308)
Year-to-date		(96)		(190)		(208)		(150)		(183)
Net charge-offs (recoveries) to average loans, annualized:
Quarter-to-date		0.03%		0.01%		-0.02%		-0.06%		-0.12%
Year-to-date		-0.01%		-0.02%		-0.04%		-0.06%		-0.02%

Nonperforming loans/total loans		0.52%		0.37%		0.48%		0.48%		0.49%
Allowance for loan losses/nonperforming loans		205.87%		393.61%		311.56%		306.51%		295.16%
Nonperforming assets/total assets		0.76%		0.78%		0.89%		0.89%		0.89%
(1) Nonperforming loans exclude troubled debt restructurings that are performing in accordance with their terms over a prescribed period of time.

Reconciliation of Common Stockholders' Equity to Tangible Common Equity
	For the Period Ended
(Dollar amounts in thousands, unaudited)		December 31,		September 30,		June 30,		March 31,		December 31,
		2022		2022		2022		2022		2021

Stockholders' Equity	$	197,691	$	122,855	$	128,220	$	137,644	$	145,335
Less Goodwill and other intangibles		39,436		16,242		16,320		16,397		16,474
Tangible Common Equity	$	158,255	$	106,613	$	111,900	$	121,247	$	128,861

Shares outstanding		8,245,235		5,767,803		5,810,351		5,873,565		5,888,737
Tangible book value per share	$	19.19	$	18.48	$	19.26	$	20.64	$	21.88

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,
		2022		2022		2022		2022		2021		2022		2021

Average Stockholders' Equity	$	148,616	$	130,263	$	133,377	$	144,630	$	145,716	$	139,270	$	146,237
Less Average Goodwill and other intangibles		23,731		16,280		16,357		16,435		16,513		18,200		16,634
Average Tangible Common Equity	$	124,885	$	113,983	$	117,020	$	128,195	$	129,203	$	121,070	$	129,603

Net income	$	3,502	$	4,249	$	4,089	$	3,833	$	4,837	$	15,673	$	18,633
Return on average tangible common equity (annualized)		11.13%		14.79%		14.02%		12.13%		14.85%		12.95%		14.38%

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,
		2022		2022		2022		2022		2021		2022		2021

Net income	$	3,502	$	4,249	$	4,089	$	3,833	$	4,837	$	15,673	$	18,633
Add Income Taxes		651		1,010		787		772		1,027		3,220		4,065
Add Provision for loan losses		-		-		-		-		(200)		-		700
PTPP	$	4,153	$	5,259	$	4,876	$	4,605	$	5,664	$	18,893	$	23,398

Reconciliation of Net Income, Less Merger and Certain Items
	For the Three Months Ended											For the Twelve Months Ended

		December 31,		September 30,		June 30,		March 31,		December 31,		December 31,		December 31,
		2022		2022		2022		2022		2021		2022		2021

Net Income	$	3,502	$	4,249	$	4,089	$	3,833	$	4,837	$	15,673	$	18,633
Acquisition related costs- after tax		1,116		308		457		-		-		1,882		-
Net loss (gain) on other real estate owned - after tax ⁽¹⁾		585		1		163		6		(52)		755		(134)
Net Income- Adjusted	$	5,203	$	4,558	$	4,709	$	3,839	$	4,785	$	18,310	$	18,499

Diluted EPS excluding merger and one-time items	$	0.79	$	0.79	$	0.80	$	0.65	$	0.80	$	3.03	$	2.98
Return on average assets excluding merger and one-time items (annualized)		1.44%		1.41%		1.43%		1.17%		1.40%		1.37%		1.35%
Return on average equity excluding merger and one-time items (annualized)		13.89%		13.88%		14.16%		10.77%		13.03%		13.15%		12.65%
Return on average tangible common equity excluding merger and one-time items (annualized)		16.53%		15.86%		16.14%		12.15%		14.69%		15.12%		14.27%

⁽¹⁾ This includes net rental income earned on other real estate owned.

MIDDLEFIELD BANC CORP.
Average Balance Sheets
(Dollar amounts in thousands, unaudited)

	For the Three Months Ended
	December 31,					December 31,
	2022					2021
	Average				Average	Average				Average
	Balance		Interest		Yield/Cost	Balance		Interest		Yield/Cost
Interest-earning assets:
Loans receivable ⁽³⁾	$	1,117,221	$	14,368	5.11%	$	999,229	$	11,586	4.61%
Investment securities ⁽³⁾	178,772		1,463		3.83%	164,254		1,170		3.30%
Interest-earning deposits with other banks ⁽⁴⁾	49,569		427		3.42%	104,804		54		0.20%
Total interest-earning assets	1,345,562		16,258		4.88%	1,268,287		12,810		4.07%
Noninterest-earning assets	89,740					90,556
Total assets	$	1,435,302				$	1,358,843
Interest-bearing liabilities:
Interest-bearing demand deposits	$	165,267	$	344	0.83%	$	212,861	$	66	0.12%
Money market deposits	172,437		435		1.00%	180,201		214		0.47%
Savings deposits	266,613		330		0.49%	257,344		39		0.06%
Certificates of deposit	201,972		662		1.30%	204,904		464		0.90%
Short-term borrowings	25,750		263		4.05%	-		-		0.00%
Other borrowings	12,086		142		4.66%	12,934		67		2.06%
Total interest-bearing liabilities	844,125		2,176		1.02%	868,244		850		0.39%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits	428,155					337,900
Other liabilities	14,406					6,983
Stockholders' equity	148,616					145,716
Total liabilities and stockholders' equity	$	1,435,302				$	1,358,843
Net interest income			$	14,082				$	11,960
Interest rate spread ⁽¹⁾					3.86%					3.68%
Net interest margin ⁽²⁾					4.23%					3.81%
Ratio of average interest-earning assets to
average interest-bearing liabilities					159.40%					146.07%

(1) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
(2) Net interest margin represents net interest income as a percentage of average interest-earning assets.
(3) Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $278 and $210 for the three months ended December 31, 2022 and 2021, respectively
(4) Includes dividends received on restricted stock.

	For the Three Months Ended
	December 31,					September 30,
	2022					2022
	Average				Average	Average				Average
	Balance		Interest		Yield/Cost	Balance		Interest		Yield/Cost
Interest-earning assets:
Loans receivable ⁽³⁾	$	1,117,221	$	14,368	5.11%	$	987,689	$	11,892	4.78%
Investment securities ⁽³⁾	178,772		1,463		3.83%	172,316		1,431		3.90%
Interest-earning deposits with other banks ⁽⁴⁾	49,569		427		3.42%	46,938		244		2.06%
Total interest-earning assets	1,345,562		16,258		4.88%	1,206,943		13,567		4.55%
Noninterest-earning assets	89,740					73,753
Total assets	$	1,435,302				$	1,280,696
Interest-bearing liabilities:
Interest-bearing demand deposits	$	165,267	$	344	0.83%	$	162,878	$	91	0.22%
Money market deposits	172,437		435		1.00%	155,095		180		0.46%
Savings deposits	266,613		330		0.49%	249,898		119		0.19%
Certificates of deposit	201,972		662		1.30%	174,091		422		0.96%
Short-term borrowings	25,750		263		4.05%	8,554		44		2.04%
Other borrowings	12,086		142		4.66%	12,530		112		3.55%
Total interest-bearing liabilities	844,125		2,176		1.02%	763,046		968		0.50%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits	428,155					382,351
Other liabilities	14,406					5,036
Stockholders' equity	148,616					130,263
Total liabilities and stockholders' equity	$	1,435,302				$	1,280,696
Net interest income			$	14,082				$	12,599
Interest rate spread ⁽¹⁾					3.86%					4.05%
Net interest margin ⁽²⁾					4.23%					4.23%
Ratio of average interest-earning assets to
average interest-bearing liabilities					159.40%					158.17%

(1) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
(2) Net interest margin represents net interest income as a percentage of average interest-earning assets.
(3) Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $278 and $277 for the three months ended December 31, 2022 and September 30, 2022, respectively
(4) Includes dividends received on restricted stock.

	For the Twelve Months Ended
	December 31,					December 31,
	2022					2021
	Average				Average	Average				Average
	Balance		Interest		Yield/Cost	Balance		Interest		Yield/Cost
Interest-earning assets:
Loans receivable ⁽³⁾	$	1,014,896	$	48,513	4.79%	$	1,052,351	$	47,896	4.56%
Investment securities ⁽³⁾	174,514		5,518		3.73%	142,705		4,244		3.45%
Interest-earning deposits with other banks ⁽⁴⁾	67,030		875		1.31%	97,417		195		0.20%
Total interest-earning assets	1,256,440		54,906		4.45%	1,292,473		52,335		4.11%
Noninterest-earning assets	84,484					78,802
Total assets	$	1,340,924				$	1,371,275
Interest-bearing liabilities:
Interest-bearing demand deposits	$	164,569	$	554	0.34%	$	212,063	$	274	0.13%
Money market deposits	174,377		1,055		0.61%	186,009		869		0.47%
Savings deposits	259,225		527		0.20%	255,267		162		0.06%
Certificates of deposit	188,617		1,882		1.00%	231,662		2,608		1.13%
Short-term borrowings	8,576		307		3.58%	85		-		0.00%
Other borrowings	12,626		404		3.20%	13,313		282		2.12%
Total interest-bearing liabilities	807,990		4,729		0.59%	898,399		4,065		0.47%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits	386,296					320,104
Other liabilities	7,368					6,535
Stockholders' equity	139,270					146,237
Total liabilities and stockholders' equity	$	1,340,924				$	1,371,275
Net interest income			$	50,177				$	48,270
Interest rate spread ⁽¹⁾					3.86%					3.64%
Net interest margin ⁽²⁾					4.08%					3.78%
Ratio of average interest-earning assets to
average interest-bearing liabilities					155.50%					143.86%

(1) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
(2) Net interest margin represents net interest income as a percentage of average interest-earning assets.
(3) Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $1,046 and $752, for 2022 and 2021, respectively.
(4) Includes dividends received on restricted stock.

Company Contact:	Investor and Media Contact:
James R. Heslop, II Chief Executive Officer Middlefield Banc Corp. (440) 632-1666 Ext. 3219 JHeslop@middlefieldbank.com	Andrew M. Berger Managing Director SM Berger & Company, Inc. (216) 464-6400 andrew@smberger.com

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