EXHIBIT 99
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15985 East High Street
P. O. Box 35
middlefield, Ohio 44062
Phone: 440/632-1666 FAX: 440/632-1700
www.middlefieldbank.com
P. O. Box 35
middlefield, Ohio 44062
Phone: 440/632-1666 FAX: 440/632-1700
www.middlefieldbank.com
PRESS RELEASE
Contact: | James R. Heslop, 2nd | |
Executive Vice President/Chief Operating Officer | ||
(440) 632-1666 Ext. 3219 | ||
jheslop@middlefieldbank.com |
Middlefield Banc Corp. Reports Second Quarter 2007 Earnings
MIDDLEFIELD, OHIO, July 24, 2007¨ ¨ ¨ ¨ Middlefield Banc Corp. (Pink Sheets: MBCN) today reported that net income for the second quarter of 2007 totaled $899,231, or 9.0 percent less than the $987,800 reported for the same period in 2006. Diluted earnings per share for the second quarter of 2007 were $0.59, a 14.5% decrease from 2006’s second quarter diluted earnings per share of $0.69. These second quarter results include the operations of Emerald Bank of Dublin, Ohio, which became a subsidiary of Middlefield on April 19, 2007.
Results from the first half of 2007 reflect a net income of $1,651,606; an 8.5% decrease compared to $1,805,372 for the first half of 2006. Diluted earnings per share for the first half of 2007 were $1.11, or 11.2% less than diluted earnings per share of $1.26 for the first six months of 2006. These figures include Emerald Bank’s operations from April 19, 2007 through June 30, 2007.
Return on average equity for the three months ended June 30, 2007, was 10.55% compared to 14.07% for the same period in 2006. Return on average assets was 0.91% for the three months ended June 30, 2007. Return on average assets was 1.26% for the three months ended June 30, 2006. For the six months ended June 30, 2007, the return on average equity and average assets were 10.21% and 0.89%, respectively. The comparable period results from 2006 were 12.94% and 1.16%.
President and Chief Executive Officer Thomas G. Caldwell commented, “The second quarter 2007 results were mixed. Like many other banks in the industry, and Ohio in particular, slower economic growth and competitive pressure have worked to reduce our net interest margin, which is the primary driver of our revenue.”
Mr. Caldwell continued, “As we reported with our first quarter 2007 results, our net income has also been impacted by anticipated increases in non-interest expenses. Our Newbury banking center and Cortland loan production office continue to be in the start-up phase. Additionally, there was an increase in non-interest expense directly related to the acquisition of Emerald Bank. While these results are disappointing in the short-term, we anticipate the longer term advantages to be gained from these actions, which have broadened the coverage of our market.”
“During the early part of the third quarter, Emerald Bank will be unveiling its new interactive website (www.emeraldbank.com), which will offer a broad array of services not previously available to that customer base. This will also include Internet banking and a bill payment feature. Our anticipation is that these actions will be well received within the market,” Caldwell concluded.
The company’s total assets ended the second quarter of 2007 at $406.4 million, an increase of 19.2% over the $340.9 million in total assets reported at December 31, 2006. Net loans at June 30, 2007, were $299.2 million, up $52.9 million, or 21.5%, over the $246.3 million reported at December 31, 2006. Total deposits at June 30, 2007, were $326.9 million, or 20.6% greater than the deposit level of $271.1 million at December 31, 2006.
Highlights for the second quarter of 2007 include:
• | Net interest income was $2.88 million, an increase of 4.5% from the $2.75 million reported for the comparable period of 2006. The net interest margin was 3.31% for the second quarter of 2007, down from the 3.88% reported for the same quarter of 2006. The decline is primarily attributable to higher deposit costs and competitive pricing on lending opportunities associated with the current interest rate environment. Deposit growth at the banks has primarily been in products such as time deposits and money market accounts, which generally carry higher interest costs than other deposit alternatives. The Middlefield subsidiary offered a special money market promotion during the first quarter of 2007, which was tied to the grand opening of the Newbury banking office. Emerald Bank found most of its deposit growth in its Prime Savings Account product, which is positioned at 300 basis points below the Prime Rate. | ||
• | Non-interest income increased $54,000 for the three-month period of 2007over the comparable 2006 period. This increase of 9.1% was primarily the result of higher service charge revenue associated with an increase in the number of deposit accounts, expanded ATM/Debit card usage, and an increase in revenue from investment services. Additionally, earnings on bank-owned life insurance were $27,000 higher during the second quarter of 2007 than the same period of 2006. | ||
• | Non-interest expense for the second quarter of 2007 was 22.3%, or $423,000, higher than the second quarter of 2006. Increases in salary and employee benefits of $205,000, occupancy expense of $85,000, and equipment expense of $32,000, were largely attributable to the opening of the Newbury banking office and the Cortland loan production office, as well as the acquisition of Emerald Bank. Non-interest expenses directly attributable to Emerald Bank accounted for $205,000 of the increase in the aggregate. Other associated expense items contributing to the increase were legal, printing, and transfer agent costs, as well as an increase of costs associated with compliance with Section 404 of the Sarbanes-Oxley Act. |
• | Total deposit growth for the first six months of 2007 was $55.8 million. The acquisition of Emerald Bank accounted for $37.4 million of the change. At the Middlefield banking subsidiary, deposit growth was fueled by promotional efforts directed to the bank’s money market account. Deposits in those accounts increased $11.6 million, while time deposits increased $11.0 million. Net loans at June 30, 2007, stood at $299.2 million, reflecting an increase of $52.9 million for the first six months of 2007. Increases were seen in all loan categories with the exception of installment loans. Of the growth during the six-month period, 79.0%, or $41.8 million is the result of the Emerald Bank acquisition. | ||
• | Provision for loan losses was $114,000 for the 2007 six month period, which was in line with the company’s plan. While lower than the $150,000 provision during the first six months of 2006, this amount was in keeping with the company’s intention to reduce the unallocated portion of its loan loss reserve. The provision is maintained at a level to absorb management’s estimate of probable inherent credit losses within the bank’s loan portfolio. At June 30, 2007, the allowance for loan losses as a percentage of total loans was 1.09%, which was down from the 1.23% reported at June 30, 2006. The ratio of non-performing loans to total loans stood at 1.16% at June 30, 2007. This was an increase from the 0.82% reported as of June 30, 2006. Loans classified as non-accrual at June 30, 2007, were $1.69 million, which was $0.1 million less than the total reported at June 30, 2006. Loans past due 90 days and still accruing interest, as of June 30, 2007, were $1.8 million, or $1.7 million more than the prior year figure. One commercial real estate credit, which was well secured and in the process of collection, accounted for $0.8 million of the increase. The majority of the remaining increase in this category was in residential secured real estate loans. | ||
• | Stockholders’ equity at June 30, 2007, was $34.5 million, or 8.48% of total assets. Book value as of June 30, 2007 was $22.66. This was an increase of $2.92 over the June 30, 2006 book value. | ||
• | In the first six months of 2007, Middlefield paid a cash dividend of $0.48 per share. This represents an increase of 7.1% over the cash dividend paid during the same period of 2006. The 2006 cash dividend amount has been adjusted to reflect the 5% stock dividend paid by the company during the fourth quarter of 2006. |
“Our earnings to this point in 2007 are reflective of the overall difficulties being experienced by most of the financial institutions within our market. We also have experienced a higher level of non-interest expenses relative to the acquisition of Emerald Bank, “ commented Donald L. Stacy, Chief Financial Officer and Treasurer of Middlefield Banc Corp. “The continued nature of the yield curve, as well as market pricing, has worked to compress our net interest margin. The additional overhead associated with our expansion is integral to our long-term growth efforts and is, we believe, within reasonable expectations.”
“We are, however, also experiencing what is, for us, a higher than normal level of problem loans. While being well secured, we are expending an increased level of effort to effect full collection. Losses will be above recent historic levels, but should remain well within peer ranges.” Stacy continued.
Middlefield Banc Corp. is a financial holding company headquartered in Middlefield, Ohio. Its subsidiary, The Middlefield Banking Company, operates full service banking centers and a UVEST Financial Services® brokerage office serving Chardon, Garrettsville, Mantua, Middlefield, Newbury, and Orwell, as well as a loan production office in Cortland, Ohio. On April 19, 2007, Middlefield Banc Corp. completed its acquisition of Emerald Bank, headquartered in Dublin, Ohio. Further information is available atwww.middlefieldbank.com.
This announcement contains forward-looking statements that involve risk and uncertainties, including changes in general economic and financial market conditions and the Company’s ability to execute its business plans. Although management believes the expectations reflected in such statements are reasonable, actual results may differ materially.
MIDDLEFIELD BANC CORP.
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET
June 30, | December 31 | |||||||
2007 | 2006 | |||||||
(unaudited) | (audited) | |||||||
ASSETS | ||||||||
Cash and due from banks | $ | 7,590,873 | $ | 6,893,148 | ||||
Federal funds sold | 4,299,341 | 6,200,000 | ||||||
Interest-bearing deposits in other institutions | 559,550 | 546,454 | ||||||
Cash and cash equivalents | 12,449,764 | 13,639,602 | ||||||
Investment securities available for sale | 71,874,997 | 63,048,135 | ||||||
Investment securities held to maturity (estimated market value of $130,579 and $134,306) | 119,899 | 125,853 | ||||||
Loans | 302,528,037 | 249,190,534 | ||||||
Less allowance for loan losses | 3,283,975 | 2,848,887 | ||||||
Net loans | 299,244,062 | 246,341,647 | ||||||
Premises and equipment | 6,910,163 | 6,742,465 | ||||||
Goodwill | 3,224,264 | 123,175 | ||||||
Bank-owned life insurance | 7,012,996 | 6,872,743 | ||||||
Accrued interest and other assets | 5,571,474 | 3,958,084 | ||||||
TOTAL ASSETS | $ | 406,407,619 | $ | 340,851,704 | ||||
LIABILITIES | ||||||||
Deposits: | ||||||||
Noninterest-bearing demand | $ | 41,348,568 | $ | 41,002,573 | ||||
Interest-bearing demand | 13,128,166 | 11,724,173 | ||||||
Money market | 27,511,193 | 14,738,767 | ||||||
Savings | 73,077,850 | 54,246,499 | ||||||
Time | 171,792,572 | 149,338,181 | ||||||
Total deposits | 326,858,349 | 271,050,193 | ||||||
Short-term borrowings | 5,768,056 | 1,609,738 | ||||||
Other borrowings | 37,225,371 | 36,112,738 | ||||||
Accrued interest and other liabilities | 2,084,045 | 1,615,101 | ||||||
TOTAL LIABILITIES | 371,935,821 | 310,387,770 | ||||||
STOCKHOLDERS’ EQUITY | ||||||||
Common stock, no par value; 10,000,000 shares authorized, 1,525,324 and 1,519,887 shares issued | 23,521,438 | 19,507,257 | ||||||
Retained earnings | 15,644,003 | 14,685,971 | ||||||
Accumulated other comprehensive income | (1,288,586 | ) | (520,987 | ) | ||||
Treasury stock, at cost, 100,080 shares in 2007, and 95,080 shares in 2006 | (3,405,057 | ) | (3,208,307 | ) | ||||
TOTAL STOCKHOLDERS’ EQUITY | 34,471,798 | 30,463,934 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 406,407,619 | $ | 340,851,704 | ||||
MIDDLEFIELD BANC CORP.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Three Months Ended | ||||||||
June 30, | ||||||||
2007 | 2006 | |||||||
INTEREST INCOME | ||||||||
Interest and fees on loans | $ | 5,315,387 | $ | 4,219,061 | ||||
Interest-bearing deposits in other institutions | 49,724 | 4,272 | ||||||
Federal funds sold | 130,200 | 5,358 | ||||||
Investment securities: | ||||||||
Taxable interest | 254,534 | 289,841 | ||||||
Tax-exempt interest | 459,595 | 248,440 | ||||||
Dividends on FHLB Stock | 26,272 | 23,341 | ||||||
Total interest income | 6,235,712 | 4,790,313 | ||||||
INTEREST EXPENSE | ||||||||
Deposits | 2,869,444 | 1,677,832 | ||||||
Short term borrowings | 20,455 | 61,827 | ||||||
Other borrowings | 469,473 | 297,890 | ||||||
Total interest expense | 3,359,372 | 2,037,549 | ||||||
NET INTEREST INCOME | 2,876,340 | 2,752,764 | ||||||
Provision for loan losses | 69,391 | 75,000 | ||||||
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 2,806,949 | 2,677,764 | ||||||
NONINTEREST INCOME | ||||||||
Service charges on deposit accounts | 481,055 | 435,842 | ||||||
Investment securities losses, net | — | — | ||||||
Earnings on bank-owned life insurance | 68,174 | 59,950 | ||||||
Other income | 99,014 | 98,863 | ||||||
Total noninterest income | 648,243 | 594,655 | ||||||
NONINTEREST EXPENSE | ||||||||
Salaries and employee benefits | 1,040,092 | 835,105 | ||||||
Occupancy expense | 198,278 | 113,544 | ||||||
Equipment expense | 132,423 | 100,473 | ||||||
Data processing costs | 163,452 | 158,279 | ||||||
Ohio state franchise tax | 155,343 | 90,000 | ||||||
Other expense | 631,245 | 600,631 | ||||||
Total noninterest expense | 2,320,833 | 1,898,032 | ||||||
Income before income taxes | 1,134,359 | 1,374,387 | ||||||
Income taxes | 235,128 | 386,587 | ||||||
NET INCOME | $ | 899,231 | $ | 987,800 | ||||
EARNINGS PER SHARE | ||||||||
Basic | $ | 0.60 | $ | 0.70 | ||||
Diluted | 0.59 | 0.69 | ||||||
DIVIDENDS DECLARED PER SHARE | $ | 0.240 | $ | 0.224 |
MIDDLEFIELD BANC CORP.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Six Months Ended | ||||||||
June 30, | ||||||||
2007 | 2006 | |||||||
INTEREST INCOME | ||||||||
Interest and fees on loans | $ | 9,845,616 | $ | 8,204,679 | ||||
Interest-bearing deposits in other institutions | 105,613 | 7,393 | ||||||
Federal funds sold | 261,435 | 8,937 | ||||||
Investment securities: | ||||||||
Taxable interest | 520,648 | 595,811 | ||||||
Tax-exempt interest | 842,380 | 493,591 | ||||||
Dividends on FHLB Stock | 51,767 | 40,538 | ||||||
Total interest income | 11,627,459 | 9,350,949 | ||||||
INTEREST EXPENSE | ||||||||
Deposits | 5,184,115 | 3,218,694 | ||||||
Short term borrowings | 39,670 | 122,650 | ||||||
Other borrowings | 914,885 | 570,864 | ||||||
Total interest expense | 6,138,670 | 3,912,208 | ||||||
NET INTEREST INCOME | 5,488,789 | 5,438,741 | ||||||
Provision for loan losses | 114,391 | 150,000 | ||||||
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 5,374,398 | 5,288,741 | ||||||
NONINTEREST INCOME | ||||||||
Service charges on deposit accounts | 933,002 | 848,684 | ||||||
Investment securities losses, net | — | (5,868 | ) | |||||
Earnings on bank-owned life insurance | 140,253 | 113,172 | ||||||
Other income | 196,616 | 188,993 | ||||||
Total noninterest income | 1,269,871 | 1,144,981 | ||||||
NONINTEREST EXPENSE | ||||||||
Salaries and employee benefits | 2,145,000 | 1,830,049 | ||||||
Occupancy expense | 367,508 | 267,847 | ||||||
Equipment expense | 254,214 | 192,686 | ||||||
Data processing costs | 314,700 | 336,786 | ||||||
Ohio state franchise tax | 251,343 | 180,000 | ||||||
Other expense | 1,261,770 | 1,126,395 | ||||||
Total noninterest expense | 4,594,535 | 3,933,763 | ||||||
Income before income taxes | 2,049,734 | 2,499,959 | ||||||
Income taxes | 398,128 | 694,587 | ||||||
NET INCOME | $ | 1,651,606 | $ | 1,805,372 | ||||
EARNINGS PER SHARE | ||||||||
Basic | $ | 1.13 | $ | 1.28 | ||||
Diluted | 1.11 | 1.26 | ||||||
DIVIDENDS DECLARED PER SHARE | $ | 0.480 | $ | 0.448 |
MIDDLEFIELD BANC CORP.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
SELECTED CONSOLIDATED FINANCIAL INFORMATION
For the Three Months Ended June 30, | ||||||||
2007 | 2006 | |||||||
Per share (1) | ||||||||
Earnings per common share — Basic | $ | 0.60 | $ | 0.70 | ||||
Earnings per common share — Diluted | 0.59 | 0.69 | ||||||
Cash dividends paid | 0.24 | 0.22 | ||||||
Book value (end of period) | 22.66 | 19.74 | ||||||
Shares Outstanding | ||||||||
Average — Basic | 1,503,412 | 1,418,496 | ||||||
Average — Diluted | 1,523,852 | 1,441,861 | ||||||
Actual (end of period) | 1,521,470 | 1,418,811 | ||||||
Key performance ratios | ||||||||
Return on average assets | 0.91 | % | 1.26 | % | ||||
Return on average equity | 10.55 | % | 14.07 | % | ||||
Net interest margin | 3.31 | % | 3.88 | % | ||||
Yield on earning assets | 6.89 | % | 6.63 | % | ||||
Efficiency ratio | 65.85 | % | 56.70 | % | ||||
Net charge-offs to average loans (actual for the period) | 0.00 | % | 0.00 | % | ||||
Net charge-offs to average loans (annualized) | 0.01 | % | 0.02 | % | ||||
Total allowance for loan losses to nonperforming loans | 93.62 | % | 149.83 | % | ||||
Nonperforming loans to total loans | 1.16 | % | 0.82 | % | ||||
Total allowance for loan losses to total loans | 1.09 | % | 1.23 | % | ||||
Equity to assets at period end | 8.48 | % | 8.91 | % | ||||
At period end (in 000s) | ||||||||
Total assets | $ | 406,408 | $ | 315,149 | ||||
Total deposits | 326,858 | 254,054 | ||||||
Net loans receivable | 299,244 | 231,214 | ||||||
Securities | 71,995 | 54,588 | ||||||
Shareholders equity | 34,472 | 28,094 |
(1) Per share data has been restated to reflect the five percent stock dividend paid in 2006.
MIDDLEFIELD BANC CORP.
SUPPLEMENTAL DETAIL
SUPPLEMENTAL DETAIL
For the Three Months Ended June 30, | ||||||||
2007 | 2006 | |||||||
Charge-offs (000s) | ||||||||
Loan charge-offs | $ | 12 | $ | 12 | ||||
Recoveries on loans | 2 | 2 | ||||||
Net loan charge-offs | 10 | 10 |
As of June 30, | ||||||||
2007 | 2006 | |||||||
Credit Quality (000s): | ||||||||
Non-accrual loans | $ | 1,691 | $ | 1,833 | ||||
Restructured loans | 0 | 0 | ||||||
90 day past due and accruing | 1,817 | 138 | ||||||
Non-performing loans | 3,508 | 1,971 | ||||||
Other real estate owned | 0 | 0 | ||||||
Total non-performing assets | $ | 3,508 | $ | 1,971 | ||||
MIDDLEFIELD BANC CORP.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
SELECTED CONSOLIDATED FINANCIAL INFORMATION
For the Six Months Ended June 30, | ||||||||
2007 | 2006 | |||||||
Per share (1) | ||||||||
Earnings per common share — Basic | $ | 1.13 | $ | 1.27 | ||||
Earnings per common share — Diluted | 1.11 | 1.25 | ||||||
Cash dividends paid | 0.48 | 0.45 | ||||||
Book value (end of period) | 22.66 | 19.74 | ||||||
Shares Outstanding | ||||||||
Average — Basic | 1,464,975 | 1,420,620 | ||||||
Average — Diluted | 1,485,907 | 1,443,572 | ||||||
Actual (end of period) | 1,521,470 | 1,418,811 | ||||||
Key performance ratios | ||||||||
Return on average assets | 0.89 | % | 1.16 | % | ||||
Return on average equity | 10.21 | % | 12.94 | % | ||||
Net interest margin | 3.36 | % | 3.88 | % | ||||
Yield on earning assets | 6.84 | % | 6.54 | % | ||||
Efficiency ratio | 67.98 | % | 59.75 | % | ||||
Net charge-offs to average loans (actual for the period) | 0.04 | % | 0.02 | % | ||||
Net charge-offs to average loans (annualized) | 0.09 | % | 0.01 | % | ||||
Total allowance for loan losses to nonperforming loans | 93.62 | % | 149.83 | % |
(1) Per share data has been restated to reflect the five percent stock dividend paid in 2006.
MIDDLEFIELD BANC CORP.
SUPPLEMENTAL DETAIL
SUPPLEMENTAL DETAIL
For the Six Months Ended June 30, | ||||||||
2007 | 2006 | |||||||
CHARGE-OFFS (000s) | ||||||||
Loan charge-offs | $ | 125 | $ | 44 | ||||
Recoveries on loans | 10 | 6 | ||||||
Net loan charge-offs | 116 | 38 |