Thomas G. Caldwell President and CEO Donald L. Stacy Treasurer and CFO Exhibit 99.1 Middlefield Banc Corp. Investor Presentation November 2014 |
Forward Looking Statements This presentation contains forward-looking statements within the meaning of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995 concerning Middlefield Banc Corp.’s plans, strategies, objectives, expectations, intentions, financial condition and results of operations. These forward-looking statements reflect management’s current views and intentions and are subject to known and unknown risks, uncertainties, assumptions and other factors that could cause the actual results to differ materially from those contemplated by the statements. The significant risks and uncertainties related to Middlefield Banc Corp. of which management is aware are discussed in detail in the periodic reports that Middlefield Banc Corp. files with the Securities and Exchange Commission (the “SEC”), including in the “Risk Factors” section of its Annual Report on Form 10-K and its Quarterly Report on Form 10-Q. Investors are urged to review Middlefield Banc Corp.’s periodic reports, which are available at no charge through the SEC’s website at www.sec.gov and through Middlefield Banc Corp.’s website at www.middlefieldbank.com on the “Investor Relations” page. Middlefield Banc Corp. assumes no obligation to update any of these forward-looking statements to reflect a change in its views or events or circumstances that occur after the date of this presentation. 2 |
Middlefield Banc Corp. For over 100 years, Middlefield Banc Corp. has supported its communities by offering customers superior financial products, exceptional service, and modern banking amenities Company Snapshot (1)(2) NASDAQ: MBCN Stock Price: $33.26 Market Cap: $68.1 million Dividend (yield): $1.04 (3.1%) Headquarters: Middlefield, Ohio Established: Bank 1901/HC 1988 Branches: 10 Total Assets: $680.3 million Net Loans $460.9 million Total Deposits: $600.0 million (1) Stock price, market cap and dividend yield as of October 31, 2014 (2) Financial figures for the period ended September 30, 2014 3 |
Rankings and Awards 4 Sources: (1) SNL June 16, 2014 Disproving the naysayers, some banks under $1B thrive By Kiah Lau Haslett and Marshall Schraibman (2) Independent Banker http://independentbanker.org/2014/05/community-banks-with-assets-of-more-than-500-million-to-1-billion/ (3) American Banker April 28, 2014 http://www.americanbanker.com/magazine/124_04/rising-tide-our-ranking-of-the-top-200-community-banks-1066820-1.html SNL Financial (1) According to a June 16, 2014 article from SNL Financial, Middlefield Banc Corp. had the 10 th highest ROAE out of public community banks with under $1 billion in assets. American Banker (3) Middlefield Banc Corp. was ranked 63 rd out of the top 200 community banks and thrifts by 3-year Avg. ROE according to an April 28, 2014 American Banker article. Independent Banker (2) According to May 30, 2014 study from Independent Banker, Middlefield Banc Corp. had the 21 st highest ROE of community banks with assets of $500 million to $1 billion |
Growing Banking Franchise Profitable throughout the economic cycle and never reported a quarterly loss History of quarterly cash dividend payments and maintained dividend amount during recession Excellent asset quality, strong liquidity profile, and robust core deposit base Strong Return on Average Equity Expanded into Central Ohio with the April 2007 acquisition of Emerald Bank Acquired Westerville branch in November 2008 Consolidated Emerald Bank into The Middlefield Banking Company on January 20, 2014 5 |
Middlefield Overview 6 Middlefield Banc Corp. is a community banking leader with strong brand recognition in its markets Favorable distribution network: 10 branches in five counties, serving two distinct Ohio market areas Northeastern Ohio market consists principally of: – Geauga County – Trumbull County – Ashtabula County – Portage County Two central Ohio branches are located in Dublin and Westerville in Franklin County, north of Columbus. Cleveland MSA and Columbus MSA have a combined population of more than 4.0 million people Opportunities to “fill in” gap between two operating geographies According to FDIC statistics, Ohio insured financial institutions have declined 25% from 304 institutions in 2003 to 227 at the end of 2013 In terms of deposits, out of 249 banks in the State of Ohio Middlefield was the 33 rd largest bank in the state at June 30, 2014 |
Middlefield Serves Two Distinct Ohio Markets with Strong Demographics Northeast Ohio Northern Columbus 8 banking locations Geauga County is 3 rd in median household income (1) out of 88 Ohio counties Geauga County is the center of the 4 th largest Amish population in the world – This demographic provides a strong borrowing and stable deposit base Marcellus and Utica Shale opportunities Improvements in manufacturing 2 banking locations Columbus is the state capital and largest city in Ohio Franklin County is 2 nd in population in Ohio Delaware County, immediately north of Franklin, has the 2 nd highest median household income in Ohio At June 30, 2014, 5 of the 34 banks in Franklin County controlled 85% of total deposits. 8 of the bank's 10 offices (and nearly 85% of deposits) are located in counties that have stronger demographics than the State average median household income, median value, value of owner-occupied housing, and employment rates 7 (1) According to: www.usa.com/rank/ohio-state--median-household-income--county-rank.htm?hl=Geauga&hlst=OH&yr=6000 |
Corporate Infrastructure and Experienced Management to Support Growth Middlefield’s success is driven by a strong leadership team dedicated to creating value for shareholders, while providing the highest quality financial products and services within the communities the Company serves Experienced Management 2014 Investments in Infrastructure Average tenure of 8 executive officers: – At MBCN is over 14 years – Within industry is over 25 years Thomas Caldwell, CEO serves on the Federal Delegate Board of the Independent Community Bankers of America, having been elected in June 2010. Mr. Caldwell previously served as Chairman of the Community Bankers Association of Ohio. Sales-orientation culture Community focused culture Focused on expanding technology – Launched new website – Enhanced on-line banking – Developed mobile banking capabilities Hired Chief Information Officer and Chief Credit Officer Centralized operations center to a new 20,000 sq. foot facility 8 |
9 Personal Banking Personal Banking Products and Services Strong brand recognition in core markets – #1 Market Share in Geauga County – #6 Market Share in Portage County – #3 overall within the primary northeastern Ohio market Focused on growth – Improved on-line banking offerings – Residential mortgage products – De novo expansion and strategic acquisitions Customers trust Middlefield Banc Corp. to be there for them in day-to-day money management as well as for those milestone events in their financial lives |
10 Market Share Ashtabula, Geauga, Portage & Trumbull Counties June 30, 2014 Rank Institution Branches Deposits in Market ($000) Market Share 1 Huntington National Bank 38 1,532,821 20.60 2 JP Morgan Chase 19 894,279 12.02 3 The Middlefield Banking Co. 8 528,765 7.11 4 KeyBank 15 522,389 7.02 5 PNC Bank 11 506,911 6.81 6 Talmer Bank and Trust 9 464,660 6.24 7 Cortland Savings & Banking 10 385,484 5.18 8 First Merit Bank 12 347,397 4.67 Total for institutions in market 190 7,441,520 Franklin County June 30, 2014 Rank Institution Branches Deposits in Market ($000) Market Share 1 Huntington National Bank 68 14,035,079 31.14 2 JP Morgan Chase 53 10,503,465 23.30 3 PNC Bank 42 5,130,794 11.38 4 Nationwide Bank 2 4,415,679 9.80 5 Fifth Third Bank 47 4,145,568 9.20 25 The Middlefield Banking Co. 2 61,079 0.14 26 Vinton County National Bank 1 57,354 0.13 27 First City Bank 1 44,764 0.10 Total for institutions in market 344 45,074,325 Strong Market Share in Northeastern Ohio Market Opportunities To Increase Market Share in Central Ohio Source: FDIC |
11 Commercial Banking Commercial Banking Products and Services $208.4 million in commercial loans at September 30, 2014 Enhanced commercial banking leadership team in 2014 by adding: – Chief Credit Officer – SVP – Commercial Lending Expertise in niche commercial loan products Growth objectives include: – Branch expansions – Selective acquisitions – Increase market share For over 100 years, Middlefield Banc Corp. has been helping businesses grow (1) Dollars in millions |
History of Strong Financial Results ROAA 0.36% 0.41% 0.65% 0.95% 1.06% ROAE 4.90% 6.44% 10.24% 11.98% 13.17% Return on Average Assets Return on Average Equity Managed cost of funding to increase net interest margin Anticipate continued pressure on margin levels due to: – Higher regulatory costs – Continued low rate environment – Investments to support growth Opportunities to offset margin pressures and increase profitability by improvements in fee based income Nine Months Ended September 30, 2014 2013 ROAA (1) 1.06% 1.05% ROAE (1) 12.74% 12.74% (1) Annualized Annual Return on Average Assets and Equity 12 |
2014 Third Quarter Highlights 2014 third quarter highlights include: (on a year-over-year basis unless noted) Net interest income increased 1.1% to $5.9 million. Noninterest income grew 22.5% to $1.0 million. Net income up 2.8% to $1.9 million, or $0.93 per diluted share. Tangible stockholders’ equity improved 4.3% from 2014 second quarter, and 16.6% from December 31, 2013. Total net loans increased 12.1%. Nonperforming assets declined to $13.1 million from $16.3 million. Tier 1 capital ratio strengthened to 9.50% from 8.70%. Throughout 2014 Middlefield will be making investments in its business by enhancing the company’s operations, products, and services, and adding senior managers to assist with its growth objectives 13 Net Income Total Noninterest Income Net Interest Income (1) Dollars in thousands |
Stable and Growing Loan Portfolio Net loans at September 30, 2014 were $460.9 million, up from $411.2 million in the same period last year Loan policy goal is to achieve a composition mix of: – 40 – 50% residential real estate loans – 35 – 45% commercial loans – 5 – 15% consumer loans – 5% credit card accounts Adding secondary mortgage market will enhance residential product – Especially in Columbus market No national or sub-prime lending Lending within market area Participation loans with banks that have similar credit quality standards and cultures Loan Portfolio at September 30, 2014 14 (1) Dollars in millions |
Excellent Asset Quality Dollars in thousands 2011 2012 2013 Q314 Q313 Nonperforming Loans $24,546 $14,224 $12,290 $10,438 $13,608 Real Estate Owned 2,196 1,846 2,698 2,674 2,719 Nonperforming Assets (NPAs) $26,742 $16,070 $14,988 $13,112 $16,327 NPAs/Total Assets (%) 4.09% 2.40% 2.32% 1.93% 2.48% Allowance for Loan Losses $6,819 $7,779 $7,046 $7,288 $7,821 Allowance/Total Loans (%) 1.70% 1.90% 1.62% 1.56% 1.87% Net Charge-off Ratio – Annualized (%) 0.65% 0.30% 0.22% (0.08)% 0.08% Strong reserve coverage provides flexibility in managing potential losses with reduced impact on net income Problem assets peaked in 2011, primarily driven by non-owner occupied 1 - 4 family in Central Ohio market Net charge-offs returned to normalized levels in 2012 15 |
Supplemental Information 16 |
Strong Capital Levels Capital Levels at September 30, 2014 Middlefield Banc Corp. (Dollars in thousands) Amount Ratio Total Capital (to Risk-weighted Assets) Actual $ 69,449 13.93% For Capital Adequacy Purposes 39,874 8.00 To Be Well Capitalized 49,843 10.00 Tier I Capital (to Risk-weighted Assets) Actual $ 63,206 12.68% For Capital Adequacy Purposes 19,937 4.00 To Be Well Capitalized 29,906 6.00 Tier I Capital (to Average Assets) Actual $ 63,206 9.50% For Capital Adequacy Purposes 26,610 4.00 To Be Well Capitalized 33,262 5.00 17 |
Quarterly and Nine-Month Financial Summary For the Three Months Ended September 30, For the Nine Months Ended September 30, Dollars in thousands 2014 2013 2014 2013 Net interest income 5,912 5,846 17,754 17,021 Provision for loan losses 70 153 370 766 Noninterest income 990 808 2,562 2,495 Noninterest expense 4,385 4,115 13,212 12,064 Income before income taxes 2,447 2,386 6,734 6,686 Income taxes 529 521 1,442 1,479 Net income 1,918 1,865 5,292 5,207 Net interest margin 3.99% 4.05% 4.08% 4.03% Total assets 680,262 658,141 Loans outstanding, net 460,920 411,239 Deposits 600,020 579,222 Equity capital 61,515 52,529 Earnings per share 0.93 0.92 2.59 2.58 Cash dividend (per share) 0.26 0.26 0.78 0.78 Dividend pay-out ratio 27.58% 27.99% 30.01% 30.13% Return on average assets 1.13% 1.12% 1.06% 1.05% Return on average equity 13.55% 13.66% 12.74% 12.74% 18 |
Annual Financial Summary Dollars in thousands 2009 2010 2011 2012 2013 Net interest income 14,268 18,149 21,075 22,299 22,928 Provision for loan losses 2,578 3,580 3,085 2,168 196 Noninterest income 2,668 2,623 2,237 3,451 3,145 Noninterest expense 12,650 14,763 15,501 15,639 16,870 Income before income taxes 1,708 2,429 4,726 7,943 9,007 Income taxes (73) (88) 596 1,662 1,979 Net income 1,781 2,517 4,130 6,281 7,028 Net interest margin 3.30% 3.41% 3.65% 3.74% 3.85% Total assets 558,658 632,197 654,551 670,288 647,090 Loans outstanding, net 348,660 366,277 395,061 400,654 428,679 Deposits 487,106 565,251 580,962 593,335 568,836 Equity capital 36,707 38,022 47,253 55,437 53,473 Earnings per share 1.15 1.60 2.45 3.29 3.49 Cash dividend (per share) 1.04 1.04 1.04 1.04 1.04 Dividend pay-out ratio 90.28% 65.04% 42.71% 31.87% 29.14% Return on average assets 0.36% 0.41% 0.65% 0.95% 1.06% Return on average equity 4.90% 6.44% 10.24% 11.98% 13.17% 19 |