Middlefield Banc (MBCN) 8-K Results of Operations and Financial Condition

Exhibit 99

15985 East High Street

P. O. Box 35

Middlefield, Ohio 44062

Phone:440/632-1666    FAX:440/632-1700    

www.middlefieldbank.bank

PRESS RELEASE

Company Contact:	Investor and Media Contact:
Thomas G. Caldwell President/Chief Executive Officer Middlefield Banc Corp. (440)632-1666 Ext. 3200 tcaldwell@middlefieldbank.com	Andrew M. Berger Managing Director SM Berger & Company, Inc. (216)464-6400 andrew@smberger.com

Middlefield Banc Corp. Reports 2018 First Quarter Financial Results

MIDDLEFIELD, OHIO, April 19, 2018 ◆◆◆◆ Middlefield Banc Corp. (NASDAQ: MBCN) today reported financial results for the 2018 first quarter ended March 31, 2018.

2018 First Quarter Financial Highlights Include(on a year-over-year basis unless noted):

• Net income increased 24.0% to $2.6 million

• Earnings per diluted share increased 2.6% to $0.80 per share, which includes a 20.3% increase in the average number of diluted shares outstanding

• Return on average equity was 8.73% for the quarter ended March 31, 2018, up from 7.72% for the quarter ended December 31, 2017

• Return on average tangible common equity⁽¹⁾ was 10.23% for the quarter ended March 31, 2018, up from 9.05% for the quarter ended December 31, 2017

• Total loans increased 11.4% to $932.4 million, and were up 1.0% from the 2017 fourth quarter

• Net interest income improved 13.1% to $9.9 million

• Noninterest expenses up only 1.0%

• Equity to assets was 10.86%, compared to 9.29%

“The 2018 first quarter reflects our optimism toward both the near- and long-term outlook of the bank. Throughout the operation there was a high level of activity as we continued investments required to support Middlefield’s impressive growth that has occurred over the past several years,” stated Thomas G. Caldwell, President and Chief Executive Officer. “During the quarter, Middlefield invested in its team as we added seasoned commercial lenders to our Beachwood and Mentor markets. In addition, to achieve continued loan growth, we proactively increased our level of deposits, which grew 11.4% in the first quarter, compared with the same period a year ago.

“We are excited about breaking ground on our fourth branch in Central Ohio, which will be in Powell and is expected to open late summer 2018. As this and other investments begin to produce returns, we expect profitability and overall activity to increase as 2018 progresses.”

Net income for the 2018 first quarter was $2.6 million, or $0.80 per diluted share, compared to net income for the 2017 first quarter of $2.1 million, or $0.78 per diluted share.

Annualized returns on average equity (“ROE”) and average assets (“ROA”) were 8.73% and 0.94%, respectively, for the 2018 first quarter, compared with 8.73% and 0.84% for the same period last year.

Return on average tangible common equity⁽¹⁾ was 10.23% for the 2018 first quarter, compared with 10.49% for the 2017 first quarter.

Income Statement

Net interest income for the 2018 first quarter was $9.9 million, compared to nearly $8.8 million for the 2017 first quarter. The 13.1% increase in net interest income for the 2018 first quarter was primarily a result of a 20.4% increase in interest and fees on loans. The net interest margin for the 2018 first quarter was 3.82%, compared to 3.84% for the same period of 2017.

Noninterest income for the 2018 first quarter was $786,000, compared to $1.5 million for the same period last year. The 48.0% decline in noninterest income was primarily due to a reduction in investment securities gains and lower gains on the sale of loans primarily due to the company’s decision to stop selling student loans.

Noninterest expense for the 2018 first quarter was $7.3 million, an increase of approximately $78,000 from the 2017 first quarter. Theone-time bonus payment made to all employees during the 2018 first quarter impacted noninterest expense by $190,000. Noninterest expense for the 2017 first quarter included $387,000 of additional operating expenses as a result of the Liberty acquisition that did not repeat in the 2018 first quarter.

“Asset quality remains strong despite the significant increase in assets resulting from year-over-year organic loan growth,” said Donald L. Stacy, Chief Financial Officer. “Over the past 12 months, we added nearly $96.7 million of new deposits, which, combined with higher rates on deposits, increased our deposit interest expense by $515,000. Loans to deposits was 98.7% at March 31, 2018 and March 31, 2017, respectively, and 105.1% at December 31, 2017. In addition, profitability during the 2018 first quarter was impacted by our decision to end our student loan program due to our former partner changing the structure of the program, which we believe increased our risk. As a result, gains on the sale of loans declined $230,000. Our net interest margin declined to 3.82% from 3.84% last year as a result of our cost of funds slightly outpacing the increase in the yield on earning assets. Nonperforming loans increased to $17.8 million, primarily due to one loan now classified as a troubled debt. We believe operating leverage will improve during 2018 as the investments made over the past three months start to produce returns.”

Balance Sheet

Total assets at March 31, 2018, increased 3.5% to $1.1 billion, compared to March 31, 2017. Net loans at March 31, 2018, increased 11.4% to $924.8 million, compared to $830.4 million at March 31, 2017. The year-over-year improvement in net loans was primarily a result of a 13.6% increase in commercial mortgage loans, a 5.4% increase in residential mortgage loans, an 8.8% increase in commercial and industrial loans, a 66.5% increase in real estate construction loans, partially offset by an 11.1% decline in consumer installment loans.

Total deposits at March 31, 2018, was $944.6 million, compared to $847.9 million at March 31, 2017. The 11.4% increase in deposits was a result of higher noninterest-bearing demand, savings, and time deposits, offset by lower money market deposits. During the first quarter, the company proactively grew deposits to reduce borrowings and support continued loan growth. The investment portfolio, classified as available for sale, was $91.3 million at March 31, 2018, compared with $110.5 million at March 31, 2017.

Stockholders’ Equity and Dividends

At the end of the 2018 first quarter, shareholders’ equity increased 21% to $120.2 million compared to $99.3 million at March 31, 2017. On a per share basis, shareholders’ equity at March 31, 2018, was $37.28 compared to $35.42 at the same period last year. Tangible stockholders’ equity⁽¹⁾ increased 27.0% to $102.4 million for the 2018 first quarter, compared to $80.6 million at March 31, 2017. On aper-share basis, tangible stockholders’ equity⁽¹⁾ was $31.78 at March 31, 2018, compared to $28.76 at March 31, 2017.

During the 2018 first quarter, the company paid cash dividends of $0.33 per share, which included a specialone-time payment of $0.05 per share. This total dividend represented a payout ratio of 40.8%.

At March 31, 2018, the company had an equity to assets leverage ratio of 10.86%, compared to 9.29% at March 31, 2017.

Asset Quality

The provision for loan losses was $210,000 for the 2018 first quarter, compared to $165,000 for the same period a year ago. Nonperforming assets at March 31, 2018, were $18.0 million, compared to $13.7 million at March 31, 2017. The Company reported net recoveries of $151,000, or 0.06% of average loans, annualized during the 2018 first quarter, compared to net charge offs of $43,000, or 0.02% of average loans, annualized at March 31, 2017. The allowance for loan losses at March 31, 2018, stood at $7.6 million, or 0.81% of total loans, compared to $6.7 million or 0.80% of total loans at March 31, 2017.

Middlefield Banc Corp., headquartered in Middlefield, Ohio, is a bank holding company with total assets of $1.1 billion at March 31, 2018. The bank operates 14 full-service banking centers and an LPL Financial^® brokerage office serving Beachwood, Chardon, Cortland, Dublin, Garrettsville, Mantua, Middlefield, Newbury, Orwell, Solon, Sunbury, Twinsburg, and Westerville. The Bank also operates a Loan Production Office in Mentor, Ohio. Additional information is available atwww.middlefieldbank.bank.

(1) This press release includes disclosure of Middlefield Banc Corp.’s tangible book value per share and return on average tangible equity, which are financial measures not prepared in accordance with generally accepted accounting principles in the United States (GAAP). Anon-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 thesenon-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 ofnon-GAAP financial measures are included in the tables following Consolidated Financial Highlights below.

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)

(2018 unaudited)

	March 31,			December 31,			September 30,			June 30,			March 31,
Balance Sheets (period end)	2018			2017			2017			2017			2017
ASSETS
Cash and due from banks	$	33,258		$	39,886		$	47,731		$	37,971		$	61,364
Federal funds sold		—			—			1,200			1,600			1,000
Cash and cash equivalents		33,258			39,886			48,931			39,571			62,364
Investment securities available for sale, at fair value		91,262			95,283			98,334			104,951			110,452
Equity securities		643			—			—			—			—
Loans held for sale		937			463			5,930			9,791			9,462
Loans		932,374			923,213			878,541			867,864			837,158
Less allowance for loan and lease losses		7,551			7,190			6,852			6,605			6,720
Net loans		924,823			916,023			871,689			861,259			830,438
Premises and equipment, net		12,225			11,853			11,768			11,511			11,481
Goodwill		15,071			15,071			15,299			15,435			15,646
Core deposit intangibles		2,658			2,749			2,848			2,948			3,051
Bank-owned life insurance		15,764			15,652			15,542			15,432			15,334
Other real estate owned		212			212			557			650			1,634
Accrued interest receivable and other assets		9,911			9,144			9,928			9,528			9,605
TOTAL ASSETS	$	1,106,764		$	1,106,336		$	1,080,826		$	1,071,076		$	1,069,467
	March 31,			December 31,			September 30,			June 30,			March 31,
	2018			2017			2017			2017			2017
LIABILITIES
Deposits:
Noninterest-bearing demand	$	194,203		$	192,438		$	181,550		$	172,199		$	162,614
Interest-bearing demand		96,659			83,990			91,184			87,084			94,605
Money market		149,359			150,277			161,101			160,858			162,843
Savings		221,851			208,502			212,371			181,259			183,845
Time		282,501			242,987			251,449			245,383			243,944
Total deposits		944,573			878,194			897,655			846,783			847,851
Short-term borrowings		18,671			74,707			20,274			63,388			76,213
Other borrowings		19,028			29,065			39,273			39,346			39,388
Accrued interest payable and other liabilities		4,340			4,507			5,130			4,357			6,700
TOTAL LIABILITIES		986,612			986,473			962,332			953,874			970,152
STOCKHOLDERS’ EQUITY
Common equity		85,116			84,859			84,722			84,587			69,123
Retained earnings		48,927			47,431			45,913			44,318			42,678
Accumulated other comprehensive (loss) income		(373	)		1,091			1,377			1,815			1,032
Treasury stock		(13,518	)		(13,518	)		(13,518	)		(13,518	)		(13,518	)
TOTAL STOCKHOLDERS’ EQUITY		120,152			119,863			118,494			117,202			99,315
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,106,764		$	1,106,336		$	1,080,826		$	1,071,076		$	1,069,467

MIDDLEFIELD BANC CORP.

Consolidated Selected Financial Highlights

(Dollar amounts in thousands)

(2018 unaudited)

	For the Three Months Ended
	March 31,			December 31,			September 30,		June 30,		March 31,
Statements of Income	2018			2017			2017		2017		2017
INTEREST AND DIVIDEND INCOME
Interest and fees on loans	$	11,054		$	10,696		$	10,443	$	9,916	$	9,180
Interest-bearing deposits in other institutions		119			80			107		92		49
Federal funds sold		14			6			5		1		3
Investment securities:
Taxable interest		169			162			159		223		218
Tax-exempt interest		525			560			579		630		637
Dividends on stock		59			60			37		40		112
Total interest and dividend income		11,940			11,564			11,330		10,902		10,199
INTEREST EXPENSE
Deposits		1,640			1,530			1,468		1,227		1,125
Short-term borrowings		276			101			202		273		177
Other borrowings		122			131			148		125		140
Total interest expense		2,038			1,762			1,818		1,625		1,442
NET INTEREST INCOME		9,902			9,802			9,512		9,277		8,757
Provision for loan losses		210			430			280		170		165
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		9,692			9,372			9,232		9,107		8,592
NONINTEREST INCOME
Service charges on deposit accounts		453			478			479		449		469
Investment securities gain on sale, net		—			—			398		—		488
Equity securities, unrealized gain		18			—			—		—		—
Earnings on bank-owned life insurance		112			115			109		98		109
Gains on sale of loans		4			106			255		231		234
Other income		199			219			200		211		211
Total noninterest income		786			918			1,441		989		1,511
NONINTEREST EXPENSE
Salaries and employee benefits		3,979			3,134			3,725		3,203		3,696
Occupancy expense		536			449			476		433		488
Equipment expense		233			261			242		266		281
Data processing costs		477			416			468		588		320
Ohio state franchise tax		115			186			186		186		186
Federal deposit insurance expense		150			165			165		135		68
Professional fees		445			522			434		423		373
Net (gain) loss on other real estate owned		(1	)		(58	)		18		15		55
Advertising expenses		228			161			248		164		248
Core deposit intangible amortization		91			98			101		103		72
Merger expense		—			28			338		307		387
Other expense		1,092			855			896		881		1,093
Total noninterest expense		7,345			6,217			7,297		6,704		7,267
Income before income taxes		3,133			4,073			3,376		3,392		2,836
Income taxes		528			1,687			914		885		736
NET INCOME	$	2,605		$	2,386		$	2,462	$	2,507	$	2,100

MIDDLEFIELD BANC CORP.

Consolidated Selected Financial Highlights

(Dollar amounts in thousands, except per share amount)

	For the Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2018			2017			2017			2017			2017
Per common share data
Net income per common share - basic	$	0.81		$	0.73		$	0.77		$	0.84		$	0.78
Net income per common share - diluted	$	0.80		$	0.73		$	0.76		$	0.83		$	0.78
Dividends declared per share	$	0.33		$	0.27		$	0.27		$	0.27		$	0.27
Book value per share (period end)	$	37.28		$	37.25		$	36.86		$	36.49		$	35.42
Tangible book value per share (period end) (2) (3)	$	31.78		$	31.71		$	31.21		$	30.77		$	28.76
Dividends declared	$	1,063		$	868		$	867		$	867		$	756
Dividend yield		2.69	%		2.24	%		2.34	%		2.14	%		2.39	%
Dividend payout ratio		40.81	%		36.38	%		35.22	%		34.58	%		36.00	%
Average shares outstanding - basic		3,220,262			3,215,300			3,212,335			3,000,451			2,679,816
Average shares outstanding - diluted		3,238,069			3,231,791			3,223,753			3,014,140			2,692,015
Period ending shares outstanding		3,222,984			3,217,716			3,214,737			3,211,748			2,803,557
Selected ratios
Return on average assets		0.94	%		0.86	%		0.90	%		0.94	%		0.84	%
Return on average equity		8.73	%		7.72	%		8.12	%		9.34	%		8.73	%
Return on average tangible common equity (2) (4)		10.23	%		9.05	%		9.57	%		11.30	%		10.49	%
Yield on earning assets		4.57	%		4.51	%		4.52	%		4.45	%		4.45	%
Cost of interest bearing liabilities		1.03	%		0.89	%		0.92	%		0.83	%		0.78	%
Net interest spread		3.54	%		3.62	%		3.60	%		3.62	%		3.67	%
Net interest margin		3.82	%		3.84	%		3.81	%		3.80	%		3.84	%
Efficiency (1)		67.00	%		55.58	%		63.96	%		63.30	%		68.58	%
Equity to assets at period end		10.86	%		10.83	%		10.96	%		10.94	%		9.29	%

(1) The efficiency ratio is calculated by dividingnon-interest expense less amortization of intangibles by the sum of net interest income on a fully taxable equivalent basis plusnon-interest income

(2) See reconciliation ofnon-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

	For the Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
End of Period Loan Balances	2018			2017			2017			2017			2017
Commercial and industrial	$	99,809		$	101,346		$	99,314		$	97,160		$	91,777
Real estate - construction		48,687			47,017			40,760			35,571			29,238
Real estate - mortgage:
Residential		316,856			318,157			316,191			308,519			300,508
Commercial		448,766			437,947			403,135			406,670			395,102
Consumer installment		18,256			18,746			19,141			19,944			20,533
Total	$	932,374		$	923,213		$	878,541		$	867,864		$	837,158
	March 31,			December 31,			September 30,			June 30,			March 31,
Asset quality data	2018			2017			2017			2017			2017
(Dollar amounts in thousands)
Non-accrual loans	$	8,747		$	8,433		$	8,525		$	10,213		$	6,545
Troubled debt restructuring		9,071			4,982			5,608			5,990			5,515
90 day past due and accruing		—			—			268			199			35
Non-performing loans		17,818			13,415			14,401			16,402			12,095
Other real estate owned		212			212			557			650			1,634
Non-performing assets	$	18,030		$	13,627		$	14,958		$	17,052		$	13,729
Allowance for loan losses	$	7,551		$	7,190		$	6,852		$	6,605		$	6,720
Allowance for loan losses/total loans		0.81	%		0.78	%		0.78	%		0.76	%		0.80	%
Net charge-offs (recoveries):
Quarter-to-date	$	(151	)	$	92		$	33		$	285		$	43
Net charge-offs to average loans, annualized
Quarter-to-date		-0.06	%		0.04	%		0.02	%		0.13	%		0.02	%
Nonperforming loans/total loans		1.91	%		1.45	%		1.64	%		1.89	%		1.44	%
Allowance for loan losses/nonperforming loans		42.38	%		53.60	%		47.58	%		40.27	%		55.56	%
Nonperforming assets/total assets		1.63	%		1.23	%		1.38	%		1.59	%		1.28	%
Reconciliation of Common Stockholders’ Equity to Tangible Common Equity	For the Three Months Ended
(Dollar amounts in thousands)	March 31,			December 31,			September 30,			June 30,			March 31,
(Average shares outstanding - diluted)	2018			2017			2017			2017			2017
Stockholders’ Equity	$	120,152		$	119,863		$	118,494		$	117,202		$	99,315
Less Goodwill and other intangibles		17,729			17,820			18,147			18,383			18,697
Tangible Common Equity	$	102,423		$	102,043		$	100,347		$	98,819		$	80,618
Average Stockholders’ Equity	$	121,001		$	122,586		$	120,310		$	107,615		$	97,585
Less Average Goodwill and other intangibles		17,773			17,987			18,251			18,633			16,402
Average Tangible Common Equity	$	103,228		$	104,599		$	102,059		$	88,982		$	81,183