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 2019 First Quarter Financial Results

MIDDLEFIELD, OHIO, April 22, 2019 ◆◆◆◆ Middlefield Banc Corp. (NASDAQ: MBCN) today reported financial results for the 2019 first quarter ended March 31, 2019.

2019 First Quarter Financial Highlights Include(on a year-over-year basis unless noted):

• Net income increased 15.6% to a first quarter record of $3.0 million

• Earnings per diluted share increased 15.0% to a first quarter record of $0.92 per share

• Return on average equity increased 63 basis points to 9.36%

• Return on average tangible common equity⁽¹⁾ increased 57 basis points to 10.80%

• Total loans up 7.7% to a record $1.0 billion, and were up 5.1% (annualized) from the 2018 fourth quarter

• Net interest income improved 3.5% to $10.3 million

• Noninterest income up 41.2% to $1.1 million

• Noninterest expenses up only 2.1%

“The solid start to 2019 demonstrates strong momentum in our business and favorable economic trends throughout both our Central and Northeast Ohio markets,” stated Thomas G. Caldwell, President and Chief Executive Officer. “We achieved record first quarter financial results including loans, assets, and earnings and I am pleased with the 41.2% increase in noninterest income during the quarter. Diversifying our income streams is an important focus in 2019 and we expect further growth throughout the year as we implement strategies to improve noninterest income.”

Mr. Caldwell continued, “I am encouraged by our potential as we increase our scale, leverage our fixed costs, and drive profitable growth in 2019 and beyond. Middlefield’s Board of Directors recently approved a 150,000 share buyback, which reflects our optimism and dedication to return value to shareholders.”

Income Statement

Net interest income for the 2019 first quarter was $10.3 million, compared to $9.9 million for the 2018 first quarter. The 3.5% increase in net interest income for the 2019 first quarter was primarily a result of a 13.2% increase in interest and fees on loans. The net interest margin for the 2019 first quarter was 3.70%, compared to 3.82% for the same period of 2018. The yield on earning assets increased 28 basis points to 4.85% for the quarter ended March 31, 2019, from 4.57% for the quarter ended March 31, 2018. The cost of interest-bearing liabilities increased 49 basis points to 1.52% for the quarter ended March 31, 2019, from 1.03% for the quarter ended March 31, 2018.

Noninterest income for the 2019 first quarter was $1.1 million, compared to $0.8 million for the same period last year. The 41.2% increase in noninterest income was primarily due to higher investment services and recoveries on purchased student loans.    

Noninterest expense for the 2019 first quarter was $7.5 million, a 2.1% increase from the 2018 first quarter. Salaries and benefits expense increased $145,000, or 3.6%, during the quarter ended March 31, 2019, compared to the quarter ended March 31, 2018, primarily as a result of increased staffing during the past twelve months, including executive management and new branch personnel.

“Asset quality remains stable as a result of conservative underwriting standards, balanced portfolio composition, and steady economic trends in both of our Ohio markets,” said Donald L. Stacy, Chief Financial Officer. “Asset quality was negatively affected by one large credit of $3.2 million in the Central Ohio market. The issue is isolated to this particular borrower and it is not indicative of a trend in the market, portfolio or an issue in underwriting. Aside from this issue, the asset quality trends of the portfolio continue to improve and the bank has provided sufficient dollars to cover any potential loss with this credit. In addition, we remain focused on attracting new deposits, and total deposits increased 10.1% over the prior year period and 9.6% annualized over the past three months. Our loans to deposits ratio was 95.9% at March 31, 2019, compared to 97.9% at March 31, 2018. While our deposit beta has increased over the past 12 months, we believe we are reaching a period of stabilization in our net interest margin over the coming quarters.”

Balance Sheet

Total assets at March 31, 2019, increased 15.7% to a record $1.28 billion, compared to March 31, 2018. The Company adopted ASC 842 on January 1, 2019. As a result, for the 2019 first quarter premises and equipment, net, was $15.7 million, an increase of $2.7 million or 21.1%, compared to the 2018 fourth quarter. Similarly, accrued interest receivable and other assets was $13.3 million, an increase of $3.6 million or 37.0%, compared to the 2018 fourth quarter.

Net loans at March 31, 2019, increased 7.8% to $997.3 million, compared to $924.8 million at March 31, 2018. The year-over-year improvement in net loans was primarily a result of a 12.4% increase in commercial mortgage loans, a 7.5% increase in residential mortgage loans, a 19.2% increase in real estate construction loans, offset by a 12.7% decline in consumer installment loans and a 14.1% decline in commercial and industrial loans.

Total deposits at March 31, 2019, was $1.04 billion, compared to $944.6 million at March 31, 2018. The 10.1% increase in deposits was primarily a result of higher time and money market deposits. The investment portfolio, classified as available for sale, was $98.1 million at March 31, 2019, compared with $91.3 million at March 31, 2018.

Stockholders’ Equity and Dividends

At the end of the 2019 first quarter, stockholders’ equity increased 9.6% to $131.7 million compared to $120.2 million at March 31, 2018. On a per share basis, shareholders’ equity at March 31, 2019, was $40.44 compared to $37.28, an increase of 8.5%, over the same period last year.

Tangible stockholders’ equity⁽¹⁾ increased 11.6% to $114.3 million for the 2019 first quarter, compared to $102.4 million at March 31, 2018. On aper-share basis, tangible stockholders’ equity⁽¹⁾ was $35.11 at March 31, 2019, compared to $31.78, an increase of 10.5%, at March 31, 2018.

During the 2019 first quarter, the Company paid cash dividends of $0.28 per share, which represented a payout ratio of 30.2%.

At March 31, 2019, the Company had an equity to assets leverage ratio of 10.28%, compared to 10.86% at March 31, 2018.

Asset Quality

The provision for loan losses was $240,000 for the 2019 first quarter, compared to $210,000 for the same period a year ago. Nonperforming assets at March 31, 2019, were $10.6 million, compared to $9.0 million at March 31, 2018. Net charge-offs were $462,000, or 0.19% of average loans, annualized, during the 2019 first quarter, compared to net recoveries of $151,000, or 0.06% of average loans, annualized, at March 31, 2018. The allowance for loan losses at March 31, 2019, stood at $7.2 million, or 0.72% of total loans, compared to $7.6 million or 0.81% of total loans at March 31, 2018.

Middlefield Banc Corp., headquartered in Middlefield, Ohio, is the bank holding company of The Middlefield Banking Company with total assets of $1.28 billion at March 31, 2019. The bank operates 15 full-service banking centers and an LPL Financial^® brokerage office serving Beachwood, Chardon, Cortland, Dublin, Garrettsville, Mantua, Middlefield, Newbury, Orwell, Powell, 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)

	March 31,			December 31,			September 30,			June 30,			March 31,
Balance Sheets (period end)	2019			2018			2018			2018			2018
ASSETS
Cash and due from banks	$	121,045		$	107,933		$	81,951		$	42,451		$	33,258
Federal funds sold		—			—			—			28,795			—
Cash and cash equivalents		121,045			107,933			81,951			71,246			33,258
Equity securities, at fair value		674			616			671			656			643
Investment securities available for sale, at fair value		98,114			98,322			99,717			100,028			91,262
Loans held for sale		1,230			597			925			1,132			937
Loans		1,004,484			992,109			972,968			943,674			932,374
Less allowance for loan and lease losses		7,206			7,428			7,494			7,502			7,551
Net loans		997,278			984,681			965,474			936,172			924,823
Premises and equipment, net		15,741			13,003			13,002			12,978			12,225
Goodwill		15,071			15,071			15,071			15,071			15,071
Core deposit intangibles		2,312			2,397			2,484			2,571			2,658
Bank-owned life insurance		16,185			16,080			15,970			15,862			15,764
Accrued interest receivable and other assets		13,285			9,698			11,063			10,363			10,123
TOTAL ASSETS	$	1,280,935		$	1,248,398		$	1,206,328		$	1,166,079		$	1,106,764
	March 31,			December 31,			September 30,			June 30,			March 31,
	2019			2018			2018			2018			2018
LIABILITIES
Deposits:
Noninterest-bearing demand	$	194,298		$	203,410		$	202,580		$	205,192		$	192,190
Interest-bearing demand		107,246			92,104			99,342			94,715			98,672
Money market		178,668			196,685			191,261			137,572			149,359
Savings		184,662			222,954			224,704			204,408			221,851
Time		375,357			300,914			295,874			290,359			282,501
Total deposits		1,040,231			1,016,067			1,013,761			932,246			944,573
Short-term borrowings		91,000			90,398			55,304			87,833			18,671
Other borrowings		11,518			8,803			8,956			18,996			19,028
Accrued interest payable and other liabilities		6,487			4,840			4,074			4,288			4,340
TOTAL LIABILITIES		1,149,236			1,120,108			1,082,095			1,043,363			986,612
STOCKHOLDERS’ EQUITY
Common stock, no par value; 10,000,000 shares authorized, 3,642,535 shares issued, 3,256,370 shares outstanding as of March 31, 2019		86,437			85,925			85,687			85,544			85,116
Retained earnings		58,139			56,037			53,520			51,121			48,927
Accumulated other comprehensive income (loss)		641			(154	)		(1,456	)		(431	)		(373	)
Treasury stock, at cost; 386,165 shares		(13,518	)		(13,518	)		(13,518	)		(13,518	)		(13,518	)
TOTAL STOCKHOLDERS’ EQUITY		131,699			128,290			124,233			122,716			120,152
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,280,935		$	1,248,398		$	1,206,328		$	1,166,079		$	1,106,764

MIDDLEFIELD BANC CORP.

Consolidated Selected Financial Highlights

(Dollar amounts in thousands)

	For the Three Months Ended
	March 31,		December 31,			September 30,		June 30,		March 31,
Statements of Income	2019		2018			2018		2018		2018
INTEREST AND DIVIDEND INCOME
Interest and fees on loans	$	12,510	$	12,467		$	11,821	$	11,234	$	11,054
Interest-earning deposits in other institutions		187		146			178		115		119
Federal funds sold		7		17			8		7		14
Investment securities:
Taxable interest		179		182			167		170		169
Tax-exempt interest		565		589			598		550		525
Dividends on stock		58		58			57		53		59
Total interest and dividend income		13,506		13,459			12,829		12,129		11,940
INTEREST EXPENSE
Deposits		2,945		2,828			2,178		1,973		1,640
Short-term borrowings		213		78			296		192		276
Other borrowings		96		92			104		118		122
Total interest expense		3,254		2,998			2,578		2,283		2,038
NET INTEREST INCOME		10,252		10,461			10,251		9,846		9,902
Provision for loan losses		240		210			210		210		210
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		10,012		10,251			10,041		9,636		9,692
NONINTEREST INCOME
Service charges on deposit accounts		508		498			491		472		453
Gain (loss) on equity securities		58		(55	)		15		13		18
Earnings on bank-owned life insurance		105		110			108		98		112
Gains on sale of loans		37		67			43		117		4
Other income		402		357			291		305		199
Total noninterest income		1,110		977			948		1,005		786
NONINTEREST EXPENSE
Salaries and employee benefits		4,124		4,065			3,839		3,866		3,979
Occupancy expense		553		465			460		472		536
Equipment expense		235		273			262		201		233
Data processing costs		465		446			481		402		477
Ohio state franchise tax		259		220			244		244		115
Federal deposit insurance expense		130		100			150		150		150
Professional fees		431		364			346		327		445
Advertising expense		203		227			236		230		228
Software amortization expense		145		145			155		155		150
Core deposit intangible amortization		85		87			87		87		91
Other expense		870		851			832		929		941
Total noninterest expense		7,500		7,243			7,092		7,063		7,345
Income before income taxes		3,622		3,985			3,897		3,578		3,133
Income taxes		611		560			593		481		528
NET INCOME	$	3,011	$	3,425		$	3,304	$	3,097	$	2,605

MIDDLEFIELD BANC CORP.

Consolidated Selected Financial Highlights

(Dollar amounts in thousands, except per share and share amounts)

	For the Three Months Ended
	March 31, 2019			December 31, 2018			September 30, 2018			June 30, 2018			March 31, 2018
Per common share data
Net income per common share - basic	$	0.93		$	1.06		$	1.02		$	0.96		$	0.81
Net income per common share - diluted	$	0.92		$	1.05		$	1.02		$	0.96		$	0.80
Dividends declared per share	$	0.28		$	0.28		$	0.28		$	0.28		$	0.33
Book value per share (period end)	$	40.44		$	39.54		$	38.38		$	37.95		$	37.28
Tangible book value per share (period end)(2) (3)	$	35.11		$	34.16		$	32.96		$	32.49		$	31.78
Dividends declared	$	909		$	908		$	905		$	903		$	1,063
Dividend yield		2.76	%		2.62	%		2.36	%		2.21	%		2.69	%
Dividend payout ratio		30.19	%		26.51	%		27.39	%		29.16	%		40.81	%
Average shares outstanding - basic		3,249,139			3,239,180			3,234,393			3,225,726			3,220,262
Average shares outstanding - diluted		3,255,284			3,250,149			3,248,326			3,240,329			3,238,069
Period ending shares outstanding		3,256,370			3,244,332			3,236,689			3,233,678			3,222,984
Selected ratios
Return on average assets		1.01	%		1.15	%		1.13	%		1.11	%		0.94	%
Return on average equity		9.36	%		10.52	%		10.33	%		10.08	%		8.73	%
Return on average tangible common equity(2) (4)		10.80	%		12.17	%		12.00	%		11.77	%		10.23	%
Efficiency(1)		64.30	%		61.61	%		61.65	%		63.43	%		67.00	%
Equity to assets at period end		10.28	%		10.28	%		10.30	%		10.52	%		10.86	%
Noninterest expense to average assets		0.62	%		0.62	%		0.61	%		0.63	%		0.66	%

(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

MIDDLEFIELD BANC CORP.

Consolidated Selected Financial Highlights

	For the Three Months Ended
	March 31, 2019			December 31, 2018			September 30, 2018			June 30, 2018			March 31, 2018
Yields
Interest-earning assets:
Loans receivable(2)		5.07	%		5.09	%		4.89	%		4.84	%		4.82	%
Investment securities(2)		3.80	%		3.73	%		3.67	%		3.68	%		3.61	%
Interest-earning deposits with other banks		2.26	%		2.08	%		1.95	%		1.72	%		1.85	%
Total interest-earning assets		4.85	%		4.82	%		4.65	%		4.61	%		4.57	%
Deposits:
Interest-bearing demand deposits		0.30	%		0.31	%		0.30	%		0.28	%		0.28	%
Money market deposits		1.58	%		1.56	%		0.99	%		0.87	%		0.82	%
Savings deposits		0.81	%		0.85	%		0.68	%		0.57	%		0.47	%
Certificates of deposit		2.15	%		1.99	%		1.84	%		1.79	%		1.65	%
Total interest-bearing deposits		1.46	%		1.38	%		1.14	%		1.07	%		0.94	%
Non-Deposit Funding:
Borrowings		2.57	%		3.54	%		2.30	%		2.59	%		1.67	%
Total interest-bearing liabilities		1.52	%		1.43	%		1.23	%		1.16	%		1.03	%
Cost of deposits		1.17	%		1.09	%		0.89	%		0.84	%		0.74	%
Cost of funds		1.24	%		1.14	%		0.98	%		0.92	%		0.83	%
Net interest margin(1)		3.70	%		3.76	%		3.72	%		3.76	%		3.82	%

(1) Net interest margin represents net interest income as a percentage of average interest-earning assets.

(2) Tax-equivalent adjustments to calculate the yield ontax-exempt securities and loans were determined using an effective tax rate of 21%.

	For the Three Months Ended
End of Period Loan Balances	March 31, 2019			December 31, 2018			September 30, 2018			June 30, 2018			March 31, 2018
(Dollar amounts in thousands)
Commercial and industrial	$	85,756		$	83,857		$	93,144		$	101,975		$	99,809
Real estate - construction		58,019			56,731			48,901			45,647			48,687
Real estate - mortgage:
Residential		340,483			336,487			329,609			320,858			316,856
Commercial		504,289			498,247			483,675			457,050			448,766
Consumer installment		15,937			16,787			17,639			18,144			18,256
Total	$	1,004,484		$	992,109		$	972,968		$	943,674		$	932,374
Asset quality data	March 31, 2019			December 31, 2018			September 30, 2018			June 30, 2018			March 31, 2018
(Dollar amounts in thousands)
Non-accrual loans	$	10,472		$	6,595		$	7,288		$	8,357		$	8,747
90 day past due and accruing		—			945			—			15			—
Nonperforming loans(3)		10,472			7,540			7,288			8,372			8,747
Other real estate owned		126			270			257			181			212
Non-performing assets	$	10,598		$	7,810		$	7,545		$	8,553		$	8,959
Allowance for loan losses	$	7,206		$	7,428		$	7,494		$	7,502		$	7,551
Allowance for loan losses/total loans		0.72	%		0.75	%		0.77	%		0.79	%		0.81	%
Net charge-offs (recoveries):
Quarter-to-date	$	462		$	276		$	218		$	259		$	(151	)
Net charge-offs to average loans, annualized:
Quarter-to-date		0.19	%		0.11	%		0.09	%		0.11	%		-0.06	%
Nonperforming loans/total loans		1.04	%		0.76	%		0.75	%		0.89	%		0.94	%
Allowance for loan losses/nonperforming loans		68.81	%		98.51	%		102.83	%		89.61	%		86.33	%
Nonperforming assets/total assets		0.83	%		0.63	%		0.63	%		0.73	%		0.81	%

(3) Non-performing 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 Three Months Ended
(Dollar amounts in thousands)	March 31, 2019			December 31, 2018			September 30, 2018			June 30, 2018			March 31, 2018
Stockholders’ Equity	$	131,699		$	128,290		$	124,233		$	122,716		$	120,152
Less Goodwill and other intangibles		17,383			17,468			17,555			17,642			17,729
Tangible Common Equity	$	114,316		$	110,822		$	106,678		$	105,074		$	102,423
Shares outstanding		3,256,370			3,244,332			3,236,689			3,233,678			3,222,984
Tangible book value per share	$	35.11		$	34.16		$	32.96		$	32.49		$	31.78
Reconciliation of Average Equity to Return on Average Tangible Common Equity	For the Three Months Ended
	March 31, 2019			December 31, 2018			September 30, 2018			June 30, 2018			March 31, 2018
Average Stockholders’ Equity	$	130,450		$	129,208		$	126,865		$	123,228		$	121,001
Less Average Goodwill and other intangibles		17,422			17,510			17,597			17,683			17,773
									��
Average Tangible Common Equity	$	113,028		$	111,698		$	109,268		$	105,545		$	103,228
Net income	$	3,011		$	3,425		$	3,304		$	3,097		$	2,605
Return on average tangible common equity (annualized)		10.80	%		12.17	%		12.00	%		11.77	%		10.23	%