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 Record 2019 Full Year Earnings

MIDDLEFIELD, OHIO, January 24, 2020 ◆◆◆◆ Middlefield Banc Corp. (NASDAQ: MBCN) today reported record financial results for the twelve months ended December 31, 2019.

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

🌑 Net income increased 2.3% to a record $12.7 million

🌑 Earnings per diluted share increased 2.1% to a record $1.95 per share

🌑 Return on average common equity was 9.35%, compared to 9.94%

🌑 Return on average tangible common equity⁽¹⁾ was 10.72%, compared to 11.57%

🌑 Book value per share was up 8.5% to a record $21.45 per share

🌑 Tangible book value⁽¹⁾ per share was up 10.0% to a record $18.78 per share

🌑 Total net loans decreased 0.7% to $977.5 million

🌑 Net interest income improved 2.3% to $41.4 million

🌑 Total noninterest income was up 29.9% to $4.8 million

🌑 Noninterest expense was up only 4.5%

🌑 Equity to assets strengthened to 11.65%, compared to 10.28%

🌑 All per share data has been adjusted to reflect the November 8, 2019two-for-one stock split

“Middlefield achieved record annual earnings, earnings per share, and book value for the year ended December 31, 2019, despite a more challenging banking landscape,” stated Thomas G. Caldwell, President and Chief Executive Officer. “During the year, we were able to successfully offset macro related pressures related to a declining rate environment and significant competition for loans and deposits, as annual noninterest income increased nearly 30%, core asset quality improved, and noninterest expenses only increased 4.5%, compared to the prior year. We continue to invest in developing new products and services for our customers, and further expanded our footprint in Central Ohio with our new Plain City branch that opened during the 2019 fourth quarter.

“During 2019, the Company repurchased 98,832 shares of our common stock, increased our quarterly cash dividend by 7.1%, and completed atwo-for-one stock split to improve our trading liquidity. These actions reflect management and the board’s optimism for our future and commitment to creating value for all shareholders.

“As we look to 2020 and beyond, we expect market conditions will remain competitive. During this period, our strategy will remain focused on balancing loan growth with a conservative approach to risk. In addition, we will continue to pursue strategies aimed at diversifying sources of income, expanding our presence in Central Ohio, increasing our market share in our core Northeast Ohio markets, and investing in our platform to support our long-term growth opportunity,” concluded Mr. Caldwell.

Income Statement

For the 2019 full year, net interest income increased 2.3% to $41.4 million, compared to $40.4 million for the same period last year. The net interest margin for the 2019 twelve-month period was 3.68%, compared to 3.77% for the same period last year. Net interest income for the 2019 fourth quarter was $10.3 million, compared to $10.5 million for the 2018 fourth quarter. The net interest margin for the 2019 fourth quarter was 3.66%, compared to 3.76% for the same period of 2018.

For the 2019 full year, noninterest income increased 29.9% to $4.8 million, compared to $3.7 million for the same period last year. Noninterest income for the 2019 fourth quarter was $1.3 million, compared to $1.0 million for the 2018 fourth quarter.

For the 2019 full year, noninterest expense increased 4.5% to $30.0 million, compared to $28.7 million last year. For the 2019 fourth quarter, noninterest expense was $7.4 million, compared to $7.2 million for the same period last year.

“We have remained focused on managing risk and pricing on loans, while prudently controlling our funding costs on deposits,” said Donald L. Stacy, Chief Financial Officer. “During the 2019 fourth quarter charge-offs were higher as a result of charging off $566,000 of acquired student loans during the quarter. We believe this was aone-time issue, and as our nonperforming assets at December 31, 2019 indicate, we expect charge-offs will return to more historical levels during the 2020 first quarter. Looking at our deposits, I am encouraged by the growth we experienced in core deposits during the fourth quarter, and we ended the quarter with aloan-to-deposit ratio of 96.4% at December 31, 2019 compared to 97.6% at December 31, 2018.”

Balance Sheet

Total assets at December 31, 2019, decreased 5.3% to $1.18 billion, from $1.25 billion at December 31, 2018. Net loans at December 31, 2019, were $977.5 million, compared to $984.7 million at December 31, 2018. The 0.7% year-over-year decrease in total net loans was a result of a 14.2% decline in consumer installment loans, and a 5.7% decline in commercial real estate loans, partially offset by an 11.5% increase in real estate construction loans, a 6.8% increase in commercial and industrial loans, and a 3.1% increase in residential real estate loans.

Total deposits at December 31, 2019, were $1.02 billion, compared to $1.02 billion at December 31, 2018. The 0.5% year-over-year increase in deposits was primarily a result of higher time deposits and interest-bearing deposits. The investment portfolio, which is entirely classified as available for sale, was $105.7 million at December 31, 2019, compared with $98.3 million at December 31, 2018.

Stockholders’ Equity and Dividends

At December 31, 2019, stockholders’ equity increased 7.4% to $137.8 million, compared to $128.3 million at December 31, 2018. On a per share basis, shareholders’ equity at December 31, 2019, was a record $21.45 compared to $19.77 at the same period last year.

At December 31, 2019, tangible stockholders’ equity⁽¹⁾ increased 8.9% to $120.6 million, compared to $110.8 million at December 31, 2018. On a per share basis, tangible stockholders’ equity⁽¹⁾ was $18.78 at December 31, 2019, compared to $17.08 at December 31, 2018.

For the 2019 full year, the company declared cash dividends of $0.57 per share, compared to $0.59 per share for the same period last year. The dividend payout ratio for the 2019 twelve-month period was 28.99%. At December 31, 2019, the company had an equity to assets leverage ratio of 11.65%, compared to 10.28% at December 31, 2018.

Asset Quality

The provision for loan losses for the 2019 fourth quarter was $460,000 versus $210,000 for the same period last year. Nonperforming assets at December 31, 2019, were $8.8 million, compared to $7.8 million at December 31, 2018. Net charge-offs for the 2019 fourth quarter were $693,000, or 0.28% of average loans, annualized, compared to $276,000, or 0.11% of average loans, annualized at December 31, 2018.

The provision for loan losses for the year ended December 31, 2019 was $890,000 compared to $840,000 for the year ended December 31, 2018. For the 2019 twelve-month period, net charge-offs were $1.6 million, or 0.16% of average loans, compared to $602,000, or 0.06% of average loans for the 2018 twelve-month period. The allowance for loan losses at December 31, 2019, stood at $6.8 million, or 0.69% of total loans, compared to $7.4 million or 0.75% of total loans at December 31, 2018.

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 $1.18 billion at December 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, Plain City, 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)

Balance Sheets (period end)	December 31, 2019			September 30, 2019				June 30, 2019			March 31, 2019			December 31, 2018
ASSETS
Cash and due from banks	$	35,113		$	118,956			$	133,372		$	121,045		$	107,933
Federal funds sold		-			1,069				2,010			-			-
Cash and cash equivalents		35,113			120,025				135,382			121,045			107,933
Equity securities, at fair value		710			628				660			674			616
Investment securities available for sale, at fair value		105,733			105,041				98,809			98,114			98,322
Loans held for sale		1,220			791				431			1,230			597
Loans		984,258			999,282				998,232			1,004,484			992,109
Less allowance for loan and lease losses		6,768			7,001				7,304			7,206			7,428
Net loans		977,490			992,281				990,928			997,278			984,681
Premises and equipment, net		17,874			17,182				16,788			15,741			13,003
Goodwill		15,071			15,071				15,071			15,071			15,071
Core deposit intangibles		2,056			2,141				2,227			2,312			2,397
Bank-owned life insurance		16,511			16,403				16,294			16,185			16,080
Accrued interest receivable and other assets		10,697			11,015				11,832			13,285			9,698
							��
TOTAL ASSETS	$	1,182,475		$	1,280,578			$	1,288,422		$	1,280,935		$	1,248,398
	December 31, 2019			September 30, 2019				June 30, 2019			March 31, 2019			December 31, 2018
LIABILITIES
Deposits:
Noninterest-bearing demand	$	191,370		$	199,235			$	198,817		$	194,298		$	203,410
Interest-bearing demand		107,844			107,033				94,266			107,246			92,104
Money market		160,826			155,419				152,885			178,668			196,685
Savings		192,003			182,005				194,505			184,662			222,954
Time		368,800			390,721				411,034			375,357			300,914
Total deposits		1,020,843			1,034,413				1,051,507			1,040,231			1,016,067
Short-term borrowings		5,075			92,000				85,000			91,000			90,398
Other borrowings		12,750			12,359				12,449			11,518			8,803
Accrued interest payable and other liabilities		6,032			5,893				5,206			6,487			4,840
TOTAL LIABILITIES		1,044,700			1,144,665				1,154,162			1,149,236			1,120,108
STOCKHOLDERS’ EQUITY *
Common stock, no par value; 10,000,000 shares authorized, 7,294,792 shares issued, 6,423,630 shares outstanding as of December 31, 2019		86,617			86,617				86,590			86,437			85,925
Retained earnings		65,063			62,886				60,517			58,139			56,037
Accumulated other comprehensive income (loss)		1,842			2,157				1,377			641			(154	)
Treasury stock, at cost; 871,162 shares as of December 31, 2019		(15,747	)		(15,747	)			(14,224	)		(13,518	)		(13,518	)
TOTAL STOCKHOLDERS’ EQUITY		137,775			135,913				134,260			131,699			128,290
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,182,475		$	1,280,578			$	1,288,422		$	1,280,935		$	1,248,398

* All share and per share information has been adjusted for atwo-for-one stock split completed on November 8, 2019

MIDDLEFIELD BANC CORP.

Consolidated Selected Financial Highlights

(Dollar amounts in thousands)

	For the Three Months Ended													For the Twelve Months Ended
Statements of Income	December 31,  2019		September 30, 2019			June 30, 2019			March 31, 2019		December 31,  2018			December 31, 2019		December 31, 2018
INTEREST AND DIVIDEND INCOME
Interest and fees on loans	$	12,392	$	12,804		$	12,706		$	12,488	$	12,467		$	50,390	$	46,576
Interest-earning deposits in other institutions		124		193			169			187		146			673		558
Federal funds sold		22		24			25			7		17			78		46
Investment securities:
Taxable interest		197		206			214			179		182			796		688
Tax-exempt interest		661		613			553			565		589			2,392		2,262
Dividends on stock		40		45			53			58		58			196		227
Total interest and dividend income		13,436		13,885			13,720			13,484		13,459			54,525		50,357
INTEREST EXPENSE
Deposits		3,014		3,173			3,277			2,945		2,828			12,409		8,631
Short-term borrowings		34		42			79			213		78			368		842
Other borrowings		80		92			95			96		92			363		436
Total interest expense		3,128		3,307			3,451			3,254		2,998			13,140		9,909
NET INTEREST INCOME		10,308		10,578			10,269			10,230		10,461			41,385		40,448
Provision for loan losses		460		80			110			240		210			890		840
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		9,848		10,498			10,159			9,990		10,251			40,495		39,608
NONINTEREST INCOME
Service charges on deposit accounts		577		571			530			508		498			2,186		1,914
Investment securities gains on sale, net		-		4			190			-		-			194		-
Gain (loss) on equity securities		82		(32	)		(14	)		58		(55	)		94		(9	)
Earnings on bank-owned life insurance		108		109			109			105		110			431		428
Gains on sale of loans		148		128			98			59		67			433		231
Other income		390		325			386			402		357			1,503		1,164
Total noninterest income		1,305		1,105			1,299			1,132		977			4,841		3,728
NONINTEREST EXPENSE
Salaries and employee benefits		4,049		4,272			4,078			4,124		4,065			16,523		15,749
Occupancy expense		580		535			496			553		465			2,164		1,933
Equipment expense		270		244			291			235		273			1,040		969
Data processing costs		614		580			549			465		446			2,208		1,806
Ohio state franchise tax		262		262			261			259		220			1,044		823
Federal deposit insurance expense		-		-			100			130		100			230		550
Professional fees		448		401			403			431		364			1,683		1,482
Advertising expense		128		202			200			203		227			733		921
Software amortization expense		159		182			152			145		145			638		605
Core deposit intangible amortization		85		86			85			85		87			341		352
Other expense		783		909			867			870		851			3,429		3,553
Total noninterest expense		7,378		7,673			7,482			7,500		7,243			30,033		28,743
Income before income taxes		3,775		3,930			3,976			3,622		3,985			15,303		14,593
Income taxes		634		661			686			611		560			2,592		2,162
NET INCOME	$	3,141	$	3,269		$	3,290		$	3,011	$	3,425		$	12,711	$	12,431

MIDDLEFIELD BANC CORP.

Consolidated Selected Financial Highlights

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

	For the Three Months Ended										For the Twelve Months Ended
	December 31,		September 30,		June 30,		March 31,		December 31,		December 31,		December 31,
	2019		2019		2019		2019		2018		2019		2018
Per common share data (5)
Net income per common share - basic	$	0.48	$	0.51	$	0.51	$	0.46	$	0.53	$	1.96	$	1.92
Net income per common share - diluted	$	0.49	$	0.50	$	0.50	$	0.46	$	0.53	$	1.95	$	1.91
Dividends declared per share	$	0.15	$	0.14	$	0.14	$	0.14	$	0.14	$	0.57	$	0.59
Book value per share (period end)	$	21.45	$	21.16	$	20.70	$	20.22	$	19.77	$	21.45	$	19.77
Tangible book value per share (period end)(2) (3)	$	18.78	$	18.48	$	18.04	$	17.55	$	17.08	$	18.78	$	17.08
Dividends declared	$	964	$	900	$	912	$	909	$	908	$	3,685	$	3,779
Dividend yield		2.28%		2.37%		2.74%		2.76%		2.62%		2.18%		2.76%
Dividend payout ratio		30.69%		27.53%		27.72%		30.19%		26.51%		28.99%		30.40%
Average shares outstanding - basic		6,423,543		6,458,258		6,502,508		6,498,278		6,478,360		6,470,408		6,459,908
Average shares outstanding - diluted		6,455,387		6,479,066		6,514,946		6,510,568		6,500,298		6,502,806		6,487,814
Period ending shares outstanding		6,423,630		6,423,130		6,485,170		6,512,740		6,488,664		6,423,630		6,488,664
Selected ratios
Return on average assets		1.04%		1.07%		1.09%		1.01%		1.15%		1.05%		1.09%
Return on average equity		8.87%		9.41%		9.79%		9.36%		10.52%		9.35%		9.94%
Return on average tangible common equity(2) (4)		10.11%		10.76%		11.23%		10.80%		12.17%		10.72%		11.57%
Efficiency(1)		61.75%		63.93%		63.03%		64.30%		61.60%		63.25%		63.29%
Equity to assets at period end		11.65%		10.61%		10.42%		10.28%		10.28%		11.65%		10.28%
Noninterest expense to average assets		0.61%		0.64%		0.62%		0.62%		0.62%		2.49%		2.51%

(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 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

(5) All share and per share information has been adjusted for atwo-for-one stock split completed on November 8, 2019

MIDDLEFIELD BANC CORP.

Consolidated Selected Financial Highlights

	For the Three Months Ended										For the Twelve Months Ended
	December 31,		September 30,		June 30,		March 31,		December 31,		December 31,		December 31,
	2019		2019		2019		2019		2018		2019		2018
Yields
Interest-earning assets:
Loans receivable(2)		4.97%		5.09%		5.08%		5.07%		5.09%		5.06%		4.91%
Investment securities(2)		3.94%		3.80%		3.79%		3.80%		3.73%		3.77%		3.67%
Interest-earning deposits with other banks		1.65%		2.31%		2.21%		2.26%		2.08%		2.11%		1.90%
Total interest-earning assets		4.75%		4.86%		4.86%		4.85%		4.82%		4.83%		4.68%
Deposits:
Interest-bearing demand deposits		0.41%		0.39%		0.36%		0.30%		0.31%		0.36%		0.23%
Money market deposits		1.41%		1.43%		1.40%		1.58%		1.56%		1.46%		1.11%
Savings deposits		0.62%		0.68%		0.69%		0.81%		0.85%		0.70%		0.65%
Certificates of deposit		2.18%		2.18%		2.35%		2.15%		1.99%		2.22%		1.83%
Total interest-bearing deposits		1.43%		1.48%		1.56%		1.46%		1.38%		1.48%		1.11%
Non-Deposit Funding:
Borrowings		2.52%		3.03%		2.70%		2.57%		3.54%		2.63%		2.20%
Total interest-bearing liabilities		1.46%		1.51%		1.59%		1.52%		1.43%		1.52%		1.18%
Cost of deposits		1.15%		1.20%		1.26%		1.17%		1.09%		1.20%		0.90%
Cost of funds		1.17%		1.23%		1.29%		1.24%		1.14%		1.23%		0.97%
Net interest margin(1)		3.66%		3.72%		3.65%		3.70%		3.76%		3.68%		3.77%

(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 taxrate of 21%.

	For the Three Months Ended
	December 31,		September 30,		June 30,		March 31,		December 31,
End of Period Loan Balances	2019		2019		2019		2019		2018
(Dollar amounts in thousands)
Commercial and industrial	$	89,527	$	85,861	$	85,520	$	85,756	$	83,857
Real estate - construction		63,246		57,564		54,619		58,019		56,731
Real estate - mortgage:
Residential		347,047		347,739		345,830		340,483		336,487
Commercial		470,027		492,914		496,300		504,289		498,247
Consumer installment		14,411		15,204		15,963		15,937		16,787
Total	$	984,258	$	999,282	$	998,232	$	1,004,484	$	992,109
	December 31,		September 30,		June 30,		March 31,		December 31,
Asset quality data	2019		2019		2019		2019		2018
(Dollar amounts in thousands)
Nonaccrual loans	$	8,689	$	10,053	$	10,671	$	10,472	$	6,595
90 day past due and accruing		-		-		58		-		945
Nonperforming loans(3)		8,689		10,053		10,729		10,472		7,540
Other real estate owned		155		89		89		126		270
Nonperforming assets	$	8,844	$	10,142	$	10,818	$	10,598	$	7,810
Allowance for loan losses	$	6,768	$	7,001	$	7,304	$	7,206	$	7,428
Allowance for loan losses/total loans		0.69%		0.70%		0.73%		0.72%		0.75%
Net charge-offs:
Quarter-to-date	$	693	$	383	$	12	$	462	$	276
Year-to-date		1,550		857		474		462		602
Net charge-offs to average loans, annualized:
Quarter-to-date		0.28%		0.15%		0.00%		0.19%		0.11%
Year-to-date		0.16%		0.11%		0.10%		0.19%		0.06%
Nonperforming loans/total loans		0.88%		1.01%		1.07%		1.04%		0.76%
Allowance for loan losses/nonperforming loans		77.89%		69.64%		68.08%		68.81%		98.51%
Nonperforming assets/total assets		0.75%		0.79%		0.84%		0.83%		0.63%
(3)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 Three Months Ended										For the Twelve Months Ended
(Dollar amounts in thousands)	December 31,		September 30,		June 30,		March 31,		December 31,		December 31,		December 31,
	2019		2019		2019		2019		2018		2019		2018
Stockholders’ Equity	$	137,775	$	135,913	$	134,260	$	131,699	$	128,290	$	137,775	$	128,290
Less Goodwill and other intangibles		17,127		17,212		17,298		17,383		17,468		17,127		17,468
Tangible Common Equity	$	120,648	$	118,701	$	116,962	$	114,316	$	110,822	$	120,648	$	110,822
Shares outstanding		6,423,630		6,423,130		6,485,170		6,512,740		6,488,664		6,423,630		6,488,664
Tangible book value per share	$	18.78	$	18.48	$	18.04	$	17.55	$	17.08	$	18.78	$	17.08
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,
	2019		2019		2019		2019		2018		2019		2018
Average Stockholders’ Equity	$	140,475	$	137,843	$	134,836	$	130,450	$	129,208	$	135,900	$	125,074
Less Average Goodwill and other intangibles		17,169		17,254		17,339		17,422		17,510		17,296		17,641
Average Tangible Common Equity	$	123,306	$	120,589	$	117,497	$	113,028	$	111,698	$	118,604	$	107,433
Net income	$	3,141		3,269		3,290		3,011		3,425		12,711		12,431
Return on average tangible common equity (annualized)		10.11%		10.76%		11.23%		10.80%		12.17%		10.72%		11.57%

 * All share and per share information has been adjusted for atwo-for-one stock split completed on November 8, 2019