Middlefield Banc 8K Results of Operations and Financial Condition | MBCN 22 Jul 20

Exhibit 99

LOGO

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 2020 First Half Financial Results

MIDDLEFIELD, OHIO, July 22, 2020◆◆◆◆ Middlefield Banc Corp. (NASDAQ: MBCN) today reported financial results for the 2020 first half and second quarter ended June 30, 2020.

2020 First Half Financial Highlights versus 2019 First Half (unless noted):

•

Net interest income up 1.3% to $20.8 million

•

Noninterest income increased 5.7% to $2.6 million

•

Net income totaled $4.0 million and included a $3.4 million increase in the year-to-date provision for loan losses as a result of the COVID-19 crisis

•

Book value per share was up 6.7% to a record $22.09 per share

•

Tangible book value⁽¹⁾ per share was up 7.7% to $19.42 per share

•

Total loans increased 11.2% to $1.11 billion

•

Approved 1,343 PPP applications for $142.7 million during the second quarter

•

Net charge-offs declined 37.1% to $0.3 million

•

Second quarter provision was $1.0 million, compared to $2.7 million for the first quarter

•

Allowance for loan losses to nonperforming loans was 104.2%, compared to 68.1% for the same period last year

•

Equity to assets increased slightly to 10.5%

Thomas G. Caldwell, President and Chief Executive Officer, stated: “We continue to focus on protecting our customers and employees, while helping our communities respond to the unprecedented challenges created by the COVID-19 pandemic. After temporarily restricting walk-in transactions in our bank lobbies in late March, all our branches reopened for lobby banking during the second quarter. We have implemented safeguards to ensure we are doing our part to protect the health and well-being of our communities. This includes requiring all employees to wear masks, limiting the number of customers allowed in our branches at one time, encouraging customers to social distance, installing partitions to limit exposure, offering special lobby hours for at-risk customers, and allowing employees to work from home. I am extremely pleased with how our team and customers have responded to the operational adjustments we have made because of the pandemic.”

Mr. Caldwell continued, “At the same time we were adapting the Bank to operate safely throughout the COVID-19 pandemic, we quickly implemented our Paycheck Protection Program (“PPP”) process. During the second quarter, we successfully secured $142.7 million for 1,343 small businesses throughout Ohio and protected over 12,000 jobs. The PPP process has driven significant loan and deposit growth during the quarter, and we are currently adjusting our focus to help customers qualify for forgiveness as permitted under the program. I am encouraged that approximately 47% of PPP applicants booked were to small businesses without a prior banking relationship demonstrating our ability to serve our communities and the need for local and responsive financial relationships.”

“For the second quarter, net interest income increased 4.4% reflecting the proactive adjustments we made to increase the yield on investment securities and reduce our cost of funds. In addition, we were able to offset the operational and financial challenges caused by the COVID-19 crisis and the low rate environment. Our book value increased 6.7% from the prior year period to a record of $22.09 per share, and noninterest income increased 15.1% to a quarterly record of $1.5 million. While the COVID-19 crisis continues to evolve, we remain dedicated to managing items under our control and maximizing shareholder value by profitably serving our Northeast and Central Ohio communities,” concluded Mr. Caldwell.

Income Statement

For the 2020 first half, net interest income increased 1.3% to $20.8 million, compared to $20.5 million for the same period last year. Year-to-date, the net interest margin was 3.56%, compared to 3.67% for the same period last year. Net interest income for the 2020 second quarter was $10.7 million, compared to $10.3 million for the 2019 second quarter. The 4.4% increase in net interest income for the 2020 second quarter was largely a result of a 29.6% reduction in interest expense. The net interest margin for the 2020 second quarter was 3.49%, compared to 3.65% for the same period of 2019.

For the 2020 first half, noninterest income was $2.6 million, compared to $2.4 million for the same period last year. Noninterest income for the 2020 second quarter was $1.5 million, compared to $1.3 million for the same period last year.

For the 2020 first half, noninterest expense decreased 0.3% to $14.9 million, compared to $15.0 million for the same period last year. Operating costs in the 2020 second quarter increased 2.8% to $7.7 million from $7.5 million for the 2019 second quarter.

Donald L. Stacy, Chief Financial Officer stated, “We continue to prudently increase our allowance for loan losses and took a $1.0 million provision in the quarter, in addition to the $2.7 million provision incurred during the first quarter. As a result, our allowance for loan losses to nonperforming loans was 104.2% at June 30, 2020, compared to 68.1% at June 30, 2019. We continue working on providing temporary relief to our customers and have modified 362 loans. We continue to believe our asset quality was strong heading into the crisis, and nonperforming assets are down 3.0% from the prior year period, while year-to-date charge-offs have declined 37.1%.”

“As benchmark rates have declined, we have quickly reduced our funding costs and our cost of funds have improved from 1.29% at June 30, 2019 to 0.83% at June 30, 2020. In addition, we continue to focus on proactively controlling expenses and second quarter noninterest expenses were up less than 3.0% and expenses are down slightly through the first six months of the year. We believe our focus on asset quality, liquidity, and profitability provides us with the flexibility to navigate the current economic challenges associated with the COVID-19 crisis, while providing local, dedicated and responsive financial services to our communities.”

Net income for the 2020 first half ended June 30, 2020, was $4.0 million, or $0.62 per diluted share, compared to $6.3 million, or $0.97 per diluted share for the same period last year. The decline in net income for the first half ended June 30, 2020 was primarily due to a $3.4 million increase in the year-to-date

provision for loan losses as a result of the COVID-19 crisis. Net income for the 2020 second quarter ended June 30, 2020, was $3.0 million, or $0.46 per diluted share, compared to $3.3 million, or $0.50 per diluted share for the same period last year. The 2020 second quarter provision for loan losses increased $0.9 million, from the prior year period.

Balance Sheet

Total assets at June 30, 2020, increased 4.3% to approximately $1.34 billion from $1.29 billion at June 30, 2019. Net loans at June 30, 2020, were $1.10 billion, compared to $990.9 million at June 30, 2019, and $977.5 million at December 31, 2019. The 11.0% year-over-year improvement in net loans was primarily a result of PPP loans originated during the quarter.

Total deposits at June 30, 2020, were $1.16 billion, compared to $1.05 billion at June 30, 2019. The 10.2% increase in deposits was driven by PPP deposits and pandemic uncertainty. The investment portfolio, which is entirely classified as available for sale, was $112.5 million June 30, 2020, compared with $98.8 million at June 30, 2019.

Stockholders’ Equity and Dividends

At the end of the 2020 second quarter, shareholders’ equity increased 4.8% to $140.7 million compared to $134.3 million at June 30, 2019. On a per share basis, shareholders’ equity at June 30, 2020, was $22.09 compared to $20.70 at the same period last year.

Tangible stockholders’ equity⁽¹⁾ increased 5.8% to $123.7 million for the 2020 second quarter, compared to $117.0 million at June 30, 2019. On a per-share basis, tangible stockholders’ equity⁽¹⁾ was $19.42 at June 30, 2020, compared to $18.04 at June 30, 2019.

Through the first six months of 2020, the company declared cash dividends of $0.30 per share, compared to $0.28 per share for the same period last year.

At June 30, 2020, the company had an equity to assets leverage ratio of 10.47%, compared to 10.42% at June 30, 2019.

Asset Quality

The provision for loan losses for the 2020 second quarter was $1.0 million versus $110,000 for the same period last year. Most of the increased provision is the result of increases to the economic conditions qualitative factors. Nonperforming assets at June 30, 2020, were $10.5 million, compared to $10.8 million at June 30, 2019.

Net charge-offs for the 2020 second quarter were $34,000, or 0.01% of average loans, annualized, compared to $12,000, or 0.00% of average loans, annualized at June 30, 2019. Year-to-date net charge-offs were $298,000, or 0.06% of average loans, annualized compared to $474,000, or 0.10% of average loans, annualized for the same period last year. The allowance for loan losses at June 30, 2020, stood at $10.2 million, or 0.92% of total loans, compared to $7.3 million, or 0.73% of total loans at June 30, 2019.

COVID-19 Update

The following table provides information with respect to our commercial loans by type at June 30, 2020.


At Risk Loans at June 30, 2020
Loan Type	Number of Loans		Balance (in thousands)		% of Total Loans
Retail		270	$	195,550		17.6	%
Multifamily & Residential NOO		354		120,697		10.9	%
Ambulatory Care, Nursing/Rehabilitation and Social Assistance		218		81,491		7.3	%
Hospitality & tourism		58		44,923		4.0	%
Restaurant/food service/bar		136		24,938		2.3	%
Other		219		20,208		1.8	%

Total		1,255	$	487,807		43.9	%

The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was signed into law on March 27, 2020, and as a qualified SBA lender, we were automatically authorized to originate PPP loans.

As of June 30, 2020, we approved 1,343 applications for up to $142.7 million of loans under the PPP.

As of June 30, 2020, we modified 362 loans aggregating $214.8 million primarily consisting of the deferral of principal and interest payments and the extension of the maturity date.

Details with respect to actual loan modifications are as follows:


Deferrals at June 30, 2020
Loan Type	Number of Loans		Balance (in thousands)		% of Total Loans
Retail		58	$	89,438		8.1	%
Multifamily & Residential NOO		16		7,628		0.7	%
Ambulatory Care, Nursing/Rehabilitation and Social Assistance		10		22,456		2.0	%
Hospitality & tourism		23		35,700		3.2	%
Restaurant/food service/bar		10		5,216		0.5	%
Other		245		54,379		4.9	%

Total		362	$	214,817		19.4	%

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 $1.34 billion at June 30, 2020. The bank operates 16 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 at www.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). A non-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 these non-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 of non-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) the effect of the COVID-19 pandemic, including on our credit quality and business operations, as well as its impact on general economic and financial market conditions; (8) changes in the securities markets; or (9) 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, unaudited)


Balance Sheets (period end)	June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019
ASSETS
Cash and due from banks	$	55,741		$	53,533		$	35,113		$	118,956		$	133,372
Federal funds sold		2,520			1,800			—			1,069			2,010

Cash and cash equivalents		58,261			55,333			35,113			120,025			135,382
Equity securities, at fair value		581			550			710			628			660
Investment securities available for sale, at fair value		112,529			102,959			105,733			105,041			98,809
Loans held for sale		4,151			513			1,220			791			431
Loans:
Commercial real estate:
Owner occupied		110,134			113,272			102,386			106,839			109,944
Non-owner occupied		300,577			292,775			302,180			312,049			307,562
Multifamily		37,604			52,276			62,028			70,633			75,252
Residential real estate		227,427			233,900			234,798			236,280			232,168
Commercial and industrial		240,096			106,797			89,527			85,861			85,520
Home equity lines of credit		117,196			114,933			112,248			111,459			113,662
Construction and other		66,015			71,186			66,680			60,957			58,161
Consumer installment		11,210			12,861			14,411			15,204			15,963

Total loans		1,110,259			998,000			984,258			999,282			998,232
Less allowance for loan and lease losses		10,210			9,244			6,768			7,001			7,304

Net loans		1,100,049			988,756			977,490			992,281			990,928
Premises and equipment, net		18,962			17,653			17,874			17,182			16,788
Goodwill		15,071			15,071			15,071			15,071			15,071
Core deposit intangibles		1,890			1,973			2,056			2,141			2,227
Bank-owned life insurance		16,723			16,618			16,511			16,403			16,294
Accrued interest receivable and other assets		15,078			14,513			10,697			11,015			11,832

TOTAL ASSETS	$	1,343,295		$	1,213,939		$	1,182,475		$	1,280,578		$	1,288,422


	June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019
LIABILITIES
Deposits:
Noninterest-bearing demand	$	270,738		$	206,372		$	191,370		$	199,235		$	198,817
Interest-bearing demand		136,722			125,184			107,844			107,033			94,266
Money market		168,842			156,556			160,826			155,419			152,885
Savings		218,545			175,468			192,003			182,005			194,505
Time		363,420			340,130			368,800			390,721			411,034

Total deposits		1,158,267			1,003,710			1,020,843			1,034,413			1,051,507

Short-term borrowings		20,417			60,000			5,075			92,000			85,000
Other borrowings		17,162			12,662			12,750			12,359			12,449
Accrued interest payable and other liabilities		6,779			4,880			6,032			5,893			5,206

TOTAL LIABILITIES		1,202,625			1,081,252			1,044,700			1,144,665			1,154,162

STOCKHOLDERS’ EQUITY *
Common stock, no par value; 10,000,000 shares authorized, 7,298,829 shares issued, 6,369,467 shares outstanding as of June 30, 2020		86,722			86,722			86,617			86,617			86,590
Retained earnings		67,125			65,140			65,063			62,886			60,517
Accumulated other comprehensive income (loss)		3,761			(2,237	)		1,842			2,157			1,377
Treasury stock, at cost; 929,362 shares as of June 30, 2020		(16,938	)		(16,938	)		(15,747	)		(15,747	)		(14,224	)

TOTAL STOCKHOLDERS’ EQUITY		140,670			132,687			137,775			135,913			134,260

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,343,295		$	1,213,939		$	1,182,475		$	1,280,578		$	1,288,422

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

MIDDLEFIELD BANC CORP.

Consolidated Selected Financial Highlights

(Dollar amounts in thousands, unaudited)


	For the Three Months Ended													For the Six Months Ended
Statements of Income	June 30, 2020		March 31, 2020			December 31, 2019		September 30, 2019			June 30, 2019			June 30, 2020			June 30, 2019

INTEREST AND DIVIDEND INCOME
Interest and fees on loans	$	12,281	$	12,078		$	12,392	$	12,804		$	12,706		$	24,359		$	25,194
Interest-earning deposits in other institutions		7		94			124		193			169			101			356
Federal funds sold		—		21			22		24			25			21			32
Investment securities:
Taxable interest		206		157			197		206			214			363			393
Tax-exempt interest		634		629			661		613			553			1,263			1,118
Dividends on stock		27		30			40		45			53			57			111

Total interest and dividend income		13,155		13,009			13,436		13,885			13,720			26,164			27,204

INTEREST EXPENSE
Deposits		2,336		2,865			3,014		3,173			3,277			5,201			6,222
Short-term borrowings		32		35			34		42			79			67			292
Other borrowings		62		76			80		92			95			138			191

Total interest expense		2,430		2,976			3,128		3,307			3,451			5,406			6,705


NET INTEREST INCOME		10,725		10,033			10,308		10,578			10,269			20,758			20,499

Provision for loan losses		1,000		2,740			460		80			110			3,740			350


NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		9,725		7,293			9,848		10,498			10,159			17,018			20,149

NONINTEREST INCOME
Service charges on deposit accounts		566		553			577		571			530			1,119			1,038
Investment securities gains on sale, net		—		—			—		4			190			—			190
Gain (loss) on equity securities		31		(160	)		82		(32	)		(14	)		(129	)		44
Earnings on bank-owned life insurance		105		107			108		109			109			212			214
Gains on sale of loans		381		114			148		128			98			495			157
Other income		412		460			390		325			386			872			788

Total noninterest income		1,495		1,074			1,305		1,105			1,299			2,569			2,431


NONINTEREST EXPENSE
Salaries and employee benefits		4,076		3,524			4,049		4,272			4,078			7,600			8,202
Occupancy expense		483		550			580		535			496			1,033			1,049
Equipment expense		307		273			270		244			291			580			526
Data processing costs		684		666			614		580			549			1,350			1,014
Ohio state franchise tax		281		268			262		262			261			549			520
Federal deposit insurance expense		74		123			—		—			100			197			230
Professional fees		369		349			448		401			403			718			834
Advertising expense		217		209			128		202			200			426			403
Software amortization expense		74		141			159		182			152			215			297
Core deposit intangible amortization		83		83			85		86			85			166			170
Other expense		1,041		1,066			783		909			867			2,107			1,737

Total noninterest expense		7,689		7,252			7,378		7,673			7,482			14,941			14,982


Income before income taxes		3,531		1,115			3,775		3,930			3,976			4,646			7,598
Income taxes		565		74			634		661			686			639			1,297


NET INCOME	$	2,966	$	1,041		$	3,141	$	3,269		$	3,290		$	4,007		$	6,301

MIDDLEFIELD BANC CORP.

Consolidated Selected Financial Highlights

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


	For the Three Months Ended															For the Six Months Ended
	June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019			June 30, 2020			June 30, 2019
Per common share data ⁽⁵⁾
Net income per common share - basic	$	0.47		$	0.16		$	0.48		$	0.51		$	0.51		$	0.63		$	0.97
Net income per common share - diluted	$	0.46		$	0.16		$	0.48		$	0.50		$	0.50		$	0.62		$	0.97
Dividends declared per share	$	0.15		$	0.15		$	0.15		$	0.14		$	0.14		$	0.30		$	0.28
Book value per share (period end)	$	22.09		$	20.83		$	21.45		$	21.16		$	20.70		$	22.09		$	20.70
Tangible book value per share (period end) ^{(2) (3)}	$	19.42		$	18.16		$	18.78		$	18.48		$	18.04		$	19.42		$	18.04
Dividends declared	$	956		$	964		$	964		$	900		$	912		$	1,920		$	1,821
Dividend yield		2.91	%		3.82	%		2.28	%		2.37	%		2.74	%		2.91	%		2.75	%
Dividend payout ratio		32.23	%		92.60	%		30.69	%		27.53	%		27.72	%		47.92	%		28.90	%
Average shares outstanding - basic		6,369,467			6,417,109			6,423,543			6,458,258			6,502,508			6,393,288			6,500,406
Average shares outstanding - diluted		6,388,118			6,429,443			6,455,387			6,479,066			6,514,946			6,412,585			6,513,050
Period ending shares outstanding		6,369,467			6,369,467			6,423,630			6,423,130			6,485,170			6,369,467			6,485,170

Selected ratios
Return on average assets		0.90	%		0.35	%		1.04	%		1.07	%		1.09	%		0.78	%		1.05	%
Return on average equity		8.56	%		3.01	%		8.87	%		9.41	%		9.79	%		5.79	%		9.58	%
Return on average tangible common equity ^{(2) (4)}		9.76	%		3.43	%		10.11	%		10.76	%		11.23	%		6.59	%		11.02	%
Efficiency ⁽¹⁾		61.29	%		63.47	%		61.75	%		63.93	%		63.03	%		62.33	%		63.66	%
Equity to assets at period end		10.47	%		10.93	%		11.65	%		10.61	%		10.42	%		10.47	%		10.42	%
Noninterest expense to average assets		0.58	%		0.61	%		0.61	%		0.64	%		0.62	%		1.44	%		1.24	%

(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 of non-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 the two-for-one stock split completed on November 8, 2019

MIDDLEFIELD BANC CORP.

Consolidated Selected Financial Highlights

(unaudited)


	For the Three Months Ended															For the Six Months Ended
Yields	June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019			June 30, 2020			June 30, 2019
Interest-earning assets:
Loans receivable ⁽²⁾		4.53	%		4.95	%		4.97	%		5.09	%		5.09	%		4.73	%		5.08	%
Investment securities ⁽²⁾		3.76	%		3.62	%		3.94	%		3.80	%		3.70	%		3.69	%		3.71	%
Interest-earning deposits with other banks		0.23	%		1.40	%		1.65	%		2.31	%		2.21	%		0.72	%		2.24	%
Total interest-earning assets		4.27	%		4.69	%		4.75	%		4.86	%		4.86	%		4.47	%		4.85	%
Deposits:
Interest-bearing demand deposits		0.35	%		0.42	%		0.41	%		0.39	%		0.36	%		0.38	%		0.33	%
Money market deposits		0.93	%		1.41	%		1.41	%		1.43	%		1.40	%		1.17	%		1.50	%
Savings deposits		0.21	%		0.50	%		0.62	%		0.68	%		0.69	%		0.35	%		0.75	%
Certificates of deposit		2.00	%		2.12	%		2.18	%		2.18	%		2.35	%		2.06	%		2.27	%
Total interest-bearing deposits		1.11	%		1.39	%		1.43	%		1.48	%		1.56	%		1.25	%		1.51	%
Non-Deposit Funding:
Borrowings		0.53	%		1.62	%		2.52	%		3.03	%		2.70	%		0.83	%		2.57	%
Total interest-bearing liabilities		1.07	%		1.40	%		1.46	%		1.51	%		1.59	%		1.23	%		1.56	%
Cost of deposits		0.85	%		1.13	%		1.15	%		1.20	%		1.26	%		0.98	%		1.22	%
Cost of funds		0.83	%		1.14	%		1.17	%		1.23	%		1.29	%		0.98	%		1.27	%
Net interest margin ⁽¹⁾		3.49	%		3.63	%		3.66	%		3.72	%		3.65	%		3.56	%		3.67	%

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

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


	For the Three Months Ended
Asset quality data	June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019
(Dollar amounts in thousands)

Nonaccrual loans	$	9,803		$	8,405		$	8,879		$	10,053		$	10,671
90 day past due and accruing		—			—			—			—			58

Nonperforming loans ⁽¹⁾		9,803			8,405			8,879			10,053			10,729
Other real estate owned		687			456			155			89			89

Nonperforming assets	$	10,490		$	8,861		$	9,034		$	10,142		$	10,818


Allowance for loan losses	$	10,210		$	9,244		$	6,768		$	7,001		$	7,304
Allowance for loan losses/total loans		0.92	%		0.93	%		0.69	%		0.70	%		0.73	%
Net charge-offs:
Quarter-to-date	$	34		$	264		$	693		$	383		$	12
Year-to-date		298			264			1,550			857			474
Net charge-offs to average loans, annualized:
Quarter-to-date		0.01	%		0.11	%		0.28	%		0.15	%		0.00	%
Year-to-date		0.06	%		0.11	%		0.16	%		0.11	%		0.10	%

Nonperforming loans/total loans		0.88	%		0.84	%		0.90	%		1.01	%		1.07	%
Allowance for loan losses/nonperforming loans		104.15	%		109.98	%		76.22	%		69.64	%		68.08	%
Nonperforming assets/total assets		0.78	%		0.73	%		0.76	%		0.79	%		0.84	%

(1)	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 Six Months Ended
(Dollar amounts in thousands)	June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019			June 30, 2020			June 30, 2019

Stockholders’ Equity	$	140,670		$	132,687		$	137,775		$	135,913		$	134,260		$	140,670		$	134,260
Less Goodwill and other intangibles		16,961			17,044			17,127			17,212			17,298			16,961			17,298

Tangible Common Equity	$	123,709		$	115,643		$	120,648		$	118,701		$	116,962		$	123,709		$	116,962


Shares outstanding		6,369,467			6,369,467			6,423,630			6,423,130			6,485,170			6,369,467			6,485,170

Tangible book value per share	$	19.42		$	18.16		$	18.78		$	18.48		$	18.04		$	19.42		$	18.04


Reconciliation of Average Equity to Return on Average Tangible Common Equity	For the Three Months Ended															For the Six Months Ended
	June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019			June 30, 2020			June 30, 2019

Average Stockholders’ Equity	$	139,287		$	139,208		$	140,475		$	137,843		$	134,836		$	139,287		$	132,643
Less Average Goodwill and other intangibles		17,002			17,085			17,169			17,254			17,339			17,043			17,381

Average Tangible Common Equity	$	122,285		$	122,123		$	123,306		$	120,589		$	117,497		$	122,244		$	115,262


Net income	$	2,966		$	1,041		$	3,141		$	3,269		$	3,290		$	4,007		$	6,301

Return on average tangible common equity (annualized)		9.76	%		3.43	%		10.11	%		10.76	%		11.23	%		6.59	%		11.02	%

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

MIDDLEFIELD BANC CORP.

Average Balance Sheets

(Dollar amounts in thousands, unaudited)


	For the Three Months Ended
	June 30, 2020							June 30, 2019
	Average Balance		Interest		Average Yield/Cost			Average Balance		Interest		Average Yield/Cost
Interest-earning assets:
Loans receivable ⁽³⁾	$	1,092,095	$	12,281		4.53	%	$	1,002,346	$	12,706		5.09	%
Investment securities ⁽³⁾		107,765		840		3.76	%		99,022		767		3.70	%
Interest-earning deposits with other banks ⁽⁴⁾		58,541		34		0.23	%		44,747		247		2.21	%

Total interest-earning assets		1,258,401		13,155		4.27	%		1,146,115		13,720		4.86	%

Noninterest-earning assets		62,976							61,267

Total assets	$	1,321,377						$	1,207,382

Interest-bearing liabilities:
Interest-bearing demand deposits	$	129,917	$	112		0.35	%	$	98,929	$	88		0.36	%
Money market deposits		164,434		381		0.93	%		159,705		558		1.40	%
Savings deposits		198,967		104		0.21	%		195,451		336		0.69	%
Certificates of deposit		350,298		1,739		2.00	%		390,997		2,295		2.35	%
Short-term borrowings		55,973		32		0.23	%		13,354		79		2.37	%
Other borrowings		15,615		62		1.60	%		12,489		95		3.05	%

Total interest-bearing liabilities		915,204		2,430		1.07	%		870,925		3,451		1.59	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		262,575							198,234
Other liabilities		4,311							3,387
Stockholders’ equity		139,287							134,836

Total liabilities and stockholders’ equity	$	1,321,377						$	1,207,382

Net interest income			$	10,725						$	10,269

Interest rate spread ⁽¹⁾						3.20	%						3.27	%
Net interest margin ⁽²⁾						3.49	%						3.65	%
Ratio of average interest-earning assets to average interest-bearing liabilities						137.50	%						131.60	%

(1)	Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

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

(3)	Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $190 and $168 for the three months ended June 30, 2020 and 2019, respectively.

(4)	Includes dividends received on restricted stock.


	For the Three Months Ended
	June 30, 2020							March 31, 2020
	Average Balance		Interest		Average Yield/Cost			Average Balance		Interest		Average Yield/Cost
Interest-earning assets:
Loans receivable ⁽³⁾	$	1,092,095	$	12,281		4.53	%	$	984,034	$	12,078		4.95	%
Investment securities ⁽³⁾		107,765		840		3.76	%		105,894		786		3.62	%
Interest-earning deposits with other banks ⁽⁴⁾		58,541		34		0.23	%		41,717		145		1.40	%

Total interest-earning assets		1,258,401		13,155		4.27	%		1,131,645		13,009		4.69	%

Noninterest-earning assets		62,976							65,003

Total assets	$	1,321,377						$	1,196,648

Interest-bearing liabilities:
Interest-bearing demand deposits	$	129,917	$	112		0.35	%	$	113,691	$	119		0.42	%
Money market deposits		164,434		381		0.93	%		158,008		552		1.41	%
Savings deposits		198,967		104		0.21	%		183,137		226		0.50	%
Certificates of deposit		350,298		1,739		2.00	%		373,866		1,968		2.12	%
Short-term borrowings		55,973		32		0.23	%		14,808		35		0.95	%
Other borrowings		15,615		62		1.60	%		12,703		76		2.41	%

Total interest-bearing liabilities		915,204		2,430		1.07	%		856,213		2,976		1.40	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		262,575							195,411
Other liabilities		4,311							5,816
Stockholders’ equity		139,287							139,208

Total liabilities and stockholders’ equity	$	1,321,377						$	1,196,648

Net interest income			$	10,725						$	10,033

Interest rate spread ⁽¹⁾						3.20	%						3.29	%
Net interest margin ⁽²⁾						3.49	%						3.63	%
Ratio of average interest-earning assets to average interest-bearing liabilities						137.50	%						132.17	%

(1)	Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

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

(3)	Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $190 and $189 for the three months ended June 30, 2020 and March 31, 2020, respectively.

(4)	Includes dividends received on restricted stock.


	For the Six Months Ended
	June 30, 2020							June 30, 2019
	Average Balance		Interest		Average Yield/Cost			Average Balance		Interest		Average Yield/Cost
Interest-earning assets:
Loans receivable ⁽³⁾	$	1,038,064	$	24,359		4.73	%	$	1,001,344	$	25,194		5.08	%
Investment securities ⁽³⁾		106,829		1,626		3.69	%		98,253		1,511		3.71	%
Interest-earning deposits with other banks ⁽⁴⁾		50,129		179		0.72	%		45,015		499		2.24	%

Total interest-earning assets		1,195,022		26,164		4.47	%		1,144,612		27,204		4.85	%

Noninterest-earning assets		63,990							60,912

Total assets	$	1,259,012						$	1,205,524

Interest-bearing liabilities:
Interest-bearing demand deposits	$	121,804	$	229		0.38	%	$	96,594	$	160		0.33	%
Money market deposits		161,221		934		1.17	%		176,970		1,313		1.50	%
Savings deposits		191,052		331		0.35	%		201,650		753		0.75	%
Certificates of deposit		362,082		3,707		2.06	%		355,620		3,996		2.27	%
Short-term borrowings		35,390		67		0.38	%		24,372		292		2.42	%
Other borrowings		14,159		138		1.96	%		13,473		191		2.86	%

Total interest-bearing liabilities		885,708		5,406		1.23	%		868,679		6,705		1.56	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		228,993							199,332
Other liabilities		5,024							4,870
Stockholders’ equity		139,287							132,643

Total liabilities and stockholders’ equity	$	1,259,012						$	1,205,524

Net interest income			$	20,758						$	20,499

Interest rate spread ⁽¹⁾						3.24	%						3.29	%
Net interest margin ⁽²⁾						3.56	%						3.67	%
Ratio of average interest-earning assets to average interest-bearing liabilities						134.92	%						131.76	%

(1)	Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

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

(3)	Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $379 and $338 for the six months ended June 30, 2020 and 2019, respectively.

(4)	Includes dividends received on restricted stock.

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