EXHIBIT 99
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15985 East High Street
P. O. Box 35
Middlefield, Ohio 44062
Phone: 440/632-1666 FAX: 440/632-1700
www.middlefieldbank.com
P. O. Box 35
Middlefield, Ohio 44062
Phone: 440/632-1666 FAX: 440/632-1700
www.middlefieldbank.com
PRESS RELEASE
Contact: | James R. Heslop, 2nd | |
Executive Vice President/Chief Operating Officer | ||
(440) 632-1666 Ext. 3219 | ||
jheslop@middlefieldbank.com |
Middlefield Banc Corp. Reports Fourth Quarter and Full Year 2008 Results
MIDDLEFIELD, OHIO, January 29, 2009¨¨¨¨ Middlefield Banc Corp. (Pink Sheets: MBCN) reported net income for the three months ended December 31, 2008, of $391,000, or $0.25 per diluted common share, compared to net income of $862,000,or $0.55 per diluted common share for the three months ended December 31, 2007. The corporation’s return on average equity for the 2008 period was 5.02% and its return on average assets was 0.34%. Comparable ratios for the 2007three-month period were 9.73% and 0.80%, respectively. Reported results for the fourth quarter of 2008 included $379,000 pre-tax, or $0.16 per diluted share after-tax, in other-than-temporary impairment (OTTI) charges on securities.
For the full year ended December 31, 2008, the corporation posted net income of $2,615,000, compared to $3,375,000 for the full year ended December 31, 2007. On a per share basis, full year 2008 earnings were $1.69 per diluted common share, representing a decrease from the $2.14 per diluted common share for the full year ended December 31, 2007. The return on average equity for the full year ended December 31, 2008, was 7.91% and its return on average assets was 0.58%. Prior year ratios were 10.06% and 0.85%, respectively.
The corporation’s total assets at year-end 2008 were $467.8 million, an increase of 7.7% over the $434.3 million recorded at December 31, 2007. Net loans at December 31, 2008, were $318.0 million, an increase of $11.9 million, or 3.9%, over the $306.1 million in net loans at December 31, 2007. Total deposits at year-end 2008 were $394.8 million, which was $31.9 million, or 8.8%, higher than the deposit level of $362.9 million recorded at December 31, 2007.
“While our level of earnings for 2008 was down from the prior year, we believe that our performance, especially in light of the economic turbulence and dynamic interest rate conditions, illustrates the solid core upon which our company has been established,” stated Thomas G. Caldwell, President and Chief Executive Officer of Middlefield Banc Corp. “Our earnings were also impacted by several of the growth efforts that we have made in recent years. This negative impact was anticipated for the near term. By focusing on our true community banking philosophy, we have avoided many of the current challenges within the industry related to sub-prime lending and risky investment securities.”
Caldwell continued, “Growth in our loan portfolio was markedly less than projected. Economic uncertainty and a misperception that it is difficult to obtain a loan have worked against our best efforts. Both of our banks have strong capital, utilize solid and consistent underwriting, and are poised to continue to assist families and businesses achieve their dreams.”
Highlights for the fourth quarter and full year of 2008 include:
• | Net interest income for the fourth quarter of 2008 was $2,999,000, which was slightly above the $2,945,000 reported for the comparable period of 2007. For the 2008 three month period, the net interest margin was 2.99%, which was lower than the prior year’s 3.12%. Full year net interest income for 2008 totaled $11,980,000, or 5.6% higher than the $11,342,000 for the 2007 full year. The net interest margin for 2008 was 3.06%, which was below the 3.25% reported for 2007. For the full year of 2008, the yield on earning assets decreased 45 basis points from the 2007 figure, while the cost of interest bearing liabilities declined 47 basis points over the same period. Contributing to the lower net interest margin for the fourth quarter and for the year was the level of non-accrual loans and charge-offs recognized by the company. |
• | Non-interest income, exclusive of OTTI charges, decreased $57,000 for the three-month period and $1,000, exclusive of OTTI charges, for the twelve-month period ending December 31, 2008, over the equal reporting periods of 2007. The decreases were primarily the result of a decrease in deposit service charges, which corresponds to a reduction in overdraft fees and statement service charges at the Middlefield affiliate. These reductions were driven, in part, by a wider acceptance of the free checking account product in that market. The other-than-temporary impairment charge relates to two mortgage backed securities held by one of the company’s subsidiary banks. Management has concluded that it is probable that there has been an adverse change in estimated cash flows for those securities, which management deemed to be other-than-temporarily impaired in accordance with generally accepted accounting principles. |
• | Non-interest expense for the fourth quarter of 2008 was $2,772,000, up 17.4% from that of the fourth quarter of 2007. Total non-interest expense for the full year of 2008 was 13.1% higher than the level of 2007. The factors that primarily led to the increase were costs associated with the operation of additional offices, increased staffing levels related to those offices, and associated higher levels of equipment depreciation. While The Middlefield Banking Company opened its office in Cortland, Ohio, in June of 2008, its Newbury, Ohio, office was completing its second year of operation in 2008. Emerald Bank expanded into Westerville, Ohio, with the purchase of a branch office in early November 2008. Deposit insurance premiums paid to the FDIC during the period ended December 31, 2008, increased $139,000 over the prior year, as that agency sought to maintain the legally prescribed coverage ratio. Audit and exam expense increased $101,000 during 2008 as the company continued its efforts to ensure compliance with the provisions of the Sarbanes-Oxley Act of 2002 and other regulatory mandates. Data processing costs for 2008 increased $109,000 over the prior year. This increased expense was driven by an increase in customer relationships and the expansion of product offerings. |
• | The provision for credit losses in the fourth quarter of 2008 was $251,000, which was nearly comparable to the $255,000 provision taken during the fourth quarter of 2007. For the full year of 2008, the provision for credit losses was $608,000, which represented an increase from the $429,000 allocated during 2007. This level of provision during 2008 is reflective of the changing economic conditions adversely impacting the market areas served by the company’s affiliate banks, which have caused charge-offs and non-performing loans to increase. Charge-offs for 2008 were $351,000, which was below the $423,000 charged-off during 2007. The allowance for loan losses at December 31, 2008, stood at $3,557,000, or 1.11% of total loans. |
• | Stockholders’ equity at December 31, 2008, was $35.1 million, or 7.49% of total assets. During 2008, the company repurchased 37,785 share of its common stock. Middlefield has examined the specific provisions of the government’s Capital Purchase Program and the senior unsecured debt guarantee. The company has opted to not participate in either program based upon the constraints placed upon its ability to conduct business to the greatest advantage of its shareholders and markets. Book value as of December 31, 2008 was $22.83 per common share. |
• | During the fourth quarter of 2008, Middlefield Banc Corp. paid a cash dividend of $0.26 per common share. Dividends for the full year of 2008 were $1.03, or 10.2% higher than the cash dividend of $0.935 paid during 2007. The 2007 amount reflects adjustment for a 5% stock dividend paid during the fourth quarter of 2007. |
“The year just ended witnessed a nearly unprecedented level of turmoil in the financial markets. Evidence of market instability is found in other-than-temporary impairment charge required on two mortgage-backed securities. Additionally, our net interest margin was negatively impacted as we competed with aggressive pricing levels driven by our larger competitors as they worked to ensure liquidity at their institutions,” commented Donald L. Stacy, Chief Financial Officer and Treasurer of Middlefield Banc Corp. “With government assistance being provided to many of those companies, we remain concerned as to the unfair disadvantage that we, and those who also acted prudently, may continue to face.”
Stacy further stated, “We will continue to aggressively seek positive earnings opportunities during the coming year. Our further focus will remain on addressing those costs that are within our control. Unfortunately, this does not include insurance premiums paid to the FDIC, which are anticipated to continue an upward trend. It is, however, important to note, that our balance sheet is strong and our local bank/relationship driven model does provide a sustainable method of operation.”
Middlefield Banc Corp., headquartered in Middlefield, Ohio, is a financial holding company with total assets of $467.8 million. Its subsidiary, The Middlefield Banking Company, operates full service banking centers and a UVEST Financial Services® brokerage office serving Chardon, Cortland, Garrettsville, Mantua, Middlefield, Newbury, and Orwell, Ohio. The company also serves the central Ohio market through its Emerald Bank subsidiary, with offices in Dublin and Westerville, Ohio. Additional information is available atwww.middlefieldbank.com andwww.emeraldbank.com.
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
(dollars in thousands, except per share amounts)
Consolidated Selected Financial Highlights
(dollars in thousands, except per share amounts)
(unaudited) | ||||||||
December 31, | December 31, | |||||||
Consolidated Balance Sheets (period end) | 2008 | 2007 | ||||||
Assets | ||||||||
Cash and due from banks | $ | 9,795 | $ | 9,073 | ||||
Federal funds sold | 7,548 | 8,632 | ||||||
Interest-bearing deposits in other institutions | 112 | 110 | ||||||
Cash and cash equivalents | 17,455 | 17,815 | ||||||
Investment securities available for sale | 104,270 | 85,968 | ||||||
Loans: | 321,575 | 309,446 | ||||||
Less: reserve for loan losses | 3,557 | 3,299 | ||||||
Net loans | 318,019 | 306,147 | ||||||
Premises and equipment | 8,449 | 7,045 | ||||||
Goodwill | 4,559 | 4,371 | ||||||
Bank-owned life insurance | 7,441 | 7,153 | ||||||
Accrued interest receivable and other assets | 7,654 | 5,774 | ||||||
Total Assets | $ | 467,847 | $ | 434,273 | ||||
December 31, | December 31, | |||||||
2008 | 2007 | |||||||
Liabilities | ||||||||
Deposits: | ||||||||
Non-interest bearing demand deposits | $ | 42,357 | $ | 41,348 | ||||
Interest bearing demand deposits | 26,405 | 19,566 | ||||||
Money market accounts | 27,845 | 22,684 | ||||||
Savings deposits | 68,969 | 76,894 | ||||||
Time deposits | 229,244 | 202,426 | ||||||
Total Deposits | 394,820 | 362,918 | ||||||
Short-term borrowings | 1,886 | 1,511 | ||||||
Other borrowings | 33,903 | 32,395 | ||||||
Other liabilities | 2,179 | 2,488 | ||||||
Total Liabilities | $ | 432,788 | $ | 399,312 | ||||
Stockholders’ Equity | ||||||||
Common stock, no par value, 10,000,000 shares authorized, 1,725,381 and 1,701,546 shares issued | 27,301 | 26,650 | ||||||
Retained earnings | 14,786 | 13,747 | ||||||
Net Unrealized gain (loss) on securities | (295 | ) | (53 | ) | ||||
Treasury stock, at cost; 189,530 shares in 2008 and 151,745 shares in 2007 | (6,734 | ) | (5,383 | ) | ||||
Total Stockholders’ Equity | 35,059 | 34,961 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 467,847 | $ | 434,273 | ||||
MIDDLEFIELD BANC CORP.
Consolidated Statement of Income
December 31, 2008 and 2007
(unaudited, dollars in thousands, except per share amounts)
Consolidated Statement of Income
December 31, 2008 and 2007
(unaudited, dollars in thousands, except per share amounts)
For the Three Months Ended | For the Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
INTEREST INCOME | ||||||||||||||||
Interest and fees on loans | $ | 5,153 | $ | 5,613 | $ | 21,426 | $ | 21,063 | ||||||||
Interest-bearing deposits in other institutions | 2 | 28 | 12 | 156 | ||||||||||||
Federal funds sold | 11 | 115 | 135 | 498 | ||||||||||||
Investment securities | 0 | |||||||||||||||
Taxable interest | 745 | 421 | 2,538 | 1,266 | ||||||||||||
Tax-exempt interest | 450 | 463 | 1,810 | 1,774 | ||||||||||||
Other dividend income | 27 | 32 | 115 | 116 | ||||||||||||
Total interest income | 6,387 | 6,672 | 26,038 | 24,873 | ||||||||||||
INTEREST EXPENSE | ||||||||||||||||
Deposits | 2,971 | 3,272 | 12,352 | 11,633 | ||||||||||||
Short term borrowings | 11 | 18 | 46 | 628 | ||||||||||||
Other borrowings | 271 | 302 | 1,120 | 735 | ||||||||||||
Trust preferred securities | 134 | 135 | 539 | 535 | ||||||||||||
Total interest expense | 3,388 | 3,727 | 14,058 | 13,531 | ||||||||||||
NET INTEREST INCOME | 2,999 | 2,945 | 11,980 | 11,342 | ||||||||||||
Provision for loan losses | 251 | 255 | 608 | 429 | ||||||||||||
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 2,748 | 2,690 | 11,372 | 10,912 | ||||||||||||
NONINTEREST INCOME | ||||||||||||||||
Service charges on deposits | 470 | 528 | 1,888 | 1,955 | ||||||||||||
Investment securities gains (losses) | (379 | ) | 7 | (344 | ) | 7 | ||||||||||
Earnings on bank-owned life insurance | 70 | 70 | 287 | 281 | ||||||||||||
Other income | 110 | 103 | 395 | 572 | ||||||||||||
Total non-interest income | 272 | 708 | 2,227 | 2,815 | ||||||||||||
NONINTEREST EXPENSE | ||||||||||||||||
Salaries and employee benefits | 1,268 | 1,092 | 4,912 | 4,458 | ||||||||||||
Occupancy expense | 242 | 194 | 886 | 746 | ||||||||||||
Equipment expense | 103 | 132 | 539 | 525 | ||||||||||||
Data processing costs | 212 | 195 | 803 | 694 | ||||||||||||
Professional fees | 164 | 88 | 587 | 423 | ||||||||||||
Ohio state franchise tax | 117 | 111 | 468 | 425 | ||||||||||||
Advertising | 57 | 59 | 373 | 316 | ||||||||||||
Postage and freight | 35 | 54 | 244 | 209 | ||||||||||||
Other operating expense | 573 | 435 | 1,785 | 1,760 | ||||||||||||
Total non-interest expense | 2,772 | 2,361 | 10,596 | 9,556 | ||||||||||||
Income before income taxes | 248 | 1,037 | 3,002 | 4,172 | ||||||||||||
Provision for income taxes | (143 | ) | 175 | 387 | 796 | |||||||||||
NET INCOME | $ | 391 | $ | 862 | $ | 2,615 | $ | 3,375 | ||||||||
For the Three Months Ended | For the Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Per common share data | ||||||||||||||||
Net income per common share — basic | $ | 0.26 | $ | 0.55 | $ | 1.71 | $ | 2.17 | ||||||||
Net income per common share — diluted | $ | 0.25 | $ | 0.55 | $ | 1.69 | $ | 2.14 | ||||||||
Dividends declared | $ | 0.260 | $ | 0.245 | $ | 1.03 | $ | 0.935 | ||||||||
Book value per share(period end) | $ | 22.83 | $ | 22.56 | $ | 22.83 | $ | 22.56 | ||||||||
Dividend payout ratio | 102.04 | % | 37.34 | % | 60.25 | % | 40.97 | % | ||||||||
Average shares outstanding — basic | 1,530,686 | 1,561,771 | 1,532,973 | 1,555,597 | ||||||||||||
Average shares outstanding — diluted | 1,533,292 | 1,582,872 | 1,545,918 | 1,577,399 | ||||||||||||
Period ending shares outstanding | 1,535,851 | 1,549,801 | 1,535,851 | 1,549,801 | ||||||||||||
Selected ratios | ||||||||||||||||
Return on average assets | 0.34 | % | 0.80 | % | 0.58 | % | 0.85 | % | ||||||||
Return on average equity | 5.02 | % | 9.73 | % | 7.91 | % | 10.06 | % | ||||||||
Yield on earning assets | 6.12 | % | 6.78 | % | 6.40 | % | 6.85 | % | ||||||||
Cost of interest bearing liabilities | 3.52 | % | 4.23 | % | 3.78 | % | 4.25 | % | ||||||||
Net interest spread | 2.60 | % | 2.55 | % | 2.63 | % | 2.60 | % | ||||||||
Net interest margin | 2.99 | % | 3.12 | % | 3.06 | % | 3.25 | % | ||||||||
Efficiency (3) | 80.96 | % | 61.97 | % | 71.50 | % | 64.75 | % | ||||||||
Equity to assets at period end | 7.49 | % | 8.05 | % | 7.49 | % | 8.05 | % |
(1) | Return on tangible assets is calculated by dividing net income less amortization of intangibles by average assets less average intangibles. | |
(2) | Return on tangible equity is calculated by dividing net income less amortization of intangibles by average equity less average intangibles. | |
(3) | The efficiency ratio is calculated by dividing non-interest expense less amortization of intangibles by the sum of net interest income on a fully taxable equivalent basis plus non-interest income. |
December 31, | December 31, | |||||||
Asset quality data | 2008 | 2007 | ||||||
Non-accrual loans | $ | 6,255 | $ | 3,744 | ||||
Loans past due >90 days and still accruing | 2,227 | 1,917 | ||||||
Non-performing loans | 8,482 | 5,661 | ||||||
Other real estate owned | 1,106 | — | ||||||
Non-performing assets | $ | 9,588 | $ | 5,661 | ||||
Allowance for loan losses | $ | 3,557 | $ | 3,299 | ||||
Allowance for loan losses/total loans | 1.11 | % | 1.07 | % | ||||
Net charge-offs: | ||||||||
Quarter-to-date | $ | 309 | $ | 76 | ||||
Year-to-date | 351 | 423 | ||||||
Net charge-offs to average loans | ||||||||
Quarter-to-date | 0.10 | % | 0.02 | % | ||||
Year-to-date | 0.11 | % | 0.15 | % | ||||
Non-performing loans/total loans | 2.98 | % | 1.83 | % | ||||
Allowance for loan losses/non-performing loans | 37.09 | % | 58.28 | % |