Middlefield Banc Corp. Reports Record 2021 First Half Financial Results

MIDDLEFIELD, Ohio, July 16, 2021 (GLOBE NEWSWIRE) — Middlefield Banc Corp. (NASDAQ: MBCN) today reported financial results for the 2021 first half and second quarter ended June 30, 2021.

2021 First Half Financial Highlights Include (on a year-over-year basis unless noted):

Net income of $8.6 million, or $1.35 per diluted share driven by record second quarter earnings of $4.4 million, or a record $0.70 per diluted share
Net interest margin improved by 16 basis points to 3.72%, compared to 3.56%
Total noninterest income was up 49.9% to $3.9 million
Pre-tax, pre-provision⁽¹⁾ income increased 35.4% to $11.4 million
Return on average assets increased to 1.26% from 0.64%
Return on average equity increased to 11.88% from 5.79%
Return on average tangible common equity⁽¹⁾ increased to 13.41% from 6.59%
Efficiency ratio improved to 57.60%, compared to 62.33%
Year-to-date net charge-offs declined 46.6% to $159,000

“Our record second quarter and first half earnings reflect strong operating performance across our business and improving economic trends throughout our Northeast and Central Ohio markets,” stated Thomas G. Caldwell, President and Chief Executive Officer. “In addition, we have successfully navigated the low interest rate environment throughout the 2021 first half by successfully managing our net interest margin, enhancing our efficiency ratio, controlling operating expenses, growing noninterest income, and maintaining strong asset quality.”

“Year-to-date, we have helped small business customers secure $93.5 million of PPP forgiveness, which provided a $1.5 million benefit to our yield on earnings assets. At June 30, 2021, $90.2 million of PPP loans remained on the balance sheet and we expect the majority of the outstanding PPP loans will be forgiven by year end.”

“While economic and interest rate uncertainty remains, we are focused on pursuing our long-term growth strategy, making investments across our business, and creating value for our shareholders. As a result, we recently hired two new loan officers in Central Ohio, we are improving our customer engagement by enhancing the Bank’s online resources and returning capital to shareholders through our higher year-over-year dividend payment and share buyback program. Year-to-date, we have repurchased 181,045 shares of our common stock at an average price of $23.16 per share, which includes 131,577 shares repurchased in the second quarter at an average price of $23.42 per share. We have repurchased our common stock at an average price of 111.2% to tangible book value, which we believe is a tremendous value and offers a significant opportunity for our shareholders to increase their ownership in Middlefield Banc Corp. Overall, I am pleased with our strong year-to-date performance, and we expect 2021 will be another strong year for the Company,” concluded Mr. Caldwell.

Income Statement
Net interest income for the 2021 first half, increased 14.6% to $23.8 million, compared to $20.8 million for the same period last year. Year-to-date, the net interest margin was 3.72%, compared to 3.56% for the same period last year. Net interest income for the 2021 second quarter was $11.9 million, compared to $10.7 million for the 2020 second quarter. The 10.8% increase in net interest income for the 2021 second quarter was largely a result of a 56.8% reduction in interest expense. The net interest margin for the 2021 second quarter was 3.72%, compared to 3.49% for the same period of 2020.

For the 2021 first half, noninterest income was $3.9 million, compared to $2.6 million for the same period last year. Noninterest income for the 2021 second quarter was $1.6 million, compared to $1.5 million for the same period last year.

For the 2021 first half, noninterest expense increased 9.0% to $16.3 million, compared to $14.9 million for the same period last year. Operating costs in the 2021 second quarter increased 3.1% to $7.9 million from $7.7 million for the 2020 second quarter.

Net income for the 2021 first half ended June 30, 2021, was a record $8.6 million, or a record $1.35 per diluted share, compared to $4.0 million, or $0.62 per diluted share for the same period last year. Net income for the 2021 second quarter ended June 30, 2021, was a quarterly record of $4.4 million, or $0.70 per diluted share, compared to $3.0 million, or $0.46 per diluted share for the same period last year.

Balance Sheet
Total assets at June 30, 2021, increased 1.3% to approximately $1.36 billion from $1.34 billion at June 30, 2020. Net loans at June 30, 2021, decreased 5.3% to $1.04 billion, compared to $1.10 billion at June 30, 2020 as PPP forgiveness increased. Middlefield originated $212.6 million of loans under the PPP and helped customers receive $122.4 million of forgiveness payments under the terms of the program. The balance of PPP loans outstanding at June 30, 2021, was $90.2 million.

Total deposits at June 30, 2021, were approximately $1.20 billion, compared to $1.16 billion at June 30, 2020. The 3.2% increase in deposits was primarily due to increases in interest-bearing, money market, savings, and non-interest-bearing accounts, partially offset by decreased time-based accounts. At June 30, 2021, Middlefield had no short-term borrowings compared to $20.4 million of short-term borrowings at June 30, 2020 as the Company paid back Federal Home Loan Bank advances. The investment portfolio, which is entirely classified as available for sale, was $150.9 million June 30, 2021, compared with $112.5 million at June 30, 2020.

Donald L. Stacy, Chief Financial Officer stated, “Our balance sheet remains strong as we benefit from record earnings, favorable asset quality, and a meaningfully higher allowance. The allowance for loan losses to total loans now stands at 1.34%, compared to 1.28% at March 31, 2021, and 0.92% at June 30, 2020. In addition, at June 30, 2021, we only had eight loans in deferral status primarily within the hospitality industry representing a balance of $17.7 million, compared to a balance of $214.8 million at June 30, 2020, a decline of approximately 92%.”

“We also ended the quarter with robust capital levels and liquidity, including nearly $92.5 million in cash and cash equivalents and $150.9 million in our investment portfolio. We are focused on maximizing the yield on our investment portfolio, while prudently managing risk. As a result, our investment portfolio includes $32 million of subordinated debt, at an average yield of approximately 4.8%, in community banks across the country with similar metrics. The remainder of our investment portfolio is primarily held in tax free municipal bonds. I believe our record year-to-date financial results demonstrate strong execution across many aspects of the Bank and our ability to focus on managing items under our control,” concluded Mr. Stacy.

Stockholders’ Equity and Dividends
At June 30, 2021, shareholders’ equity increased 3.8% to $146.0 million compared to $140.7 million at June 30, 2020. On a per share basis, shareholders’ equity at June 30, 2021, was $23.50 compared to $22.09 at the same period last year.

Tangible stockholders’ equity⁽¹⁾ increased 4.6% to $129.4 million for the 2021 second quarter, compared to $123.7 million at June 30, 2020. On a per-share basis, tangible stockholders’ equity⁽¹⁾ was $20.82 at June 30, 2021, compared to $19.43 at June 30, 2020.

Through the first six months of 2021, the Company declared cash dividends of $0.32 per share, compared to $0.30 per share for the same period last year.

At June 30, 2021, the Company had an equity to assets leverage ratio of 10.74%, compared to 10.47% at June 30, 2020.

Asset Quality
The provision for loan losses for the 2021 second quarter was $200,000 versus $1.0 million for the same period last year. The year-over-year decline in the provision for loan losses was partially due to strong asset quality and last year’s prudent build in the Company’s allowance for loan losses associated with the potential economic impacts caused by the COVID-19 pandemic. The provision for loan losses for the 2021 first half was $900,000 versus $3.7 million for the same period last year.

Net charge-offs were $122,000, or 0.05% of average loans, annualized, during the 2021 second quarter, compared to net charge-offs of $34,000, or 0.01% of average loans, annualized, at June 30, 2020. Year-to-date net charge-offs were $159,000, or 0.03% of average loans, annualized, compared to net charge-offs of $298,000, or 0.06% of average loans, annualized for the six-months ended June 30, 2020.

Nonperforming assets at June 30, 2021, were $14.9 million, compared to $10.5 million at June 30, 2020. The $4.4 million increase in nonperforming assets was affected by one large legacy credit in the Central Ohio market, which was charged-off during the 2020 third quarter. Nonperforming loans at June 30, 2021 were $7.8 million a 20.8% decline from the same period last year, and a 13.4% decline from the 2021 first quarter. The allowance for loan losses at June 30, 2021, stood at $14.2 million, or 1.34% of total loans, compared to $10.2 million, or 0.92% of total loans at June 30, 2020.

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 $1.36 billion at June 30, 2021. 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, return on average tangible equity, and pre-tax, pre-provision for loan losses income, 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.

Company Contact:	Investor and Media Contact:
Thomas G. Caldwell President/Chief Executive Officer Middlefield Banc Corp. (440) 632-1666 Ext. 3200 [email protected]	Andrew M. Berger Managing Director SM Berger & Company, Inc. (216) 464-6400 [email protected]

MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
(Dollar amounts in thousands, unaudited)
		June 30,			March 31,			December 31,			September 30,			June 30,
Balance Sheets (period end)		2021			2021			2020			2020			2020
ASSETS
Cash and due from banks	$	82,435		$	93,037		$	92,874		$	46,097		$	55,766
Federal funds sold		10,034			7,436			19,543			6,884			2,520
Cash and cash equivalents		92,469			100,473			112,417			52,981			58,286
Equity securities, at fair value		730			690			609			553			581
Investment securities available for sale, at fair value		150,850			123,218			114,360			112,968			112,529
Loans held for sale		790			1,260			878			10,457			4,151
Loans:
Commercial real estate:
Owner occupied		109,777			104,379			103,121			107,342			110,134
Non-owner occupied		304,324			304,623			309,424			310,512			300,577
Multifamily		34,926			39,015			39,562			39,622			37,604
Residential real estate		228,102			228,052			233,995			222,237			227,427
Commercial and industrial		200,558			242,651			232,044			258,313			240,096
Home equity lines of credit		107,685			111,474			112,543			115,223			117,196
Construction and other		62,229			64,960			63,573			60,613			66,015
Consumer installment		8,694			9,046			9,823			10,534			11,210
Total loans		1,056,295			1,104,200			1,104,085			1,124,396			1,110,259
Less allowance for loan and lease losses		14,200			14,122			13,459			11,359			10,210
Net loans		1,042,095			1,090,078			1,090,626			1,113,037			1,100,049
Premises and equipment, net		17,680			18,002			18,333			18,633			18,962
Goodwill		15,071			15,071			15,071			15,071			15,071
Core deposit intangibles		1,564			1,644			1,724			1,807			1,890
Bank-owned life insurance		16,846			16,740			16,938			16,832			16,723
Other real estate owned		7,090			7,372			7,387			7,391			687
Accrued interest receivable and other assets		15,033			13,545			13,636			15,079			14,391
TOTAL ASSETS	$	1,360,218		$	1,388,093		$	1,391,979		$	1,364,809		$	1,343,320

		June 30,			March 31,			December 31,			September 30,			June 30,
		2021			2021			2020			2020			2020
LIABILITIES
Deposits:
Noninterest-bearing demand	$	326,665		$	317,224		$	291,347		$	268,838		$	270,738
Interest-bearing demand		207,725			215,684			195,722			179,080			136,722
Money market		183,453			187,204			198,493			184,936			168,842
Savings		252,171			259,973			243,888			231,696			218,545
Time		225,271			245,342			295,750			329,413			363,420
Total deposits		1,195,285			1,225,427			1,225,200			1,193,963			1,158,267

Short-term borrowings		–			–			–			–			20,417
Other borrowings		13,031			13,095			17,038			17,100			17,162
Accrued interest payable and other liabilities		5,858			4,901			5,931			11,690			6,779
TOTAL LIABILITIES		1,214,174			1,243,423			1,248,169			1,222,753			1,202,625
STOCKHOLDERS’ EQUITY
Common stock, no par value; 10,000,000 shares authorized, 7,325,918
shares issued, 6,215,511 shares outstanding as of June 30, 2021		87,131			87,073			86,886			86,871			86,722
Retained earnings		76,150			72,729			69,578			68,046			67,150
Accumulated other comprehensive income		3,893			2,917			4,284			4,077			3,761
Treasury stock, at cost; 1,110,407 shares as of June 30, 2021		(21,130	)		(18,049	)		(16,938	)		(16,938	)		(16,938	)
TOTAL STOCKHOLDERS’ EQUITY		146,044			144,670			143,810			142,056			140,695

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,360,218		$	1,388,093		$	1,391,979		$	1,364,809		$	1,343,320

MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
(Dollar amounts in thousands, unaudited)

		For the Three Months Ended													For the Six Months Ended
		June 30,	March 31,		December 31,			September 30,			June 30,				June 30,		June 30,
Statements of Income		2021	2021		2020			2020			2020				2021		2020

INTEREST AND DIVIDEND INCOME
Interest and fees on loans	$	11,885	$	12,167	$	12,041		$	12,603		$	12,281		$	24,052	$	24,359
Interest-earning deposits in other institutions		12		18		9			8			7			30		101
Federal funds sold		1		–		1			–			–			1		21
Investment securities:
Taxable interest		410		370		297			249			206			780		363
Tax-exempt interest		602		558		591			618			634			1,160		1,263
Dividends on stock		26		29		28			29			27			55		57
Total interest and dividend income		12,936		13,142		12,967			13,507			13,155			26,078		26,164
INTEREST EXPENSE
Deposits		1,010		1,205		1,655			2,106			2,336			2,215		5,201
Short-term borrowings		–		–		(2	)		14			32			–		67
Other borrowings		39		39		43			28			62			78		138
Total interest expense		1,049		1,244		1,696			2,148			2,430			2,293		5,406

NET INTEREST INCOME		11,887		11,898		11,271			11,359			10,725			23,785		20,758

Provision for loan losses		200		700		2,100			4,000			1,000			900		3,740

NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES		11,687		11,198		9,171			7,359			9,725			22,885		17,018
NONINTEREST INCOME
Service charges on deposit accounts		856		787		729			691			566			1,643		1,119
Gain (loss) on equity securities		40		81		56			(28	)		31			121		(129	)
Earnings on bank-owned life insurance		106		226		106			109			105			332		212
Gains on sale of loans		221		592		332			660			381			813		495
Other income		409		532		387			379			412			941		872
Total noninterest income		1,632		2,218		1,610			1,811			1,495			3,850		2,569

NONINTEREST EXPENSE
Salaries and employee benefits		4,321		4,254		4,458			3,657			4,136			8,575		7,720
Occupancy expense		549		600		628			497			483			1,149		1,033
Equipment expense		313		357		365			363			307			670		580
Data processing costs		698		786		617			683			684			1,484		1,350
Ohio state franchise tax		286		286		251			282			281			572		549
Federal deposit insurance expense		150		144		103			123			74			294		197
Professional fees		323		419		352			289			369			742		718
Net loss (gain) on other real estate owned		22		46		(172	)		(184	)		(33	)		68		(32	)
Advertising expense		221		221		55			217			217			442		426
Software amortization expense		74		80		66			70			74			154		215
Core deposit intangible amortization		80		80		83			83			83			160		166
Other expense		889		1,080		1,019			942			1,014			1,969		2,019
Total noninterest expense		7,926		8,353		7,825			7,022			7,689			16,279		14,941

Income before income taxes		5,393		5,063		2,956			2,148			3,531			10,456		4,646
Income taxes		968		896		467			295			565			1,864		639

NET INCOME	$	4,425	$	4,167	$	2,489		$	1,853		$	2,966		$	8,592	$	4,007

PTPP ⁽¹⁾	$	5,593	$	5,763	$	5,056		$	6,148		$	4,531		$	11,356	$	8,386

(1) The pre-tax pre-provision (PTPP) is the income before income taxes before provision for loan losses considerations, for reconciliation of non-GAAP measures.

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,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
		2021			2021			2020			2020			2020			2021			2020
Per common share data
Net income per common share – basic	$	0.70		$	0.65		$	0.39		$	0.29		$	0.47		$	1.36		$	0.63
Net income per common share – diluted	$	0.70		$	0.65		$	0.39		$	0.29		$	0.46		$	1.35		$	0.62
Dividends declared per share	$	0.16		$	0.16		$	0.15		$	0.15		$	0.15		$	0.32		$	0.30
Book value per share (period end)	$	23.50		$	22.80		$	22.54		$	22.27		$	22.09		$	23.50		$	22.09
Tangible book value per share (period end) ^{(2) (3)}	$	20.82		$	20.17		$	19.91		$	19.63		$	19.43		$	20.82		$	19.43
Dividends declared	$	1,004		$	1,016		$	957		$	957		$	956		$	2,020		$	1,920
Dividend yield		2.72	%		3.10	%		2.65	%		3.09	%		2.91	%		2.73	%		2.91	%
Dividend payout ratio		22.69	%		24.38	%		38.45	%		51.65	%		32.23	%		23.51	%		47.92	%
Average shares outstanding – basic		6,297,071			6,364,132			6,378,706			6,376,291			6,369,467			6,331,356			6,393,288
Average shares outstanding – diluted		6,312,230			6,378,493			6,397,681			6,385,765			6,388,118			6,348,345			6,412,585
Period ending shares outstanding		6,215,511			6,344,657			6,379,323			6,378,110			6,369,467			6,215,511			6,369,467

Selected ratios
Return on average assets		1.30	%		1.22	%		0.72	%		0.54	%		0.90	%		1.26	%		0.64	%
Return on average equity		12.10	%		11.65	%		6.76	%		5.11	%		8.57	%		11.88	%		5.79	%
Return on average tangible common equity ^{(2) (4)}		13.65	%		13.17	%		7.64	%		5.79	%		9.76	%		13.41	%		6.59	%
Efficiency ⁽¹⁾		57.28	%		57.91	%		59.29	%		51.96	%		61.29	%		57.60	%		62.33	%
Equity to assets at period end		10.74	%		10.42	%		10.33	%		10.41	%		10.47	%		10.74	%		10.47	%
Noninterest expense to average assets		0.58	%		0.60	%		0.57	%		0.52	%		0.58	%		1.18	%		1.19	%

(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

MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
(Unaudited)

			For the Three Months Ended																			For the Six Months Ended
			June 30,				March 31,				December 31,			September 30,				June 30,				June 30,			June 30,
Yields				2021				2021			2020				2020				2020			2021			2020
Interest-earning assets:
Loans receivable ⁽²⁾				4.43	%			4.48	%		4.28	%			4.48	%			4.53	%		4.45	%		4.73	%
Investment securities ⁽²⁾				3.47	%			3.75	%		3.65	%			3.66	%			3.76	%		3.60	%		3.69	%
Interest-earning deposits with other banks				0.18	%			0.20	%		0.21	%			0.27	%			0.23	%		0.19	%		0.72	%
Total interest-earning assets				4.05	%			4.11	%		4.00	%			4.23	%			4.27	%		4.08	%		4.47	%
Deposits:
Interest-bearing demand deposits				0.12	%			0.16	%		0.21	%			0.32	%			0.35	%		0.14	%		0.38	%
Money market deposits				0.46	%			0.47	%		0.53	%			0.70	%			0.93	%		0.47	%		1.17	%
Savings deposits				0.06	%			0.07	%		0.11	%			0.20	%			0.21	%		0.07	%		0.35	%
Certificates of deposit				1.19	%			1.28	%		1.56	%			1.77	%			2.00	%		1.24	%		2.06	%
Total interest-bearing deposits				0.46	%			0.53	%		0.70	%			0.93	%			1.11	%		0.50	%		1.25	%
Non-Deposit Funding:
Borrowings				1.18	%			1.10	%		0.95	%			0.45	%			0.53	%		1.14	%		0.83	%
Total interest-bearing liabilities				0.47	%			0.54	%		0.71	%			0.91	%			1.07	%		0.50	%		1.23	%
Cost of deposits				0.34	%			0.40	%		0.54	%			0.72	%			0.85	%		0.37	%		0.98	%
Cost of funds				0.35	%			0.41	%		0.55	%			0.71	%			0.83	%		0.38	%		0.98	%
Net interest margin ⁽¹⁾				3.72	%			3.73	%		3.49	%			3.57	%			3.49	%		3.72	%		3.56	%

(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
			June 30,				March 31,				December 31,			September 30,				June 30,
Asset quality data				2021				2021			2020				2020				2020
(Dollar amounts in thousands, unaudited)
Nonperforming loans ⁽¹⁾		$		7,760		$		8,958		$	7,858		$		6,690		$		9,803
Other real estate owned				7,090				7,372			7,387				7,391				687
Nonperforming assets		$		14,850		$		16,330		$	15,245		$		14,081		$		10,490

Allowance for loan losses		$		14,200		$		14,122		$	13,459		$		11,359		$		10,210
Allowance for loan losses/total loans				1.34	%			1.28	%		1.22	%			1.01	%			0.92	%
Net charge-offs:
Quarter-to-date		$		122		$		37		$	–		$		2,851		$		34
Year-to-date				159				37			3,149				3,149				298
Net charge-offs to average loans, annualized:
Quarter-to-date				0.05	%			0.01	%		0.00	%			1.01	%			0.01	%
Year-to-date				0.03	%			0.01	%		0.29	%			0.39	%			0.06	%

Nonperforming loans/total loans				0.73	%			0.81	%		0.71	%			0.59	%			0.88	%
Allowance for loan losses/nonperforming loans				182.99	%			157.65	%		171.28	%			169.79	%			104.15	%
Nonperforming assets/total assets				1.09	%			1.18	%		1.10	%			1.03	%			0.78	%
(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, unaudited)			June 30,				March 31,				December 31,			September 30,				June 30,				June 30,			June 30,
				2021				2021			2020				2020				2020			2021			2020

Stockholders’ Equity		$		146,044		$		144,670		$	143,810		$		142,056		$		140,695		$	146,044		$	140,695
Less Goodwill and other intangibles				16,635				16,715			16,795				16,878				16,961			16,635			16,961
Tangible Common Equity		$		129,409		$		127,955		$	127,015		$		125,178		$		123,734		$	129,409		$	123,734

Shares outstanding				6,215,511				6,344,657			6,379,323				6,378,110				6,369,467			6,215,511			6,369,467
Tangible book value per share		$		20.82		$		20.17		$	19.91		$		19.63		$		19.43		$	20.82		$	19.43

Reconciliation of Average Equity to Return on Average Tangible Common Equity
	For the Three Months Ended																					For the Six Months Ended

			June 30,				March 31,				December 31,			September 30,				June 30,				June 30,			June 30,
			2021				2021				2020			2020				2020				2021			2020

Average Stockholders’ Equity		$		146,719		$		145,065		$	146,374		$		144,167		$		139,212		$	145,892		$	139,287
Less Average Goodwill and other intangibles				16,674				16,754			16,836				16,919				17,002			16,714			17,043
Average Tangible Common Equity		$		130,045		$		128,311		$	129,538		$		127,248		$		122,210		$	129,178		$	122,244

Net income		$		4,425		$		4,167		$	2,489		$		1,853		$		2,966		$	8,592		$	4,007
Return on average tangible common equity (annualized)				13.65	%			13.17	%		7.64	%			5.79	%			9.76	%		13.41	%		6.59	%

Reconciliation of Pre-Tax Pre-Provision Income (PTPP)
Reconciliation of Pre-Tax Pre-Provision Income (PTPP)	For the Three Months Ended																					For the Six Months Ended

			June 30,				March 31,				December 31,			September 30,				June 30,				June 30,			June 30,
			2021				2021				2020			2020				2020				2021			2020

Net income		$		4,425		$		4,167		$	2,489		$		1,853		$		2,966		$	8,592		$	4,007
Add Income Taxes				968				896			467				295				565			1,864			639
Add Provision for loan losses				200				700			2,100				4,000				1,000			900			3,740
PTPP		$		5,593		$		5,763		$	5,056		$		6,148		$		4,531		$	11,356		$	8,386

MIDDLEFIELD BANC CORP.
Average Balance Sheets
(Dollar amounts in thousands, unaudited)

	For the Three Months Ended
	June 30,						June 30,
	2021						2020
	Average				Average		Average				Average
	Balance		Interest		Yield/Cost		Balance		Interest		Yield/Cost
Interest-earning assets:
Loans receivable ⁽³⁾	$	1,078,866	$	11,885	4.43	%	$	1,092,095	$	12,281	4.53	%
Investment securities ⁽³⁾		135,338		1,012	3.47	%		107,765		840	3.76	%
Interest-earning deposits with other banks ⁽⁴⁾		85,245		39	0.18	%		58,541		34	0.23	%
Total interest-earning assets		1,299,449		12,936	4.05	%		1,258,401		13,155	4.27	%
Noninterest-earning assets		70,692						62,976
Total assets	$	1,370,141					$	1,321,377
Interest-bearing liabilities:
Interest-bearing demand deposits	$	207,080	$	64	0.12	%	$	129,917	$	112	0.35	%
Money market deposits		185,728		212	0.46	%		164,434		381	0.93	%
Savings deposits		253,612		38	0.06	%		198,967		104	0.21	%
Certificates of deposit		233,930		696	1.19	%		350,298		1,739	2.00	%
Short-term borrowings		227		–	0.00	%		55,973		32	0.23	%
Other borrowings		13,062		39	1.20	%		15,615		62	1.60	%
Total interest-bearing liabilities		893,639		1,049	0.47	%		915,204		2,430	1.07	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		323,590						262,575
Other liabilities		6,193						4,311
Stockholders’ equity		146,719						139,287
Total liabilities and stockholders’ equity	$	1,370,141					$	1,321,377
Net interest income			$	11,887					$	10,725
Interest rate spread ⁽¹⁾					3.58	%					3.20	%
Net interest margin ⁽²⁾					3.72	%					3.49	%
Ratio of average interest-earning assets to
average interest-bearing liabilities					145.41	%					137.50	%

(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 $179 and $190 for the three months ended June 30, 2021 and 2020, respectively
(4) Includes dividends received on restricted stock.

	For the Three Months Ended
	June 30,						March 31,
	2021						2021
	Average				Average		Average				Average
	Balance		Interest		Yield/Cost		Balance		Interest		Yield/Cost
Interest-earning assets:
Loans receivable ⁽³⁾	$	1,078,866	$	11,885	4.43	%	$	1,103,373	$	12,167	4.48	%
Investment securities ⁽³⁾		135,338		1,012	3.47	%		116,510		928	3.75	%
Interest-earning deposits with other banks ⁽⁴⁾		85,245		39	0.18	%		93,709		47	0.20	%
Total interest-earning assets		1,299,449		12,936	4.05	%		1,313,592		13,142	4.11	%
Noninterest-earning assets		70,692						71,007
Total assets	$	1,370,141					$	1,384,599
Interest-bearing liabilities:
Interest-bearing demand deposits	$	207,080	$	64	0.12	%	$	203,047	$	78	0.16	%
Money market deposits		185,728		212	0.46	%		195,275		228	0.47	%
Savings deposits		253,612		38	0.06	%		256,151		47	0.07	%
Certificates of deposit		233,930		696	1.19	%		269,493		852	1.28	%
Short-term borrowings		227		–	0.00	%		111		–	0.00	%
Other borrowings		13,062		39	1.20	%		14,258		39	1.11	%
Total interest-bearing liabilities		893,639		1,049	0.47	%		938,335		1,244	0.54	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		323,590						295,199
Other liabilities		6,193						6,000
Stockholders’ equity		146,719						145,065
Total liabilities and stockholders’ equity	$	1,370,141					$	1,384,599
Net interest income			$	11,887					$	11,898
Interest rate spread ⁽¹⁾					3.58	%					3.57	%
Net interest margin ⁽²⁾					3.72	%					3.73	%
Ratio of average interest-earning assets to
average interest-bearing liabilities					145.41	%					139.99	%

(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 $179 and $169 for the three months ended June 30, 2021, and March 31, 2021, respectively.
(4) Includes dividends received on restricted stock.

	For the Six Months Ended
	June 30,						June 30,
	2021						2020
	Average				Average		Average				Average
	Balance		Interest		Yield/Cost		Balance		Interest		Yield/Cost
Interest-earning assets:
Loans receivable ⁽³⁾	$	1,091,119	$	24,052	4.45	%	$	1,038,064	$	24,359	4.73	%
Investment securities ⁽³⁾		125,924		1,940	3.60	%		106,829		1,626	3.69	%
Interest-earning deposits with other banks ⁽⁴⁾		89,477		86	0.19	%		50,129		179	0.72	%
Total interest-earning assets		1,306,520		26,078	4.08	%		1,195,022		26,164	4.47	%
Noninterest-earning assets		70,850						63,990
Total assets	$	1,377,370					$	1,259,012
Interest-bearing liabilities:
Interest-bearing demand deposits	$	205,063	$	141	0.14	%	$	121,804	$	229	0.38	%
Money market deposits		190,502		441	0.47	%		161,221		934	1.17	%
Savings deposits		254,882		85	0.07	%		191,052		331	0.35	%
Certificates of deposit		251,711		1,548	1.24	%		362,082		3,707	2.06	%
Short-term borrowings		169		–	0.00	%		35,390		67	0.38	%
Other borrowings		13,660		78	1.15	%		14,159		138	1.96	%
Total interest-bearing liabilities		915,987		2,293	0.50	%		885,708		5,406	1.23	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		309,395						228,993
Other liabilities		6,096						5,024
Stockholders’ equity		145,892						139,287
Total liabilities and stockholders’ equity	$	1,377,370					$	1,259,012
Net interest income			$	23,785					$	20,758
Interest rate spread ⁽¹⁾					3.58	%					3.24	%
Net interest margin ⁽²⁾					3.72	%					3.56	%
Ratio of average interest-earning assets to
average interest-bearing liabilities					142.64	%					134.92	%

(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 $347 and $379 for the six months ended June 30, 2021 and 2020, respectively.
(4) Includes dividends received on restricted stock.