Middlefield Banc Corp. Reports 2020 Full Year Financial Results - Middlefield Banc (NASDAQ:MBCN)

MIDDLEFIELD, Ohio, Jan. 26, 2021 (GLOBE NEWSWIRE) -- Middlefield Banc Corp. (NASDAQ:MBCN) today reported financial results for the three and twelve months ended December 31, 2020.

2020 Financial Highlights (on a year-over-year basis unless noted):

Net income decreased 34.3% to $8.3 million, as a result of a $9.0 million annual increase in the provision for loan losses
Net interest income improved 4.8% to $43.4 million
Total noninterest income was up 23.7% to $6.0 million
Noninterest expense declined 0.8%
Pre-tax, pre-provision for loan losses⁽¹⁾ income increased 21.0% to $19.6 million
Allowance for loan losses increased 98.9% to $13.5 million
Allowance for loan losses to nonperforming loans was 171.3%, compared to 76.2%
Book value per share was up 5.1% to a record $22.54 per share
Tangible book value⁽¹⁾ per share was up 6.0% to a record $19.91 per share
Total loans increased 12.2% to $1.10 billion
Middlefield remains well capitalized with an equity to assets ratio of 10.3% at December 31, 2020

Thomas G. Caldwell, President and Chief Executive Officer, stated: "Our strong asset quality, our focus on supporting our local communities, and the commitment and dedication of our team members helped us successfully navigate the unprecedented effects of the COVID-19 pandemic. Despite significant operating and economic challenges, pre-tax, pre-provision for loan losses⁽¹⁾ income increased 21.0% year-over-year, reflecting strong core earnings growth, higher noninterest income, and proactive expense management. In addition, we ended the year with record assets and a record book value per share, representing the seventh consecutive year of annual growth in book value."

"Unfortunately, the COVID-19 pandemic continues to have a severe impact on the economy. As a result, we are focused on supporting our communities, proactively controlling asset quality, and strengthening our balance sheet. I believe this conservative approach will allow us to continue to successfully navigate near-term economic uncertainty, while providing the Company with flexibility to pursue long-term growth opportunities."

"On behalf of Middlefield's leadership team and Board of Directors, I would like to thank our customers, employees, communities, and shareholders for their support throughout this challenging period," concluded Mr. Caldwell.

Income Statement
For the 2020 full year, net interest income increased 4.8% to $43.4 million, compared to $41.4 million for the same period last year. The net interest margin for the 2020 twelve-month period was 3.54%, compared to 3.68% for the same period last year. Net interest income for the 2020 fourth quarter was $11.3 million, compared to $10.3 million for the 2019 fourth quarter. The 9.3% increase in net interest income for the 2020 fourth quarter was largely a result of a 45.8% decrease in total interest expense. The net interest margin for the 2020 fourth quarter was 3.49%, compared to 3.65% for the same period of 2019.

For the 2020 full year, noninterest income increased 23.7% to $6.0 million, compared to $4.8 million for the same period last year. Noninterest income for the 2020 fourth quarter was $1.6 million, compared to $1.3 million for the 2019 fourth quarter.

For the 2020 full year, noninterest expense decreased 0.8% to $29.8 million, compared to $30.0 million last year. For the 2020 fourth quarter, noninterest expense was $7.8 million, compared to $7.4 million for the same period last year.

Core earnings measured by pre-tax, pre-provision for loan losses⁽¹⁾ income, increased 21.0% to $19.6 million for the year ended December 31, 2020, compared to $16.2 million for the year ended December 31, 2019. Pre-tax, pre-provision for loan losses⁽¹⁾ income for the 2020 fourth quarter increased 19.4% to $5.1 million, compared to $4.2 million for the same period last year.

Balance Sheet
Total assets at December 31, 2020, increased 17.7% to $1.39 billion, from $1.18 billion at December 31, 2019. Net loans at December 31, 2020, were $1.09 billion, compared to $977.5 million at December 31, 2019. The 11.6% year-over-year increase in total net loans was primarily a result of PPP loans originated during the second and third quarters, as well as organic loan growth that occurred throughout the year.

Total deposits at December 31, 2020, were $1.23 billion, compared to $1.02 billion at December 31, 2019. The 20.0% year-over-year increase in deposits was primarily a result of higher interest-bearing deposits. The investment portfolio, which is entirely classified as available for sale, was $114.4 million at December 31, 2020, compared with $105.7 million at December 31, 2019.

Stockholders' Equity and Dividends
At December 31, 2020, stockholders' equity increased 4.4% to $143.8 million, compared to $137.8 million at December 31, 2019. On a per share basis, shareholders' equity at December 31, 2020, was a record $22.54 compared to $21.45 at the same period last year.

At December 31, 2020, tangible stockholders' equity⁽¹⁾ increased 5.3% to $127.0 million, compared to $120.6 million at December 31, 2019. On a per share basis, tangible stockholders' equity⁽¹⁾ was $19.91 at December 31, 2020, compared to $18.78 at December 31, 2019.

For the 2020 full year, the Company declared cash dividends of $0.60 per share, compared to $0.57 per share for the same period last year.

At December 31, 2020, the Company had an equity to assets leverage ratio of 10.33%, compared to 11.65% at December 31, 2019.

Net charge-offs for the 2020 fourth quarter were $0, compared to $693,000, or 0.28% of average loans, for the same period last year. For the 2020 twelve-month period, net charge-offs were $3.1 million, or 0.29% of average loans, compared to $1.6 million, or 0.16% of average loans for the 2019 twelve-month period.

Nonperforming assets at December 31, 2020, were $15.2 million, compared to $9.0 million at December 31, 2019. The allowance for loan losses at December 31, 2020, stood at $13.5 million, or 1.22% of total loans, compared to $6.8 million, or 0.69% of total loans at December 31, 2019.

COVID-19 Update
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 December 31, 2020, we approved 1,414 applications for up to $143.8 million of loans under the PPP. At December 31, 2020, we have processed $28.9 million of PPP forgiveness.

As of December 31, 2020, we modified 11 loans aggregating $24.5 million consisting of the deferral of principal payments and the extension of the maturity date, compared to 362 loans aggregating $214.8 million at June 30, 2020.

Additional information is available at www.middlefieldbank.bank

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MIDDLEFIELD, Ohio, Jan. 26, 2021 (GLOBE NEWSWIRE) -- Middlefield Banc Corp. (NASDAQ:MBCN) today reported financial results for the three and twelve months ended December 31, 2020.

2020 Financial Highlights (on a year-over-year basis unless noted):

Net income decreased 34.3% to $8.3 million, as a result of a $9.0 million annual increase in the provision for loan losses
Net interest income improved 4.8% to $43.4 million
Total noninterest income was up 23.7% to $6.0 million
Noninterest expense declined 0.8%
Pre-tax, pre-provision for loan losses⁽¹⁾ income increased 21.0% to $19.6 million
Allowance for loan losses increased 98.9% to $13.5 million
Allowance for loan losses to nonperforming loans was 171.3%, compared to 76.2%
Book value per share was up 5.1% to a record $22.54 per share
Tangible book value⁽¹⁾ per share was up 6.0% to a record $19.91 per share
Total loans increased 12.2% to $1.10 billion
Middlefield remains well capitalized with an equity to assets ratio of 10.3% at December 31, 2020

Net income for the year ended December 31, 2020, was $8.3 million, or $1.30 per diluted share, compared to $12.7 million, or $1.95 per diluted share for the same period last year. The decline in net income for the year ended December 31, 2020, was primarily due to a $9.0 million increase in the provision for loan losses as a result of the COVID-19 crisis and the resolution of an isolated commercial loan that occurred in the 2020 third quarter. Net income for the 2020 fourth quarter, was $2.5 million, or $0.39 per diluted share, compared to $3.1 million, or $0.48 per diluted share for the same period last year. The 2020 fourth quarter provision for loan losses increased $1.6 million from the prior year period.

Donald L. Stacy, Chief Financial Officer stated, "Throughout 2020, we focused on building our allowance for loan losses, which increased 98.9% over the prior year period to $13.5 million at December 31, 2020. In addition, our allowance for loan losses to nonperforming loans was 171.28% at December 31, 2020, compared to our allowance for loan losses to nonperforming loans of 76.22% at December 31, 2019. This is the highest our allowance for loan losses to nonperforming loans reserve has been in over 13 years. Over the near-term, we will continue to fund our allowance and increase our reserve which we believe is necessary to reserve for potential incurred losses in the portfolio associated with the COVID-19 crisis."

"Overall asset quality remains strong. Loans in deferral status continue to improve and declined 88.6% from $214.8 million at June 30, 2020, to $24.5 million at December 31, 2020. No restaurant customers were seeking additional deferrals at year end, while most deferred loans were within the hospitality segment. Overall, the quality of our loan portfolio remains solid and does not appear to be significantly impacted by the current difficult economic environment. We continue to closely watch our loan portfolio, and we are doing everything we can to support all our customers and communities impacted by the COVID-19 crisis."

For the 2020 full year, the Company declared cash dividends of $0.60 per share, compared to $0.57 per share for the same period last year.

At December 31, 2020, the Company had an equity to assets leverage ratio of 10.33%, compared to 11.65% at December 31, 2019.

Asset Quality
The provision for loan losses for the 2020 fourth quarter was $2.1 million versus $460,000 for the same period last year. The provision for loan losses for the year ended December 31, 2020 was $9.8 million compared to $890,000 for the year ended December 31, 2019. Most of the increased provision for the year ended December 31, 2020, was the result of increases to the economic conditions qualitative factors and higher charge-offs that occurred during the 2020 third quarter.

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 $1.39 billion at December 31, 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, 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]

MBCNMiddlefield Banc Corp

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Overview

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MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
(Dollar amounts in thousands, unaudited)
	December 31,			September 30,			June 30,			March 31,			December 31,
Balance Sheets (period end)	2020			2020			2020			2020			2019
ASSETS
Cash and due from banks	$	92,874		$	46,097		$	55,766		$	53,533		$	35,113
Federal funds sold		19,543			6,884			2,520			1,800			-
Cash and cash equivalents		112,417			52,981			58,286			55,333			35,113
Equity securities, at fair value		609			553			581			550			710
Investment securities available for sale, at fair value		114,360			112,968			112,529			102,959			105,733
Loans held for sale		878			10,457			4,151			513			1,220
Loans:
Commercial real estate:
Owner occupied		103,121			107,342			110,134			113,272			102,386
Non-owner occupied		309,424			310,512			300,577			292,775			302,180
Multifamily		39,562			39,622			37,604			52,276			62,028
Residential real estate		233,995			222,237			227,427			233,900			234,798
Commercial and industrial		232,044			258,313			240,096			106,797			89,527
Home equity lines of credit		112,543			115,223			117,196			114,933			112,248
Construction and other		63,573			60,613			66,015			71,186			66,680
Consumer installment		9,823			10,534			11,210			12,861			14,411
Total loans		1,104,085			1,124,396			1,110,259			998,000			984,258
Less allowance for loan and lease losses		13,459			11,359			10,210			9,244			6,768
Net loans		1,090,626			1,113,037			1,100,049			988,756			977,490
Premises and equipment, net		18,333			18,633			18,962			17,653			17,874
Goodwill		15,071			15,071			15,071			15,071			15,071
Core deposit intangibles		1,724			1,807			1,890			1,973			2,056
Bank-owned life insurance		16,938			16,832			16,723			16,618			16,511
Other real estate owned		7,387			7,391			687			456			155
Accrued interest receivable and other assets		13,636			15,079			14,391			14,057			10,542
TOTAL ASSETS	$	1,391,979		$	1,364,809		$	1,343,320		$	1,213,939		$	1,182,475

	December 31,			September 30,			June 30,			March 31,			December 31,
	2020			2020			2020			2020			2019
LIABILITIES
Deposits:
Noninterest-bearing demand	$	291,347		$	268,838		$	270,738		$	206,372		$	191,370
Interest-bearing demand		195,722			179,080			136,722			125,184			107,844
Money market		198,493			184,936			168,842			156,556			160,826
Savings		243,888			231,696			218,545			175,468			192,003
Time		295,750			329,413			363,420			340,130			368,800
Total deposits		1,225,200			1,193,963			1,158,267			1,003,710			1,020,843

Short-term borrowings		-			-			20,417			60,000			5,075
Other borrowings		17,038			17,100			17,162			12,662			12,750
Accrued interest payable and other liabilities		5,931			11,690			6,779			4,880			6,032
TOTAL LIABILITIES		1,248,169			1,222,753			1,202,625			1,081,252			1,044,700
STOCKHOLDERS' EQUITY
Common stock, no par value; 10,000,000 shares authorized, 7,308,685 shares issued, 6,379,323 shares outstanding as of December 31, 2020		86,886			86,871			86,722			86,722			86,617
Retained earnings		69,578			68,046			67,150			65,140			65,063
Accumulated other comprehensive income (loss)		4,284			4,077			3,761			(2,237	)		1,842
Treasury stock, at cost; 929,362 shares as of December 31, 2020		(16,938	)		(16,938	)		(16,938	)		(16,938	)		(15,747	)
TOTAL STOCKHOLDERS' EQUITY		143,810			142,056			140,695			132,687			137,775

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,391,979		$	1,364,809		$	1,343,320		$	1,213,939		$	1,182,475

MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
(Dollar amounts in thousands, unaudited)
	For the Three Months Ended															For the Twelve Months Ended
	December 31,			September 30,				June 30,		March 31,			December 31,			December 31,			December 31,
Statements of Income	2020			2020			2020			2020			2019			2020			2019

INTEREST AND DIVIDEND INCOME
Interest and fees on loans	$	12,041		$	12,603		$	12,281		$	12,078		$	12,392		$	49,003		$	50,390
Interest-earning deposits in other institutions		9			8			7			94			124			118			673
Federal funds sold		1			-			-			21			22			22			78
Investment securities:
Taxable interest		297			249			206			157			197			909			796
Tax-exempt interest		591			618			634			629			661			2,472			2,392
Dividends on stock		28			29			27			30			40			114			196
Total interest and dividend income		12,967			13,507			13,155			13,009			13,436			52,638			54,525
INTEREST EXPENSE
Deposits		1,655			2,106			2,336			2,865			3,014			8,962			12,409
Short-term borrowings		(2	)		14			32			35			34			79			368
Other borrowings		43			28			62			76			80			209			363
Total interest expense		1,696			2,148			2,430			2,976			3,128			9,250			13,140

NET INTEREST INCOME		11,271			11,359			10,725			10,033			10,308			43,388			41,385

Provision for loan losses		2,100			4,000			1,000			2,740			460			9,840			890

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		9,171			7,359			9,725			7,293			9,848			33,548			40,495
NONINTEREST INCOME
Service charges on deposit accounts		729			691			566			553			577			2,539			2,186
Investment securities gains on sale, net		-			-			-			-			-			-			194
Gain (loss) on equity securities		56			(28	)		31			(160	)		82			(101	)		94
Earnings on bank-owned life insurance		106			109			105			107			108			427			431
Gains on sale of loans		332			660			381			114			148			1,487			433
Other income		387			379			412			460			390			1,638			1,503
Total noninterest income		1,610			1,811			1,495			1,074			1,305			5,990			4,841

NONINTEREST EXPENSE
Salaries and employee benefits		4,458			3,657			4,136			3,584			4,039			15,835			16,783
Occupancy expense		628			497			483			550			580			2,158			2,164
Equipment expense		365			363			307			273			270			1,308			1,040
Data processing costs		617			683			684			666			614			2,650			2,208
Ohio state franchise tax		251			282			281			268			262			1,082			1,044
Federal deposit insurance expense		103			123			74			123			-			423			230
Professional fees		352			289			369			349			448			1,359			1,683
Loss (gain) on other real estate owned		44			(184	)		(33	)		1			11			(172	)		(125	)
Advertising expense		55			217			217			209			128			698			733
Software amortization expense		66			70			74			141			159			351			638
Core deposit intangible amortization		83			83			83			83			85			332			341
Other expense		803			942			1,014			1,005			782			3,764			3,294
Total noninterest expense		7,825			7,022			7,689			7,252			7,378			29,788			30,033

Income before income taxes		2,956			2,148			3,531			1,115			3,775			9,750			15,303
Income taxes		467			295			565			74			634			1,401			2,592

NET INCOME	$	2,489		$	1,853		$	2,966		$	1,041		$	3,141		$	8,349		$	12,711

PTPP ⁽¹⁾	$	5,056		$	6,148		$	4,531		$	3,855		$	4,235		$	19,590		$	16,193

(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 Twelve Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
	2020			2020			2020			2020			2019			2020			2019
Per common share data
Net income per common share - basic	$	0.39		$	0.29		$	0.47		$	0.16		$	0.48		$	1.31		$	1.96
Net income per common share - diluted	$	0.39		$	0.29		$	0.46		$	0.16		$	0.48		$	1.30		$	1.95
Dividends declared per share	$	0.15		$	0.15		$	0.15		$	0.15		$	0.15		$	0.60		$	0.57
Book value per share (period end)	$	22.54		$	22.27		$	22.09		$	20.83		$	21.45		$	22.54		$	21.45
Tangible book value per share (period end) ^{(2) (3)}	$	19.91		$	19.63		$	19.43		$	18.16		$	18.78		$	19.91		$	18.78
Dividends declared	$	957		$	957		$	956		$	964		$	964		$	3,834		$	3,685
Dividend yield		2.65	%		3.09	%		2.91	%		3.82	%		2.28	%		2.67	%		2.18	%
Dividend payout ratio		38.45	%		51.65	%		32.23	%		92.60	%		30.69	%		45.92	%		28.99	%
Average shares outstanding - basic		6,378,706			6,376,291			6,369,467			6,417,109			6,423,543			6,385,350			6,470,408
Average shares outstanding - diluted		6,397,681			6,385,765			6,388,118			6,429,443			6,455,387			6,404,524			6,502,806
Period ending shares outstanding		6,379,323			6,378,110			6,369,467			6,369,467			6,423,630			6,379,323			6,423,630

Selected ratios
Return on average assets		0.72	%		0.54	%		0.90	%		0.35	%		1.04	%		0.64	%		1.05	%
Return on average equity		6.76	%		5.11	%		8.57	%		3.01	%		8.87	%		5.87	%		9.35	%
Return on average tangible common equity ^{(2) (4)}		7.64	%		5.79	%		9.76	%		3.43	%		10.11	%		6.66	%		10.72	%
Efficiency ⁽¹⁾		59.29	%		51.96	%		61.29	%		63.47	%		61.75	%		58.77	%		63.25	%
Equity to assets at period end		10.33	%		10.41	%		10.47	%		10.93	%		11.65	%		10.33	%		11.65	%
Noninterest expense to average assets		0.57	%		0.52	%		0.58	%		0.61	%		0.61	%		2.27	%		2.49	%

(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 Twelve Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
Yields	2020			2020			2020			2020			2019			2020			2019
Interest-earning assets:
Loans receivable ⁽²⁾		4.28	%		4.48	%		4.53	%		4.95	%		4.97	%		4.55	%		5.06	%
Investment securities ⁽²⁾		3.65	%		3.66	%		3.76	%		3.62	%		3.79	%		3.68	%		3.77	%
Interest-earning deposits with other banks		0.21	%		0.27	%		0.23	%		1.40	%		1.65	%		0.45	%		2.11	%
Total interest-earning assets		4.00	%		4.23	%		4.27	%		4.69	%		4.73	%		4.28	%		4.83	%
Deposits:
Interest-bearing demand deposits		0.21	%		0.32	%		0.35	%		0.42	%		0.41	%		0.31	%		0.36	%
Money market deposits		0.53	%		0.70	%		0.93	%		1.41	%		1.41	%		0.87	%		1.46	%
Savings deposits		0.11	%		0.20	%		0.21	%		0.50	%		0.62	%		0.24	%		0.70	%
Certificates of deposit		1.56	%		1.77	%		2.00	%		2.12	%		2.18	%		1.87	%		2.22	%
Total interest-bearing deposits		0.70	%		0.93	%		1.11	%		1.39	%		1.43	%		1.02	%		1.48	%
Non-Deposit Funding:
Borrowings		0.95	%		0.45	%		0.53	%		1.62	%		2.52	%		0.75	%		2.63	%
Total interest-bearing liabilities		0.71	%		0.91	%		1.07	%		1.40	%		1.46	%		1.01	%		1.52	%
Cost of deposits		0.54	%		0.72	%		0.85	%		1.13	%		1.15	%		0.79	%		1.20	%
Cost of funds		0.55	%		0.71	%		0.83	%		1.14	%		1.17	%		0.79	%		1.23	%
Net interest margin ⁽¹⁾		3.49	%		3.57	%		3.49	%		3.63	%		3.65	%		3.54	%		3.68	%

(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
	December 31,			September 30,				June 30,		March 31,			December 31,
Asset quality data		2020			2020			2020			2020			2019
(Dollar amounts in thousands, unaudited)
Nonperforming loans ⁽¹⁾	$	7,858		$	6,690		$	9,803		$	8,405		$	8,879
Other real estate owned		7,387			7,391			687			456			155
Nonperforming assets	$	15,245		$	14,081		$	10,490		$	8,861		$	9,034

Allowance for loan losses	$	13,459		$	11,359		$	10,210		$	9,244		$	6,768
Allowance for loan losses/total loans		1.22	%		1.01	%		0.92	%		0.93	%		0.69	%
Net charge-offs:
Quarter-to-date	$	-		$	2,851		$	34		$	264		$	693
Year-to-date		3,149			3,149			298			264			1,550
Net charge-offs to average loans, annualized:
Quarter-to-date		0.00	%		1.01	%		0.01	%		0.11	%		0.28	%
Year-to-date		0.29	%		0.39	%		0.06	%		0.11	%		0.16	%

Nonperforming loans/total loans		0.71	%		0.59	%		0.88	%		0.84	%		0.90	%
Allowance for loan losses/nonperforming loans		171.28	%		169.79	%		104.15	%		109.98	%		76.22	%
Nonperforming assets/total assets		1.10	%		1.03	%		0.78	%		0.73	%		0.76	%
(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 Twelve Months Ended
(Dollar amounts in thousands, unaudited)	December 31,			September 30,				June 30,		March 31,			December 31,				December 31,			December 31,
		2020			2020			2020			2020			2019			2020			2019

Stockholders' Equity	$	143,810		$	142,056		$	140,695		$	132,687		$	137,775		$	143,810		$	137,775
Less Goodwill and other intangibles		16,795			16,878			16,961			17,044			17,127			16,795			17,127
Tangible Common Equity	$	127,015		$	125,178		$	123,734		$	115,643		$	120,648		$	127,015		$	120,648

Shares outstanding		6,379,323			6,378,110			6,369,467			6,369,467			6,423,630			6,379,323			6,423,630
Tangible book value per share	$	19.91		$	19.63		$	19.43		$	18.16		$	18.78		$	19.91		$	18.78

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,
		2020			2020			2020			2020			2019			2020			2019

Average Stockholders' Equity	$	146,374		$	144,167		$	139,212		$	139,208		$	140,475		$	142,241		$	135,900
Less Average Goodwill and other intangibles		16,836			16,919			17,002			17,085			17,169			16,960			17,296
Average Tangible Common Equity	$	129,538		$	127,248		$	122,210		$	122,123		$	123,306		$	125,281		$	118,604

Net income	$	2,489		$	1,853		$	2,966		$	1,041		$	3,141		$	8,349		$	12,711
Return on average tangible common equity (annualized)		7.64	%		5.79	%		9.76	%		3.43	%		10.11	%		6.66	%		10.72	%

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

	December 31,			September 30,				June 30,		March 31,			December 31,				December 31,			December 31,
		2020			2020			2020			2020			2019			2020			2019

Net income	$	2,489		$	1,853		$	2,966		$	1,041		$	3,141		$	8,349		$	12,711
Add Income Taxes		467			295			565			74			634			1,401			2,592
Add Provision for loan losses		2,100			4,000			1,000			2,740			460			9,840			890
PTPP	$	5,056		$	6,148		$	4,531		$	3,855		$	4,235		$	19,590		$	16,193

MIDDLEFIELD BANC CORP.
Average Balance Sheets
(Dollar amounts in thousands, unaudited)
	For the Three Months Ended
	December 31,									December 31,
		2020									2019
	Average							Average		Average							Average
	Balance			Interest				Yield/Cost		Balance			Interest				Yield/Cost
Interest-earning assets:
Loans receivable ⁽³⁾	$	1,121,259		$	12,041			4.28	%	$	990,106		$	12,392			4.97	%
Investment securities ⁽³⁾		113,801			888			3.65	%		104,139			858			3.79	%
Interest-earning deposits with other banks ⁽⁴⁾		70,803			38			0.21	%		44,816			186			1.65	%
Total interest-earning assets		1,305,863			12,967			4.00	%		1,139,061			13,436			4.73	%
Noninterest-earning assets		78,064									64,303
Total assets	$	1,383,927								$	1,203,364
Interest-bearing liabilities:
Interest-bearing demand deposits	$	186,933		$	97			0.21	%	$	108,015		$	112			0.41	%
Money market deposits		191,771			255			0.53	%		157,117			557			1.41	%
Savings deposits		238,991			66			0.11	%		198,577			309			0.62	%
Certificates of deposit		316,293			1,237			1.56	%		370,404			2,036			2.18	%
Short-term borrowings		26			-			0.00	%		5,330			34			2.53	%
Other borrowings		17,068			41			0.96	%		12,602			80			2.52	%
Total interest-bearing liabilities		951,082			1,696			0.71	%		852,045			3,128			1.46	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		281,608									207,793
Other liabilities		4,863									3,051
Stockholders' equity		146,374									140,475
Total liabilities and stockholders' equity	$	1,383,927								$	1,203,364
Net interest income				$	11,271								$	10,308
Interest rate spread ⁽¹⁾								3.29	%								3.27	%
Net interest margin ⁽²⁾								3.49	%								3.65	%
Ratio of average interest-earning assets to
average interest-bearing liabilities								137.30	%								133.69	%

(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 $178 and $157 for the three months ended December 31, 2020 and 2019, respectively
(4) Includes dividends received on restricted stock.

	For the Three Months Ended
	December 31,									September 30,
		2020									2020
	Average							Average		Average							Average
	Balance			Interest				Yield/Cost		Balance			Interest				Yield/Cost
Interest-earning assets:
Loans receivable ⁽³⁾	$	1,121,259		$	12,041			4.28	%	$	1,121,763		$	12,603			4.48	%
Investment securities ⁽³⁾		113,801			888			3.65	%		111,994			867			3.66	%
Interest-earning deposits with other banks ⁽⁴⁾		70,803			38			0.21	%		53,826			37			0.27	%
Total interest-earning assets		1,305,863			12,967			4.00	%		1,287,583			13,507			4.23	%
Noninterest-earning assets		78,064									66,836
Total assets	$	1,383,927								$	1,354,419
Interest-bearing liabilities:
Interest-bearing demand deposits	$	186,933		$	97			0.21	%	$	149,048		$	120			0.32	%
Money market deposits		191,771			255			0.53	%		176,136			312			0.70	%
Savings deposits		238,991			66			0.11	%		223,507			113			0.20	%
Certificates of deposit		316,293			1,237			1.56	%		349,981			1,561			1.77	%
Short-term borrowings		26			-			0.00	%		19,740			14			0.28	%
Other borrowings		17,068			41			0.96	%		17,130			28			0.65	%
Total interest-bearing liabilities		951,082			1,696			0.71	%		935,542			2,148			0.91	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		281,608									270,868
Other liabilities		4,863									3,842
Stockholders' equity		146,374									144,167
Total liabilities and stockholders' equity	$	1,383,927								$	1,354,419
Net interest income				$	11,271								$	11,359
Interest rate spread ⁽¹⁾								3.29	%								3.32	%
Net interest margin ⁽²⁾								3.49	%								3.57	%
Ratio of average interest-earning assets to
average interest-bearing liabilities								137.30	%								137.63	%

(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 $178 and $186 for the three months ended December 31, 2020, and September 30, 2020, respectively.
(4) Includes dividends received on restricted stock.

	For the Twelve Months Ended
	December 31,									December 31,
		2020									2019
	Average							Average		Average							Average
	Balance			Interest				Yield/Cost		Balance			Interest				Yield/Cost
Interest-earning assets:
Loans receivable ⁽³⁾	$	1,079,788		$	49,003			4.55	%	$	997,744		$	50,390			5.06	%
Investment securities ⁽³⁾		109,863			3,381			3.68	%		101,381			3,188			3.77	%
Interest-earning deposits with other banks ⁽⁴⁾		56,222			254			0.45	%		44,943			947			2.11	%
Total interest-earning assets		1,245,873			52,638			4.28	%		1,144,068			54,525			4.83	%
Noninterest-earning assets		68,219									61,596
Total assets	$	1,314,092								$	1,205,664
Interest-bearing liabilities:
Interest-bearing demand deposits	$	144,897		$	445			0.31	%	$	102,550		$	374			0.36	%
Money market deposits		172,587			1,501			0.87	%		167,187			2,438			1.46	%
Savings deposits		211,151			510			0.24	%		199,515			1,399			0.70	%
Certificates of deposit		347,609			6,506			1.87	%		369,006			8,198			2.22	%
Short-term borrowings		22,637			79			0.35	%		14,808			368			2.49	%
Other borrowings		15,629			209			1.34	%		12,986			363			2.80	%
Total interest-bearing liabilities		914,510			9,250			1.01	%		866,052			13,140			1.52	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		252,615									199,672
Other liabilities		4,726									4,040
Stockholders' equity		142,241									135,900
Total liabilities and stockholders' equity	$	1,314,092								$	1,205,664
Net interest income				$	43,388								$	41,385
Interest rate spread ⁽¹⁾								3.27	%								3.31	%
Net interest margin ⁽²⁾								3.54	%								3.68	%
Ratio of average interest-earning assets to
average interest-bearing liabilities								136.23	%								132.10	%

(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 $742 and $720 for 2020 and 2019, respectively.
(4) Includes dividends received on restricted stock.