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Section 1: 8-K (8-K)

8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 8 – K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

June 17, 2019

(Date of Report: Date of earliest event reported)

 

 

Middlefield Banc Corp.

(Exact name of registrant as specified in its charter)

 

 

Ohio

(State or other jurisdiction of incorporation)

001-36613

(Commission File Number)

34-1585111

(I.R.S. Employer Identification Number)

15985 East High Street

Middlefield, Ohio 44062

(Address of principal executive offices, including zip code)

(440) 632-1666

(Registrant’s telephone number, including area code)

(not applicable)

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Stock, no par value   MBCN  

The NASDAQ Stock Market, LLC

(NASDAQ Capital Market)

 

 

 


ITEM 7.01

Regulation FD Disclosure

Middlefield Banc Corp. (NASDAQ: MBCN) intends to use the materials furnished herewith in one or more meetings with investors/analysts during the second quarter of 2019.

The information in this current Report on Form 8-K is being furnished under Item 7.01 and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

ITEM 9.01(d)

Exhibits

The following exhibit is furnished as Regulation FD Disclosure to this Current Report on Form 8-K:

(a) Exhibits.

 

99.1    2019 First Quarter Investor Presentation


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

                                   MIDDLEFIELD BANC CORP.
Date: June 17, 2019      

/s/ James R. Heslop, II                  ,

      Executive Vice President and COO
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Section 2: EX-99.1 (EX-99.1)

EX-99.1

Slide 1

Middlefield Banc Corp. 2019 First Quarter Investor Presentation (Nasdaq: MBCN) Exhibit 99.1


Slide 2

Forward Looking Statements This presentation contains forward-looking statements within the meaning of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995 concerning Middlefield Banc Corp.’s plans, strategies, objectives, expectations, intentions, financial condition and results of operations. These forward-looking statements reflect management’s current views and intentions and are subject to known and unknown risks, uncertainties, assumptions and other factors that could cause the actual results to differ materially from those contemplated by the statements. The significant risks and uncertainties related to Middlefield Banc Corp. of which management is aware are discussed in detail in the periodic reports that Middlefield Banc Corp. files with the Securities and Exchange Commission (the “SEC”), including in the “Risk Factors” section of its Annual Report on Form 10-K and its Quarterly Report on Form 10-Q. Investors are urged to review Middlefield Banc Corp.’s periodic reports, which are available at no charge through the SEC’s website at www.sec.gov and through Middlefield Banc Corp.’s website at www.middlefieldbank.bank on the “Investor Relations” page. Middlefield Banc Corp. assumes no obligation to update any of these forward-looking statements to reflect a change in its views or events or circumstances that occur after the date of this presentation. www.middlefieldbank.bank


Slide 3

Ashtabula Cuyahoga Delaware Franklin Geauga Portage Trumbull Lake Summit Middlefield’s Investment Overview: Providing superior, community-oriented financial services since 1901. Established leading brand recognition in core markets. Serves two of Ohio's most attractive banking markets. Developed a strong and experienced leadership team. Optimally positioned between rural and metropolitan communities to support profitable growth, organically or by acquisition, in the coming years. Profitable throughout the economic cycle, never reported a quarterly loss and maintained dividend during the recession. Well positioned to accelerate profitable future growth.


Slide 4

Middlefield: A community bank that is safe, strong and committed www.middlefieldbank.bank $127.8 Mil. Market Cap $1.12 (2.9%) Div. & Yield $1,281 Mil. Assets $1,040 Mil. Deposits $3.97 TTM EPS 9.9x P/TTM EPS Notes: Stock Data at May 31, 2019 Financial Data at March 31, 2019 EPS uses period ending shares outstanding Total Assets (in millions) Market Cap (in millions)


Slide 5

Well Positioned in a Competitive Environment www.middlefieldbank.bank Northeast Ohio Market Overview Central Ohio Market Overview Four banking locations Columbus is the state capital and largest city in Ohio Franklin County has the largest population in Ohio, with an unemployment rate below the state average Delaware County, immediately north of Franklin, has the highest median household income in Ohio At June 30, 2018, five of the 33 banks in Franklin and Delaware Counties controlled over 86% of total deposits Middlefield is the largest independent community bank in its core northeast Ohio markets 11 banking locations and one LPO Geauga County is 3rd in median household income out of 88 Ohio counties Geauga County is the center of the 4th largest Amish population in the world Middlefield’s strategy is to locate branches in counties that have above average median household income, median value of owner-occupied housing, and employment rates


Slide 6

Economic Highlights www.middlefieldbank.bank Northeast Ohio 18 county region, statistics according to Cleveland+ Central Ohio 11 county region, statistics according to Columbus Region Demographics Residents:4,280,924 Households: 1,793,140 Median Income:$54,536 Residents:2,185,780 Households: 806,279 Median Income:$56,518 Rankings Region reaches the largest number of consumers in a 250-mile radius compared with any other metro market in the U.S. 9th best city for jobs in 2017 (Glassdoor) Columbus #2 hottest housing market in US (Realtor.com July 2018) Top 9 logistics hotspots (Inbound Logistics) 7th best city for jobs in 2017 (Glassdoor) Signficant Employers Progressive Insurance FirstEnergy KeyCorp Swagelok Cleveland Clinic University Hospitals U.S. Office of Personnel Management Sherwin Williams JPMorgan Chase & Co. Nationwide Honda of America Mfg., Inc. L Brands Cardinal Health Ohio State University State of Ohio OhioHealth Corp Key Industries Health Care and Social Assistance Manufacturing Government Retail Trade Accommodation and Food Services Professional and Business Services Government Education and Health Leisure and Hospitality Retail Trade https://columbusregion.com/market-research/county-profiles/columbus-region/


Slide 7

Compelling Central Ohio Growth and Development www.middlefieldbank.bank Projections for Central Oho are growing bolder. The Mid-Ohio Regional Planning Commission estimates the 15-county region will reach three million people by 2050. In 2018, Columbus grew by 43,000 people, to reach 2.4 million. Columbus 2020’s president, Kenny McDonald noted the greater region has seen $8 billion in capital investment and added $150,000 in eight years – two years sooner than its targets. Columbus Business First December 26, 2018 Recent Announcements Ohio State asking Powell to annex planned outpatient campus Ohio State University's Wexner Medical Center already has picked a second site for a series of massive suburban outpatient complexes with surgery centers and specialty medical offices. Each center will cost about $95 million to develop. Columbus Business First July 3, 2018 New Facebook data center a boost to Ohio’s technology sector Facebook will spend $750 million on a new data center in central Ohio. The 22-acre (8.9-hectare) data center will be powered exclusively with renewable energy. It is expected to employ 100 people to start and to begin providing services in 2019. Associated Press August 15, 2017 34-unit multifamily development in Powell Columbus Business First July 11, 2018 22-unit townhome development coming to Powell Columbus Business First February 14, 2018


Slide 8

Community Oriented Banking Services www.middlefieldbank.bank Personal Banking Annual Personal Loan Growth(1) Commercial Banking Annual Commercial Loan Growth(2) Franchise value driven by dedication to making a difference in markets served Clients benefit from local decision making and individual service Customer-centric approach builds long term relationships with desirable customers Respected position in communities served encourages retention of talented and experienced management team The Bank’s markets have seen significant industry consolidation in the past ten years In most cases, the large regional banks are not in a position to deliver the same level of community service that MBCN can 6-year CAGR of 23.2% in commercial loans Expertise in niche commercial loan products (2) In millions, commercial loans are C&I plus commercial real estate loans (1) In millions, personal loans are consumer installment plus residential real estate loans


Slide 9

Middlefield’s Market Share Source: FDIC Ashtabula, Geauga, Portage & Trumbull Counties June 30, 2018 Rank Institution Branches Deposits in Market ($000) Market Share 1 Huntington National Bank 40 2,035,337 24.16 2 JPMorgan Chase 16 1,141,449 13.55 3 The Middlefield Banking Co. 8 688,583 8.17 4 PNC Bank 10 640,923 7.61 5 Key Bank 14 584,406 6.94 Total for institutions in market 167 8,423,718 Franklin & Delaware Counties June 30, 2018 Rank Institution Branches Deposits in Market ($000) Market Share 1 Huntington National Bank 68 23,936,509 40.29 2 JPMorgan Chase 62 12,946,912 21.79 3 PNC Bank 48 5,392,136 9.08 22 The Middlefield Banking Co. 3 70,177 0.12 23 United Bankers’ Bank 1 67,278 0.11 Total for institutions in market 383 59,413,009 Strong Market Share in Core Northeastern Ohio Market Opportunities To Increase Market Share in Central Ohio Growth Potential In Liberty Bank’s Core Markets Cuyahoga and Summit Counties June 30, 2018 Rank Institution Branches Deposits in Market ($000) Market Share 1 Key Bank 66 16,637,874 25.25 2 PNC Bank 64 9,865,272 14.97 3 Huntington National Bank 105 9,388,385 14.25 17 The Middlefield Banking Co. 3 176,470 0.27 18 Independence Bank 1 171,190 0.26 Total for institutions in market 549 65,886,469


Slide 10

www.middlefieldbank.bank “In 2008 I put together an aggressive growth strategy for my business Exscape Designs. The need for a local relationship based approach made clear sense. In my experience over the years with Middlefield Bank we have been able to achieve a lot of growth together. With Middlefield you're not just numbers, it's the relationship and community that matters to them.” “Ease Logistics was looking for a small community bank to help us grow our business. We needed a credit line to support our 40% growth. Middlefield bank was able to step up and provide us the working capital we needed and the process was seamless. When Ease Logistics needed a mortgage for their new headquarters in Dublin, Middlefield Bank was there. We love the staff too!” “It has been a pleasure to do business with Middlefield Bank for these past 20 years. When all of the other local major banks turned away from the business, Middlefield Bank welcomed it with open arms. This relationship started with trust and that trust is the foundation in which we continue to use Middlefield for all of our banking needs.” 116 Years Supporting its Local Communities Local Strong Committed


Slide 11

Growth Platform www.middlefieldbank.bank Middlefield is focused on expanding in high growth markets with favorable demographics and exploiting changing market dynamics. Over the past three years, Middlefield has invested in creating an infrastructure to support a bank with $1.5 billion in assets. People Strengthen and empower associates and added important members to leadership team including Michael Allen Chief Banking Officer, John Lane Chief Credit and Risk Officer, and Michael Ranttila Sr. VP Finance Products Expanding product and service offerings Launching new products to increase noninterest income Systems & Security Continual investments in security, privacy, and compliance Customer Interaction Enhancing online and digital banking, while growing physical footprint


Slide 12

History of Strong Financial Results www.middlefieldbank.bank Annual Return on Average Assets and Equity Return on Average Assets Return on Average Equity Return on Tangible Common Equity ROAA: 1.07% 0.97% 0.85% 0.88% 1.09% ROAE: 12.17% 10.62% 9.33% 8.52% 9.94% ROATCE: 13.21% 11.44% 10.01% 10.15% 11.57%


Slide 13

Strong and Growing Deposit Base March 31, 2019 March 31, 2018 Money Market Time Interest Bearing Demand Savings Total Deposits = $1,040.2 million Total Deposits = $944.6 million Non-interest bearing Demand


Slide 14

Continued Growth in Profitability www.middlefieldbank.bank Overview Net interest income (in millions) Net Income (in millions) EPS, Diluted Up 3.5% Up 15.6% 2019 Q1 interest and fees on loans increased 13.2% to $12.5 million over 2018 Q1 The net interest margin for 2019 Q1 was 3.70% versus 3.82% for 2018 Q1 Noninterest income for 2019 Q1 was $1.1 million an increase of 41.2% from 2018 Q1 Up 15.0%


Slide 15

Strong Loan Growth (at March 31, 2019) www.middlefieldbank.bank Overview Total Loans (in millions) Loan Growth Net Loans / Assets Stable local economies, additional loan officers, and Mentor LPO driving loan growth. Year-over-year loan growth: $55.5 million increase in commercial mortgages $23.6 million increase in residential mortgages $14.1 million decrease in commercial and industrial $9.3 million increase in real estate construction loans $2.3 million decrease in consumer installment loans Up $72.1 million year-over-year or up 7.7%


Slide 16

Stable Asset Quality www.middlefieldbank.bank Overview Annualized Net Charge Off Nonperforming Loans / Total Loans Nonperforming Assets / Total Assets No national or sub-prime lending Lending within market area Participation loans with banks that have similar credit quality standards and cultures 2019 Q1 asset quality was negatively affected by one large credit of $3.2 million in the Central Ohio market. The issue is isolated to this particular borrower and it is not indicative of a trend in the market, portfolio or an issue in underwriting


Slide 17

Annual Supplemental Data (Nasdaq: MBCN)


Slide 18

Annual Financial Summary www.middlefieldbank.bank Dollars in thousands   2014 2015 2016 2017 2018 Net interest income $ 23,804 $ 24,775 $ 25,804 $ 37,348 $ 40,448 Provision for loan losses 370 315 570 1,045 840 Noninterest income 3,588 4,044 3,959 4,859 3,728 Noninterest expense 17,850 20,077 20,872 27,485 28,743 Income before income taxes 9,172 8,427 8,321 13,677 14,593 Income taxes 1,992 1,562 1,905 4,222 2,162 Net income $ 7,180 $ 6,865 $ 6,416 $ 9,455 $ 12,431 Net interest margin 3.93% 3.94% 3.79% 3.82% 3.77% Total assets $ 677,531 $ 735,139 $ 787,821 $1,106,336 $1,248,398 Loans outstanding, net $ 463,738 $ 527,325 $ 602,542 $ 916,023 $ 984,681 Deposits $ 586,112 $ 624,447 $ 629,934 $ 878,194 $1,016,067 Equity capital $ 63,867 $ 62,304 $ 76,960 $ 119,863 $ 128,290 Earnings per share $ 3.52 $ 3.41 $ 3.04 $ 3.12 $ 3.85 Cash dividend (per share) $ 1.04 $ 1.07 $ 1.08 $ 1.08 $ 1.17 Dividend pay-out ratio 29.54% 30.90% 36.13% 35.52% 30.40% Return on average assets 1.07% 0.97% 0.85% 0.88% 1.09% Return on average equity 12.17% 10.62% 9.33% 8.52% 9.94% Return on tangible common equity 13.21% 11.44% 10.01% 10.15% 11.57%


Slide 19

Excellent Asset Quality and Capital Levels www.middlefieldbank.bank Strong reserve coverage provides flexibility in managing potential losses with reduced impact on net income 2014 2015 2016 2017 2018 Nonperforming Loans $9,048 $10,263 $12,043 $13,415 $10,571 Real Estate Owned 2,590 1,412 934 212 270 Nonperforming Assets $11,638 $11,675 $12,977 $13,627 $10,841 Nonperforming Assets/ Total Assets (%) 1.72% 1.59% 1.65% 1.23% 0.87% Allowance for Loan Losses $6,846 $6,385 $6,598 $7,190 $7,428 Allowance/Total Loans (%) 1.45% 1.20% 1.08% 0.78% 0.75% Net Charge-off Ratio (%) 0.13% 0.16% 0.06% 0.05% 0.06%

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