Name: MIDDLEFIELD BANC CORP Q2 2025 Earnings Call
Start: 2025-07-22T00:00:00.000Z

Executive Summary

Q2 2025 delivered a clean beat: diluted EPS of $0.76 vs Wall Street consensus of $0.55*, and total revenue of ~$20.33M vs $18.30M*; upside driven by net interest margin expansion, loan growth, and a $1.2M one-time gain on an exchange of real estate .
Net interest margin (NIM) rose to 3.88% (+37 bps YoY; +19 bps QoQ) as deposit costs moderated and FHLB advances declined; net interest income increased 15.6% YoY to $17.4M .
Asset quality improved sequentially: nonperforming assets/total assets decreased to 1.30% (from 1.56% in Q1 and 1.62% in Q4 2024); allowance coverage of NPLs rose to 89.15% .
Operating expenses climbed (+14.7% YoY) on a $0.7M loss related to recording property held for sale and higher salaries; efficiency ratio improved to 64.49% vs 67.97% in Q2 2024 .
Management reiterated focus on technology upgrades, core deposit growth, and commercial banker additions; expects continued loan and core deposit growth to support profitability in 2H 2025 .

What Went Well and What Went Wrong

NIM expansion and stronger net interest income: NIM 3.88% (+37 bps YoY; +19 bps QoQ), net interest income $17.4M (+15.6% YoY), supported by lower cost of funds and reduced FHLB balances .
Noninterest income tailwind: $1.2M non-cash gain from Westerville real estate exchange lifted noninterest income to $3.1M vs $1.8M a year ago .
Sequential asset quality improvement: NPA/TA improved to 1.30% (from 1.56% in Q1 and 1.62% in Q4); CEO: “asset quality continued to improve sequentially” .

Higher operating costs: noninterest expense rose to $13.7M (+14.7% YoY), including a $0.7M loss on recording a separate property as held for sale and higher salaries/benefits (+$623K YoY) .
Elevated nonperforming loans YoY: NPLs were $25.1M vs $16.0M in Q2 2024, reflecting loans moved to nonaccrual in 2H 2024; allowance/loans declined modestly to 1.41% (from 1.46% YoY) .
Deposit mix shift: brokered deposits increased to $165.1M (vs $86.5M YoY), while noninterest-bearing demand declined to 24.2% of deposits (from 26.3%), adding funding mix complexity despite cost improvements .

Metric	Q2 2024	Q1 2025	Q2 2025 Consensus*	Q2 2025 Actual
Diluted EPS ($)	$0.52	$0.60	$0.55*	$0.76
Net Interest Margin (%)	3.51%	3.69%	—	3.88%
Net Interest Income ($000s)	$15,083	$16,098	—	$17,437
Noninterest Income ($000s)	$1,760	$1,944	—	$3,078
Total Revenue ($000s) (NII + Noninterest)	$16,843	$18,042	$18,300*	$20,328*; $20,515 computed from filings

Estimates marked with * are values retrieved from S&P Global.
Total revenue presented two ways: S&P Global actual ($20,328*) and sum of reported net interest income + noninterest income ($20,515) from company filings .

Asset Quality & Profitability KPIs	Q2 2024	Q1 2025	Q2 2025
NPA / Total Assets (%)	0.87%	1.56%	1.30%
NPL / Loans (%)	1.07%	1.91%	1.58%
ACL / Loans (%)	1.46%	1.44%	1.41%
Efficiency Ratio (%)	67.97%	65.22%	64.49%
ROAA (Annualized, %)	0.91%	1.04%	1.29%
ROATCE (Annualized, %)	10.29%	11.48%	14.31%

Loans by Category ($000s, Period End)	Q2 2025
Owner-occupied CRE	$196,645
Non-owner-occupied CRE	$405,032
Multifamily	$79,497
Residential Real Estate	$357,217
Commercial & Industrial	$257,519
HELOC	$156,297
Construction & Other	$123,531
Consumer	$6,187
Total Loans	$1,581,925

Metric	Period	Previous Guidance	Current Guidance	Change
Dividend per share	Q2 2025	$0.20 (2024 quarterly)	$0.21 declared (Q2 payable Jun 13, 2025)	Raised
Westerville branch relocation	H2 2025	Not provided	“Expect our new Westerville branch to open in the second half of 2025”	New timeline
NIM / Revenue / OpEx / OI&E / Tax rate	2025	Not provided	No formal guidance provided in filings/press releases	Maintained (no guidance)

(No Q2 2025 earnings call transcript available; themes drawn from press releases and 10-Q.)

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
NIM and funding costs	Q4: NIM 3.56%; strategy to let brokered deposits mature; monitoring cost of funds	NIM 3.88%; “seven-basis point reduction in cost of funds since beginning of year”; lower average cost of FHLB advances	Improving margin profile
Core deposit growth	Q1: Focus on core funding; $346.9M additional borrowing capacity	Plan to grow core deposits via C&I mix and treasury management	Positive focus
Technology and platform investments	Q1: “significant upgrades to infrastructure... multi-year technology road map”	Continued platform investment highlighted by CEO	Ongoing execution
Asset quality	Q4: NPA/TA stable at 1.62%; loans moved to nonaccrual in 2H 2024	NPA/TA improved to 1.30%; allowance/NPL 89.15%	Sequential improvement
CRE exposure/regulatory context	Q4: CRE at ~45% of loans; under supervisory thresholds	CRE totals $681.2M; still below concentration triggers; detailed category LTVs disclosed	Managed concentration

CEO: “The second quarter of 2025 was another strong quarter of growth, profitability and value creation… net interest margin… expanded 37 basis points year-over-year to 3.88%… Net income also benefited from a $1.2 million net gain on the exchange of real estate… We expect our new Westerville branch to open in the second half of 2025” .
CFO: “We continue to monitor our funding mix… contributed to a seven-basis point reduction in our cost of funds since the beginning of the year… focused on growing core deposits by improving the mix of commercial and industrial loans and growing treasury management relationships” .

No Q2 2025 earnings call transcript was available; consequently, Q&A themes and any guidance clarifications cannot be assessed from a call transcript [ListDocuments returned none].

EPS: $0.76 actual vs $0.55 consensus* → beat by $0.21; driven by NIM expansion, loan growth, and the $1.2M non-cash gain .
Total revenue: ~$20.33M actual vs $18.30M consensus* → beat; S&P actual reflects ~$20.33M*, while company-reported NII + noninterest totals $20.52M .
Target price consensus: ~$33.67*; estimate counts: EPS (4), revenue (3)*.
Values marked with * are retrieved from S&P Global.

Margin tailwinds: With deposit costs easing and FHLB advances down, NIM expansion is likely to continue modestly in a flat-to-down-rate scenario; watch deposit mix (brokered vs core) and money market pricing .
Asset quality stabilization: Sequentially lower NPA/TA and higher allowance coverage of NPLs reduce credit risk optics; monitor two larger nonaccrual CRE relationships remaining from 2024 .
One-time items lifted Q2: The $1.2M non-cash gain is nonrecurring; adjust run-rate noninterest income accordingly when modeling 2H 2025 .
Efficiency trend constructive: Ratio improved to 64.49% despite higher salaries and a $0.7M property loss; continued tech investments should support operating leverage .
Core deposit strategy: Banker hires in Northeast and Central Ohio and treasury management focus should help remix deposits and support spread resilience .
Dividend signaling: Quarterly dividend increased to $0.21; signals confidence in earnings durability and capital, but monitor AOCI volatility from securities marks .
Near-term trading: Positive estimate beats and improving NIM/asset quality are catalysts; adjust valuation for nonrecurring gain and watch funding mix (brokered deposits) into 2H.

Notes:
- Estimates marked with * are values retrieved from S&P Global.

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