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MIDDLEFIELD BANC CORP (MBCN)·Q4 2024 Earnings Summary

Executive Summary

  • Record profitability: Q4 2024 diluted EPS was $0.60, up 36.4% YoY; net income reached $4.848M with NIM at 3.56% and ROAA at 1.04% .
  • Sequential improvement: Net interest income increased to $15.555M and NIM rose to 3.56% from 3.46% in Q3, while noninterest income grew to $1.914M .
  • Credit quality stable vs Q3 but elevated YoY: nonperforming assets were $29.983M (1.62% of assets), allowance/loans at 1.48%, and Q4 quarter-to-date net charge-offs were $151K (0.04% annualized) .
  • Capital and funding: equity/assets improved to 11.36%; brokered deposits fell to $35.1M (from $86.5M in Q3), with robust liquidity including discount window access and $381.7M of FHLB capacity at 12/31/24 .
  • Potential catalysts: 5% dividend increase to $0.21 in Feb-2025 and CFO’s outlook for a stable NIM in 2025 may bolster sentiment .

What Went Well and What Went Wrong

What Went Well

  • Record fourth-quarter profitability driven by higher net interest income, growth in noninterest income, stable asset quality, and controlled operating expenses; CEO: “one of the most profitable quarters in Middlefield’s 124-year history” .
  • Sequential margin expansion and funding progress: NIM increased to 3.56% in Q4; brokered deposits allowed to mature and liquidity broadened with discount window access and substantial FHLB capacity .
  • Equity and book value strengthened: equity/assets 11.36%, book value per share $26.08, tangible book $20.88 at 12/31/24 .

What Went Wrong

  • Elevated nonperforming assets YoY stemming from specific credits: NPA 1.62% of assets vs 0.60% in Q4 2023; three relationships accounted for $20.2M of NPA as of Q3, with one $13.5M loan moved to nonaccrual in Q3 .
  • Cost of funds remained high vs prior year: total interest-bearing liabilities cost was 3.33% for 2024 vs 2.28% in 2023; NIM full-year compressed to 3.52% from 3.97% .
  • AOCI volatility in Q4 amid rate moves: CFO noted rate environment was volatile, temporarily increasing accumulated other comprehensive loss .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Diluted EPS ($)$0.44 $0.52 $0.29 $0.60
Net Income ($USD Millions)$3.543 $4.164 $2.340 $4.848
Net Interest Income ($USD Millions)$15.376 $15.083 $15.073 $15.555
Noninterest Income ($USD Millions)$1.602 $1.760 $1.743 $1.914
Net Interest Margin (%)3.63% 3.51% 3.46% 3.56%
ROAA (Annualized, %)0.78% 0.91% 0.50% 1.04%
PTPP ($USD Millions)$4.806 $4.941 $4.945 $5.666
Total Deposits (Period End, $USD Billions)$1.427 $1.470 $1.513 $1.446
FHLB Advances (Period End, $USD Billions)$0.163 $0.125 $0.106 $0.172

Segment/Portfolio Breakdown (CRE at Dec 31, 2024)

CategoryBalance ($USD Thousands)% of CRE Portfolio% of Total LoansWeighted Avg LTV
Multi-Family$89,849 13.1% 5.9% 58.3%
Owner Occupied – Real Estate & Rental$62,647 9.2% 4.1% 56.0%
Owner Occupied – Other Services$30,320 4.4% 2.0% 53.9%
Owner Occupied – Manufacturing$16,617 2.4% 1.1% 49.0%
Owner Occupied – Agriculture/Forestry/Fishing/Hunting$12,881 1.9% 0.8% 36.9%
Owner Occupied – Accommodation/Food Services$11,272 1.6% 0.7% 56.5%
Owner Occupied – Other$47,710 6.9% 3.1% 53.8%
Total Owner Occupied$181,447 26.4% 11.8% —
Non-Owner Occupied – Real Estate & Rental$338,981 49.6% 22.3% 69.6%
Non-Owner Occupied – Accommodation/Food$40,398 5.9% 2.7% 54.9%
Non-Owner Occupied – Health Care/Social Assistance$20,144 2.9% 1.3% 56.7%
Non-Owner Occupied – Manufacturing$7,108 1.0% 0.5% 51.1%
Non-Owner Occupied – Other$5,660 1.1% 0.4% 73.7%
Total Non-Owner Occupied$412,291 60.5% 27.2% —
Total CRE$683,587 100.0% 44.9% —

KPIs and Asset Quality

KPIQ4 2023Q2 2024Q3 2024Q4 2024
Nonperforming Assets ($USD Millions)$10.877 $15.961 $30.078 $29.983
NPA / Total Assets (%)0.60% 0.87% 1.62% 1.62%
Nonperforming Loans / Total Loans (%)0.74% 1.07% 2.00% 1.97%
Allowance for Credit Losses ($USD Millions)$21.693 $21.795 $22.526 $22.447
ACL / Total Loans (%)1.47% 1.46% 1.50% 1.48%
Allowance / NPL (%)199.44% 136.55% 74.89% 74.86%
Net Charge-offs (QTD, $USD Thousands)$(117) $(29) $1,382 $151
Net Charge-offs to Avg Loans (QTD, annualized)(0.03%) (0.01%) 0.36% 0.04%
Brokered Deposits ($USD Millions)$90.3 $90.4 $86.5 $35.1

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per shareQ1 2025$0.20 (Q4 2024 declared) $0.21 declared (payable Mar 14, 2025) Raised 5%
Net Interest Margin outlookFY 2025N/A“Cautiously optimistic we can maintain a stable net interest margin throughout 2025.” — CFO New qualitative outlook
Brokered deposits strategyQ4 2024N/AAllowed brokered deposits to mature in Q4 to assess market post Fed rate cut Strategic shift noted

Earnings Call Themes & Trends

Note: No Q4 2024 earnings call transcript was found; themes reflect management disclosures in press releases.

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Deposit competition/cost of fundsFocus on improving cost of funds; reduced FHLB advances; strong liquidity First sequential decline in cost of funds in 10 quarters; disciplined expense control Expect competition to continue; brokered deposits maturity; liquidity robust Persistent but improving operationally
Net interest marginNIM 3.53%; compression vs prior year NIM 3.46%; sequential pressure NIM 3.56%; CFO expects stable NIM in 2025 Stabilizing
Credit qualityNPA 0.87%; two relationships moved to nonaccrual NPA rose to 1.62%; $13.5M loan to nonaccrual; strong reserves NPA 1.62% and stable vs Q3; net charge-offs minimal in Q4 Deteriorated in Q3, stabilized in Q4
Liquidity & fundingAdditional FHLB capacity; liquidity strong Approved to use Fed discount window Cash & investments $221.6M; FHLB capacity $381.7M Robust throughout
Capital/Shareholder returnsTangible book growth; dividends maintained Equity/assets strengthened; book value record Dividend increased post-Q4; equity/assets 11.36% Positive

Management Commentary

  • CEO: “Our 2024 fourth quarter marks one of the most profitable quarters in Middlefield’s 124-year history… higher net interest income, grew non-interest income, achieved stable asset quality, and controlled operating expenses… record fourth quarter net income” .
  • CEO: “While we expect competition for deposits will continue, our loan pipeline remains robust… We believe 2025 will be another good year of profitable growth…” .
  • CFO: “The rate environment was volatile during the fourth quarter… we strategically let brokered deposits mature… capital levels continue to expand… equity to assets ratio improved… liquidity remains robust… discount window access… cash and investments of $221.6M… FHLB borrowing capacity of $381.7M” .
  • CFO: “With nearly 70% of our loan portfolio subject to repricing at December 31, 2024, we are cautiously optimistic we can maintain a stable net interest margin throughout 2025… credit quality remained firm… well reserved with ACL to total loans of 1.48%” .

Q&A Highlights

  • No Q4 2024 earnings call transcript was available; Q&A highlights and any guidance clarifications from a call could not be assessed [ListDocuments none for earnings-call-transcript; Search yielded none].

Estimates Context

  • Wall Street consensus via S&P Global for Q4 2024 EPS and revenue was unavailable due to request limits; as a result, we cannot provide beat/miss comparisons for this quarter [GetEstimates error: Daily Request Limit Exceeded]. Values would have been retrieved from S&P Global if available.

Key Takeaways for Investors

  • Profitability inflection: Q4 delivered record net income and EPS with sequential NIM expansion, suggesting earnings resilience into 2025 .
  • Margin outlook constructive: CFO expects stable NIM in 2025; with ~70% of loans repricing, rate path and deposit mix will be key to sustaining margins .
  • Credit watch manageable: Elevated NPA from discrete relationships stabilized in Q4; reserves remain strong (ACL/loans 1.48%; allowance/NPL ~75%) .
  • Funding improvement: Brokered deposits fell sharply to $35.1M; diversified liquidity (discount window and FHLB capacity) supports flexibility and growth .
  • Capital support and dividends: Equity/assets at 11.36% and a 5% dividend hike to $0.21 underscore confidence in earnings trajectory and capital return capacity .
  • Deposit competition persists: Management expects ongoing deposit competition; monitor mix shifts (money market growth vs CD runoff) and cost of funds trajectory .
  • Near-term trading lens: Positive momentum from Q4 profitability and dividend increase; watch for incremental disclosures on credit resolution and funding costs as catalysts in 1H25 .