More annual reports from Middlefield Banc Corp.:
2023 ReportInvesting In the future 2023 Summary Annual Report $2.14 EARNINGS PER SHARE FOR BOTH BASIC AND DILUTED EPS TOTAL ASSETS (in thousands) NET INCOME (in thousands) $ $ 1 1 , , 8 8 2 2 2 2 8 8 8 8 3 3 , , $ $ 1 1 , , 6 6 8 8 7 7 6 6 8 8 2 2 , , $ $ 1 1 , , 3 3 9 9 11 1 , , 9 9 7 7 9 9 $ $ 1 1 , , 3 3 33 3 1 1 , , 0 0 0 0 6 6 $ $ 11 1 , , 1 1 8 8 2 2 4 4 7 7 5 5 , , , $ 1 8 6 3 3 , $ 1 7 3 6 8 , $ 1 5 6 7 3 $ 1 2 7 1 1 , , $ 8 3 4 9 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 RETURN ON AVERAGE EQUITY DIVIDENDS DECLARED PER SHARE . . 1 1 2 2 7 7 4 4 % % . . 1 1 1 1 2 2 5 5 % % ( ( 1 1 ) ) . . 8 8 8 88 3 3 % % $ $ 0 0 8 8 1 1 . . $ $ 0 0 8 8 5 5 . . $ $ 0 0 6 6 9 9 . . $ $ 0 00 5 5 7 7 . . . . $ $ 0 0 6 66 0 0 . . 9 9 3 3 5 5 %% % . . 6 6 0 0 7 7 % % 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 (1) 2022 includes $2.3 million in one-time merger expenses. 20000 15000 10000 5000 0 $ $ 1 1 , , 2 2 4 4 8 8 , , 3 3 9 9 8 8 9 9 . . 9 9 4 4 % % $ $ 1 1 2 2 , , 4 4 3 3 1 1 $ $ 0 0 . . 5 5 9 9 2000000 1500000 1000000 500000 0 15 12 9 6 3 0 1.0 0.8 0.6 0.4 0.2 0.0 CHAIRMAN’S LETTER TO SHAREHOLDERS: On behalf of the Middlefield Banc Corp. Board of Directors, I am pleased to report that 2023 was a year of solid operating performance for our Company. Despite the challenges posed by the ever-changing business and economic landscape, we remained steadfast in our commitment to excellence, achieving key milestones and delivering value to our shareholders, customers, and communities. One of the defining moments of the year was the successful integration of the Liberty Bancshares, Inc. (“Liberty”) merger. This strategic merger has significantly strengthened our position across several compelling Western and Central Ohio markets, expanded our reach to more communities, and unlocked new growth opportunities. On behalf of the entire Board of Directors, I would like to extend my gratitude to all our employees who worked tirelessly to ensure a smooth transition and maximize the synergies resulting from this merger. Recognizing the importance of continuity and leadership development at Middlefield, succession planning has been a key area of focus for our Board of Directors. Most notably, two long-standing members of Middlefield’s executive team retired this year. James R. Heslop, II retired as Chief Executive Officer on December 31, 2023, and Donald L. Stacy retired as Chief Financial Officer on April 30, 2023. After decades of service to Middlefield, both Jim and Don played critical roles in Middlefield’s evolution, developing successful business strategies, and ensuring our long-term financial excellence. On behalf of everyone at Middlefield, I wish Jim and Don the very best in their retirements. As a part of the Company’s comprehensive succession plan, on January 1, 2024, Ronald L. Zimmerly, Jr. assumed the role of Chief Executive Officer. As President of Middlefield and the former Chief Executive Officer of Liberty Bancshares, Ron brings over 35 years of Ohio community banking experience to Middlefield that will continue to drive the Company’s legacy of strong financial and operating performance. In addition, Michael C. Ranttila was elected Chief Financial Officer of the Company on May 1, 2023, after serving in several financial and leadership roles at Middlefield. Mike is a proven leader with strong financial acumen and a deep understanding of Middlefield’s competitive growth strategies, M&A activities, and the key drivers of our financial performance. In addition to Ron and Mike’s appointments, we have made several other changes to our executive leadership team, which includes leaders developed from within the Bank and proven bankers attracted from outside our Company. Overall, we have assembled an experienced executive team to drive the next phase of Middlefield’s growth. I am also pleased to report that of the top seven executives of the bank, 43% are women reflecting our commitment to building a diverse management team. 50% have joined the Board since 2020, which has added highly qualified professionals and fresh perspectives. A new three-year strategic plan is being developed to align with Middlefield’s evolution, the success of the Liberty merger, a new executive team, and an updated Board. While details of the strategy are being finalized, key elements of the plan are focused on increasing revenue opportunities, improving Middlefield’s customer experience, and advancing our operational performance. I am proud to report that under our 2020-2023 strategic plan, assets increased 31% to $1.8 billion, earnings increased 108% to $17.4 million, and pre-tax pre-provision earnings increased 21% to $23.8 million. In addition, from January 1, 2020, to December 31, 2023, a $100 investment in Middlefield’s stock has produced a total shareholder return of $140, compared to $107 for the Nasdaq Bank Index and $116 for the KBW Regional Bank Index. A diverse capital allocation plan drives our efforts to create value for our shareholders by supporting our growth and our long-standing commitment to return excess capital to our shareholders through opportunistic stock repurchase programs and a legacy of dividend growth. Since 2020, our annual dividend has increased from $0.60 to $0.85 in 2023. The 42% improvement in our annual dividend includes a 33% increase in our regular quarterly dividend over this period and a $0.05 per share special dividend that was paid in the 2023 fourth quarter. This represents the third consecutive year Middlefield has paid a special cash dividend to shareholders. I am proud to reflect on Middlefield’s remarkable journey over the past year. Through the strategic merger, infusion of new leadership, and steadfast commitment to our Ohio communities, we have weathered challenges and emerged stronger than ever before. Our unwavering dedication to providing unparalleled value to our shareholders, customers, team members, and communities has been the cornerstone of our success. As we continue to navigate an ever-evolving economic and banking landscape, I am confident in Middlefield’s ability to adapt, innovate, and thrive—just like our Bank has done for over 120 years. On behalf of the Middlefield Banc Corp. Board of Directors and our employees, we thank you for your continued support. We also continue to update our Board of Directors, and during 2023, we proactively reduced the size of our Board from 13 to 12 members. Of Middlefield’s 12 current directors, WILLIAM J. SKIDMORE Chairman, Board of Directors Middlefield Banc Corp. 2023 Summary Annual Report 1 TO OUR SHAREHOLDERS: I am proud to present our first annual report under my leadership as President and Chief Executive Officer of Middlefield Banc Corp. 2023 was an eventful year, marked by significant challenges within the banking industry, but also remarkable achievements at our Company. Despite operating in a more uncertain economic environment, we have made substantial progress in positioning Middlefield for sustained value creation, and the Company ended the year with record total assets, stockholders’ equity, and annual net income. For the year ended December 31, 2023, net income was a record $17.4 million. The 10.8% increase in net income over the prior year was due to record net interest income after the provision for credit losses, and stable noninterest income, partially offset by higher noninterest expense, primarily associated with the Liberty Bancshares, Inc. (“Liberty”) merger. Profitability this year was especially encouraging as we navigated rapid increases in interest rates by the Federal Reserve, growing competition for deposits and increased economic uncertainty. In fact, for 2023 our net interest margin was 4.04%, compared to 4.08% last year, despite continued rate increases from the Federal Reserve throughout the year. Our performance in 2023 reflects the successful integration of the December 2022 merger with Liberty as we focused on blending our corporate cultures, eliminating redundant costs and systems, and adding additional members to Middlefield’s leadership team. In addition, the merger increased Middlefield’s scale, strengthened its financial position, and expanded the Company’s services and offerings in both the Central and Western Ohio markets. With the addition of Liberty’s six branches, Middlefield currently operates 21 full-service banking centers across a 13-county operating footprint and a loan production office in Mentor, Ohio. The Ohio economy remained resilient throughout 2023 and benefited from a strong labor market and multiple large-scale development projects. Ohio was named the number one state and Columbus was named the number two metro area in Site Selection Magazine’s 2023 Global Groundwork Index. Compelling economic trends throughout the state, and especially in Central Ohio, are expected to continue in 2024 and Middlefield is well positioned to support this growth. In the Columbus region alone, historic development projects are underway. Highlights include Intel’s $100 billion manufacturing campus in Licking County, Amazon’s $8 billion in investments to expand its data operations in Central Ohio, Honda and LG’s $3.5 billion EV battery plant in Fayette County, and Nationwide Children’s Hospital’s $3+ billion expansion in Columbus. We invested strategically in our leadership team in 2023 to ensure local support, community involvement, and quick decision making across our three distinct Ohio markets. We added seasoned Ohio bankers with deep expertise across Commercial, Business, and Consumer Banking as we remain focused on developing talent from within the Company and attracting leading bankers from outside our organization. In 2023, Mike Cheravitch was named Chief Banking Officer, Josh Riley was named Chief Commercial Market Executive—Central Ohio, Jerry Benko was named Chief Commercial Market Executive—Northeast Ohio, Anna Maria Brenneman was named Western Regional President, and Brett Baumeister was named Senior Vice President—Commercial Lending Western Region. As part of Middlefield’s long-standing succession plan, Mike Ranttila was named Chief Financial Officer, Sarah Winters was named Senior Vice President/Chief Human Resources Officer, and Rebecca Noblit was promoted to Executive Vice President/Chief Credit Officer, succeeding Alfred F. Thompson Jr. who retired from the Company on February 1, 2024. As you can see, we have built a solid team with a deep bench of experienced leaders. I am excited by the prospects of what our team can do together 2 Middlefield Banc Corp. 2023 Summary Annual Report to drive Middlefield’s record of generating long-term shareholder value. In addition, we believe we have the infrastructure to manage a much larger bank, and we are following a strategic plan focused on growth, profitability, and returning capital to our shareholders. Throughout 2023, we enhanced the value we provide our communities by creating new deposit products, improving small business lending capabilities, and developing new retail customer banking resources. We have aligned our culture, incentive and compensation programs, and go- to-market strategies in order to successfully support these initiatives in 2024 and beyond. Maintaining excellent asset quality and strong liquidity levels remains a focus of our leadership team. Our conservative underwriting philosophy, and “quick to downgrade, slow to upgrade” credit approach continue to demonstrate our ability to manage risk throughout various economic cycles. Over the past ten years, Middlefield’s net charge-offs have averaged 0.10%, and over the past three years, annual recoveries have exceeded charge- offs, reflecting outstanding asset quality. Limited credit losses and our highly profitable financial model have also helped support robust liquidity levels. At December 31, 2023, we had $60.8 million in cash and cash equivalents, $170.8 million in available-for-sale investment securities, and $618.1 million of maximum borrowing capacity at the Federal Home Loan Bank, demonstrating ample liquidity. Balancing the retention of capital for growth and financial stability with the desire to return capital to our shareholders remains a key component of our strategic plan. For 2023, we repurchased 164,221 shares of Company stock for $4.5 million. We also paid a record $6.9 million in dividends, reflecting an increase of 25.0% over the prior year. On a per-share basis, Middlefield declared cash dividends of $0.85, an increase of 4.9% from $0.81 per share last year. Dividends in 2023 included a $0.05 per share special dividend payment declared in the fourth quarter. This was the third consecutive year Middlefield has paid a special dividend to shareholders. The Company ended the year with record total assets, stockholders’ equity, and annual net income. As you can see, during 2023, we focused on integrating the merger and building a proper foundation to drive long- term growth and sustainable value. As we look to 2024, we are focused on executing against our long-term strategic plan, benefiting from the synergies of the Liberty merger, and realizing the value from the investments we have made across our business this past year. While we expect uncertainty related to Federal Reserve monetary policies and their impact on national economic conditions in 2024, economic activity and employment within our Ohio markets are expected to remain stable. Middlefield has a legacy of success as a result of its commitment to the communities, customers, employees, and shareholders the Bank serves. This dedication supports a powerful foundation that will drive our future performance. I am honored to lead this strong team of proven bankers. The opportunities to create value for Middlefield are immense as we bring our community- oriented banking approach to more customers across our Northeast, Central and Western Ohio markets. On behalf of everyone at the Middlefield Banc Corp., thank you for your continued support. Sincerely, RONALD L. ZIMMERLY, JR. President and Chief Executive Officer Middlefield Banc Corp. 2023 Summary Annual Report 3 DECADE OF PROGRESS (Dollar amounts in thousands, except earnings per share data) 2014 2015 2016 2016 2017 2018 2019 2020 2021 2022 2023 Interest income Interest expense Net interest income Provision for credit losses(1) Net interest income after provision for credit losses Noninterest income, including security gains/losses Noninterest expense Income before income taxes Income taxes Net income Total assets Deposits Equity capital Loans outstanding, net Allowance for credit losses(1) Net (recoveries) charge-offs Full time employees (average equivalents) Number of offices Earnings per share Dividends per share Book value per share Dividends payout ratio Cash dividends paid Return on average assets Return on average equity $ 27,874 $ 28,595 $ 29,994 $ 29,994 $ 43,995 $ 50,357 $ 54,525 4,070 23,804 370 23,434 3,588 17,850 9,172 1,992 3,820 24,775 315 24,460 4,044 20,077 8,427 1,562 4,190 25,804 570 25,234 3,959 20,872 8,321 1,905 $ 7,180 $ 6,865 $ 6,416 $ 6,416 $ 9,455 $ 12,431 $ 12,711 $677,531 $735,139 $787,821 $787,821 $1,106,336 $1,248,398 $1,182,475 586,112 624,447 629,934 63,867 62,304 76,960 463,738 527,325 602,542 6,846 6,385 6,598 570 139 10 776 143 10 357 139 11 $ 1.76 $ 1.71 $ 1.52 $ 1.52 $ 1.56 $ 1.92 $ 1.96 0.52 15.56 0.54 16.59 0.54 17.07 0.54 17.07 0.54 18.63 0.59 19.77 29.54% 30.90% 36.13% 36.13% 35.52% 30.40% 28.99% $ 2,121 $ 2,153 $ 2,318 $ 2,318 $ 3,358 $ 3,779 $ 3,685 1.07% 12.17% 0.97% 10.62% 0.85% 9.33% 0.85% 9.33% 0.88% 8.52% 1.09% 9.94% 1.05% 9.35% 4,190 25,804 570 25,234 3,959 20,872 8,321 1,905 629,934 76,960 602,542 6,598 357 139 11 6,647 37,348 1,045 36,303 4,859 27,485 13,677 4,222 119,863 916,023 7,190 453 190 14 9,909 40,448 840 39,608 3,728 28,743 14,593 2,162 128,290 984,681 7,428 602 200 15 878,194 1,016,067 1,020,843 13,140 41,385 890 40,495 4,841 30,033 15,303 2,592 137,775 977,490 6,768 1,550 189 16 0.57 21.45 (1) On January 1, 2023, we adopted ASU 2016-13, Financial Instruments—Credit Losses—Topic (326): Measurement of Credit Losses on Financial Instruments. This methodology for calculating the allowance for credit losses considers the possibility of expected loss over the life of the loan. Prior to January 1, 2023, the calculation of the allowance for loan losses was based on an incurred loan loss methodology. 4 Middlefield Banc Corp. 2023 Summary Annual Report 2016 2017 2018 2019 2020 2021 2022 2023 $ 29,994 $ 43,995 $ 50,357 $ 54,525 $ 52,638 $ 52,335 $ 54,906 $ 90,301 4,190 25,804 570 25,234 3,959 20,872 8,321 1,905 6,647 37,348 1,045 36,303 4,859 27,485 13,677 4,222 9,909 40,448 840 39,608 3,728 28,743 14,593 2,162 13,140 41,385 890 40,495 4,841 30,033 15,303 2,592 9,250 43,388 9,840 33,548 5,990 29,788 9,750 1,401 4,195 48,140 700 47,440 7,249 31,991 22,698 4,065 4,729 50,177 — 50,177 6,746 38,030 18,893 3,220 25,098 65,203 3,002 62,201 6,691 48,137 20,755 3,387 $ 6,416 $ 9,455 $ 12,431 $ 12,711 $ 8,349 $ 18,633 $ 15,673 $ 17,368 $787,821 $1,106,336 $1,248,398 $1,182,475 $1,391,979 $1,331,006 $1,687,682 $1,822,883 629,934 76,960 602,542 6,598 357 139 11 878,194 1,016,067 1,020,843 1,225,200 1,166,610 1,402,019 1,426,602 119,863 916,023 7,190 453 190 14 128,290 984,681 7,428 602 200 15 137,775 977,490 6,768 1,550 189 16 143,810 145,335 197,691 205,681 1,090,626 967,349 1,338,434 1,456,437 13,459 3,149 184 16 14,342 14,438 21,693 (183) 185 16 (96) 238 22 (31) 256 23 $ 1.52 $ 1.56 $ 1.92 $ 1.96 $ 1.31 $ 3.01 $ 2.60 $ 2.14 0.54 17.07 0.54 18.63 0.59 19.77 0.57 21.45 0.60 21.86 0.69 24.68 0.81 23.98 0.85 25.41 36.13% 35.52% 30.40% 28.99% 45.92% 22.76% 37.23% 39.52% $ 2,318 $ 3,358 $ 3,779 $ 3,685 $ 3,834 $ 4,240 $ 5,490 $ 6,864 0.85% 9.33% 0.88% 8.52% 1.09% 9.94% 1.05% 9.35% 0.64% 6.07% 1.36% 12.74% 1.17% 11.25% 0.99% 8.83% Middlefield Banc Corp. 2023 Summary Annual Report 5 CONSOLIDATED BALANCE SHEET (Dollar amounts in thousands, except shares) 2023 2022 ASSETS Cash and due from banks Federal funds sold Cash and cash equivalents Investment securities available for sale, at fair value Other investments Loans: Commercial real estate: Owner occupied Non-owner occupied Multifamily Residential real estate Commercial and industrial Home equity lines of credit Construction and other Consumer installment Total loans Less: allowance for credit losses(1) Net loans Premises and equipment, net Goodwill Core deposit intangibles Bank-owned life insurance Other real estate owned Accrued interest receivable and other assets TOTAL ASSETS LIABILITIES Deposits: Noninterest-bearing demand Interest-bearing demand Money market Savings Time Total deposits Federal Home Loan Bank advances Other borrowings Accrued interest payable and other liabilities TOTAL LIABILITIES STOCKHOLDERS’ EQUITY Common stock, no par value; 25,000,000 shares authorized, 9,930,704 and 9,916,466 shares issued; 8,095,252 and 8,245,235 shares outstanding Retained earnings Accumulated other comprehensive loss Treasury stock, at cost; 1,835,452 and 1,671,231 shares TOTAL STOCKHOLDERS’ EQUITY $ 56,397 4,439 $ 51,404 2,405 60,836 170,779 955 183,545 401,580 82,506 328,854 221,508 127,818 125,105 7,214 1,478,130 21,693 1,456,437 21,339 36,356 6,642 34,349 — 35,190 53,809 164,967 915 191,748 380,580 58,251 296,308 195,602 128,065 94,199 8,119 1,352,872 14,438 1,338,434 21,961 31,735 7,701 33,811 5,821 28,528 $1,822,883 $1,687,682 $ 401,384 205,582 274,682 210,639 334,315 1,426,602 163,000 11,862 15,738 1,617,202 161,388 100,237 (16,090) (39,854) 205,681 $ 503,907 164,677 187,498 307,917 238,020 1,402,019 65,000 12,059 10,913 1,489,991 161,029 94,154 (22,144) (35,348) 197,691 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $1,822,883 $1,687,682 (1) On January 1, 2023, we adopted ASU 2016-13, Financial Instruments—Credit Losses—Topic (326): Measurement of Credit Losses on Financial Instruments. This methodology for calculating the allowance for credit losses considers the possibility of expected loss over the life of the loan. Prior to January 1, 2023, the calculation of the allowance for loan losses was based on an incurred loan loss methodology. See accompanying notes to the consolidated financial statements. 6 Middlefield Banc Corp. 2023 Summary Annual Report CONSOLIDATED STATEMENT OF INCOME (Dollar amounts in thousands, except per share data) 2023 2022 INTEREST AND DIVIDEND INCOME Interest and fees on loans Interest-earning deposits in other institutions Federal funds sold Investment securities: Taxable interest Tax-exempt interest Dividends on stock Total interest and dividend income INTEREST EXPENSE Deposits Short-term borrowings Other borrowings Total interest expense NET INTEREST INCOME Provision for credit losses(1) NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES NONINTEREST INCOME Service charges on deposit accounts Loss on other investments Loss on sale of other real estate owned Earnings on bank-owned life insurance Gain on sale of loans Revenue from investment services Gross rental income Other income Total noninterest income NONINTEREST EXPENSE Salaries and employee benefits Occupancy expense Equipment expense Data processing costs Ohio state franchise tax Federal deposit insurance expense Professional fees Other real estate owned writedowns Advertising expense Software amortization expense Core deposit intangible amortization Gross other real estate owned expenses Merger-related costs Other expense Total noninterest expense Income before income taxes Income taxes NET INCOME EARNINGS PER SHARE Basic Diluted $81,963 1,289 771 1,893 3,914 471 90,301 18,995 5,386 717 25,098 65,203 3,002 62,201 3,878 (161) (170) 823 97 743 421 1,060 6,691 24,511 2,566 1,241 4,764 1,578 861 2,293 — 1,477 95 1,059 510 473 6,709 48,137 20,755 3,387 $ 17,368 $ 2.14 2.14 $ 48,513 472 219 1,811 3,707 184 54,906 4,018 307 404 4,729 50,177 — 50,177 3,850 (173) — 459 24 674 951 961 6,746 17,548 2,033 1,074 3,701 1,157 329 1,500 1,200 1,033 143 372 707 2,382 4,851 38,030 18,893 3,220 $ 15,673 $ 2.60 2.59 (1) On January 1, 2023, we adopted ASU 2016-13, Financial Instruments—Credit Losses—Topic (326): Measurement of Credit Losses on Financial Instruments. This methodology for calculating the allowance for credit losses considers the possibility of expected loss over the life of the loan. Prior to January 1, 2023, the calculation of the allowance for loan losses was based on an incurred loan loss methodology. See accompanying notes to the consolidated financial statements. Middlefield Banc Corp. 2023 Summary Annual Report 7 MIDDLEFIELD BANC CORP. BOARD OF DIRECTORS WILLIAM J. SKIDMORE 2007 Chairman, Board of Directors Middlefield Banc Corp. The Middlefield Banking Company Retired Ohio Senior District Manager Waste Management of Ohio, Inc. RONALD L. ZIMMERLY, JR. 2022 President and Chief Executive Officer Middlefield Banc Corp. The Middlefield Banking Company JAMES J. McCASKEY 2004 Vice Chairman, Board of Directors Middlefield Banc Corp. The Middlefield Banking Company President McCaskey Landscape and Design, LLC CAROLYN J. TURK, C.P.A. 2004 Retired Financial Executive Molded Fiber Glass Companies KENNETH E. JONES 2008 Retired Financial Executive Chesapeake Financial Advisors DARRYL E. MAST 2013 Retired: Hattie Larlham Care Group and Hattie Larlham Foundation THOMAS W. BEVAN 2017 Chief Executive Officer Bevan & Associates, LPA, Inc. 8 Middlefield Banc Corp. 2023 Summary Annual Report MICHAEL C. VOINOVICH 2020 Executive Vice President and Chief Investment Officer of ECHO Health, Inc. KEVIN A. DiGERONIMO 2021 Principal DiGeronimo Companies JENNIFER L. MOELLER 2023 Angel Investor THOMAS E. “TED” GRIFFITH* 2022 Partner Powell Seeds, LLC THOMAS J. SIMON* 2022 Chairman of the Board Coverlink Insurance SPENCER T. COHN 2022 Director Castle Creek Capital LLC MARK R. WATKINS 2022 Partner Watkins Farm Central Ohio Region Advisory Board: JEFFREY A. GONGWER; GEORGE J. KONTOGIANNIS, AIA; TIMOTHY C. LONG; MICHAEL J. MORAN *Director of The Middlefield Banking Company Middlefield Banc Corp. 2023 Summary Annual Report 9 MIDDLEFIELD BANC CORP. OFFICERS THE MIDDLEFIELD BANKING COMPANY EXECUTIVE OFFICERS THE MIDDLEFIELD BANKING COMPANY OFFICERS RONALD L. ZIMMERLY, JR. President and Chief Executive Officer RONALD L. ZIMMERLY, JR. 1999 President and Chief Executive Officer ANNA MARIA BRENNEMAN 2009 President, Western Ohio Region MICHAEL C. RANTTILA Senior Vice President and Chief Financial Officer COURTNEY M. ERMINIO 2010 Executive Vice President Chief Risk Officer JULIE E. SHAW Corporate Secretary REBECCA NOBLIT 2017 Executive Vice President Chief Credit Officer MICHAEL C. RANTTILA 2017 Executive Vice President Chief Financial Officer THOMAS WILSON, CFA 2020 Executive Vice President Chief Strategy and Innovation Officer MICHAEL CHERAVITCH 2023 Executive Vice President Chief Banking Officer SARAH WINTERS 2023 Senior Vice President Chief Human Resources Officer 10 Middlefield Banc Corp. 2023 Summary Annual Report PATRICIA ARNETT 1987 Senior Vice President Treasury Management Director THOMAS R. NEIKIRK 1994 Senior Vice President Commercial Relationship Manager MATTHEW E. BELLIN 2006 Senior Vice President Commercial Relationship Manager ADAM T. COOK 2006 Senior Vice President Project Manager FELICIA M. HOUGH 2009 Senior Vice President Branch Administration CRAIG E. REAY 2011 Senior Vice President Credit Administration LORI A. GRAHAM 2013 Senior Vice President Compliance and CRA Officer DANIEL B. PLANT 2014 Senior Vice President Mortgage Lending STANLEY GREGORIN, JR. 2018 Senior Vice President Commercial Relationship Manager GREG T. YURCO 2019 Senior Vice President Commercial Relationship Manager GARY C. KERN 2020 Senior Vice President Chief Information Officer BRETT BAUMEISTER 2023 Senior Vice President Commercial Relationship Manager AMANDA HOYT 2016 Vice President Abrigo Product Owner JERRY BENKO 2023 Senior Vice President Senior Commercial Market Executive THOMAS PARKER 2016 Vice President Commercial Relationship Manager JOSHUA RILEY 2023 Senior Vice President Senior Commercial Market Executive NICOLE MARCHIO 2017 Vice President Deposit Operations Officer JULIE E. SHAW 2019 Executive Assistant Corporate Secretary/Training and Development Coordinator MELISSA M. MAKI 2018 Vice President Marketing Communications Director MOLLY MILLER 2023 Vice President Project Manager KIMBERLY SARK 2023 Vice President Chief Accounting Officer PRESTON STAPLETON 2023 Vice President Commercial Relationship Manager RACHEL DEAN 1985 Assistant Vice President Regional Branch Administrator Northeast Ohio Region DAVID KUCERA 2004 Vice President Controller BRETT A. RICHEY 2010 Vice President Special Assets Manager KEVIN SERNA 2019 Vice President Commercial Relationship Manager KATHLEEN M. VANEK 1998 Assistant Vice President Mortgage and Consumer Loan Originator VANCE STEELE 2022 Vice President Commercial Relationship Manager MARLIN J. MOSCHELL 2000 Assistant Vice President Lending Officer VALERIE MULLHOLAND 2011 Vice President Loan Administration JAMESON CURRY 2023 Vice President Commercial Relationship Manager HEATHER ALTSTAETTER 2002 Assistant Vice President Public Relations Manager BRANDON BUCKNELL 2015 Vice President Commercial Relationship Manager JOHN SOLICH 2015 Vice President Commercial Relationship Manager AIMEE GILLILAND 2023 Vice President Treasury Management Sales Officer CORSIE ARN 2003 Assistant Vice President Branch Operations Manager MARIA HYDELL 2024 Vice President Credit Manager ALICE MCINTOSH 2023 Vice President Controller NANETTE PFEIFFER 2003 Assistant Vice President Commercial Loan Specialist Middlefield Banc Corp. 2023 Summary Annual Report 11 KRISTINA STEPHENS 2006 Banking Officer Account Processing Manager MICHELLE BAHLEDA 2014 Banking Officer MLO III JAMIE GENOVESE 2016 Banking Officer Support Center Manager THE MIDDLEFIELD BANKING COMPANY OFFICERS (continued) KEVIN J. MITCHELL 2007 Assistant Vice President Lender II MELISSA K. GAY 2008 Assistant Vice President BSA Officer JEAN M. CARTER 2009 Assistant Vice President Branch Manager KELLY HECKMAN 2009 Assistant Vice President Compliance Assistant DALE MOORE 2009 Assistant Vice President Project Manager and Bank Security Officer DERRICK HAYNES 2011 Assistant Vice President Manager of Tech Support ERNA LEAGAN-MABEL 2015 Assistant Vice President Loan Servicing Manager WARREN R. COX, II 2016 Assistant Vice President Branch Manager CORRINE MITCHELL 2016 Assistant Vice President Regional Branch Administrator Western Ohio Region LAURA STIMMEL 2017 Assistant Vice President Branch Manager CHRISTOPHER J. HESS 2018 Assistant Vice President Branch Manager NICHOLAS GRAND 2019 Assistant Vice President Underwriting Manager LISABETH A. MULDOWNEY 2012 Assistant Vice President Market Manager/Portage County RYAN LANE 2019 Assistant Vice President Mortgage and Consumer Lender JENNI UNDERWOOD 2013 Assistant Vice President Mortgage Loan Operations Manager JAMES LONG 2019 Assistant Vice President Risk Management and CRA Coordinator STEPHEN J. LEBOLD 2014 Assistant Vice President Branch Manager COLLEEN PIRRMANN 2014 Assistant Vice President Regional Branch Administrator Central Ohio Region KIMBERLY UTTERBACK 2014 Assistant Vice President Compliance Manager BRIAN MOORE 2019 Assistant Vice President Mortgage and Consumer Lender DAVID WILLOBY 2019 Assistant Vice President Commercial Relationship Manager JUSTIN FERGUSON 2024 Assistant Vice President Loan Documentation Manager 12 Middlefield Banc Corp. 2023 Summary Annual Report “ Customer service is the experience we deliver to our customer. It’s the promise we keep to the customer. It’s how we follow through for the customer. It’s how we make them feel when they do business with us.” — Shep Hyken ASHTABULA CLEVELAND GEAUGA TRUMBULL PORTAGE KENTON KENTON HARDIN BELLEFONTAINE BELLEFONTAINE MARYSVILLE MARYSVILLE DELAWARE UNION LOGAN FRANKLIN COLUMBUS 14 Middlefield Banc Corp. 2023 Summary Annual Report CORTLANDGARRETTSVILLENEWBURYSOLONTWINSBURGBEACHWOODORWELLCHARDONDUBLINPOWELLPLAIN CITYWESTERVILLEMANTUAMIDDLEFIELDMENTOR (LPO)SUNBURYADABELLEFONTAINEMARYSVILLEKENTONCORTLANDGARRETTSVILLENEWBURYSOLONTWINSBURGBEACHWOODORWELLCHARDONDUBLINPOWELLPLAIN CITYWESTERVILLEMANTUAMIDDLEFIELDMENTOR (LPO)SUNBURYADABELLEFONTAINEMARYSVILLEKENTON ASHTABULA CLEVELAND GEAUGA TRUMBULL PORTAGE KENTON KENTON HARDIN BELLEFONTAINE BELLEFONTAINE MARYSVILLE MARYSVILLE DELAWARE UNION LOGAN FRANKLIN COLUMBUS THE MIDDLEFIELD BANKING COMPANY LOCATIONS Middlefield Banc Corp. 2023 Summary Annual Report 15 CORTLANDGARRETTSVILLENEWBURYSOLONTWINSBURGBEACHWOODORWELLCHARDONDUBLINPOWELLPLAIN CITYWESTERVILLEMANTUAMIDDLEFIELDMENTOR (LPO)SUNBURYADABELLEFONTAINEMARYSVILLEKENTON THE MIDDLEFIELD BANKING COMPANY LOCATIONS Administrative Offices 15200 Madison Road Middlefield, Ohio 44062 888.801.1666 Ada Office 118 South Main Street P.O. Box 135 Ada, Ohio 45810 419.634.5015 Beachwood 25201 Chagrin Boulevard Suite 120 Beachwood, Ohio 44122 216.359.5580 Bellefontaine North Office 1120 North Main Street P.O. Box 849 Bellefontaine, Ohio 43311 937.592.5688 Bellefontaine South Office 1454 South Main Street P.O. Box 670 Bellefontaine, Ohio 43311 937.593.9694 Chardon 348 Center Street P.O. Box 1078 Chardon, Ohio 44024 440.286.1222 Cortland 3450 Niles-Cortland Road Cortland, Ohio 44410 330.637.3208 Dublin 6215 Perimeter Drive Dublin, Ohio 43017 614.793.4631 Garrettsville 8058 State Street Garrettsville, Ohio 44231 330.527.2121 Kenton Office 100 East Franklin Street P.O. Box 234 Kenton, Ohio, 43326 419.673.1217 Lake County Loan Production Office 8373 Mentor Avenue Mentor, Ohio 44060 440.632.8140 Mantua 10691 Main Street Mantua, Ohio 44255 330.274.0881 Marysville 160 Coleman’s Crossing Boulevard Marysville, Ohio 43040 937.642.0467 Middlefield Main 15985 East High Street P.O. Box 35 Middlefield, Ohio 44062 440.632.8115 Middlefield West 15545 West High Street P.O. Box 35 Middlefield, Ohio 44062 440.632.8113 Newbury 11110 Kinsman Road Suite 1 P.O. Box 208 Newbury, Ohio 44065 440.564.7000 Orwell 30 South Maple Street P.O. Box 66 Orwell, Ohio 44076 440.437.7200 Plain City 490 South Jefferson Avenue Plain City, Ohio 43064 614.689.2622 Powell 10628 Sawmill Parkway Powell, Ohio, 43065 614.392.5702 Solon 6134 Kruse Drive Solon, Ohio 44139 440.542.3789 Sunbury 492 West Cherry Street Sunbury, Ohio 43074 740.913.0632 Twinsburg 2351 Edison Boulevard P.O. Box 560 Twinsburg, Ohio 44087 330.425.3033 Westerville 17 North State Street Westerville, Ohio 43081 614.890.7832 16 Middlefield Banc Corp. 2023 Summary Annual Report COMMUNITY INVOLVEMENT 2023 As a community bank, The Middlefield Banking Company strives to be a leader, advocate, and partner for the communities we serve. We do this in part through charitable giving, volunteerism, and strong support for nonprofit and vital community organizations. MB team members generously give their time, talent, and treasure with over 400 hours of volunteering including serving in leadership roles for 30+ organizations ranging from non-profits, to direct services, and education. Together, we can continue to make a positive impact on the lives of those in need and build stronger, more connected communities! Here’s a glimpse into the meaningful donations we’ve proudly contributed in 2023 aiding more than 350 organizations with overall contributions nearing $300,000. Top Gifts: Corporate): $50,000 · United Way Organizations (Team Members + · Local Schools: $35,000 · Local Chambers of Commerce: $32,000 · Financial Literacy Programs (Junior Achievement & · The Salvation Army: over $10,000 EVERFI): over $30,000 Examples of Organizations Include: (Northeast & Central Region) · Beatitudes Community Center (Western Region) · Children’s Hunger Alliance (All Regions) · Fair Housing (Northeast & Central Region) · Financial Empowerment (Northeast Region) · Geauga Growth Partnership (Northeast Region) · Geauga Park District (Northeast Region) · Hattie Larlham Center for Children with Disabilities · Hope Hollow (Central Region) · Kan Du Group (Western Region) · Leadership Geauga (Northeast Region) · Local Fairs and Livestock Purchase (All Regions) · Memorial Health Foundation (Central Region) · Next Step (Northeast Region) · Rotary Clubs (All Regions) · Women’s Recovery Center (Northeast Region) · WomenSafe at the Green House (Northeast Region) Middlefield Banc Corp. 2023 Summary Annual Report 17 COMMUNITY INVOLVEMENT Main Branch Manager Larry Maniche presents Cardinal Schools with a $1,000 check for their student and staff initiatives. MB West Branch’s Community Appreciation Day. VP, Commercial Relationship Manager Vance Steele at the Hartfort Fair at the junior auction with Junior Fair participant Kelly with her bunny “Oreo”. Kenton’s Mortgage Lender Elisabeth Moore poses with Hardin County Livestock Auction winners. The Sunbury Team’s Parade Float during the Christmas on the Square Event. Tom from IT and Matt from Marketing lend a hand at the United Way of Geauga Community Day of Action. MB’s Tom Parker, VP, Relationship Manager attends the groundbreaking of the all new Firefly Winery in Hilliard, Ohio. Members of the Garrettsville Team grill off for their Community Appreciation Day. Govenor DeWine attends the groundbreaking for the West Warren Industrial Park with President and CEO Ron Zimmerly and SVP, Commercial Relationship Manager Greg Yurco. 18 Middlefield Banc Corp. 2023 Summary Annual Report The Chardon Team attends Trunk-or-Treat for St. Mary’s School. Members of the Ada Team celebrate their Customer Appreciation Day. Central Team Commercial lenders attend The Bill Shantz Memorial Golf Outing put on by the Powell Chamber of Commerce. Solon Branch Manager Michelle Burke drops off snacks for the Solon Fire Department for Random Act of Kindness Day. Western Ohio Team Members participate in the United Way of Logan County’s Community Care Day. The Mantua Team joins the 2023 Mantua Potato Festival Parade. MB Western Teams attend the Bourbon Ball for Hardin County United Way. NEO Team Members Dana Warren- Tolios and Melissa Maki received awards at Untied Way of Trumball County’s Annual Meeting. The Garrettsville team is ready to serve peach pies at the Peach Social and Car Cruise. MB Team Members taught financial literacy with Junior Achievement at Pymatuming Valley High. Members of the NEO Teams visit Chardon Middle School to teach a lesson by Junior Achievement. Middlefield Banc Corp. 2023 Summary Annual Report 19 CUSTO M E R Forging relationships by adding value through proactive and responsive service. S E R V I C E NITY U M M O C Fostering relationships and maintaining the tradition of local support by being a trusted ambassador of the Bank. Every interaction within our communities is an opportunity to build deeper and prospective customers. CORE VALUES T N E M MIT M Continuously building shareholder value by providing prudent and fiscally responsible management combined with effective and efficient stewardship of our resources. H E S H A R O L D E R CO T E A M F O C U S Our team members are our most valuable asset. We support one another through collaboration, passion, and professionalism. Our people differentiate us from our competitors. 20 Middlefield Banc Corp. 2023 Summary Annual Report SHAREHOLDER INFORMATION CORPORATE HEADQUARTERS Middlefield Banc Corp. 15985 East High Street P.O. Box 35 Middlefield, Ohio 44062 888.801.1666 • 440.632.1666 fax: 440.632.1700 FORM 10-K AND 10-Q AVAILABILITY A copy of Middlefield Banc Corp.’s Annual Report on Form 10-K and Quarterly Reports on 10-Q filed with the Securities and Exchange Commission will be furnished to any shareholder, free of charge, upon written or e-mail request to: Michael Ranttila Executive Vice President and CFO Middlefield Banc Corp. P.O. Box 35 Middlefield, Ohio 44062 or mranttila@middlefieldbank.com MARKET MAKER The symbol for Middlefield Banc Corp. common stock is MBCN and the CUSIP is 596304204. Keefe, Bruyette & Woods 800.342.5529 www.kbw.com NOTICE OF ANNUAL MEETING The 2024 Annual Meeting of Shareholders of Middlefield Banc Corp. will be held on Wednesday, May 15, 2024 at 1:00 p.m. Eastern Time. We have adpoted a virtual format for our Annual Meeting. We will provide a live webcast of the Annual Meeting at www.meetnow.global/MFDL4CJ You will need the control number located on your proxy card to participate. TRANSFER AGENT AND REGISTRAR Computershare P.O. Box 505000 Louisville, KY 40233-5000 1.800.736.3001 INDEPENDENT AUDITORS S.R. Snodgrass, P.C. 2009 Mackenzie Way, Suite 340 Cranberry Township, PA 16066 724.934.0344 INTERNET INFORMATION Information on the Company and its subsidiary bank is available on the Internet at www.middlefieldbank.bank. DIVIDEND PAYMENT DATES Subject to action by the Board of Directors, Middlefield Banc Corp. will pay dividends in March, June, September, and December. DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN Shareholders may elect to reinvest their dividends in additional shares of Middlefield Banc Corp.’s common stock through the Company’s Dividend Reinvestment Plan. To arrange automatic purchase of shares with quarterly dividend proceeds, please call 1.800.736.3001. DIRECT DEPOSIT OF DIVIDENDS The direct deposit program, which is offered at no charge, provides for automatic deposit of quarterly dividends directly to a checking or savings account with The Middlefield Banking Company. For information regarding this program, please call 888.801.1666. RELATED STOCKHOLDER MATTERS Middlefield Banc Corp. had approximately 1,200 shareholders of record as of March 7, 2024. Our common stock trades on the NASDAQ Capital Market under the ticker symbol MBCN. The table below shows the high and low bid prices of and cash dividends paid on the Company’s common stock during the periods indicated. The high and low bid prices are compiled from data available through NASDAQ. This information does not reflect retail mark-up, markdowns or commissions, and does not necessarily represent actual transactions. 2023 First Quarter Second Quarter Third Quarter Fourth Quarter 2022 First Quarter Second Quarter Third Quarter Fourth Quarter HIGH CLOSE LOW CLOSE CASH DIVIDENDS PER SHARE $ 29.43 $29.24 $30.20 $ 36.70 $26.08 $ 26.86 $ 28.38 $29.60 $ 26.00 $ 22.33 $ 24. 7 1 $ 25.19 $ 24.10 $ 24.35 $ 25.03 $ 27.36 $0.20 $0.20 $0.20 $0.25 $0. 1 7 $0. 1 7 $0. 1 7 $0.30 Middlefield Banc Corp. 15985 East High Street, Middlefield, Ohio 44062 888.801.1666 www.middlefieldbank.bank
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