MBCN 10-Q Quarterly Report March 31, 2025

MIDDLEFIELD BANC CORP

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mbcn20250201_10q.htm

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

	☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended March 31, 2025

	☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from ___________ to ___________

Commission File Number 001-36613

Middlefield Banc Corp.

(Exact Name of Registrant as Specified in its Charter)

Ohio		34-1585111
State or Other Jurisdiction of		I.R.S. Employer Identification No.
Incorporation or Organization

15985 East High Street , Middlefield , Ohio		44062-0035
Address of Principal Executive Offices		Zip Code

440 - 632-1666

Registrant’s Telephone Number, Including Area Code

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

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, Without Par Value

MBCN

The NASDAQ Stock Market, LLC

(NASDAQ Capital Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Outstanding at May 13, 2025: 8,081,193

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MIDDLEFIELD BANC CORP.

INDEX

Part 1 – Financial Information
Item 1.	Financial Statements (unaudited)
	Consolidated Balance Sheet	3
	Consolidated Statement of Income	4
	Consolidated Statement of Comprehensive Income (Loss)	5
	Consolidated Statement of Changes in Stockholders’ Equity	6
	Consolidated Statement of Cash Flows	7
	Notes to Unaudited Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	31
Item 4.	Controls and Procedures	32
PART II – Other Information		32
Item 1.	Legal Proceedings	32
Item 1a.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	32
Item 4.	Mine Safety Disclosures	32
Item 5.	Other information	32
Item 6.	Exhibits	33
Signatures		36
Exhibit 31.1
Exhibit 31.2
Exhibit 32

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MIDDLEFIELD BANC CORP.

CONSOLIDATED BALANCE SHEET

(Dollar amounts in thousands, except share data)

(Unaudited)

	March 31,			December 31,
	2025			2024

ASSETS
Cash and due from banks	$	56,150		$	46,037
Federal funds sold		10,720			9,755
Cash and cash equivalents		66,870			55,792
Investment securities available for sale, at fair value		165,014			165,802
Other investments		1,021			855
Loans:
Commercial real estate:
Owner occupied		185,412			181,447
Non-owner occupied		413,621			412,291
Multifamily		88,737			89,849
Residential real estate		351,274			353,442
Commercial and industrial		235,547			229,034
Home equity lines of credit		147,154			143,379
Construction and other		122,653			103,608
Consumer installment		5,951			6,564
Total loans		1,550,349			1,519,614
Less: allowance for credit losses		22,401			22,447
Net loans		1,527,948			1,497,167
Premises and equipment, net		20,494			20,565
Goodwill		36,356			36,356
Core deposit intangibles		5,362			5,611
Bank-owned life insurance		34,866			35,259
Accrued interest receivable and other assets		30,425			35,952
TOTAL ASSETS	$	1,888,356		$	1,853,359
LIABILITIES
Deposits:
Noninterest-bearing demand	$	369,492		$	377,875
Interest-bearing demand		222,953			208,291
Money market		481,664			414,074
Savings		189,943			197,749
Time		275,673			247,704
Total deposits		1,539,725			1,445,693
Federal Home Loan Bank advances		110,000			172,400
Other borrowings		11,609			11,660
Accrued interest payable and other liabilities		13,229			13,044
TOTAL LIABILITIES		1,674,563			1,642,797
STOCKHOLDERS' EQUITY
Common stock, no par value; 25,000,000 shares authorized, 9,960,503 and 9,953,018 shares issued; 8,081,193 and 8,073,708 shares outstanding		162,195			161,999
Additional paid-in capital		515			246
Retained earnings		112,432			109,299
Accumulated other comprehensive loss		( 20,440	)		( 20,073	)
Treasury stock, at cost; 1,879,310 and 1,879,310 shares		( 40,909	)		( 40,909	)
TOTAL STOCKHOLDERS' EQUITY		213,793			210,562
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,888,356		$	1,853,359

See accompanying notes to unaudited consolidated financial statements.

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MIDDLEFIELD BANC CORP.

CONSOLIDATED STATEMENT OF INCOME

(Dollar amounts in thousands, except per share data)

(Unaudited)

	Three Months Ended
	March 31,
	2025			2024
INTEREST AND DIVIDEND INCOME
Interest and fees on loans	$	23,387		$	22,395
Interest-earning deposits in other institutions		291			437
Federal funds sold		155			152
Investment securities:
Taxable interest		530			467
Tax-exempt interest		960			972
Dividends on stock		150			189
Total interest and dividend income		25,473			24,612

INTEREST EXPENSE
Deposits		7,885			7,466
Short-term borrowings		1,347			1,993
Other borrowings		143			184
Total interest expense		9,375			9,643

NET INTEREST INCOME		16,098			14,969

Provision for (Recovery of) credit losses		95			( 136	)

NET INTEREST INCOME AFTER PROVISON FOR (RECOVERY OF) CREDIT LOSSES		16,003			15,105

NONINTEREST INCOME
Service charges on deposit accounts		989			909
Loss on equity securities		( 34	)		( 52	)
Earnings on bank-owned life insurance		493			227
Gain on sale of loans		24			10
Revenue from investment services		268			204
Gross rental income		-			67
Other income		204			431
Total noninterest income		1,944			1,796

NONINTEREST EXPENSE
Salaries and employee benefits		6,557			6,333
Occupancy expense		687			552
Equipment expense		225			240
Data processing and information technology costs		1,271			1,217
Ohio state franchise tax		399			397
Federal deposit insurance expense		267			251
Professional fees		598			558
Advertising expense		364			419
Software amortization expense		90			22
Core deposit intangible amortization		249			258
Gross other real estate owned expenses		-			99
Other expense		1,486			1,619
Total noninterest expense		12,193			11,965

Income before income taxes		5,754			4,936
Income taxes		924			769

NET INCOME	$	4,830		$	4,167

EARNINGS PER SHARE
Basic	$	0.60		$	0.52
Diluted	$	0.60		$	0.51

See accompanying notes to unaudited consolidated financial statements.

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MIDDLEFIELD BANC CORP.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(Dollar amounts in thousands)

(Unaudited)

	Three Months Ended
	March 31,
	2025			2024

Net income	$	4,830		$	4,167

Other comprehensive income (loss):
Unrealized holding gain (loss) on securities available for sale		( 464	)		( 2,582	)
Tax effect		97			542
Total other comprehensive income (loss)		( 367	)		( 2,040	)

Comprehensive income (loss)	$	4,463		$	2,127

See accompanying notes to unaudited consolidated financial statements.

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MIDDLEFIELD BANC CORP.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(Dollar amounts in thousands, except share and per share data)

(Unaudited)

										Accumulated
					Additional					Other						Total
	Common Stock				Paid-in		Retained			Comprehensive			Treasury			Stockholders'
	Shares		Amount		Capital		Earnings			Income (Loss)			Stock			Equity

Balance, December 31, 2024		9,953,018	$	161,999	$	246	$	109,299		$	( 20,073	)	$	( 40,909	)	$	210,562

Net income								4,830									4,830
Other comprehensive loss											( 367	)					( 367	)
Shares issued for stock options and grants		7,485		196													196
Restricted stock grant						269											269
Cash dividends ($ 0.21 per share)								( 1,697	)								( 1,697	)

Balance, March 31, 2025		9,960,503	$	162,195	$	515	$	112,432		$	( 20,440	)	$	( 40,909	)	$	213,793

								Accumulated
								Other						Total
	Common Stock				Retained			Comprehensive			Treasury			Stockholders'
	Shares		Amount		Earnings			Income (Loss)			Stock			Equity

Balance, December 31, 2023		9,930,704	$	161,388	$	100,237		$	( 16,090	)	$	( 39,854	)		205,681

Net income						4,167									4,167
Other comprehensive loss									( 2,040	)					( 2,040	)
Shares issued for stock options and grants		15,750		435											435
Common shares repurchased ( 43,858 )												( 1,055	)		( 1,055	)
Cash dividends ($ 0.20 per share)						( 1,613	)								(1,613	)

Balance, March 31, 2024		9,946,454	$	161,823	$	102,791		$	( 18,130	)	$	( 40,909	)	$	205,575

See accompanying notes to unaudited consolidated financial statements.

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MIDDLEFIELD BANC CORP.

CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollar amounts in thousands)

(Unaudited)

	For the Three Months Ended
	March 31,
	2025			2024
OPERATING ACTIVITIES
Net income	$	4,830		$	4,167
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for (recovery of) credit losses		95			( 136	)
Loss (gain) on equity securities		34			52
Software amortization expense		90			22
Amortization of premium and discount on investment securities, net		138			140
Amortization of core deposit intangibles		249			258
Depreciation, amortization, and accretion, net		( 4	)		97
Stock-based compensation, net		309			-
Origination of loans held for sale		( 1,379	)		( 629	)
Proceeds from sale of loans held for sale		1,403			639
Gain (Loss) on sale of loans held for sale		( 24	)		( 10	)
Earnings on bank-owned life insurance		( 493	)		( 227	)
Deferred income tax		110			447
Decrease (increase) in accrued interest receivable		72			( 131	)
Increase (decrease) in accrued interest payable		190			3,495
Other, net		2,398			( 2,744	)
Net cash provided by (used in) operating activities		8,018			5,440

INVESTING ACTIVITIES
Investment securities available for sale:
Proceeds from repayments and maturities		186			167
Other Investments
Purchases		( 200	)		( 4	)
Decrease (Increase) in loans, net		( 29,347	)		( 12,185	)
Purchase of loans		( 831	)		-
Proceeds from bank-owned life insurance		892			-
Purchase of premises and equipment		( 273	)		( 92	)
Redemption of restricted stock		2,749			503
Net cash provided by (used in) investing activities		( 26,824	)		( 11,611	)

FINANCING ACTIVITIES
Net increase (decrease) in deposits		94,032			20,307
Net increase (decrease) in Federal Home Loan Bank advances		( 62,400	)		( 26,000	)
Repayment of other borrowings		( 51	)		( 50	)
Repurchase of common shares		-			( 1,055	)
Cash dividends		( 1,697	)		( 1,613	)
Net cash provided by (used in) financing activities		29,884			( 8,411	)

Increase (decrease) in cash and cash equivalents		11,078			( 14,582	)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		55,792			60,836

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	66,870		$	46,254

	For the Three Months Ended
	March 31,
	2025			2024
SUPPLEMENTAL INFORMATION
Cash paid during the year for:
Interest on deposits and borrowings	$	9,185		$	6,148
Income taxes		-			1,890

See accompanying notes to unaudited consolidated financial statements.

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MIDDLEFIELD BANC CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Basis of Presentation

The consolidated financial statements of Middlefield Banc Corp. ("Company") include its bank subsidiary, The Middlefield Banking Company (“MBC” or “Bank”), and a nonbank asset resolution subsidiary EMORECO, Inc. The consolidated financial statements also include the accounts of MBC’s subsidiaries, Middlefield Investments, Inc. (“MI”) and MB Insurance Services (“MIS”). All significant inter-company items have been eliminated. On March 13, 2019, MBC established MI as an operating subsidiary to hold and manage an investment portfolio. On March 31, 2025 , MI’s assets consist of a cash account, available-for-sale investment securities, and related accrued interest accounts. MI may only hold and manage investments and may not engage in any other activity without prior approval of the Ohio Division of Financial Institutions. In the first quarter of 2022, MBC established MIS as an operating subsidiary to offer retail and business customers various insurance services, including home, renters, automobile, pet, identity theft, travel, and professional liability insurance. On March 31, 2025 , MIS assets consist of a cash account, a prepaid asset, and an accounts receivable. As a result of the bank merger of Liberty National Bank and MBC on December 1, 2022, Middlefield Banc Corp. acquired a 100 % ownership interest in LBSI Insurance, LLC (“LBSI”), a wholly owned financial subsidiary of Liberty National Bank. LBSI did not operate after the merger, and its existence ended January 19, 2024. All significant intercompany items have been eliminated between MBC and these subsidiaries.

The unaudited consolidated financial statements have been prepared in conformity with the instructions to Form 10 -Q and Article 10 of Regulation SX. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements. The financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10 -K for the year ended December 31, 2024. The interim consolidated financial statements include all adjustments (consisting of only normal recurring items) that, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the periods presented. The results of operations for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year.

Accounting Pronouncements Adopted in 2025

None

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023 - 09, Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures. The amendments require entities to disclose specific categories in the rate reconciliation and provide additional information for material reconciling items. The ASU also requires the disclosure of income taxes paid disaggregated by jurisdiction. The amendments in this ASU are effective for public business entities for annual periods beginning after December 15, 2024. This ASU is not expected to have a significant impact on the Company’s financial statements.

In November 2024, the FASB issued ASU 2024 - 03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Topic 220 - 40 ): Disaggregation of Income Statement Expenses. The guidance requires public companies to disclose additional information about certain types of costs and expenses. The amendment should be applied on a prospective or retrospective basis. The amendments in this ASU are effective for annual periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. This ASU is not expected to have a significant impact on the Company’s financial statements.

NOTE 2 – REVENUE RECOGNITION

Following ASC Topic 606, Revenue from Contracts with Customers (Topic 606 ) , management determined that the primary sources of revenue, which emanate from interest income on loans and investments, along with noninterest revenue resulting from equity security gains (losses), gains on the sale of loans, rental income, and BOLI income, are not within the scope of ASC 606. For the three months ended March 31, 2025 , these revenue sources cumulatively comprise 94.7 % of the total revenue of the Company.

The main types of noninterest income within the scope of the standard are as follows:

Service charges on deposit accounts – The Company has contracts with its deposit customers whereby fees are charged if the account balance falls below predetermined levels defined as compensating balances. These agreements can be canceled at any time by either the Company or the deposit customer. Revenue from these transactions is recognized monthly as the Company has an unconditional right to the fee consideration. The Company also has transaction fees related to specific customer requests or activities that include overdraft fees, online banking fees, and other transaction fees. All of these fees are attributable to specific performance obligations of the Company where the revenue is recognized at a defined point in time, which is the completion of the requested service/transaction.

Revenue from investment services – The Company earns investment services revenue through its referral agreement with LPL Financial. The performance obligation to investment management customers is satisfied over time, and therefore, revenue is recognized over time. The Company generally receives trailing investment services revenue in arrears and recognizes the revenue when the monthly statement with referral revenue is received.

Miscellaneous fee income – Fees earned on other services, such as ATM surcharge fees, money order fees, and check fees, are recognized at the time of the event or the applicable billing cycle.

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The following table depicts the disaggregation of revenue derived from contracts with customers to depict the nature, amount, timing, and uncertainty of revenue and cash flows:

	For the Three Months Ended March 31,
Noninterest Income	2025			2024
(Dollar amounts in thousands)
Service charges on deposit accounts:
Overdraft fees	$	261		$	250
ATM banking fees		432			439
Service charges and other fees		296			220
Loss on equity securities ⁽ª⁾		( 34	)		( 52	)
Earnings on bank-owned life insurance ⁽ª⁾		493			227
Gain on sale of loans ⁽ª⁾		24			10
Revenue from investment services		268			204
Miscellaneous fee income		95			93
Gross rental income ⁽ª⁾		-			67
Other income		109			338
Total noninterest income	$	1,944		$	1,796

(a) Not within scope of ASC 606

NOTE 3 - EARNINGS PER SHARE

The Company provides a dual presentation of basic and diluted earnings per share. Basic earnings per share is calculated by dividing net income by the average shares outstanding. Diluted earnings per share adds the dilutive effects of restricted stock to average shares outstanding.

The following table sets forth the composition of the weighted-average common shares (denominator) used in the basic and diluted earnings per share computation for the three months ended March 31, 2025 and 2024 :

	For the Three
	Months Ended
	March 31,
	2025			2024

Weighted-average common shares outstanding		9,958,115			9,941,596

Average treasury stock shares		( 1,879,310	)		( 1,850,393	)

Weighted-average common shares and common stock equivalents used to calculate basic earnings per share		8,078,805			8,091,203

Additional common stock equivalents (stock options and restricted stock) used to calculate diluted earnings per share		18,740			5,114

Weighted-average common shares and common stock equivalents used to calculate diluted earnings per share		8,097,545			8,096,317

At March 31, 2025 and 2024, there were 43,471 and 7,576 anti-dilutive shares, respectively, excluded from the calculation of diluted earnings per share related to restricted stock awards.

NOTE 4 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents the changes in accumulated other comprehensive income (loss) (“AOCI”) by component, net of tax, for the three months ended March 31, 2025 , and 2024 , respectively:

(Dollars in thousands)	Unrealized (losses)/gains on securities available-for-sale
Balance at December 31, 2024	$	( 20,073	)
Other comprehensive loss⁽ª⁾		( 367	)
Balance at March 31, 2025	$	( 20,440	)

(Dollars in thousands)	Unrealized (losses)/gains on securities available-for-sale
Balance at December 31, 2023	$	( 16,090	)
Other comprehensive loss⁽ª⁾		( 2,040	)
Balance at March 31, 2024	$	( 18,130	)

(a)

All amounts are net of tax.

There were no other reclassifications of amounts from AOCI for the three months ended March 31, 2025 , and 2024 .

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NOTE 5 - FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for an asset or liability in an orderly transaction between market participants at the measurement date. GAAP establishes a fair value hierarchy that prioritizes the use of inputs used in valuation methodologies into the following levels:

Level I:

Quoted prices are available in active markets for identical assets or liabilities as of the reported date.

Level II:

Pricing inputs are other than the quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and liabilities includes items for which quoted prices are available but traded less frequently and items that are valued using other financial instruments, the parameters of which can be directly observed.

Level III:

Assets and liabilities that have little to no pricing observability as of the reported date. These items do not have two -way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.

This hierarchy requires the use of observable market data when available.

The following tables present the assets measured at fair value on a recurring basis on the Consolidated Balance Sheet by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

			March 31, 2025
(Dollar amounts in thousands)	Level I		Level II		Level III		Total
Assets measured on a recurring basis:
Subordinated debt	$	-	$	26,175	$	6,654	$	32,829
Obligations of states and political subdivisions		-		123,851		-	$	123,851
Mortgage-backed securities in government-sponsored entities		-		8,334		-	$	8,334
Total investment securities available for sale		-		158,360		6,654		165,014
Equity securities		728		-		-		728
Total	$	728	$	158,360	$	6,654	$	165,742

			December 31, 2024
(Dollar amounts in thousands)	Level I		Level II		Level III		Total
Assets measured on a recurring basis:
Subordinated debt	$	-	$	25,830	$	6,639	$	32,469
Obligations of states and political subdivisions		-		124,966		-		124,966
Mortgage-backed securities in government-sponsored entities		-		8,367		-		8,367
Total investment securities available for sale		-		159,163		6,639		165,802
Equity securities		753		-		-		753
Total	$	753	$	159,163	$	6,639	$	166,555

Investment Securities Available for Sale - An independent pricing service provides the Company fair values determined by pricing models using a market approach that considers observable market data, such as interest rate volatilities, benchmarked yield curve, credit spreads and prices from market makers and live trading systems (Level II). Level III securities are assets whose fair value cannot be determined by using observable measures. The inputs to the valuation methodology of these securities are unobservable and significant to the fair value measurement. Currently, this category includes certain subordinated debt investments that are valued based on the discounted cash flow approach assuming a yield curve of similarly structured instruments.

While the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of specific financial instruments could result in a different estimate of fair value at the reporting date. Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction on the dates indicated. The estimated fair value amounts have been measured as of their respective period-ends and have not been re-evaluated or updated for purposes of these financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments following the respective reporting dates may be different from the amounts reported at each period-end.

Equity Securities - Equity securities that are traded on a national securities exchange are valued at their last reported sales price as of the measurement date. Equity securities traded in the over-the-counter (“OTC”) markets and listed securities for which no sale was reported on that date are generally valued at their last reported “bid” price if held long, and last reported “ask” price if sold short. To the extent equity securities are actively traded and valuation adjustments are not applied, they are categorized in Level I of the fair value hierarchy.

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The following table presents the fair value reconciliation of Level III assets measured at fair value on a recurring basis.

	Subordinated debt
(Dollar amounts in thousands)	March 31, 2025		December 31, 2024
Beginning of year	$	6,639	$	8,801
Purchases, sales, settlements:
Transfers out of Level III ⁽¹⁾		-		( 2,250	)
Net change in unrealized loss on investment securities available-for-sale		15		88
End of year	$	6,654	$	6,639

( 1 )

Transfers between hierarchy levels are based on the availability of sufficient observable inputs to meet Level II versus Level III criteria. The level designation of each financial instrument is reassessed at the end of each period.

The following table presents the assets measured at fair value on a non-recurring basis on the Consolidated Balance Sheet by level within the fair value hierarchy.

			March 31, 2025
(Dollar amounts in thousands)	Level I		Level II		Level III		Total
Assets measured on a non-recurring basis:
Collateral-dependent loans	$	-	$	-	$	3,087	$	3,087

			December 31, 2024
(Dollar amounts in thousands)	Level I		Level II		Level III		Total
Assets measured on a non-recurring basis:
Collateral-dependent loans	$	-	$	-	$	3,321	$	3,321

Collateral-Dependent Loans – The Company has measured impairment on collateral-dependent individually analyzed loans generally based on the fair value of the loan’s collateral. Fair value is generally determined based on independent third -party appraisals of the properties. In some cases, management may adjust the appraised value due to the age of the appraisal, changes in market conditions, or observable deterioration of the property since the appraisal was completed. Additionally, management makes estimates about expected costs to sell the property, which are also included in the net realizable value. If the fair value of the collateral-dependent loan is less than the carrying amount of the loan, a specific reserve for the loan is made in the allowance for credit losses, or a charge-off is taken to reduce the loan to the fair value of the collateral (less estimated selling costs), and the loan is included in the above table as a Level III measurement in the period in which the adjustment is recorded. If the fair value of the collateral exceeds the carrying amount of the loan, then the loan is not included in the above table as it is not currently being carried at its fair value. The fair values in the preceding tables include selling costs of $ 968,000 million for both March 31, 2025 , and December 31, 2024 .

The following table presents additional quantitative information about assets measured at fair value on a non-recurring basis and for which the Company uses Level III inputs to determine fair value:

	Quantitative Information about Level III Fair Value Measurements
(Dollar amounts in thousands)
	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range (Weighted Average)
March 31, 2025
Collateral-dependent loans	$	3,087	Appraisal of collateral (1)	Appraisal adjustments (2)		0 - 23.9% (23.9%)

	Quantitative Information about Level III Fair Value Measurements
(Dollar amounts in thousands)
	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range (Weighted Average)
December 31, 2024
Collateral-dependent loans	$	3,321	Appraisal of collateral ⁽¹⁾	Appraisal adjustments ⁽²⁾		0 - 23.9% (23.9%)

( 1 )

Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various level III inputs that are not identifiable, less any associated allowance.

( 2 )

Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

The estimated fair value of the Company’s financial instruments not recorded at fair value on a recurring basis is as follows:

	March 31, 2025
	Carrying								Total
	Value		Level I		Level II		Level III		Fair Value
	(Dollar amounts in thousands)
Financial assets:
Net loans	$	1,527,948	$	-	$	-	$	1,502,880	$	1,502,880
Mortgage servicing rights		1,465		-		-		2,469		2,469

Financial liabilities:
Non-maturing deposits	$	1,264,052	$	1,264,052	$	-	$	-	$	1,264,052
Time deposits		275,673		-		-		274,161		274,161
Other borrowings		11,609		-		-		11,609		11,609

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	December 31, 2024
	Carrying								Total
	Value		Level I		Level II		Level III		Fair Value
	(Dollar amounts in thousands)
Financial assets:
Net loans	$	1,497,167	$	-	$	-	$	1,462,650	$	1,462,650
Mortgage servicing rights		1,497		-		-		2,522		2,522

Financial liabilities:
Non-maturing deposits	$	1,197,989	$	1,197,989	$	-	$	-	$	1,197,989
Time deposits		247,704		-		-		245,999		245,999
Other borrowings		11,660		-		-		11,660		11,660

Included within other borrowings is an $ 8.2 million note payable, which matures in December 2037. These borrowings were used to form a special purpose entity to issue $ 8.0 million of floating rate, obligated mandatorily redeemable securities. The rate adjusts quarterly, equal to SOFR plus 1.67 %. The borrowing is a floating rate instrument, and any difference between the cost and fair value is insignificant.

In addition to the financial instruments included in the above tables, cash and cash equivalents, bank-owned life insurance, Federal Home Loan Bank (the “FHLB”) stock, other investments, accrued interest receivable, Federal Home Loan Bank advances, finance lease liabilities, and accrued interest payable, are carried at cost, which approximates the fair value of the instruments.

NOTE 6 – INVESTMENT AND EQUITY SECURITIES

The amortized cost and fair values of investment securities available for sale are as follows:

	March 31, 2025
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
(Dollar amounts in thousands)	Cost (a)		Gains		Losses			Value

Subordinated debt	$	34,300	$	86	$	( 1,557	)	$	32,829
Obligations of states and political subdivisions:
Tax-exempt		147,634		4		( 23,787	)		123,851
Mortgage-backed securities in government-sponsored entities		8,953		25		( 644	)		8,334
Total	$	190,887	$	115	$	( 25,988	)	$	165,014

(a)	Accrued interest of $ 1.5 million is excluded from amortized cost and presented in " accrued interest receivable and other assets " on the Consolidated Balance Sheet.

	December 31, 2024
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
(Dollar amounts in thousands)	Cost (a)		Gains		Losses			Value

Subordinated debt	$	34,300	$	67	$	( 1,898	)	$	32,469
Obligations of states and political subdivisions:
Tax-exempt		147,767		4		( 22,805	)		124,966
Mortgage-backed securities in government-sponsored entities		9,144		1		( 778	)		8,367
Total	$	191,211	$	72	$	( 25,481	)	$	165,802

(a)	Accrued interest of $ 1.5 million is excluded from amortized cost and presented in "accrued interest receivable and other assets" on the Consolidated Balance Sheet.

The amortized cost and fair value of investment securities at March 31, 2025 , by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized		Fair
(Dollar amounts in thousands)	Cost		Value

Due in one year or less	$	590	$	591
Due after one year through five years		6,816		6,664
Due after five years through ten years		57,517		54,754
Due after ten years		125,964		103,005
Total	$	190,887	$	165,014

There were no investment securities sold during the three months ended March 31, 2025 , or year ended December 31, 2024 .

Investment securities with an approximate carrying value of $ 111.0 million and $ 112.1 million on March 31, 2025 , and December 31, 2024 , respectively, were pledged to secure deposits and for other purposes as required by law.

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The following table shows the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position.

	March 31, 2025
	Less than Twelve Months					Twelve Months or Greater					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Dollar amounts in thousands)	Value		Losses			Value		Losses			Value		Losses

Subordinated debt	$	2,660	$	( 90	)	$	27,333	$	( 1,467	)	$	29,993	$	( 1,557	)
Obligations of states and political subdivisions:
Tax-exempt		11,486		( 414	)		105,341		( 23,373	)		116,827		( 23,787	)
Mortgage-backed securities in government-sponsored entities		1,400		( 24	)		5,082		( 620	)		6,482		( 644	)
Total	$	15,546	$	( 528	)	$	137,756	$	( 25,460	)	$	153,302	$	( 25,988	)

	December 31, 2024
	Less than Twelve Months					Twelve Months or Greater					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Dollar amounts in thousands)	Value		Losses			Value		Losses			Value		Losses

Subordinated debt	$	10,632	$	( 368	)	$	20,770	$	( 1,530	)	$	31,402	$	( 1,898	)
Obligations of states and political subdivisions:
Tax-exempt		15,456		( 487	)		102,484		( 22,318	)		117,940		( 22,805	)
Mortgage-backed securities in government-sponsored entities		1,986		( 49	)		5,118		( 729	)		7,104		( 778	)
Total	$	28,074	$	( 904	)	$	128,372	$	( 24,577	)	$	156,446	$	( 25,481	)

Every quarter, the Company evaluates investment securities with unrealized losses to determine if the decline in fair value has resulted from credit losses or other factors. There were 23 securities in an unrealized loss position for less than twelve months and 177 securities in an unrealized loss position for twelve months or greater on March 31, 2025 . Unrealized losses on investment securities available for sale have not been recognized into income because we do not intend to sell and it is more likely than not that we will not be required to sell any of the securities in an unrealized loss position before recovery of their amortized cost. The unrealized losses on investment securities were attributable to changes in interest rates and not related to the credit quality of these issuers. As of March 31, 2025 and December 31, 2024 , no ACL was required on investment securities available for sale.

Other investments, which primarily represents equity securities, totaled $ 1.0 million and $ 855,000 at March 31, 2025 and December 31, 2024 , respectively. The Company recognized a loss on other investments of $ 34,000 and $ 52,000 for the three months ended March 31, 2025 and 2024, respectively.

NOTE 7 – LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES

The following table summarizes the loan portfolio by primary segment and class of financial receivable:

	March 31,			December 31,
	2025 ⁽¹⁾⁽²⁾			2024 ⁽¹⁾⁽²⁾

Commercial real estate:
Owner occupied	$	185,412		$	181,447
Non-owner occupied		413,621			412,291
Multifamily		88,737			89,849
Residential real estate		351,274			353,442
Commercial and industrial		235,547			229,034
Home equity lines of credit		147,154			143,379
Construction and other		122,653			103,608
Consumer installment		5,951			6,564
Total loans		1,550,349			1,519,614
Less: Allowance for credit losses		( 22,401	)		( 22,447	)
Net loans	$	1,527,948		$	1,497,167

^{( 1 )}	Accrued interest of $ 5.5 million and $ 5.5 million at March 31, 2025 and December 31, 2024 , respectively, is excluded from amortized cost and presented in " accrued interest receivable and other assets " on the Consolidated Balance Sheets.
^{( 2 )}	Unearned income, including net deferred loan fees and costs and unamortized premiums and discounts, totaled $ 7.7 million and $ 8.2 million at March 31, 2025 and December 31, 2024 , respectively.

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Allowance for Credit Losses: Loans

The methodology for calculating the allowance for credit losses considers the possibility of expected loss over the life of the loan. It also considers historical loss rates and other qualitative adjustments, as well as a new forward-looking component that considers reasonable and supportable forecasts over the expected life of each loan. To develop the ACL estimate under the current expected loss model, the Company segments the loan portfolio into loan pools based on loan type and similar credit risk elements. An ACL is maintained to absorb losses from the loan portfolio. The ACL is based on management’s continuing evaluation of the risk characteristics and credit quality of the loan portfolio, assessment of current economic conditions, diversification and size of the portfolio, adequacy of collateral, past and anticipated loss experience, and the amount of nonperforming loans. Refer to Note 1 – Summary of Significant Accounting Policies under the heading "Allowance for Credit Losses - Loans" of our 2024 Form 10 -K for additional information on the Bank’s methodology for estimating the ACL.

Management reviews the loan portfolio quarterly using a defined, consistently applied process to make appropriate and timely adjustments to the ACL. When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ACL.

The following tables summarize the ACL within the primary segments of the loan portfolio and the activity within those segments:

	For the Three Months Ended March 31, 2025
	Allowance for Credit Losses
	Balance										Balance
(Dollar amounts in thousands)	December 31, 2024		Charge-offs			Recoveries		Provision			March 31, 2025
Loans:
Commercial real estate:
Owner occupied	$	2,100	$	-		$	13	$	175		$	2,288
Non-owner occupied		8,364		-			7		( 3,273	)		5,098
Multifamily		1,310		-			-		( 142	)		1,168
Residential real estate		5,236		( 1	)		36		379			5,650
Commercial and industrial		2,427		( 5	)		169		380			2,971
Home equity lines of credit		897		( 4	)		8		19			920
Construction and other		2,052		-			-		2,181			4,233
Consumer installment		61		( 44	)		30		26			73
Total	$	22,447	$	( 54	)	$	263	$	( 255	)	$	22,401

	For the Three Months Ended March 31, 2024
	Allowance for Credit Losses
	Balance										Balance
(Dollar amounts in thousands)	December 31, 2023		Charge-offs			Recoveries		Provision			March 31, 2024
Loans:
Commercial real estate:
Owner occupied	$	2,668	$	-		$	11	$	( 619	)	$	2,060
Non-owner occupied		4,480		-			-		3,288			7,768
Multifamily		1,796		-			-		( 592	)		1,204
Residential real estate		5,450		-			-		( 676	)		4,774
Commercial and industrial		4,377		-			8		( 2,347	)		2,038
Home equity lines of credit		750		( 7	)		-		42			785
Construction and other		1,990		-			-		383			2,373
Consumer installment		182		-			56		( 171	)		67
Total	$	21,693	$	( 7	)	$	75	$	( 692	)	$	21,069

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The total ACL decreased by $ 46,000 , or 0.2 %, from December 31, 2024 to March 31, 2025 . The decrease was driven by portfolio activity, updated assumptions, and the economic outlook. For 2024 and the first quarter of 2025, the Bank utilized unemployment rate data from Federal Open Market Committee ("FOMC") within the model to forecast credit losses in the portfolio. The FOMC Summary of Economic Projections for the Civilian Unemployment Rate – Central Tendency – High used in the March 31, 2025 calculation projects a slight increase in the unemployment rate from the prior quarter. The prepayment rates, probability of default (“PD”), and loss given default (“LGD”) assumptions were updated with the March 31, 2025 calculation in accordance with our policy to refresh assumptions on an annual basis. Prepayment rate assumptions are based on Bank data, while PD and LGD assumptions are determined using peer benchmark data. To the extent that credit risk is not fully identified within the forecasts and calculated reserve, management has made qualitative adjustments to the ACL balance.

The fluctuation in the ACL during the three months ended March 31, 2025, can be attributed to the following along with general increases and decreases in outstanding loan balances:

	•	Decrease in ACL for non-owner occupied CRE loans is due to ( 1 ) a decrease in PDs and LGDs based on using Bank data for the first 12 months of the forecast and reverting to peer benchmark data for the remainder of the forecast, partially offset by a decrease in prepayment rates and ( 2 ) a decrease in the maximum loss rate used in the qualitative adjustment.
	•	Increase in ACL for construction and other loans is due to ( 1 ) the impact a decrease in prepayment rates and an increase in PDs and LGDs causing an increase in the calculated reserve and ( 2 ) an increase in the qualitative adjustment to adjust for a change in the Credit team.
	•	Increase in ACL for residential real estate loans is due to a decrease in prepayment rates, partially offset by a decrease in PDs and LGDs in the calculation reserve.

Credit Quality Indicators

Management evaluates individual loans in all of the commercial segments for possible impairment based on guidelines established by the Board of Directors. Loans are individually analyzed when, based on current information and events, the Company will probably be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in evaluating credit loss include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall concerning the principal and interest owed. The evaluation of the need and amount of a specific allocation of the allowance and whether a loan can be removed from impairment status is made quarterly.

Management uses a nine -point internal risk-rating system to monitor the credit quality of the overall loan portfolio. The first five categories are considered not criticized and are aggregated as Pass rated. The criticized rating categories utilized by management generally follow bank regulatory definitions. The Special Mention category includes assets that are currently protected but have potential weaknesses, resulting in undue and unwarranted credit risk, but not to the point of justifying a Substandard classification. Loans in the Substandard category have well-defined weaknesses that jeopardize the liquidation of the debt and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected. All loans greater than 90 days past due are considered Substandard. A loan categorized as Doubtful contains all of the weaknesses as a Substandard loan with the added characteristic that the weaknesses are so pronounced that the collection or liquidation in full of both principal and interest is highly questionable or improbable. Any portion of a loan that has been charged off is placed in the Loss category.

To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Company has a structured loan rating process with several layers of internal and external oversight. Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as payment delinquency, bankruptcy, repossession, or death, occurs to raise awareness of a possible credit quality loss. The Company’s Commercial Loan Officers are responsible for the timely and accurate risk rating of the loans in their portfolios at origination and on an ongoing basis. The Credit Department performs an annual review of all commercial relationships with loan balances of $ 750,000 or greater. Detailed reviews, including plans for resolution, are performed on criticized loans of $ 150,000 or more on at least a quarterly basis. Loans in the Special Mention and Substandard categories that are collectively evaluated for impairment are given separate consideration in the determination of the allowance.

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due.

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The following table represents outstanding loan balances by credit quality indicators and vintage year by class of financing receivable and current period gross charge-offs by year of origination as of March 31, 2025 :

March 31, 2025
Term Loans Amortized Cost Basis by Origination Year													Revolving Amortized
(Dollar amounts in thousands)	2025		2024		2023		2022		2021		Prior		Cost Basis		Total
Commercial real estate:
Owner occupied
Pass	$	4,247	$	11,016	$	19,720	$	32,740	$	43,295	$	62,859	$	4,630	$	178,507
Special Mention		-		-		-		-		383		765		-		1,148
Substandard		-		949		-		4,522		-		286		-		5,757
Total Owner occupied	$	4,247	$	11,965	$	19,720	$	37,262	$	43,678	$	63,910	$	4,630	$	185,412
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Non-owner occupied
Pass	$	9,492	$	7,504	$	61,388	$	96,175	$	46,552	$	151,416	$	1,046	$	373,573
Special Mention		-		-		-		2,507		-		1,984		-		4,491
Substandard		-		-		-		3,668		635		31,254		-		35,557
Total Non-owner occupied	$	9,492	$	7,504	$	61,388	$	102,350	$	47,187	$	184,654	$	1,046	$	413,621
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Multifamily
Pass	$	-	$	2,912	$	36,114	$	21,870	$	7,382	$	20,459	$	-	$	88,737
Total Multifamily	$	-	$	2,912	$	36,114	$	21,870	$	7,382	$	20,459	$	-	$	88,737
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Residential real estate
Pass	$	7,506	$	44,694	$	49,301	$	60,850	$	68,027	$	117,913	$	141	$	348,432
Substandard		-		-		164		306		635		1,737		-		2,842
Total Residential real estate	$	7,506	$	44,694	$	49,465	$	61,156	$	68,662	$	119,650	$	141	$	351,274
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	1	$	-	$	1
Commercial and industrial
Pass	$	7,186	$	48,861	$	32,864	$	28,922	$	9,883	$	23,475	$	81,394	$	232,585
Special Mention		-		-		565		-		-		-		1,721		2,286
Substandard		-		214		9		-		10		370		72		675
Loss		-		-		-		-		-		-		1		1
Total Commercial and industrial	$	7,186	$	49,075	$	33,438	$	28,922	$	9,893	$	23,845	$	83,188	$	235,547
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	5	$	-	$	5
Home equity lines of credit
Pass	$	-	$	358	$	22	$	195	$	-	$	2,166	$	142,963	$	145,704
Substandard		-		-		166		148		-		639		497		1,450
Total Home equity lines of credit	$	-	$	358	$	188	$	343	$	-	$	2,805	$	143,460	$	147,154
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	4	$	-	$	4
Construction and other
Pass	$	705	$	42,390	$	55,127	$	2,110	$	1,080	$	1,858	$	16,544	$	119,814
Special Mention		-		-		-		-		-		210		-		210
Substandard		-		-		493		-		-		1,046		1,090		2,629
Total Construction and other	$	705	$	42,390	$	55,620	$	2,110	$	1,080	$	3,114	$	17,634	$	122,653
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Consumer installment
Pass	$	284	$	1,328	$	896	$	290	$	89	$	2,904	$	-	$	5,791
Substandard		-		-		-		-		-		160		-		160
Total Consumer installment	$	284	$	1,328	$	896	$	290	$	89	$	3,064	$	-	$	5,951
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	44	$	-	$	44
Total Loans	$	29,420	$	160,226	$	256,829	$	254,303	$	177,971	$	421,501	$	250,099	$	1,550,349

Total Loans Summary
Pass	$	29,420	$	159,063	$	255,432	$	243,152	$	176,308	$	383,050	$	246,718	$	1,493,143
Special Mention		-		-		565		2,507		383		2,959		1,721		8,135
Substandard		-		1,163		832		8,644		1,280		35,492		1,659		49,070
Loss		-		-		-		-		-		-		1		1
Total Loans	$	29,420	$	160,226	$	256,829	$	254,303	$	177,971	$	421,501	$	250,099	$	1,550,349

Table of Contents

December 31, 2024
Term Loans Amortized Cost Basis by Origination Year													Revolving Amortized
(Dollar amounts in thousands)	2024		2023		2022		2021		2020		Prior		Cost Basis		Total
Commercial real estate:
Owner occupied
Pass	$	12,424	$	20,265	$	33,389	$	39,025	$	25,532	$	39,393	$	4,394	$	174,422
Special Mention		-		-		-		389		-		772		-		1,161
Substandard		974		-		4,535		-		-		355		-		5,864
Total Owner occupied	$	13,398	$	20,265	$	37,924	$	39,414	$	25,532	$	40,520	$	4,394	$	181,447
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	45	$	-	$	45
Non-owner occupied
Pass	$	7,542	$	63,559	$	96,624	$	49,009	$	20,230	$	133,530	$	905	$	371,399
Special Mention		-		-		2,506		-		-		2,002		-		4,508
Substandard		-		-		3,719		635		-		32,030		-		36,384
Total Non-owner occupied	$	7,542	$	63,559	$	102,849	$	49,644	$	20,230	$	167,562	$	905	$	412,291
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	1,341	$	-	$	1,341
Multifamily
Pass	$	2,930	$	36,113	$	21,978	$	7,437	$	10,057	$	11,324	$	10	$	89,849
Total Multifamily	$	2,930	$	36,113	$	21,978	$	7,437	$	10,057	$	11,324	$	10	$	89,849
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Residential real estate
Pass	$	45,347	$	50,820	$	61,963	$	69,982	$	36,067	$	86,492	$	291	$	350,962
Substandard		34		169		115		635		-		1,527		-		2,480
Total Residential real estate	$	45,381	$	50,989	$	62,078	$	70,617	$	36,067	$	88,019	$	291	$	353,442
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Commercial and industrial
Pass	$	48,654	$	33,860	$	31,305	$	13,512	$	18,864	$	4,888	$	74,169	$	225,252
Special Mention		2,263		-		-		-		-		-		832		3,095
Substandard		214		10		-		-		305		84		74		687
Total Commercial and industrial	$	51,131	$	33,870	$	31,305	$	13,512	$	19,169	$	4,972	$	75,075	$	229,034
Current-period gross charge-offs	$	-	$	180	$	23	$	12	$	-	$	-	$	-	$	215
Home equity lines of credit
Pass	$	244	$	-	$	166	$	183	$	133	$	2,041	$	139,214	$	141,981
Substandard		-		68		150		-		34		493		653		1,398
Total Home equity lines of credit	$	244	$	68	$	316	$	183	$	167	$	2,534	$	139,867	$	143,379
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	7	$	-	$	7
Construction and other
Pass	$	31,361	$	48,177	$	2,418	$	1,223	$	506	$	1,368	$	14,909	$	99,962
Special Mention		-		-		834		-		-		221		-		1,055
Substandard		-		493		-		-		-		1,171		927		2,591
Total Construction and other	$	31,361	$	48,670	$	3,252	$	1,223	$	506	$	2,760	$	15,836	$	103,608
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Consumer installment
Pass	$	1,539	$	1,047	$	381	$	112	$	36	$	3,284	$	-	$	6,399
Substandard		-		-		3		-		-		162		-		165
Total Consumer installment	$	1,539	$	1,047	$	384	$	112	$	36	$	3,446	$	-	$	6,564
Current-period gross charge-offs	$	-	$	-	$	2	$	6	$	-	$	30	$	-	$	38
Total Loans	$	153,526	$	254,581	$	260,086	$	182,142	$	111,764	$	321,137	$	236,378	$	1,519,614

Total Loans Summary
Pass	$	150,041	$	253,841	$	248,224	$	180,483	$	111,425	$	282,320	$	233,892	$	1,460,226
Special Mention		2,263		-		3,340		389		-		2,995		832		9,819
Substandard		1,222		740		8,522		1,270		339		35,822		1,654		49,569
Total Loans	$	153,526	$	254,581	$	260,086	$	182,142	$	111,764	$	321,137	$	236,378	$	1,519,614

Table of Contents

Collateral-dependent Loans

The following table presents individually analyzed and collateral-dependent loans by classes of loan type as of March 31, 2025 :

	March 31, 2025
	Type of Collateral
(Dollar amounts in thousands)	Real Estate		Blanket Lien		Investment/Cash		Other		Total
Commercial real estate:
Owner occupied	$	5,471	$	-	$	-	$	-	$	5,471
Non-owner occupied		25,971		-		-		-		25,971
Residential real estate		617		-		-		-		617
Commercial and industrial		214		-		-		-		214
Construction and other		493		-		-		-		493
Total	$	32,766	$	-	$	-	$	-	$	32,766

The following table presents individually analyzed and collateral-dependent loans by classes of loan type as of December 31, 2024:

	December 31, 2024
	Type of Collateral
(Dollar amounts in thousands)	Real Estate		Blanket Lien		Investment/Cash		Other		Total
Commercial real estate:
Owner occupied	$	3,198	$	-	$	-	$	-	$	3,198
Non-owner occupied		24,881		-		-		-		24,881
Residential real estate		617		-		-		-		617
Commercial and industrial		214		-		-		-		214
Construction and other		493		-		-		-		493
Total	$	29,403	$	-	$	-	$	-	$	29,403

At March 31, 2025 and December 31, 2025 , the Company reported $ 959,000 and $ 352,000 , respectively, in residential real estate loans in the process of foreclosure

Nonperforming and Past Due Loans

The following table present the aging of the recorded investment in past-due loans by class of loans as of March 31, 2025 :

			30-59 Days		60-89 Days		90 Days+		Total		Total
March 31, 2025	Current		Past Due		Past Due		Past Due		Past Due		Loans

Commercial real estate:
Owner occupied	$	185,243	$	47	$	-	$	122	$	169	$	185,412
Non-owner occupied		405,609		-		-		8,012		8,012		413,621
Multifamily		88,737		-		-		-		-		88,737
Residential real estate		348,246		1,805		233		990		3,028		351,274
Commercial and industrial		235,284		242		10		11		263		235,547
Home equity lines of credit		146,597		209		94		254		557		147,154
Construction and other		122,160		-		-		493		493		122,653
Consumer installment		5,888		41		22		-		63		5,951
Total	$	1,537,764	$	2,344	$	359	$	9,882	$	12,585	$	1,550,349

The following table present the aging of the recorded investment in past-due loans by class of loans as of December 31, 2024 :


			30-59 Days		60-89 Days		90 Days+		Total		Total
December 31, 2024	Current		Past Due		Past Due		Past Due		Past Due		Loans

Commercial real estate:
Owner occupied	$	180,752	$	513	$	122	$	60	$	695	$	181,447
Non-owner occupied		402,924		1,355		-		8,012		9,367		412,291
Multifamily		89,756		93		-		-		93		89,849
Residential real estate		349,645		2,216		562		1,019		3,797		353,442
Commercial and industrial		226,669		81		2,284		-		2,365		229,034
Home equity lines of credit		142,484		366		102		427		895		143,379
Construction and other		103,115		-		-		493		493		103,608
Consumer installment		6,479		41		44		-		85		6,564
Total	$	1,501,824	$	4,665	$	3,114	$	10,011	$	17,790	$	1,519,614

Table of Contents

The following tables present the recorded investment in nonaccrual loans and loans 90 and greater days past due and still on accrual by class of loans:

	March 31, 2025
	Nonaccrual		Nonaccrual				Loans Past
(Dollar amounts in thousands)	with no		with		Total		Due Over 90 Days		Total
	ACL		ACL		Nonaccrual		Still Accruing		Nonperforming
Commercial real estate:
Owner occupied	$	949	$	234	$	1,183	$	-	$	1,183
Non-owner occupied		20,504		3,616		24,120		-		24,120
Residential real estate		617		1,745		2,362		-		2,362
Commercial and industrial		-		158		158		-		158
Home equity lines of credit		-		1,070		1,070		4		1,074
Construction and other		493		-		493		-		493
Consumer installment		160		-		160		-		160
Total	$	22,723	$	6,823	$	29,546	$	4	$	29,550

	December 31, 2024
	Nonaccrual		Nonaccrual				Loans Past
(Dollar amounts in thousands)	with no		with		Total		Due Over 90 Days		Total
	ACL		ACL		Nonaccrual		Still Accruing		Nonperforming
Commercial real estate:
Owner occupied	$	974	$	301	$	1,275	$	-	$	1,275
Non-owner occupied		21,265		3,616		24,881		-		24,881
Multifamily		-		-		-		-		-
Residential real estate		617		1,377		1,994		-		1,994
Commercial and industrial		-		159		159		-		159
Home equity lines of credit		-		1,017		1,017		-		1,017
Construction and other		-		493		493		-		493
Consumer installment		162		3		165		-		165
Total	$	23,018	$	6,966	$	29,984	$	-	$	29,984

Interest income that would have been recorded had these loans not been placed on nonaccrual status was $ 417,000 and $ 1.1 million for the three -month period ended March 31, 2025 and December 31, 2024 respectively.

Modifications to Borrowers Experiencing Financial Difficulty

The following disclosures are for loan modifications to borrowers experiencing financial difficulty. The Bank may modify the contractual terms of a loan to a borrower experiencing financial difficulty to mitigate the risk of loss. Such modifications may include a term extension, interest rate reduction, significant payment deferral, other modifications, or a combination of modification types. In general, any delay in payment of greater than 90 days in the last 12 months is considered to be a significant payment deferral.

The table below details the amortized cost basis of the loans modified to borrowings experiencing financial difficulty, disaggregated by class of loans and type of concessions granted, and the financial effect of the modifications:

	March 31, 2025
	Modifications
					Payment		Interest Rate		Interest Rate				Percentage of
					Deferral		Reduction		Reduction				Total Loans
	Payment		Term		and Term		and Term		and Principal				Held for
(Dollar amounts in thousands)	Deferral		Extension		Extension		Extension		Forgiveness		Total		Investment

Commercial real estate:
Owner occupied	$	-	$	438	$	-	$	-	$	-	$	438		0.0	%
Non-owner occupied		-		8,349		12,439		-		-		20,788		1.3	%
Multifamily		-		695		-		-		-		695		0.0	%
Commercial and industrial		-		889		-		-		-		889		0.1	%
Home equity lines of credit		-		84		-		-		-		84		0.0	%
Total	$	-	$	10,455	$	12,439	$	-	$	-	$	22,894		1.5	%

Table of Contents

	March 31, 2024
	Modifications
					Payment		Interest Rate		Interest Rate				Percentage of
					Deferral		Reduction		Reduction				Total Loans
	Payment		Term		and Term		and Term		and Principal				Held for
(Dollar amounts in thousands)	Deferral		Extension		Extension		Extension		Forgiveness		Total		Investment

Commercial real estate:
Non-owner occupied	$	-	$	14,924	$	2,507	$	-	$	-	$	17,431		1.2	%
Construction and other		-		3,202		-		-		-		3,202		0.2	%
Total	$	-	$	18,126	$	2,507	$	-	$	-	$	20,633		1.4	%

As of March 31, 2025 , the Bank had a commitment to lend $ 111,000 of additional funds on one modified loan. As of March 31, 2025 , and December 31, 2024 the Bank did not have any loans that were modified for borrowers experiencing financial difficulty and subsequently defaulted. Payment default is defined as movement to nonperforming status, foreclosure or charge-off, whichever occurs first.

Allowance for Credit Losses: Unfunded Commitments

The Company records a separate ACL for unfunded commitments using a methodology that is inherently similar to the methodology used for calculating the ACL for loans. The liability for credit losses on these exposures is $ 2.0 million and $ 1.6 million as of March 31, 2025 and December 31, 2024 , respectively, and included in “accrued interest payable and other liabilities” on the Consolidated Balance Sheet. The provision for credit loss associated with the liability for unfunded commitments amounted to a provision for credit losses of $ 350,000 for the three months ended March 31, 2025 , and a provision for credit losses of $ 556,000 for the three months ended March 31, 2024 .

NOTE 8 – COMMITMENTS AND CONTINGENT LIABILITIES

In the ordinary course of business, various outstanding commitments and certain contingent liabilities are not reflected in the accompanying consolidated financial statements. These commitments and contingent liabilities represent financial instruments with off-balance-sheet risk. The contract or notional amounts of those instruments reflect the extent of involvement in particular types of financial instruments.

Commitments to Extend Credit

The following table summarizes the commitments to extend credit, which were composed of the following:

(Dollar amounts in thousands)	March 31, 2025		December 31, 2024

Commitments to extend credit	$	455,494	$	468,006
Standby letters of credit		542		798

Total	$	456,036	$	468,804

The commitments to extend credit involve, to varying degrees, elements of credit and interest rate risk over the amount recognized in the Consolidated Balance Sheet. The Company’s exposure to credit loss, in the event of nonperformance by the other parties to the financial instruments, is represented by the contractual amounts as disclosed. The Company minimizes its exposure to credit loss under these commitments by subjecting them to credit approval, review procedures, and collateral requirements as deemed necessary. Loan commitments generally have fixed expiration dates within one year of their origination.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. These instruments are issued primarily to support bid or performance-related contracts. The coverage period for these instruments is typically one year, with an annual renewal option subject to prior approval by management. Fees earned from the issuance of these letters are recognized over the coverage period. The collateral is typically bank deposit instruments or customer business assets for secured letters of credit.

Commitments to Fund

We have an investment in a low-income housing tax credit operating partnership. As a limited partner, we are allocated tax credits and deductions associated with the underlying properties. Our maximum exposure to loss in connection with the partnership consists of the unamortized investment balance plus any unfunded equity commitments and tax credits claimed but subject to recapture. The investment at March 31, 2025 and December 31, 2024, was $ 1.8 million, and recorded in the Consolidated Balance Sheet in " accrued interest receivable and other assets ". We do not have any loss reserves recorded since we believe the likelihood of loss is remote. The investment is amortized over the period that we expect to receive the tax benefits using the proportional amortization method. For the three months ended March 31, 2025 and 2024, we recognized $ 47,000 and $ 21,000 , respectively, of amortization. At March 31, 2025 and December 31, 2024, we had an unfunded tax credit commitment of $ 1.5 million, which is recorded in the Consolidated Balance Sheet in "accrued interest payable and other liabilities".

Table of Contents

Cannabis Industry

We provide deposit services to customers who are licensed by the State of Ohio's Division of Cannabis Control to do business as (or are related to) growers, processors, and dispensaries. Marijuana businesses are regulated by the Ohio Department of Commerce and legal in the State of Ohio, although it is not legal at the federal level. The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) published guidelines in 2014 for financial institutions servicing state-legal cannabis businesses. A financial institution that provides services to cannabis-related businesses can comply with Bank Secrecy Act (“BSA”) disclosure standards by following the FinCEN guidelines. We maintain stringent written policies and procedures related to the acceptance of such businesses and the monitoring and maintenance of such business accounts. We conduct a significant due diligence review of the cannabis business before the business is accepted as a new client, including confirmation that the business is properly licensed by the State of Ohio and state visits. Throughout the relationship, we continue monitoring the business to ensure that the business continues to meet our stringent requirements, including maintenance of required licenses and periodic financial reviews of the business.

While we believe we are operating in compliance with the FinCEN guidelines, there can be no assurance that federal enforcement guidelines will not change. Federal prosecutors have significant discretion, and there can be no assurance that the federal prosecutors will not choose to strictly enforce the federal laws governing cannabis. Any change in the Federal government’s enforcement position could cause us to immediately cease providing banking services to the cannabis industry. We are upfront with our customers regarding the fact that we may have to terminate our deposit services relationship if a change occurs with the Federal government’s position, and that the termination may come with little or no notice.

Litigation

As previously disclosed, a cyber-attack occurred in April 2023 that resulted in a temporary disruption to our computer systems. A cybersecurity firm investigated the nature and scope of the incident, evaluated our systems, and confirmed that nonpublic information relating to current and former employees, customers, and others was obtained from our systems.

On January 8, 2024, a customer filed a lawsuit against The Middlefield Banking Company in the U.S. District Court for the Northern District of Ohio related to the cyber-attack incident. A similar lawsuit was filed on January 10, 2024, against The Middlefield Banking Company in the Court of Common Pleas for Cuyahoga County, Ohio. The plaintiffs and class members in the two cases, who are current and former customers of the Bank, claim to have been harmed by alleged actions or inactions by the Bank in connection with the incident. The plaintiffs assert a variety of common law and statutory claims regarding the compromised nonpublic information and seek monetary damages, equitable and injunctive relief, pre-judgment and post-judgment interest, awards of actual and punitive damages, costs and attorneys’ fees, and other related relief. On March 28, 2024, the plaintiff in the case before the U.S. District Court for the Northern District of Ohio voluntarily dismissed their lawsuit against The Middlefield Banking Company without prejudice. The plaintiff in the Cuyahoga County lawsuit filed an amended complaint on August 8, 2024, to add an additional plaintiff. The amendment made no change to the relief sought in the original complaint.

On October 31, 2024, the plaintiffs filed with the Court of Common Pleas a motion for preliminary approval of class action settlement, with the Court granting preliminary approval of the class action settlement on November 6, 2024. On February 4, 2025, the plaintiffs submitted a motion for attorneys’ fees for class counsel. The Court of Common Pleas held the Fairness Hearing on April 1, 2025, and granted the final approval of the class action settlement, attorneys’ fees, and class representative service awards. The case has been settled, and settlement payments are expected to occur by May 16, 2025. Losses attributable to the April 2023 incident are within the coverage limits of the cyber risk insurance policy in place at that time. The policy has an aggregate limit of $ 3 million and a deductible of $ 50,000 . The policy includes coverage for business loss, breach response, and liabilities that could occur as a result of a cyber event. The costs associated with the lawsuit, including attorney fees and settlement, will be billed to and paid by the insurance company in accordance with the terms of the policy.

NOTE 9 - RELATED PARTY TRANSACTIONS

The following table summarizes lending activities to principal officers, directors, and their affiliates for the periods ended March 31, 2025 and December 31, 2024 :

(Dollars in thousands)	March 31, 2025			December 31, 2024
Beginning balance	$	26,114		$	24,185
New loans		25			3,362
Repayments		( 132	)		( 1,377	)
Effect of change in related party status		-			( 56	)
Ending balance	$	26,007		$	26,114

Deposits of related parties amount to $ 31.3 million and $ 32.5 million as of March 31, 2025 and December 31, 2024 , respectively.

NOTE 10 - SEGMENT REPORTING

The Company has one business segment: Bank Segment. The Bank Segment provides customers with a broad range of banking services, including various deposit and lending products to consumer and commercial customers. The Company’s chief operating decision maker (CODM) is the Chief Executive Officer.

Table of Contents

The following table shows selected financial data for the Bank Segment for the three months ended March 31, 2025 , and 2024 . The accounting policies of the segment are the same as those followed by the Company. The information is derived from the internal financial reporting records that are used to monitor and manage the Company's financial performance. The segment expense categories are based on the information regularly provided to the CODM and are considered significant to the segment’s operations. The Bank Segment excludes the income, expenses, and total assets of the parent company, Middlefield Banc Corp, and the parent company’s nonbank asset resolution subsidiary, EMORECO, Inc., which are shown as reconciling items in the following table. There is no authoritative guidance for management accounting equivalent to GAAP, and therefore, the financial results of our business segment are not necessarily comparable with similar information presented by other companies.

	For the Three Months Ended March 31,
	2025							2024
			Reconciling								Reconciling
(Dollar amounts in thousands)	Bank		Items			Total		Bank			Items			Total

Net interest income	$	16,215	$	( 117	)	$	16,098	$	15,126		$	( 157	)	$	14,969
Noninterest income		1,969		( 25	)		1,944		1,838			( 42	)		1,796
Total revenue		18,184		( 142	)		18,042		16,964			( 199	)		16,765
Provision for (recovery of) credit losses		95		-			95		( 136	)		-			( 136	)
Salaries and employee benefits		6,067		490			6,557		6,015			318			6,333
Occupancy expenses		687		-			687		552			-			552
Data processing costs		1,271		-			1,271		1,217			-			1,217
Other noninterest expense (1)		3,191		487			3,678		3,204			659			3,863
Income tax provision (benefit)		1,159		( 235	)		924		1,016			( 247	)		769
Net income	$	5,714	$	( 884	)	$	4,830	$	5,096		$	( 929	)	$	4,167
Total assets	$	1,886,606	$	1,750		$	1,888,356	$	1,814,726		$	1,942		$	1,816,668

^{(

1

)}

Includes expenses that are in the reported measure of net income but not specifically provided to the CODM. Other noninterest expense is composed of expenses such as equipment expense, Ohio state franchise tax, professional fees, advertising expense, and other expenses.

The CODM utilizes net income as the primary measure to allocate resources during the annual budget process. This measure is used by CODM to evaluate the performance of the business segment, with a focus on net interest income, provision for credit losses, noninterest income, and noninterest expense. Net income is compared to both budgeted and comparative historical amounts on a monthly basis. Drivers of any significant variations from budget are assessed. The measure of segment assets is reported as total assets.

NOTE 11 - SUBSEQUENT EVENTS

On April 10, 2025, the Bank completed an exchange of real estate with the City of Westerville, OH. The Bank received a parcel of land in Westerville, OH from the City of Westerville with a fair value of $ 1.5 million, and in exchange, the Bank transferred land and a building with related furnishings associated with its current branch located in Westerville, OH. The transferred branch had a net book value of $ 221,000 . The exchange of real estate transaction resulted in a gain of $ 1.2 million.

On April 30, 2025, Bank management committed to a plan to sell a separate property located in Westerville, OH consisting of land and a building. The property has subsequently been recorded as held for sale, and a loss of $ 700,000 recognized.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Form 10-Q contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on a variety of estimates and assumptions. The estimates and assumptions involve judgments about a number of things, including future economic, competitive, cybersecurity, and financial market conditions, conflicts around the world, and future business decisions. These matters are inherently subject to significant business, economic, and competitive uncertainties, all of which are difficult to predict and many of which are beyond the Company's control. Although the Company believes its estimates and assumptions are reasonable, actual results could vary materially from those shown. The inclusion of forward-looking information does not constitute a representation by the Company or any other person that the indicated results will be achieved. Investors are cautioned not to place undue reliance on forward-looking information.

These forward-looking statements may involve significant risks and uncertainties. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from the results in these forward-looking statements.

CHANGES IN FINANCIAL CONDITION

Overview

These comments should be read in conjunction with the Company’s consolidated financial statements and accompanying notes appearing elsewhere herein.

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This discussion contains certain performance measures determined by methods other than under GAAP. Management of the Company uses these non-GAAP measures in its analysis of the Company’s performance. These measures are useful when evaluating the underlying performance and efficiency of the Company’s operations and Consolidated Balance Sheet. The Company’s management believes that these non-GAAP measures provide a greater understanding of ongoing operations, enhance comparability of results with prior periods, and demonstrate the effects of significant gains and charges in the current period. The Company’s management believes that investors may use these non-GAAP financial measures to evaluate the Company’s financial performance without the impact of unusual items that may obscure trends in the Company’s underlying performance. These disclosures should not be viewed as a substitute for financial measures determined under GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Non-GAAP measures include tangible book value per common share, return on average tangible common equity, and pre-tax, pre-provision income. The Company calculates the regulatory capital ratios using current regulatory report instructions. The Company’s management uses these measures to assess the quality of capital and believes that investors may find them useful in their evaluation of the Company. These capital measures may or may not be necessarily comparable to similar capital measures that may be presented by other companies.

2025 Three-Month Financial Highlights (on a year-over-year basis) :

	●	Earnings per share increased 17.6% year-over-year to $0.60 per diluted share
	●	Net interest margin expanded 15 basis points to 3.69%
	●	Return on average assets (annualized) increased 12 basis points year-over-year to 1.04%
	●	Asset quality improved from the 2024 fourth quarter with nonperforming assets to total assets decreasing by 6 basis points to 1.56%
	●	First quarter dividend payment increased 5% to $0.21 per share

	For the Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2025			2024			2024			2024			2024
Per common share data
Net income per common share - basic	$	0.60		$	0.60		$	0.29		$	0.52		$	0.52
Net income per common share - diluted	$	0.60		$	0.60		$	0.29		$	0.52		$	0.51
Dividends declared per share	$	0.21		$	0.20		$	0.20		$	0.20		$	0.20
Book value per share (period end)	$	26.46		$	26.08		$	26.11		$	25.63		$	25.48
Tangible book value per share (period end) ^{(1) (2)}	$	21.29		$	20.88		$	20.87		$	20.37		$	20.18
Dividends declared	$	1,697		$	1,616		$	1,615		$	1,613		$	1,613
Dividend yield		3.05	%		2.84	%		2.76	%		3.34	%		3.37	%
Dividend payout ratio		35.13	%		33.33	%		69.02	%		38.74	%		38.71	%
Average shares outstanding - basic		8,078,805			8,071,905			8,071,032			8,067,144			8,091,203
Average shares outstanding - diluted		8,097,545			8,092,357			8,086,872			8,072,499			8,096,317
Period ending shares outstanding		8,081,193			8,073,708			8,071,032			8,067,144			8,067,144

Selected ratios
Return on average assets (Annualized)		1.04	%		1.04	%		0.50	%		0.91	%		0.92	%
Return on average equity (Annualized)		9.22	%		9.19	%		4.45	%		8.15	%		8.16	%
Return on average tangible common equity ^{(1) (3)}		11.48	%		11.50	%		5.58	%		10.29	%		10.30	%
Efficiency ⁽⁴⁾		65.22	%		65.05	%		67.93	%		67.97	%		68.68	%
Equity to assets at period end		11.32	%		11.36	%		11.34	%		11.31	%		11.32	%
Noninterest expense to average assets		0.65	%		0.63	%		0.66	%		0.64	%		0.66	%

(1) See section “GAAP to Non-GAAP Reconciliations” for the reconciliation of GAAP performance measures to non-GAAP measures.

(2) Calculated by dividing tangible common equity by shares outstanding.

(3) Calculated by dividing annualized net income for each period by average tangible common equity.

(4) 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.

	For the Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
Yields	2025			2024			2024			2024			2024
Interest-earning assets:
Loans receivable ⁽¹⁾		6.17	%		6.12	%		6.19	%		6.27	%		6.11	%
Investment securities ^{(1) (2)}		3.69	%		3.63	%		3.62	%		3.59	%		3.52	%
Interest-earning deposits with other banks		3.57	%		4.23	%		4.27	%		4.59	%		4.88	%
Total interest-earning assets		5.81	%		5.78	%		5.84	%		5.92	%		5.77	%
Deposits:
Interest-bearing demand deposits		2.13	%		2.07	%		2.16	%		1.93	%		1.86	%
Money market deposits		3.38	%		3.81	%		3.93	%		3.95	%		3.81	%
Savings deposits		0.82	%		0.75	%		0.71	%		0.64	%		0.58	%
Certificates of deposit		3.93	%		4.21	%		4.49	%		4.57	%		4.06	%
Total interest-bearing deposits		2.82	%		3.05	%		3.17	%		3.15	%		2.88	%
Non-Deposit Funding:
Borrowings		4.58	%		4.93	%		5.54	%		5.60	%		5.61	%
Total interest-bearing liabilities		3.01	%		3.21	%		3.41	%		3.45	%		3.23	%
Cost of deposits		2.10	%		2.24	%		2.33	%		2.30	%		2.08	%
Cost of funds		2.30	%		2.41	%		2.58	%		2.61	%		2.42	%
Net interest margin ⁽³⁾		3.69	%		3.56	%		3.46	%		3.51	%		3.54	%

(1) Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were determined using an effective tax rate of 21%.

(2) Yield is calculated on the basis of amortized cost.

(3) Net interest margin represents net interest income as a percentage of average interest-earning assets.

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	For the Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
Asset quality data	2025			2024			2024			2024			2024
(Dollar amounts in thousands, unaudited)
Nonperforming assets ⁽¹⁾	$	29,550		$	29,984		$	30,078		$	15,961		$	10,831

Allowance for credit losses	$	22,401		$	22,447		$	22,526		$	21,795		$	21,069
Allowance for credit losses/total loans		1.44	%		1.48	%		1.50	%		1.46	%		1.41	%
Net charge-offs (recoveries):
Quarter-to-date	$	(209	)	$	151		$	1,382		$	(29	)	$	(68	)
Year-to-date		(209	)		1,436			1,285			(97	)		(68	)
Net charge-offs (recoveries) to average loans, annualized:
Quarter-to-date		(0.06	%)		0.04	%		0.36	%		(0.01	%)		(0.02	%)
Year-to-date		(0.06	%)		0.10	%		0.11	%		(0.01	%)		(0.02	%)

Nonperforming loans/total loans		1.91	%		1.97	%		2.00	%		1.07	%		0.73	%
Allowance for credit losses/nonperforming loans		75.81	%		74.86	%		74.89	%		136.55	%		194.52	%
Nonperforming assets/total assets		1.56	%		1.62	%		1.62	%		0.87	%		0.60	%

⁽¹⁾ Nonperforming assets consist of nonperforming loans

GAAP to Non-GAAP Reconciliations

Reconciliation of Common Stockholders' Equity to Tangible Common Equity	For the Three Months Ended
(Dollar amounts in thousands, unaudited)	March 31,		December 31,		September 30,		June 30,		March 31,
	2025		2024		2024		2024		2024

Stockholders' equity	$	213,793	$	210,562	$	210,705	$	206,788	$	205,575
Less goodwill and other intangibles		41,718		41,967		42,225		42,482		42,740
Tangible common equity	$	172,075	$	168,595	$	168,480	$	164,306	$	162,835

Shares outstanding		8,081,193		8,073,708		8,071,032		8,067,144		8,067,144
Tangible book value per share	$	21.29	$	20.88	$	20.87	$	20.37	$	20.18

Reconciliation of Average Equity to Return on Average Tangible Common Equity	For the Three Months Ended

	March 31,			December 31,			September 30,			June 30,			March 31,
	2025			2024			2024			2024			2024

Average stockholders' equity	$	212,465		$	209,864		$	209,096		$	205,379		$	205,342
Less average goodwill and other intangibles		41,839			42,092			42,350			42,607			42,654
Average tangible common equity	$	170,626		$	167,772		$	166,746		$	162,772		$	162,688

Net income	$	4,830		$	4,848		$	2,340		$	4,164		$	4,167
Return on average tangible common equity (annualized)		11.48	%		11.50	%		5.58	%		10.29	%		10.30	%

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

	March 31,		December 31,			September 30,		June 30,		March 31,
	2025		2024			2024		2024		2024

Net income	$	4,830	$	4,848		$	2,340	$	4,164	$	4,167
Add income taxes		924		995			371		690		769
Add provision for (recovery of) credit losses		95		(177	)		2,234		87		(136	)
PTPP	$	5,849	$	5,666		$	4,945	$	4,941	$	4,800

Financial Condition

General . The Company’s total assets on March 31, 2025 were $1.89 billion, an increase of $35.0 million from December 31, 2024. For the same period, total loans increased by $30.7 million, cash and cash equivalents increased by $11.1 million, and investment securities available for sale decreased by $788,000. The Company's total liabilities on March 31, 2025 were $1.67 billion, an increase of $31.8 million from December 31, 2024. For the same period, total deposits increased by $94.0 million. Stockholders’ equity increased by $3.2 million, or 1.5%, as a result of higher retained earnings.

Cash and cash equivalents . Cash and cash equivalents increased $11.1 million to $66.9 million on March 31, 2025, from $55.8 million on December 31, 2024. The increase in cash and cash equivalents is primarily due to an increase in deposits, and partially offset by an increase in loans and decrease in short-term borrowings. Deposits from customers into savings and checking accounts, loan and securities repayments, and proceeds from borrowed funds typically increase these accounts. Decreases result from customer withdrawals, new loan originations, security purchases, and repayments of borrowed and brokered funds.

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Investment securities. Management's objective in structuring the portfolio is to maintain liquidity while providing an acceptable rate of return without sacrificing asset quality. Securities available for sale on March 31, 2025, totaled $165.0 million, a decrease of $788,000, or 0.5%, from $165.8 million on December 31, 2024. There were no purchases or sales of securities for the three months ended March 31, 2025. During this period, the Company recorded repayments, calls, and maturities of $186,000 and an increase in the net unrealized losses of $464,000.

On March 31, 2025, the Company held $32.8 million at fair value of subordinated debt in other banks, as compared to $32.5 million on December 31, 2024. The average yield on this portfolio was 5.32% for the three-month period ended March 31, 2025, as compared to 5.19% for the 12-month period ended December 31, 2024.

Periodically, management reviews the entire municipal bond portfolio to assess credit quality. Each security held in this portfolio is assessed on attributes that have historically influenced default incidences in the municipal market, such as sector, security, impairment filing, timeliness of disclosure, external credit assessment(s), credit spread, state, vintage, and underwriter. Municipal bonds compose 75.1% of the overall portfolio. These investments have historically proven to have extremely low credit risk.

Loans. The loan portfolio consists primarily of single-family mortgage loans used to purchase or refinance personal residences located within the Company’s market area, commercial and industrial loans, home equity lines of credit, and commercial real estate loans used to finance properties that are used in the borrowers’ businesses, or to finance investor-owned rental properties, and, to a lesser extent, construction and consumer loans. The portfolio is well dispersed geographically. Total loans increased $30.7 million, or 2.0%, to $1.55 billion as of March 31, 2025 from $1.52 billion as of December 31, 2024. The increase in construction and other loans is the result of draws on existing construction loans during the first quarter of 2025. The increase in owner occupied and commercial and industrial loan portfolios is due to an increased focus on these segments. The increase in home equity lines of credit is primarily the result of current economic conditions. The following table summarizes fluctuation within the primary segments of the loan portfolio:

	March 31,			December 31,
	2025			2024			$ change			% change			% of loans

Commercial real estate:
Owner occupied	$	185,412		$	181,447		$	3,965			2.19	%		11.96	%
Non-owner occupied		413,621			412,291			1,330			0.32	%		26.68	%
Multifamily		88,737			89,849			(1,112	)		(1.24	%)		5.72	%
Residential real estate		351,274			353,442			(2,168	)		(0.61	%)		22.66	%
Commercial and industrial		235,547			229,034			6,513			2.84	%		15.20	%
Home equity lines of credit		147,154			143,379			3,775			2.63	%		9.49	%
Construction and other		122,653			103,608			19,045			18.38	%		7.91	%
Consumer installment		5,951			6,564			(613	)		(9.34	%)		0.38	%
Total loans		1,550,349			1,519,614			30,735			2.02	%		100.00	%
Less: Allowance for credit losses		(22,401	)		(22,447	)		(46	)		(0.20	%)

Net loans	$	1,527,948		$	1,497,167		$	30,781			2.06	%

The Company’s Mortgage Banking operation generates loans for sale to the Federal Home Loan Mortgage Corporation (“Freddie Mac”) and the FHLB. There were no loans held for sale on March 31, 2025 and December 31, 2024. The Company recorded gains on the sale of these loans totaling $24,000 based on proceeds of $1.4 million for the three months ended March 31, 2025.

Commercial real estate loans represent the Company’s largest loan segment and consist of term loans secured by a mortgage lien on real property and include both owner occupied and non-owner occupied loans as well as multifamily loans. The Company originates fixed and adjustable rate commercial real estate loans to new and existing customers located within its primary markets; however, the property may be located outside of our primary lending areas. As of March 31, 2025, approximately 92% of the properties related to the commercial real estate loans were located in the state of Ohio. Commercial real estate loans are typically originated with maturity dates of less than 20 years with repricing every 5 years. Management believes that the segment is well diversified.

The following table breaks down the Company’s commercial real estate portfolio by category and provides the weighted average loan-to-value for each category as of March 31, 2025:

			Percent of			Percent of			Weighted Average
(Dollar amounts in thousands)	Balance		CRE Portfolio			Loan Portfolio			Loan-to-Value

Multi-Family	$	88,737		12.9	%		5.7	%		61.3	%
Owner Occupied
Real Estate and Rental and Leasing		61,835		9.0	%		4.0	%		55.7	%
Other Services (except Public Administration)		32,815		4.8	%		2.1	%		54.1	%
Manufacturing		18,397		2.7	%		1.2	%		44.7	%
Agriculture, Forestry, Fishing and Hunting		12,628		1.8	%		0.8	%		36.4	%
Other		59,737		8.6	%		3.9	%		54.0	%
Total Owner Occupied	$	185,412		26.9	%		12.0	%
Non-Owner Occupied
Real Estate and Rental and Leasing		343,169		49.9	%		22.1	%		55.5	%
Accommodation and Food Services		40,039		5.8	%		2.6	%		55.9	%
Health Care and Social Assistance		19,328		2.8	%		1.2	%		65.5	%
Manufacturing		7,428		1.1	%		0.5	%		49.5	%
Other		3,657		0.6	%		0.2	%		85.4	%
Total Non-Owner Occupied	$	413,621		60.2	%		26.6	%
Total CRE	$	687,770		100.0	%		44.3	%

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The federal banking regulators have issued guidance for those institutions that are deemed to have concentrations in commercial real estate lending. According to the supervisory criteria contained in the guidance for identifying institutions with a potential commercial real estate concentration risk, institutions that have (1) total reported loans for construction, land development, and other land acquisitions that represent 100% or more of an institution’s total risk-based capital; or (2) total commercial real estate loans representing 300% or more of the institution’s total risk-based capital and the institution’s commercial real estate loan portfolio has increased 50% or more during the prior 36 months are identified as having potential commercial real estate concentration risk. Institutions that are deemed to have concentrations in commercial real estate lending are expected to employ heightened levels of risk management concerning their commercial real estate portfolios and may be required to hold higher levels of capital. The Company, like many community banks, has a material percentage of its loan portfolio in commercial real estate loans. On March 31, 2025, commercial real estate loans (including construction, land, and land development loans) represented 285.9% of total risk-based capital, and growth in that segment over the past 36 months was 19.7%, which is less than the 50% threshold laid out in the regulatory guidance. Construction, land, and land development loans represent 51.7% of total risk-based capital. Based on the regulatory guidance, the Company does not have a concentration in commercial real estate lending as of March 31, 2025.

Management has extensive experience in commercial real estate lending and has implemented and continues to maintain heightened risk management procedures and strong underwriting criteria for its commercial real estate portfolio. The Board of Directors has adopted limits on both aggregate and industry specific concentration levels, including limits specific to commercial real loans. The underwriting and risk rating of all loans is completed by a team that is independent of the individuals originating the loans. Loan monitoring practices include but are not limited to periodic stress testing analysis to evaluate changes in cash flows due to interest rate increases and declines in net operating income. The primary risk elements with respect to our commercial real estate loans are the financial condition of the borrower, sufficiency of the valued collateral, and timeliness of scheduled loan payments, and these loans may be negatively impacted by changes in the real estate markets or in the general economy. We have a policy that requires a periodic review of financial statements from commercial loan customers and have a disciplined and formalized review of the existence of collateral and its value. Nevertheless, we may be required to maintain higher levels of capital as a result of our commercial real estate concentrations, which could require us to obtain additional capital, and may adversely affect shareholder returns. The Company has an extensive capital planning policy, which includes pro forma projections, including stress testing, in which the Board of Directors has established internal minimum targets for regulatory capital ratios that are more than well-capitalized ratios as defined by regulatory requirements.

Nonperforming loans in the commercial real estate segment were $25.3 million at March 31, 2025. The allowance for credit losses for this segment totaled $8.6 million at March 31, 2025, representing an allowance for credit losses to loans ratio of 1.24% specific to the commercial real estate segment.

Our residential real estate loans totaled $351.3 million, or 22.7% of total loans, at March 31, 2025. The Bank grants real estate loans primarily within its designated lending areas, consisting of the communities surrounding branch offices in Ashtabula, Geauga, Portage, Summit, Cuyahoga, Lake, Trumbull, Madison, Delaware, Franklin, Union, Logan, and Hardin counties in Ohio. At March 31, 2025, approximately 99% of the properties related to our residential real estate loans were located in Ohio. Management believes our knowledge of these markets and our relative connectedness to the consumer borrowers we serve outweighs the geographic concentration risks. Our credit policy requires minimum credit scores, evidence of stable income, and maximum loan-to-values when underwriting residential real estate loans. The evaluation of our retail credit portfolio is defined in our credit policy and incorporates the Uniform Real Credit Classification and Account Management Policy as prescribed by federal regulatory authorities. Nonperforming loans in the residential real estate segment were $2.4 million at March 31, 2025. The allowance for credit losses for this segment totaled $5.7 million at March 31, 2025, representing an allowance for credit losses to loans ratio of 1.61% specific to the residential real estate segment.

The Company opted not to phase in, over three years, the effects of the initial CECL entry to equity for the implementation of ASC 326, recorded on January 1, 2023. As of March 31, 2025, management believes that the Company and the Bank meet all capital adequacy requirements to which they are subject.

The Company monitors fluctuations in unused commitments as a means of identifying potential material drawdowns on existing lines of credit. On March 31, 2025, unused line of credit commitments totaled $455.5 million, which is a decrease of $7.3 million, or 1.6%, from December 31, 2024. The commercial unused line of credit commitments were $292.3 million as of March 31, 2025, compared to $308.8 million on December 31, 2024.

Allowance for Credit Losses and Asset Quality. The ACL decreased by $46,000, or 0.2%, to $22.4 million on March 31, 2025, from $22.4 million on December 31, 2024. For the three months ended March 31, 2025, net loan recoveries totaled $209,000, or 0.06% of average loans, annualized, compared to $68,000 or 0.02% of average loans, annualized, for the same period in 2024. The provision for credit losses associated with loans was $255,000 for the three months ended March 31, 2025. The ratio of the ACL to nonperforming loans was 75.8% as of March 31, 2025, compared to 194.5% for the same period in the prior year. The ACL to total loans ratio increased to 1.44% as of March 31, 2025, compared to 1.41% as of March 31, 2024. The decrease in the ACL was mainly from changes in portfolio activity, updated assumptions, and the economic outlook.

Management analyzes the adequacy of the ACL regularly through reviews of the performance of the loan portfolio considering economic conditions, changes in interest rates and the effect of such changes on real estate values, and changes in the amount and composition of the loan portfolio. The ACL is a significant estimate that is particularly susceptible to changes in the near term. Risks that may impact our loan portfolio include the weakened economic outlook exacerbated by the uncertainty characterized by inflation, interest rates, and tariffs. The direct impacts of the pandemic and related economic disruptions, the market liquidity events in 2023, and persistently high inflation, which previously dominated our risk analysis, have lessened. Geopolitical events with weakening growth prospects raise the potential for adverse impacts on the U.S. economy. Changes in interest rates could potentially impact the valuations of assets that collateralize our loans. The Company is concerned about the impact of tighter credit conditions on the economy and the effect that may have on future economic growth. Management’s analysis includes a review of all loans designated as individually analyzed, historical loan loss experience, the estimated fair value of the underlying collateral, economic conditions, current interest rates, trends in the borrower’s industry, and other factors that management believes warrant recognition in providing for an appropriate allowance for credit losses. Future additions or reductions to the allowance for credit losses will be dependent on these factors. Additionally, the Company uses an outside party to conduct an independent review of commercial and commercial real estate loans that is designed to validate management conclusions of risk ratings and the appropriateness of the allowance allocated to these loans. The Company uses the results of this review to help determine the effectiveness of policies and procedures and to assess the adequacy of the allowance for credit losses allocated to these types of loans. Management believes the ACL is appropriately stated as of March 31, 2025. Based on the variables involved and management’s judgments about uncertain outcomes, the determination of the allowance for credit losses is considered a critical accounting policy.

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The following table illustrates the net charge-offs to average loans ratio for each loan category for each reported period:

	For the Three Months Ended March 31,
	2025								2024
	Average Loan Balance		Net recoveries (charge-offs)			Net recoveries (charge-offs) to average loans			Average Loan Balance		Net recoveries (charge-offs)			Net recoveries (charge-offs) to average loans
(Dollar amounts in thousands)
Type of Loans:
Commercial real estate:
Owner occupied	$	183,711	$	13			0.03	%	$	180,119	$	11			0.02	%
Non-owner occupied		413,590		7			0.01	%		398,167		-			0.00	%
Multifamily		89,430		-			0.00	%		81,679		-			0.00	%
Residential real estate		352,899		35			0.04	%		328,480		-			0.00	%
Commercial and industrial		232,647		164			0.28	%		223,323		8			0.01	%
Home equity lines of credit		145,489		4			0.01	%		127,896		(7	)		(0.02	%)
Construction and other		113,304		-			0.00	%		129,744		-			0.00	%
Consumer installment		6,267		(14	)		(0.89	%)		7,136		56			3.14	%
Total	$	1,537,337	$	209			0.05	%	$	1,476,543	$	68			0.02	%

Nonperforming assets. Nonperforming assets include nonaccrual loans, loans 90 days or more past due, other real estate owned, and repossessed assets. Real estate owned is written down to fair value at its initial recording and continually monitored for changes in fair value. A loan is classified as nonaccrual when, in the opinion of management, there are serious doubts about the collectability of interest and principal. Accrual of interest is discontinued on a loan when management believes, after considering economic and business conditions, the borrower’s financial condition is such that collection of principal and interest is doubtful. Payments received on nonaccrual loans are applied against the principal until doubt about collectability ceases.

Nonperforming loans at March 31, 2025, were $29.6 million, compared to $30.0 million at December 31, 2024. Three commercial real estate loans were moved to nonaccrual during 2024, and the balance of these loans as of March 31, 2025, was $18.9 million. These loans are adequately secured and individually analyzed within the ACL calculation as of March 31, 2025. Management believes these relationships do not indicate a trend in the markets served, the portfolio, or underwriting standards. A major factor in determining the appropriateness of the ACL is the type of collateral that secures the loans. Nonperforming loans secured by real estate totaled $29.2 million and $29.7 million as of March 31, 2025 and December 31, 2024, respectively. Of the total nonperforming loans on March 31, 2025, 98.9% were secured by real estate. Although this does not insure against all losses, real estate typically provides for at least partial recovery, even in a distressed sale and declining-value environment. The objective of the Company is to minimize future loss exposure.

Deposits. The Company considers various sources when evaluating funding needs, including but not limited to deposits, which are a significant source of funds, totaling $1.54 billion or 93.0% of the Company’s total average funding sources at March 31, 2025. Total deposits increased $94.0 million on March 31, 2025, from $1.45 billion on December 31, 2024. The following table summarizes fluctuation within the primary segments of the deposit portfolio (in thousands):

	March 31,		December 31,
	2025		2024		$ change			% change

Noninterest-bearing demand	$	369,492	$	377,875	$	(8,383	)		(2.22	%)
Interest-bearing demand		222,953		208,291		14,662			7.04	%
Money market		481,664		414,074		67,590			16.32	%
Savings		189,943		197,749		(7,806	)		(3.95	%)
Time		275,673		247,704		27,969			11.29	%
Total deposits	$	1,539,725	$	1,445,693	$	94,032			6.50	%

The Company uses specific non-core funding instruments to grow the balance sheet and maintain liquidity. These deposits, either from a broker or a listing service, were $92.4 million on March 31, 2025 and $35.1 million on December 31, 2024 and are included in time deposits on the Consolidated Balance Sheet.

Deposit balances in excess of the $250,000 FDIC-insured limit totaled approximately $486.4 million, or 31.6% of total deposits, at March 31, 2025 and approximately $447.2 million, or 30.9% of total deposits, at December 31, 2024.

Public fund deposits from state and political subdivisions in the U.S. compared to total deposits were $194.6 million, or 12.6% at March 31, 2025 and $167.9 million, or 11.6% at December 31, 2024.

Borrowed funds. The Company uses short-term and long-term borrowings as another source of funding for asset growth and liquidity needs. These borrowings primarily include advances from the FHLB, subordinated debt, short-term borrowings from other banks, and federal funds purchased. Short-term borrowings decreased by $62.4 million to $110.0 million as of March 31, 2025, compared to $172.4 million at December 31, 2024. Other borrowings were relatively unchanged at $11.6 million as of March 31, 2025 and $11.7 million on December 31, 2024.

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Stockholders ’ equity. Stockholders’ equity increased $3.2 million, or 1.5%, to $213.8 million at March 31, 2025 from $210.6 million at December 31, 2024. This increase was primarily the result of $4.8 million in net income. These changes were partially offset by $1.7 million of cash dividends paid.

The Company's tangible book value per share, which is a non-GAAP financial measure, was $21.29 at March 31, 2025 compared to $20.18 at March 31, 2024 and $20.88 at December 31, 2024. Tangible equity has been impacted by the changes in stockholders' equity described in the previous paragraph, including the unrealized losses of the Company's available-for-sale investment securities portfolio. Net unrealized losses from available-for-sale investment securities were $25.9 million as of March 31, 2025, compared to net unrealized losses of $23.0 million at March 31, 2024, and net unrealized losses of $25.4 million at December 31, 2024.

RESULTS OF OPERATIONS

General. Net income for the three months ended March 31, 2025, was $4.8 million, a $663,000, or 15.9%, increase from the amount earned during the same period in 2024. Diluted earnings per share for the quarter were $0.60 for the three months ended March 31, 2025 and $0.51 for the same period in 2024.

Net interest income . Net interest income, the primary source of revenue for the Company, is determined by the interest rate spread, which is defined as the difference between income on earning assets and the cost of funds supporting those assets, and the relative amounts of interest-earning assets and interest-bearing liabilities. Management reviews and periodically adjusts the mix of interest-earning assets and interest-bearing liabilities, to manage and improve net interest income. The level of interest rates and changes in the amount and composition of interest-earning assets and liabilities affect the Company’s net interest income. Management’s goal is to maintain a balance between steady net interest income growth and the risks associated with interest rate fluctuations.

Net interest income for the three months ended March 31, 2025, totaled $16.1 million, an increase of 7.5% from that reported in the comparable period of 2024. The net interest margin was 3.69% for the three months ended March 31, 2025, an increase of 15 basis points for the same period of 2024. The increase in the net interest margin is attributable to a decrease of 56 basis points paid on money market deposits and certificates of deposits, a decrease in the average balance of certificates of deposit of $72.9 million, an increase in the average balance of loans of $60.8 million, and a decrease in the average balance of FHLB advances of $24.1 million, coupled with a decrease of 101 basis points in the average cost of those advances. The increase was partially offset by an increase in the average balance of money market deposits of $160.0 million.

The Company is currently in a slightly liability-sensitive position and expects to remain so for the next 18-month outlook period. A decrease in rates should lead to a minimal expansion of net interest margin as the Company’s interest-bearing liabilities reprice faster than its interest-bearing assets. As part of the Company’s strategy, floor rates are used to protect the Company’s net interest margin in a declining interest rate environment. As of March 31, 2025, nearly all loan contracts with floor rates exceed their contractual floor rates. Please refer to Item 3, Quantitative and Qualitative Disclosures about Market Risk, for further discussion on asset and liability management and interest rate sensitivity.

Interest and dividend income. Interest and dividend income increased $861,000 or 3.5%, for the three months ended March 31, 2025, compared to the same period in the prior year. This is mainly attributable to a $992,000 increase in interest and fees on loans, which is due to an increase in the average balance of loans of $60.8 million, or 4.1%. The average balance of investment securities increased by $145,000, or 0.1%, and the 3.69% yield on the investment portfolio increased by 13 basis points, from 3.56%, for the same period in the prior year. The yield for the investment portfolio is based on amortized cost.

Interest expense. Interest expense decreased by $268,000, or 2.8%, for the three months ended March 31, 2025, compared to the same period in the prior year. This decrease in interest expense is primarily attributable to a decrease in short-term borrowing expense of $646,000 as a result of the Bank paying down FHLB advances and a decrease of 101 basis points on the rate paid on those advances. The increase in deposit expense of $419,000 is attributable to an increase in the average balance of interest-bearing deposits of $88.1 million, or 8.4% which is slightly offset by a 5-basis point decrease in the rates paid on deposits.

Provision for (recovery of) credit losses . The provision for (recovery of) credit losses represents the charge to income necessary to adjust the ACL to an amount that represents management’s assessment of the estimated probable incurred credit losses inherent in the loan portfolio. Each quarter, management reviews the loan portfolio for estimated probable expected credit losses. Based on this review, a provision for credit losses of $95,000 was recorded for the three months ended March 31, 2025, consisting of a recovery of credit losses on loans of $255,000 and a provision for credit losses for unfunded commitments of $350,000. A recovery of credit losses of $136,000 was recorded for the three months ended March 31, 2024. The increase in the provision for credit losses for the three months ended March 31, 2025 was mainly due to an increase in the liability for unfunded commitments related to an increase in loss rates.

Noninterest income. Noninterest income increased by $148,000, or 8.2%, for the three months ended March 31, 2025, over the comparable 2024 period. This increase was the result of a tax-free benefit from a bank-owned life insurance death claim of $633,000. The increase was partially offset by a $227,000 decrease in other income.

Noninterest expense. Noninterest expense of $12.2 million for the first quarter of 2025 was 1.9%, or $228,000 higher than the first quarter of 2024, primarily due to a $224,000 increase in salaries and employee benefits and a $135,000 increase in occupancy expense. This increase was partially offset by a $133,000 decrease in other expense and $99,000 decrease in gross OREO expenses.

Provision for income taxes. The Company recognized $924,000 in income tax expense for the three months ended March 31, 2025, which reflected an effective tax rate of 16.1%, as compared to $769,000 in income tax expense with an effective tax rate of 15.6% for the comparable 2024 period.

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Average Balance Sheet and Yield/Rate Analysis. The following table sets forth, for the periods indicated, information concerning the total dollar amounts of interest income from interest-earning assets and the resultant average yields, the total dollar amounts of interest expense on interest-bearing liabilities and the resultant average costs, net interest income, interest rate spreads and the net interest margin earned on average interest-earning assets. For purposes of this table, average balances are calculated using monthly averages, the average loan balances include nonaccrual loans and exclude the allowance for credit losses, and interest income includes accretion of net deferred loan fees. Yields on tax-exempt securities (tax-exempt for federal income tax purposes) and loans are shown on a fully tax-equivalent basis utilizing a federal tax rate of 21%. Yields and rates have been calculated on an annualized basis utilizing monthly interest amounts.

	For the Three Months Ended March 31,
	2025							2024

	Average				Average			Average				Average
(Dollars in thousands)	Balance		Interest		Yield/Cost			Balance		Interest		Yield/Cost
Interest-earning assets:
Loans receivable ⁽¹⁾	$	1,537,337	$	23,387		6.17	%	$	1,476,543	$	22,395		6.11	%
Investment securities ⁽²⁾		191,996		1,490		3.69	%		191,851		1,439		3.56	%
Interest-earning deposits with other banks ⁽³⁾		67,661		596		3.57	%		64,139		778		4.88	%
Total interest-earning assets	$	1,796,994	$	25,473		5.81	%	$	1,732,533	$	24,612		5.78	%
Noninterest-earning assets		84,542							90,151
Total assets	$	1,881,536						$	1,822,684
Interest-bearing liabilities:
Interest-bearing demand deposits	$	220,192		1,154		2.13	%	$	211,009		978		1.86	%
Money market deposits		458,446		3,816		3.38	%		298,479		2,827		3.81	%
Savings deposits		192,931		388		0.82	%		201,080		290		0.58	%
Certificates of deposit		261,006		2,527		3.93	%		333,871		3,371		4.06	%
Short-term borrowings		120,238		1,347		4.54	%		144,357		1,993		5.55	%
Other borrowings		11,639		143		4.98	%		11,840		184		6.25	%
Total interest-bearing liabilities	$	1,264,452	$	9,375		3.01	%	$	1,200,636	$	9,643		3.23	%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits	$	390,354						$	400,209
Other liabilities		14,265							16,497
Stockholders' equity		212,465							205,342
Total liabilities and stockholders' equity	$	1,881,536						$	1,822,684
Net interest income			$	16,098						$	14,969
Interest rate spread ⁽⁴⁾						2.80	%						2.55	%
Net interest margin ⁽⁵⁾						3.69	%						3.54	%
Ratio of average interest-earning assets to average interest-bearing liabilities						142.12	%						144.30	%

(1) Tax-equivalent adjustments to calculate the yield on tax-exempt securities and loans were $272 and $281 for the three months ended March 31, 2025 and 2024, respectively.

(2) Yield is calculated on the basis of amortized cost.

(3) Includes dividends received on restricted stock.

(4) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

(5) Net interest margin represents net interest income as a percentage of average interest-earning assets.

Analysis of Changes in Net Interest Income. The following table analyzes the changes in interest income and interest expense, between the three-month periods ended March 31, 2025, and 2024, in terms of (1) changes in the volume of interest-earning assets and interest-bearing liabilities and (2) changes in yields and rates. The table reflects the extent to which changes in the Company’s interest income and interest expense are attributable to changes in rate (change in rate multiplied by prior period volume), changes in volume (changes in volume multiplied by prior period rate), and changes attributable to the combined impact of volume/rate (change in rate multiplied by the change in volume). The changes attributable to the combined impact of volume/rate are allocated consistently between the volume and rate variances.

	2025 versus 2024
	Increase (decrease) due to
(Dollars in thousands)	Volume			Rate			Total

Interest-earning assets:
Loans receivable	$	916		$	76		$	992
Investment securities		1			50			51
Interest-earning deposits with other banks		42			(224	)		(182	)
Total interest-earning assets	$	959		$	(98	)	$	861

Interest-bearing liabilities:
Interest-bearing demand deposits	$	42		$	134		$	176
Money market deposits		1,503			(514	)		989
Savings deposits		(12	)		110			98
Certificates of deposit		(729	)		(115	)		(844	)
Short-term borrowings		(330	)		(316	)		(646	)
Other borrowings		(3	)		(38	)		(41	)
Total interest-bearing liabilities	$	471		$	(739	)	$	(268	)

Net interest income	$	488		$	641		$	1,129

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LIQUIDITY

Management's objective in managing liquidity is to continue meeting the cash flow needs of banking customers, such as new or increased borrowings or deposit withdrawals, as well as the Company’s financial commitments, while doing so at a reasonable cost and in a timely manner. The principal sources of liquidity are customer deposits, loan repayments, maturing investment securities available for sale, and federal funds sold, which generate cash that the Company deposits with banks. While investment securities available for sale are generally considered as a source of cash, in the current interest rate environment, it is unlikely that any of these securities would be sold for funding needs. The Company offers a line of retail deposit products created to align with customer expectations while expanding the Company’s core funding base. The Company’s goal is to obtain the majority of its funding from customer deposits, which are generated principally through development of long-term customer relationships. Along with its liquid assets, the Company has additional sources of liquidity available to ensure that adequate funds are available as needed. These include, but are not limited to, the purchase of federal funds, the ability to borrow funds under line of credit agreements with correspondent banks and borrowing agreements with the FHLB and Federal Reserve Bank, the purchase of brokered deposits, and the adjustment of interest rates to obtain deposits.

At March 31, 2025, the additional borrowing capacity at the FHLB was $346.9 million, as compared to $381.7 million on December 31, 2024. The Company’s maximum borrowing capacity at the FHLB was $481.9 million at March 31, 2025. During the third quarter of 2024, the Company was approved for a Borrower in Custody ("BIC") Arrangement to pledge certain loan portfolios, and therefore, the Company also has the option of borrowing from the Federal Reserve discount window. The borrowing capacity with the Federal Reserve discount window was $138.1 million at March 31, 2025. Given the flexibility of borrowing structure options with the FHLB, if the Company needed additional liquidity, the FHLB capacity would likely be used before other funding mechanisms.

At March 31, 2025, total net available liquidity was $785.2 million, compared to $859.0 million at December 31, 2025. This accounted for 51.0% of total deposits at March 31, 2025, compared to 59.4% at December 31, 2025. At March 31, 2025, these liquidity sources exceeded the amount of the Company’s uninsured deposit balances. Management believes that the combination of high levels of potentially liquid assets, cash flows from operations, and additional borrowing capacity provided the Bank with strong liquidity as of March 31, 2025. Although the Company currently exhibits strong liquidity, management will continue to monitor liquidity in future periods.

For the three months ended March 31, 2025, the adjustments to reconcile net income to net cash provided by operating activities consisted mainly of net stock-based compensation, core deposit intangibles amortization, origination and proceeds from the sale of loans held for sale, earnings on bank-owned life insurance, and net changes in other assets and liabilities. For a more detailed illustration of sources and uses of cash, refer to the Consolidated Statement of Cash Flows.

INFLATION

Substantially all of the Company's assets and liabilities relate to banking activities and are monetary. The consolidated financial statements and related financial data are presented following US GAAP. US GAAP currently requires the Company to measure the financial position and results of operations in terms of historical dollars, except for investment securities available for sale, individually analyzed loans, and other real estate owned that are measured at fair value. Changes in the value of money due to rising inflation can cause purchasing power loss.

Management believes that movements in interest rates affect the financial condition and results of operations to a greater degree than changes in the inflation rate. It should be noted that interest rates and inflation do affect each other but do not always move in correlation with each other. Please refer to Item 3, Quantitative and Qualitative Disclosures about Market Risk , for further discussion on interest rate risk.

REGULATORY MATTERS

The Company is subject to the regulatory requirements of the Federal Reserve System as a bank holding company. The bank subsidiary is subject to regulations of the Federal Deposit Insurance Corporation (“FDIC”) and the Ohio Division of Financial Institutions.

The Federal Reserve Board and the FDIC have extensive authority to prevent and remedy unsafe and unsound practices and violations of applicable laws and regulations by institutions and holding companies. The agencies may assess civil money penalties, issue cease-and-desist or removal orders, seek injunctions, and publicly disclose those actions. In addition, the Ohio Division of Financial Institutions possesses enforcement powers to address violations of Ohio banking law by Ohio-chartered banks.

REGULATORY CAPITAL REQUIREMENTS

Financial institution regulators have established guidelines for minimum capital ratios for banks, thrifts, and bank and thrift holding companies. The net unrealized gain or loss on available-for-sale securities is generally not included in computing regulatory capital. To avoid limitations on capital distributions, including dividend payments, the Bank and the Company must each hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. Within the tabular presentation that follows is the adequately capitalized ratio plus a 2.50% capital conservation buffer.

The Bank and the Company met each of the well-capitalized ratio guidelines as of March 31, 2025. The following table indicates the capital ratios for the Bank and the Company as of March 31, 2025, and December 31, 2024, as well as the capital category threshold ratios for a well-capitalized, adequately capitalized plus the capital conservation buffer institution.

	As of March 31, 2025
	Leverage			Tier 1 Risk Based			Common Equity Tier 1			Total Risk Based
The Middlefield Banking Company		10.87	%		11.92	%		11.92	%		13.17	%
Middlefield Banc Corp.		10.92	%		12.09	%		11.61	%		13.35	%
Adequately capitalized ratio		4.00	%		6.00	%		4.50	%		8.00	%
Adequately capitalized ratio plus fully phased-in capital conservation buffer		4.00	%		8.50	%		7.00	%		10.50	%
Well-capitalized ratio (Bank only)		5.00	%		8.00	%		6.50	%		10.00	%

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	As of December 31, 2024
	Leverage			Tier 1 Risk Based			Common Equity Tier 1			Total Risk Based
The Middlefield Banking Company		10.70	%		11.99	%		11.99	%		13.24	%
Middlefield Banc Corp.		10.86	%		12.28	%		11.78	%		13.54	%
Adequately capitalized ratio		4.00	%		6.00	%		4.50	%		8.00	%
Adequately capitalized ratio plus fully phased-in capital conservation buffer		4.00	%		8.50	%		7.00	%		10.50	%
Well-capitalized ratio (Bank only)		5.00	%		8.00	%		6.50	%		10.00	%

Item 3. Quantitative and Qualitative Disclosures about Market Risk

ASSET AND LIABILITY MANAGEMENT

The primary objective of the Company’s asset and liability management function is to maximize the Company’s net interest income while simultaneously maintaining an acceptable level of interest rate risk given the Company’s operating environment, capital and liquidity requirements, performance objectives, and overall business focus. The principal determinant of the exposure of the Company’s earnings to interest rate risk is the timing difference between the repricing or maturity of interest-earning assets and the repricing or maturity of interest-bearing liabilities. The Company’s asset and liability management policies are designed to decrease interest rate sensitivity primarily by shortening the maturities of interest-earning assets while at the same time extending the maturities of interest-bearing liabilities. The Board of Directors of the Company continues to believe in a strong asset/liability management process to insulate the Company from material and prolonged increases in interest rates.

The Company’s Board of Directors has established an Asset and Liability Management Committee consisting of outside directors and senior management. This committee meets quarterly and generally monitors various asset and liability management policies and strategies.

Interest Rate Sensitivity Simulation Analysis

The Company engages an external consultant to facilitate net interest income simulation modeling on a quarterly basis. This modeling measures interest rate risk and sensitivity. The Asset and Liability Management Committee of the Company believes the various rate scenarios of the simulation modeling enable the Company to more accurately evaluate and manage the exposure of interest rate fluctuations on net interest income, the yield curve, various loan and mortgage-backed security prepayments, and deposit decay assumptions.

Earnings simulation modeling and assumptions about the timing and volatility of cash flows are critical in net portfolio equity valuation analysis. Particularly important are the assumptions driving mortgage prepayments and the expected attrition of the core deposit portfolios. These assumptions are based on the Company’s historical experience and industry standards and are applied consistently across all rate risk measures.

The Company has established the following guidelines for assessing interest rate risk:

Net interest income simulation (“NII”) - Projected net interest income over the next twelve months will not be reduced by more than 10% given a gradual shift (i.e., over 12 months) in interest rates of up to 200 basis points (+ or -) and assuming no balance sheet growth.

Portfolio equity simulation - Portfolio equity is the net present value of the Company’s existing assets and liabilities. The Company uses an Economic Value of Equity (“EVE”) analysis which shows the estimated changes in portfolio equity considering certain long-term shock rates. Given a 200 basis point immediate and permanent increase in market interest rates, portfolio equity may not correspondingly decrease or increase by more than 20% of stockholders’ equity. Given a 100 basis point immediate and permanent decrease in market interest rates, portfolio equity may not correspondingly decrease or increase by more than 10% of stockholders’ equity.

The following table presents the simulated impact of a 200-basis point upward or 100-basis point downward shift of market interest rates on net interest income and the change in portfolio equity. This analysis assumed the interest-earning asset and interest-bearing liability levels at March 31, 2025, and December 31, 2024, remained constant. The impact of the market rate movements was developed by simulating the effects of rates changing gradually over one year from the March 31, 2025, and December 31, 2024 levels for net interest income and portfolio equity. The impact of market-rate movements was developed by simulating the effects of an immediate and permanent change in rates at March 31, 2025, and December 31, 2024, for portfolio equity.

	March 31, 2025						December 31, 2024
Change in Rates	% Change in NII			% Change in EVE			% Change in NII			% Change in EVE
+200bp		(2.60	%)		(3.00	%)		(3.40	%)		(7.10	%)
-100bp		1.30	%		(0.20	%)		1.80	%		2.10	%

CRITICAL ACCOUNTING ESTIMATES

The Company’s critical accounting estimates involving the more significant judgments and assumptions used in the preparation of the consolidated financial statements as of March 31, 2025, have remained unchanged from December 31, 2024. However, the Company has identified accounting policies that are critical accounting policies, and an understanding of these policies is necessary to understand the Company’s financial statements. These policies relate to determining the adequacy of the allowance for credit losses for the investment securities available for sale, loan portfolios, and unfunded commitments. Please refer to Note 1 - Summary of Significant Accounting Policies of our 2024 Form 10-K for further discussion on significant accounting policies.

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Item 4. Controls and Procedures

Controls and Procedures Disclosure

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered by this quarterly report, an evaluation was carried out under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are, to the best of their knowledge, effective in ensuring that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the periods specified in Securities and Exchange Commission rules and forms. After the date of their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that there were no significant changes in internal control or in other factors that could significantly affect the Company’s internal controls, including any corrective actions concerning significant deficiencies and material weaknesses.

A material weakness is a significant deficiency (as defined in Public Company Accounting Oversight Board Auditing Standard No. 2), or a combination of significant deficiencies, that results in there being more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by management or employees in the normal course of performing their assigned functions.

Changes in Internal Control over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings
	See the information in Note 8, which we incorporate here by reference.

	From time to time, the Company and the subsidiary bank may be involved in litigation relating to claims arising out of their normal course of business. In the opinion of management, no other current legal proceedings are material to the Company's financial condition or the subsidiary bank, either individually or in the aggregate.

Item 1a.	Risk Factors
	The Company is attentive to various risks and continuously evaluates the potential impact of such risks. There have been no material updates or changes in risks faced by the Company since December 31, 2024. For more information regarding our risk factors, refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

The following table summarized the Company's repurchases of common shares for the three months ended March 31, 2025:

2025 period
(Dollar amounts in thousands, except per share data)	Total shares purchased		Average price paid per share		Total shares purchased as part of a publicly announced program (a)		Maximum number of shares that may yet be purchased under the program

January 1-31		-	$	-		-		250,052
February 1-28		-		-		-		250,052
March 1-31		-		-		-		250,052
Total		-	$	-

(a) In February 2022, the Board of Directors authorized the repurchase of up to 300,000 shares of common stock under the Company's repurchase program (the "Program") to enhance the value of Company stock and manage its capital. In February 2023, the Board of Directors authorized the Company to repurchase an additional 300,000 shares under the Program. The Company has completed the repurchase of 349,948 shares under the Program through March 31, 2025. The Program may be modified, suspended or terminated by the Company at any time.

Item 3.	Defaults Upon Senior Securities
	None

Item 4.	Mine Safety Disclosures
	N/A

Item 5.	Other information
	During the three months ended March 31, 2025 , there were no “Rule 10b5 - 1 trading plans” or “non-Rule 10b5 - 1 trading arrangements” adopted, modified or terminated by any director or officer of the Company (as such terms are defined in Item 408 of Regulation S-K of the Exchange Act).

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Item 6.

Exhibits

Exhibit list for Middlefield Banc Corp. ’ s Form 10-Q Quarterly Report for the Period Ended March 31, 2025

Exhibit Number	Description	Location

3.1	Second Amended and Restated Articles of Incorporation of Middlefield Banc Corp., as amended	Incorporated by reference to Exhibit 3.1 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2005, filed on March 29, 2006

3.2	Regulations of Middlefield Banc Corp.	Incorporated by reference to Exhibit 3.2 of Middlefield Banc Corp.’s Form 8-K Current Report filed on December 1, 2022

4	Specimen stock certificate	Incorporated by reference to Exhibit 4 of Middlefield Banc Corp.’s registration statement on Form 10 filed on April 17, 2001

4.1	Amended and Restated Trust Agreement, dated as of December 21, 2006, between Middlefield Banc Corp., as Depositor, Wilmington Trust Company, as Property trustee, Wilmington Trust Company, as Delaware Trustee, and Administrative Trustees	Incorporated by reference to Exhibit 4.1 of Middlefield Banc Corp.’s Form 8-K Current Report filed on December 27, 2006

4.2	Junior Subordinated Indenture, dated as of December 21, 2006, between Middlefield Banc Corp. and Wilmington Trust Company	Incorporated by reference to Exhibit 4.2 of Middlefield Banc Corp.’s Form 8-K Current Report filed on December 27, 2006

4.3	Guarantee Agreement, dated as of December 21, 2006, between Middlefield Banc Corp. and Wilmington Trust Company	Incorporated by reference to Exhibit 4.3 of Middlefield Banc Corp.’s Form 8-K Current Report filed on December 27, 2006

10.1.0*	2017 Omnibus Equity Plan	Incorporated by reference to Middlefield Banc Corp.’s definitive proxy statement for the 2017 Annual Meeting of Shareholders, Appendix A, filed on April 4, 2017

10.1.1*	Split-Dollar Agreement between The Middlefield Banking Company and Rebecca A. Noblit	Incorporated by reference to Exhibit 10.1.1 of Middlefield Banc Corp.'s Form 10-Q filed on May 14, 2024

10.2*	Split-Dollar Agreement between The Middlefield Banking Company and Thomas M. Wilson	Incorporated by reference to Exhibit 10.2 of Middlefield Banc Corp.'s Form 10-Q filed on May 14, 2024

10.3	Agreement for the Exchange of Real Estate	Incorporated by reference to Exhibit 99.1 of Middlefield Banc Corp.'s 8-K Current Report filed on June 5, 2024

10.4	Federal Home Loan Bank of Cincinnati Agreement for Advances and Security Agreement dated September 14, 2000	Incorporated by reference to Exhibit 10.4 of Middlefield Banc Corp.’s registration statement on Form 10 filed on April 17, 2001

10.4.1*	Change in Control Agreement between Middlefield Banc Corp. and Michael L. Cheravitch	Incorporated by reference to Exhibit 10.4.1 of Middlefield Banc Corp.'s Form 10-Q filed on May 14, 2024

10.4.2*	Change in Control Agreement between Middlefield Banc Corp. and Rebecca A. Noblit	Incorporated by reference to Exhibit 10.4.2 of Middlefield Banc Corp.'s Form 10-Q filed on May 14, 2024

10.4.3*	Change in Control Agreement between Middlefield Banc Corp. and Thomas M. Wilson	Incorporated by reference to Exhibit 10.4.3 of Middlefield Banc Corp.'s Form 10-Q filed on May 14, 2024

10.4.4*	Change in Control Agreement between Middlefield Banc Corp. and Sarah A. Winters	Incorporated by reference to Exhibit 10.4.4 of Middlefield Banc Corp.'s Form 10-Q filed on May 14, 2024

10.4.5	[reserved]

10.4.6	[reserved]

10.4.7*	Amended Change in Control Agreement between Middlefield Banc Corp. and Michael C. Ranttila	Incorporated by reference to Exhibit 99 of Middlefield Banc Corp.’s Form 8-K Current Report filed on August 15, 2023

10.4.8*	Change in Control Agreement between Middlefield Banc Corp. and Courtney M. Erminio	Incorporated by reference to Exhibit 10.4.8 of Middlefield Bank Corp’s Form 10-K Annual Report filed on March 15, 2023

10.5*	Severance Agreement between Middlefield Banc Corp. and Ronald L. Zimmerly, Jr., dated December 1, 2022	Incorporated by reference to Exhibit 10.5 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2022, filed on March 15, 2023

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10.6*	Restricted Stock Award Agreement between Middlefield Banc Corp. and Ronald L. Zimmerly, Jr., dated December 1, 2022	Incorporated by reference to Exhibit 10.6 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2022, filed on March 15, 2023

10.7*	Amended Director Retirement Agreement with Frances H. Frank	Incorporated by reference to Exhibit 10.7 of Middlefield Banc Corp.’s Form 8-K Current Report filed on January 9, 2008

10.8*	Supplemental Executive Retirement Benefits Agreement with Ronald L. Zimmerly, Jr.	Incorporated by reference to Exhibit 10.8 of Middlefield Banc Corp.'s Form 10-Q filed on May 14, 2024

10.9*	First Amendment to the Supplemental Executive Retirement Benefits Agreement with Ronald L. Zimmerly, Jr.	Incorporated by reference to Exhibit 10.9 of Middlefield Banc Corp.'s Form 10-Q filed on May 14, 2024

10.10*	Secondary Supplemental Executive Retirement Plan with Ronald L. Zimmerly, Jr.	Incorporated by reference to Exhibit 10.10 of Middlefield Banc Corp.'s Form 10-Q filed on May 14, 2024

10.11*	Director Retirement Agreement with Martin S. Paul	Incorporated by reference to Exhibit 10.11 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2001, filed on March 28, 2002

10.12*	Split-Dollar Agreement between The Middlefield Banking Company and Ronald L. Zimmerly, Jr.	Incorporated by reference to Exhibit 10.12 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2022, filed on March 15, 2023

10.13*	Supplemental Executive Retirement Plan with Ronald L. Zimmerly, Jr.	Incorporated by reference to Exhibit 10.13 of Middlefield Banc Corp.'s Form 10-Q filed on May 14, 2024

10.14*	Executive Survivor Income Agreement (aka DBO agreement [death benefit only]) with Donald L. Stacy	Incorporated by reference to Exhibit 10.14 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2003, filed on March 30, 2004

10.15*	[reserved]

10.16	[reserved]

10.17	[reserved]

10.18 *	Executive Deferred Compensation Agreement with Jay P. Giles	Incorporated by reference to Exhibit 10.18 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2011, filed on March 20, 2012
10.19*	DBO Agreement with Michael C. Ranttila	Incorporated by reference to Exhibit 10.19 of Middlefield Banc Corp.'s Form 8-K Current Report on Form 8-K filed on July 11, 2024

10.20*	DBO Agreement with James R. Heslop, II	Incorporated by reference to Exhibit 10.20 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2003, filed on March 30, 2004

10.21*	DBO Agreement with Thomas G. Caldwell	Incorporated by reference to Exhibit 10.21 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2003, filed on March 30, 2004

10.22*	Annual Incentive Plan	Incorporated by reference to Exhibit 10.22 of Middlefield Banc Corp.’s Form 8-K Current Report filed on June 13, 2024

10.22.1	[reserved]

10.23**	Amended Executive Deferred Compensation Agreement with Thomas G. Caldwell	Incorporated by reference to Exhibit 10.23 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2019, filed on March 4, 2020

10.24**	Amended Executive Deferred Compensation Agreement with James R. Heslop, II	Incorporated by reference to Exhibit 10.24 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2019, filed on March 4, 2020

10.25**	Amended Executive Deferred Compensation Agreement with Donald L. Stacy	Incorporated by reference to Exhibit 10.25 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2019, filed on March 4, 2020

10.26**	Executive Variable Benefit Deferred Compensation Agreement with James R. Heslop, II	Incorporated by reference to Exhibit 10.26 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2019, filed on March 4, 2020

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10.27**	Executive Variable Benefit Deferred Compensation Agreement with Donald L. Stacy	Incorporated by reference to Exhibit 10.27 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2019, filed on March 4, 2020

10.28**	Executive Deferred Compensation Agreement with Charles O. Moore	Incorporated by reference to Exhibit 10.28 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2019, filed on March 4, 2020

10.29*	Executive Deferred Compensation Agreement with Ronald L. Zimmerly, Jr.	Incorporated by reference to Exhibit 10.29 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2022, filed on March 15, 2023

10.29.1*	Form of a conditional stock award under the 2017 Omnibus Equity Plan	Incorporated by reference to Exhibit 10.29 of Middlefield Banc Corp.’s Form 8-K Current Report filed on July 24, 2017

10.30**	Executive Deferred Compensation Agreement with Michael L. Allen	Incorporated by reference to Exhibit 10.30 of Middlefield Banc Corp.’s Form 10-Q Quarterly Report filed on May 7, 2019

10.31**	Executive Deferred Compensation Agreement with John D. Lane	Incorporated by reference to Exhibit 10.31 of Middlefield Banc Corp.’s Form 10-Q Quarterly Report filed on May 7, 2019

10.32**	Executive Deferred Compensation Agreement with Michael C. Ranttila	Incorporated by reference to Exhibit 10.32 of Middlefield Banc Corp.’s Form 10-K Annual Report filed on March 12, 2021

10.33**	Executive Deferred Compensation Agreement with Courtney M. Erminio	Incorporated by reference to Exhibit 10.33 of Middlefield Banc Corp.’s Form 10-Q Quarterly Report filed on August 8, 2022

10.34**	Executive Deferred Compensation Agreement with Alfred F. Thompson	Incorporated by reference to Exhibit 10.34 of Middlefield Banc Corp.’s Form 10-Q Quarterly Report filed on August 8, 2022

10.35*	Form of a Performance Share Unit Award Agreement under the 2017 Omnibus Equity Plan	Incorporated by reference to Exhibit 10.1 of Middlefield Banc Corp.’s Form 8-K Current Report filed on September 4, 2024

10.36*	Form of a Restricted Share Unit Award Agreement under the 2017 Omnibus Equity Plan	Incorporated by reference to Exhibit 10.2 of Middlefield Banc Corp.’s Form 8-K Current Report filed on September 4, 2024

31.1	Rule 13a-14(a) certification of Chief Executive Officer	filed herewith

31.2	Rule 13a-14(a) certification of Chief Financial Officer	filed herewith

32	Rule 13a-14(b) certification	filed herewith

99.1	Form of Indemnification Agreement with directors of Middlefield Banc Corp. and with executive officers of Middlefield Banc Corp. and The Middlefield Banking Company	Incorporated by reference to Exhibit 99.1 of Middlefield Banc Corp.’s registration statement on Form 10, Amendment No. 1, filed on June 14, 2001

100	[reserved]

101.INS***	Inline XBRL Instance	furnished herewith

101.SCH***	Inline XBRL Taxonomy Extension Schema	furnished herewith

101.CAL***	Inline XBRL Taxonomy Extension Calculation	furnished herewith

101.DEF***	Inline XBRL Taxonomy Extension Definition	furnished herewith

101.LAB***	Inline XBRL Taxonomy Extension Labels	furnished herewith

101.PRE***	Inline XBRL Taxonomy Extension Presentation	furnished herewith

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* management contract or compensatory plan or arrangement

** management contract or compensatory plan or arrangement, a schedule has been omitted pursuant to Item 601(a)(5) of Regulation S-K and will be provided on a supplemental basis to the Securities and Exchange Commission upon request

*** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections

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SIGNATURES

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

	MIDDLEFIELD BANC CORP.

Date: May 13, 2025	By: /s/ Ronald L. Zimmerly, Jr.

	----------------------------------------

	Ronald L. Zimmerly, Jr.

	Director, President and Chief Executive Officer

	(Principal Executive Officer)

Date: May 13, 2025	By: /s/Michael C. Ranttila

	----------------------------------------

	Michael C. Ranttila

	Executive Vice President - Chief Financial Officer and Treasurer

	(Principal Financial and Accounting Officer)

TABLE OF CONTENTS

Note 1 - Summary Of Significant Accounting Policies Note 2 Revenue Recognition Note 3 - Earnings Per Share Note 4 - Accumulated Other Comprehensive Income (loss)Note 5 - Fair Value Measurements Note 6 Investment and Equity Securities Note 7 Loans and Related Allowance For Credit Losses Note 8 Commitments and Contingent Liabilities Note 9 - Related Party Transactions Note 10 - Segment Reporting Note 11 - Subsequent Events Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures Part II - Other Information

Exhibits

MBCN 10-Q Quarter ended March 31, 2025

Exhibits