Middlefield Banc Corp. (NASDAQ: MBCN), the parent company of The Middlefield Banking Co., announced that it's resuming its share repurchase program that was previously put on hold due to the COVID-19 outbreak.
The Northeast Ohio community bank of about $1.36 billion in assets launched a repurchase program in April 2019. It suspended those plans in late March this year following the rise in COVID-19 cases, which resulted in lockdowns in Ohio. Doing this lets the bank hold on to capital that would've otherwise been spent on those stocks. The company said it had repurchased 157,032 shares from the 300,000-share authorization under the program as of suspending it in the spring.
Per the announcement: On November 9, 2020, the Board authorized an increase to the Program by an additional 157,032 shares for a total of 300,000 shares that may be repurchased. This equates to approximately 4.7% of the Company's 6,378,960 outstanding shares at November 3, 2020. The Program may be modified, suspended or terminated by the Company at any time.
"We entered the COVID-19 crisis with favorable asset quality and strong capital levels, and we believe our stock is trading at a compelling valuation," said Middlefield president and CEO Tom Caldwell in a statement. "This share repurchase program demonstrates our confidence in the strength of our business and our continued commitment to delivering value to our shareholders."
Bank Director reported in September that some community banks were looking to buy back stock — and that the trend might continue — as they sit on elevated levels of capital and their shares trade below tangible book value.
"If you can buy your stock below book value, it's a really attractive financial trade," Eric Corrigan, senior managing director at Commerce Street Capital, told Bank Director. "You are doing the right thing for shareholders, you're supporting the price of the stock, and financially it's a good move."
Some of the nation's largest banks — namely those with more than $100 billion in assets, which includes regionals like KeyBank and Huntington Bank — remain under buyback moratoriums imposed by the Federal Reserve, which led many smaller banks to follow suit on their own accords. At the end of September, the Fed extended those moratoriums through the end of this year that were otherwise due to expire at the end of the third quarter. The purpose is to require banks to hold on to some excess capital they might need to put toward covering loan losses in a turbulent economic environment.
But thanks largely to government stimulus programs, credit quality remains relatively good. Many banks at the end of the third quarter indicated they are in good shape with loan loss reserves. However, the outlook for troubled loans will be tied to economic and consumer stability, which may vary based on the availability of additional government stimulus funds and to what extent the health crisis is brought under control.
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November 14, 2020 at 01:25AM
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Middlefield Banking Co. resumes suspended share buyback program - Crain's Cleveland Business
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