Middlebury National Corporation

Q1 2020 Letter to Shareholders

Dear Shareholder:

In response to the COVID-19 outbreak, we put our pandemic plans in action in March by eliminating forms of in-person service, implementing remote access from home for many employees, and re-deploying employees to provide service by phone and to support lending. At the same time, we have been providing debt relief measures for our customers and fulfilling requests for SBA Payment Protection Program (PPP) loans in April.

First quarter financial results reflect a time before the impact of the pandemic and when interest rates had begun to fall. Borrower interest in refinancing has been at an all-time high, adding non-interest income at a time of a retreat in the net interest margin. By quarter-end, though, we had a glimpse into the potential financial impact of the pandemic and we made a $140,000 contribution to the loan loss reserve; the result was net income of $733,720, a 14% decline over first quarter of last year. 

Given that social distancing requirements are still in place, our annual meeting this year will not be held at the Middlebury Inn but instead will be an opportunity to call in to vote, if you have not previously voted by ballot, on May 19 at 4:00 during a brief business-only meeting (Phone: 415-655-0003, Meeting #:227 521 445, ID #: 1937). The Board of Directors is pleased to vote a dividend of $0.26 per share to shareholders of record April 27, 2020. The Voluntary Stock Repurchase Program has been suspended at this time. Buyback requests will be reviewed on a case by case basis by contacting me, Michele Warren, or Stacey Brown and granted upon approval by directors. 

Thank you for your support and interest in Middlebury National Corporation and National Bank of Middlebury.

Caroline R. Carpenter
Executive Vice President
Middlebury National Corporation

Consolidated Balance Sheet (unaudited)

March 31,20202019
Assets
Cash & Due from Bank$8,181,678$8,429,970
Federal Reserve Bank Balance$25,539,212$9,310,933
Securities$81,814,630$76,417,506
Loans, Net$258,413,899$251,043,366
Bank Premises & Equipment, Net$10,478,972$7,067,769
Other Assets$17,260,833$15,676,394
Total Assets$401,689,224$367,945,938
Liabilities & Shareholders' Equity
Deposits$345,527,087$321,216,451
Securities Sold Under Repurchase Agreements$8,232,473$6,917,883
Other Borrowed Money$1,592,619$1,631,010
Other Liabilities$6,756,462$2,889,586
Total Liabilities$362,108,641$332,654,930
Shareholders' Equity
Common Stock & Related Surplus$1,400,000$1,400,000
Treasury Stock$(1,500,599)$(1,180,595)
Accumulated Other Comprehensive Income (Loss)$1,786,680$(250,697)
Retained Earnings$37,894,502$35,322,300
Total Shareholders' Equity$39,580,583$35,291,008
Total Liabilities & Shareholders' Equity$401,689,224$367,945,938
Per Share Book Value
863,200 & 872,587 shares outstanding		$45.85$40.44

 Consolidated Statements of Income (unaudited)

Three Months Ended March 31,20202019
Total Interest Income$3,465,165$3,383,994
Total Interest Expense$291,539$190,466
Net Interest Income$3,173,626$3,193,528
Provision for Loan Losses$140,000$50,000
Net Interest Income After Provision for Loan Losses$3,033,626$3,143,528
Other Operating Income$750,270$671,068
Other Operating Expenses$2,959,900$2,800,007
Income Before Income Taxes$823,996$1,014,589
Income Tax Expense$90,267$161,327
Net Income$733,729$853,262
Earnings Per Share$0.85$0.98