2002 News Releases
Middlefield Banc Corp. Reports Third Quarter Earnings of $0.55 Per Share

MIDDLEFIELD, OHIO  Middlefield Banc Corp. (Pink Sheets: MBCN) today reported third quarter 2002 net income of $639,000, or $0.55 per basic and diluted share. The company’s third quarter earnings represent a decrease of 3.11% from the $660,000 net income reported for the quarter ended September 30, 2001. Earnings per share for the year ago period were $0.57.

Third quarter 2002 results represent a return on average assets (ROA) of 1.15% and a return on average equity (ROE) of 12.11%. Comparable ratios from the 2001 period were 1.39% and 13.53%, respectively.

For the nine months ended September 30, 2002, the company’s earnings were $1,760,000, or $1.52 per basic and diluted share, an increase of 4.11% over the $1,689,000, or $1.46 per basic and diluted share, recorded for the first nine months of 2001.

For the nine month period of 2002, Return on Average Assets and Return on Average Equity were 1.12% and 11.45%, respectively. Comparable Returns for the prior year were 1.22% and 11.89%. The ratio of capital to assets, at the end of the quarter, stood at 9.44%, well above regulatory minimums.

In commenting on the third quarter, Middlefield Banc Corp. President and CEO Thomas G. Caldwell stated, "In light of the current economic climate, we are satisfied with our earnings performance. Our net interest income continued to trend positively. However, noninterest expenses were up 12.65%. Our expenses, however, did grow at a slower rate than did total assets, loans, and deposits, all of which showed double digit increases over the prior year."

"Our credit quality remains strong relative to the overall market," said Caldwell. "Net charge-offs for the quarter approximated last year, but on a year-to-date basis we are running well below 2001. We do, however, have some problem credits. These are all well secured by real estate and pose no threat to future earnings."

Net interest income for the quarter was 12.24% higher than the third quarter of 2001. The comparable figures are $1,995,000 for 2002 and $1,777,000 for 2001. Noninterest income for the quarter was up 6.54% to $285,000. Noninterest expense for the quarter was $1,268,000, an increase of 12.65% over the third quarter of 2001. The increase in noninterest expense is primarily attributable to increased employee compensation and benefit expense, which reflects increased staffing levels and cost of health insurance benefits.

For the first nine months of 2002, net interest income was $5,872,000, an increase of 13.83% from the same period of 2001. A reduction in total interest expense was the primary factor in the increase. Noninterest expense for the period was $3,873,000, and was 12.16% higher than the same period of last year. Noninterest income increased a modest 4.51% over the comparable period.

Middlefield Banc Corp.’s balance sheet at September 30, 2002 reflected continued asset growth. Total assets were 17.36% higher than the same point in 2001. Net loans increased 13.33% to $167,031,000. Total deposits also increased significantly, being $186,083,000 at September 30, 2002, an increase of 15.55% from the prior year. Shareholders’ equity at the quarter end was $21,228,000, 8.09% higher than September 30, 2001.

"With interest rates at sustained low levels, we are experiencing pressure on our net interest margin," noted Donald L. Stacy, Chief Financial Officer of MBCN. "Although our overall loan originations continue at a good pace, we are in the midst of another cycle of payoffs on existing loans as customers seek out the lower interest rates. Our net interest margin is below desired levels, however our asset/liability mix is positioned to strengthen the margin in a rising rate environment."

Headquartered in Middlefield, Ohio, Middlefield Banc Corp. is a one-bank holding company for The Middlefield Banking Company. The Middlefield Banking Company , which operates offices in Chardon, Garrettsville, Mantua and Middlefield, has received regulatory approval for a new office in Orwell, Ohio. Middlefield Banc Corp. trades under the symbol MBCN.

The information contained in this press release contains forward-looking statements regarding future performance which are not historical facts and which involve risk and uncertainties. Actual results and performance could differ materially from those contemplated by these forward looking statements.