2005 News Releases
Middlefield Banc Corp. Reports 19.1% Increase in Third Quarter Earnings Per Share

MIDDLEFIELD, OHIO  Middlefield Banc Corp. (Pink Sheets:  BCN) reported consolidated net income for the quarter ended September 30, 2005, of $976,000, representing an increase of 18.8% over the same period in the prior year. Earnings per diluted share for the third quarter of 2005 were $0.75, up 19.1% from the $0.63 earned during the third quarter of 2004.

For the nine months ended September 30, 2005, Middlefield Banc Corp. recorded net earnings of $2,607,000, or $2.02 per diluted share. Net income for the comparable period of 2004 was $2,416,000, or $1.86 per diluted share.

The key ratios for the company for the quarter and the first nine months of 2005 reflect positively in comparison to the results posted for the same periods of 2004. Return on average assets (ROA) for the quarter and year-to-date were 1.29% and 1.16%, respectively, as compared to 1.15% and 1.17% a year ago. Return on average equity (ROE) for the third quarter of 2005 was 14.76%, while the figure for the first nine months was 13.81%. The respective returns for 2004 were 13.19% for both reporting periods.

Discussing the results, Middlefield Banc Corp. President and CEO Thomas G. Caldwell said, "The Company posted a solid increase in earnings, of which we are pleased. This was driven by a modest increase in earning assets and a steady net interest margin. Another strong contributing factor to our performance was the growth in non-interest income, which may be tied to an overall increase in deposit accounts as well as the continued performance of our overdraft privilege program."

"Our balance sheet growth, however, has not met our targets for the year. Highly competitive pricing for both loans and deposits has been the primary factor in the slower growth. While we continue to seek quality relationships, we have felt it imprudent, in light of the current interest rate environment, to pursue those opportunities that posed the potential to have a strong negative impact on our net interest margin."

Highlights for the third quarter and year-to-date periods of 2005 include:

• Net interest income for the third quarter of 2005 was $2.76 million, an increase of 9.6% over the comparable period of 2004. The net interest margin was 4.02% in the third quarter of 2005, up from the 3.86% posted for the same quarter of 2004. For the first nine months of 2005, net interest income was $7.98 million, up 7.6% from the prior year, while the net interest margin was 3.91% for the 2005 period and 3.93% for the first nine months of 2004.
• Non-interest income increased $75,000 for the three-month period and $200,000 for the nine-month period ending September 30, 2005, over the equal reporting periods of 2004. This increase was primarily the result of higher service charge revenue associated with an increase in the number of deposit accounts as well as an increase in revenue from investment services. Offsetting the increase was a decline in earnings on bank-owned life insurance and check order fees.
• Non-interest expense for the quarter was 4.3% higher than the third quarter of 2004, while the nine months of 2005 were 17.1% higher than the 2004 first nine months. The majority of the increase was attributable to higher equipment depreciation, franchise taxes, maintenance contracts, and data processing fees. Also being an important factor in the higher 2005 figure were costs associated with efforts on the part of the company to ensure compliance with the Sarbanes-Oxley Act of 2002.
• Total deposit growth during 2005 was $8.3 million. The slower growth is directly the result of the competitive interest rate environment present within the company's market area. The company also had a shift in the deposit composition as certificates of deposits and IRA accounts increased $16.3 million during the nine months and savings accounts decreased $9.0 million. Net loans at September 30, 2005, stood at $223.1 million, reflecting an increase of $10.1 million during the first nine months of 2005. Increases in commercial loans and home equity lines of credit were partially offset by an unusually high number of pay-offs on residential mortgage loans during the year.
• Provision for loan losses was $75,000 for the third quarter and $195,000 for the nine-month period of 2005. While these levels were higher than those reported for 2004, they are in keeping with the company's 2005 financial plan and are attributable to higher loan levels. At September 30, 2005, the allowance for loan losses as a percentage of total loans was 1.21%, which was lower than the 1.26% recorded at September 30, 2004.
• Stockholders' equity at September 30, 2005, was $26.7 million, or 8.74% of total assets. This represents an increase of 7.5% from the December 31, 2004 figure. Book value as of September 30, 2005 was $20.90.
• During the third quarter of 2005, Middlefield Banc Corp. paid a cash dividend of $0.24 per common share. Adjusted for the 5% stock dividend paid in December 2004, this cash dividend 14.3% higher than that paid in the third quarter of 2004.

"Management of the balance sheet has become an even more integral part of our success," noted Donald L. Stacy, Chief Financial Officer and Treasurer of Middlefield Banc Corp. "While we have chosen to avoid assuming questionable interest rate exposure on the loan side, we have also witnessed a strong shift to higher cost deposits. Because of this environment, we have re-affirmed our commitment to closely monitor non-interest expense so that we may continue to deliver satisfactory bottom line results to our shareholders."

"We are also pleased to announce," Stacy continued, "that during the third quarter of 2005 we have introduced e-mail delivery of checking statements and made images of checks available with our on-line banking service. We firmly believe that these technological advances represent our on-going commitment to the best in customer service. We would encourage current and potential customers to visit us at www.middlefieldbank.com."

Middlefield Banc Corp. and The Middlefield Banking Company are headquartered in Middlefield, Ohio. The bank operates full service banking centers and a UVEST Financial Services' brokerage office serving Chardon, Garrettsville, Mantua, Middlefield, and Orwell, Ohio.

This announcement contains forward-looking statements that involve risk and uncertainties, including changes in general economic and financial market conditions and the Company’s ability to execute its business plans. Although management believes the expectations reflected in such statements are reasonable, actual results may differ materially.