2011 News Releases
Middlefield Banc Corp. Reports Second Quarter 2011 Results

Middlefield Banc Corp. (OTCQB:  MBCN) today announced results for the second quarter of 2011.  Net income totaled $720,000 for the quarter ended June 30, 2011, representing earnings per diluted share of $0.44.  In comparison, earnings per diluted share were $0.45, on net income of $715,000, for the second quarter of 2010.

Net income for the first six months of 2011 was $1,722,000 or $1.10 per diluted share.  For the same period of 2010, net income of $1,360,000 equated to $0.87 per diluted share.

Annualized returns on average equity ("ROE") and average assets ("ROA") for the 2011 second quarter were 7.22% and 0.45%, respectively, compared with 7.48% and 0.47% for the second quarter of 2010.  ROE and ROA were 8.89% and 0.55%, respectively, for the six month period of 2011.  Comparable results for the 2010 six month period were 7.27% and 0.46%, respectively.

"We are pleased with our earnings position for the second quarter of 2011," stated Thomas G. Caldwell, President and Chief Executive Officer, "This is especially true as we seek to navigate through a very uncertain economic environment."

"We remain cautiously optimistic that a transition in that environment will begin near the end of 2011.  We will continue to remain firmly focused on delivering excellent customer service, increasing value to our shareholders, and operating our company under safe and sound banking principles," Caldwell concluded.

For the second quarter of 2011, net interest income increased $531,000, or 11.6% from the same period last year.  A decrease of $369,000 in interest on deposits was the leading factor in this improvement.  Similarly, for the first six months of 2011, net interest income was $1,494,000 above the figure reported for the 2010 first half.  An increase of $524,000 in interest income coupled with a decrease in interest expense of $970,000 were the components of the shift.

The net interest margin for the three months ended June 30, 2011 was 3.64% compared to 3.49% for the same period of 2010.  For the six month periods, the net interest margin for 2011 was 3.66%, with 2010 being 3.39%.

"Our net interest margin continues to show positive movement," commented Donald L. Stacy, Chief Financial Officer.  "However, the challenges relative to consistent net interest margin improvement are far from over.  The Fed's policy of maintaining a continued low rate environment has led to aggressive pricing on the part of many of our competitors."

For the three months ended June 30, 2011, management added $700,000 to the allowance for loan losses, being only a slight increase from the $690,000 recorded for the same period the prior year.  The comparable six months figures are $1,565,000 for 2011 and $1,129,000 for 2010.  The increased loan loss provision on a year-to-date basis for 2011 was related to a higher level of charge-offs and an increase in the general allocation for loan losses.  Net charge-offs for 2011 were $759,000, or 0.20% of average loans.  The allowance for loan losses at June 30, 2011 stood at $7,027,000, or 1.82% of total loans.  At June 30, 2010, the allowance for loan losses was $5,834,000, representing 1.60% of total loans. 

Noninterest income for the second quarter of 2011 was $594,000, and continues to be tempered by certain regulatory changes including those mandated by the Dodd-Frank Act.  The first half of 2011 saw the company report noninterest income of $1,293,000, down only $1,000 from the prior year.     

Noninterest expense for the second quarter of 2011 totaled $4,292,000, an increase of $464,000, from the same period last year.  The two largest components of this increase were salaries and benefits, which was up $231,000, and loss on the sale of other real estate owned of $230,000.  The increased employee costs reflect increased headcounts, primarily related to special assets/collections, credit analysis, and regulatory compliance.  For the first half of 2011, total noninterest expense of $7,997,000 was $611,000 above the 2010 comparable period. 

Balance Sheet Growth

The company's total assets as of June 30, 2011 stood at $639.6 million, an increase of 1.2% over the $632.2 million in total assets reported at December 31, 2010.  Net loans at June 30, 2011, were $378.3 million, up $12.0 million, or 3.3%, over the $366.3 million reported at December 31, 2010.  Total deposits at the end of the second quarter 2011 were $569.7 million or 0.8% greater than the deposit level of $566.3 million at December 31, 2010.  Stockholders' equity at June 30, 2011, was $42.3 million.  Book value per share as of June 30, 2011, was $25.58.

Dividends   

During the second quarter of both 2011 and 2010, Middlefield paid cash dividends of $0.26 per share.

Middlefield Banc Corp. headquartered in Middlefield, Ohio is a multi-bank holding company with total assets of $639.6 million.  The company's lead bank, The Middlefield Banking Company, operates full service banking centers and a UVEST Financial Services¬Æ brokerage office serving Chardon, Cortland, Garrettsville, Mantua, Middlefield, Newbury, and Orwell.  The company also serves the central Ohio market through its Emerald Bank subsidiary, with offices in Dublin and Westerville, Ohio.  Additional information is available at www.middlefieldbank.com and www.emeraldbank.com

This press release of Middlefield Banc Corp. and the reports Middlefield Banc Corp. files with the Securities and Exchange Commission often contain "forward-looking statements" relating to present or future trends or factors affecting the banking industry and, specifically, the financial operations, markets and products of Middlefield Banc Corp.  These forward-looking statements involve certain risks and uncertainties.  There are a number of important factors that could cause Middlefield Banc Corp.'s future results to differ materially from historical performance or projected performance.  These factors include, but are not limited to: (1) a significant increase in competitive pressures among financial institutions; (2) changes in the interest rate environment that may reduce interest margins; (3) changes in prepayment speeds, charge-offs and loan loss provisions; (4) less favorable than expected general economic conditions; (5) legislative or regulatory changes that may adversely affect businesses in which Middlefield Banc Corp. is engaged; (6) technological issues which may adversely affect Middlefield Banc Corp.'s financial operations or customers; (7) changes in the securities markets; or (8) risk factors mentioned in the reports and registration statements Middlefield Banc Corp. files with the Securities and Exchange Commission.  Middlefield Banc Corp. undertakes no obligation to release revisions to these forward-looking statements or to reflect events or circumstances after the date of this press release.