<PAGE>   1
                                                                    Exhibit 10.4

                      FEDERAL HOME LOAN BANK OF CINCINNATI

                         Blanket Agreement for Advances
                                       and
                               Security Agreement

                                                              Cincinnati, Ohio

                                                            September 14, 2000

                         THE MIDDLEFIELD BANKING COMPANY
--------------------------------------------------------------------------------
the principal place of business of which is located at 15985 East High Street
Middlefield, OH 44062 (hereinafter called the "Borrower"), in consideration of
advances (as further defined in Section 1 below) or other financial
accommodations heretofore or at anytime hereafter made or granted to Borrower
and any affiliate of Borrower by the FEDERAL HOME LOAN BANK OF CINCINNATI
(hereinafter called the "Bank"), hereby grants to the Bank a security interest
in and collateral assignment of all of the Borrower's assets or rights to the
extent listed and defined in Section 2 below and hereunder, and in any Addendum
hereto, now or hereafter acquired, and all proceeds and products thereof, cash
or non-cash, to secure the payment of all such advances and all other
indebtedness and liabilities of the Borrower to the Bank, now existing or
hereafter arising, plus interest thereon and all costs of collection and legal
expenses incurred by the Bank in collecting and/or enforcing any of such
liabilities or realizing on the security given hereby (hereinafter collectively
called the "Obligations").

                  1. APPLICATION AND AUTHORITY FOR ADVANCES; REPAYMENT; INTEREST
AFTER MATURITY. Pursuant to the Federal Home Loan Bank Act of 1932, as amended,
and all relevant rules and regulations in effect thereunder (hereinafter
collectively the "Act"), the Bank makes available loans to its members and
certain qualified non-member mortgagees (hereinafter referred to as "advances"),
which advances shall be used by such members and their affiliates for the
purposes specified in the Act. The procedures and the form of application for
such advances shall be as specified within the "Advance Programs" in effect from
time to time as adopted by the Board of Directors of the Bank as part of its
"Credit Policy". The Borrower shall furnish to the Bank a certified copy of a
resolution of the Borrower's Board of Directors (or other governing body)
specifying certain of the Borrower's officers or other employees who are
authorized to apply for, amend and renew such advances from the Bank. Generally,
all applications for advances shall be made by such specified persons in
writing, except that applications may be made by facsimile on the conditions set
out in the Credit Policy only if applications for advances by facsimile are then
permitted by the Credit Policy. However, unless the Bank shall be otherwise
notified by the Borrower in writing, the Bank may honor any form of request,
including an oral request, for disbursements of previously-approved applications
for advances. The Bank's records of such advances to the Borrower shall be
rebuttable evidence of such advance and of the Borrower's agreement to repay
same in accord with the Advance Programs. Further, notwithstanding the
particular repayment schedule or interest rates specified in the Advance
Programs, or within the notice of approval from the Bank as to any such advance,
interest shall be assessed against past-due principal and/or interest (whether
past due because of maturity, acceleration or otherwise), or, at the Bank's
option upon any event of default occurring and continuing hereunder, at a
default rate as outlined in the Credit Policy.

                  2. SECURED PROPERTY LISTING AND DEFINITION. The following
collateral shall be included in the Bank's security interest (as noted in the
box by each category) and all of such items, together with all shares of the
Bank owned by Borrower and such other collateral as may from time to time be
specified in separate agreements between the Bank and the Borrower or between
the Bank and any affiliate of the Borrower (each such separate agreement
hereinafter sometimes called an "Addendum"), or which are otherwise pledged to
the Bank or in which the Bank takes a security interest or collateral
assignment, if any, shall hereinafter collectively be called the "secured
property":

                           (a) [  ] Obligations of the United States of America,
or obligations fully guaranteed by the United States of America, or other
securities (whether certificated or uncertificated), investment property,
financial assets, security entitlements, accounts or other equity or ownership
interests in any corporation, partnership, limited liability company, trust or
other entity, association or organization, including without limitation any
affiliate which holds or may hold, directly or indirectly, transferred assets of
the Borrower, which obligations or securities are approved by the Bank as
eligible collateral security and delivered to the Bank's possession or (at the
Bank's sole discretion) are otherwise in the Bank's control or subject to an
acceptable negative pledge, which obligations or securities are to be treated as
secured property (whether hereunder or pursuant to other agreements with the
Bank), and all replacements therefor and proceeds thereof (hereinafter called
"Securities Collateral").

                           (b) [  ] Specific one to four family residential
mortgages and/or one to four family residential deeds of trust in favor of the
Borrower or an affiliate of Borrower, as the case may be, as mortgagee, and the


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notes or other instruments evidencing the indebtedness secured thereby, and
complying with the requirements of the Act and all replacements therefor and
proceeds thereof (hereinafter sometimes called "Specific Mortgage Collateral").

                           (c) [ XX ] 100% of the Borrower's one to four family
mortgage portfolio i.e., each and every one to four family residential mortgage
or one to four family residential deed of trust in favor of the Borrower or an
affiliate of Borrower, as the case may be, as mortgagee, and the notes or other
instruments evidencing indebtedness secured thereby, or any participation or
residual interest therein, complying with the requirements of the Act and
meeting the requirements of Section 5(b) and 5(e) below, whether now existing or
hereafter acquired) and all replacements therefor and proceeds thereof
(hereinafter sometimes called "Blanket One to Four Mortgage Collateral").

                           (d) [ XX ] 100% of the Borrower's multi-family
mortgage portfolio (i.e., each and every five or more family residential
mortgage or five or more family residential deed of trust in favor of the
Borrower or an affiliate of Borrower, as the case may be, as mortgagee, and the
notes or other instruments evidencing indebtedness secured thereby, or any
participation or residual interest therein, complying with the requirements of
the Act and meeting the requirements of Sections 5(b) and 5(e) below, whether
now existing or hereafter acquired) and all replacements therefor and proceeds
thereof (hereinafter the "Blanket Multi-Family Mortgage Collateral," and, along
with the interests of the Bank specified in Section 2(c) above, collectively
called "Blanket Mortgage Collateral").

                  3. EVIDENCE OF SECURED PROPERTY: MAINTENANCE OF COLLATERAL
LEVEL. The Borrower agrees to deliver to the Bank such evidence of eligibility
to borrow hereunder, its interest in the secured property and of availability of
same for use as collateral pursuant hereto, in accordance with the Credit Policy
and as the Bank may in good faith request. The Borrower agrees that all secured
property shall be subject to audit and verification by or on behalf of the Bank
at the sole expense of the Borrower. The Borrower will at all times maintain, as
minimum secured property hereunder, secured property having an aggregate
collateral value acceptable to the Bank, which shall make such determination in
good faith and in conformity with the requirements of Section 5(b) below, and if
the Borrower fails to do so (a) the Borrower will, within three (3) days of
receipt of written notification from the Bank, reduce its unpaid advances or
other Obligations as requested in writing by the Bank or (b) the Borrower, upon
the written request of the Bank, will immediately deposit additional collateral
and/or agree to additional security interests satisfactory to the Bank.

                  4. SECURITIES COLLATERAL. If item 2(a) above is included in
the secured property, Securities Collateral shall be given to the Bank in
aggregate principal amounts as required by the Bank and, if in certificated or
other tangible form, such Securities Collateral (or custodial receipts for same
acceptable to the Bank) shall be deposited with the Bank, together with
indorsements acceptable to the Bank. In said connection, the Bank will be deemed
to be an entitlements holder of and in sole control, within the meaning of
Article 8 of the Uniform Commercial Code, of any Securities Collateral, with
full power to hold and dispose of same as financial assets under Article 8 of
the Uniform Commercial Code (including, without limitation, full power to
exercise voting rights and to receive any income resulting from stock splits,
stock dividends, cash dividends or otherwise), and the Borrower agrees to take
and/or consent to such further actions as the Bank may deem appropriate to take
and maintain control over any Securities Collateral, including obtaining the
agreement of the issuer of any Securities Collateral to comply with instructions
originated by the Bank without further consent by the Borrower and the agreement
of any securities intermediary to comply with entitlement orders originated by
the Bank without further consent by the Borrower. The Bank, upon the occurrence
and during the continuation of an event of default (should the Bank have not
already accelerated the Obligations), may retain any interest or principal
payments, or dividends or other distributions, collected by it as to such
Securities Collateral and apply same against interest or principal of the
Obligations in its sole discretion.

                  5. MORTGAGE COLLATERAL. The Borrower acknowledges that the
Bank is permitting it to retain in its possession all Specific and Blanket
Mortgage Collateral (together or separately the "Mortgage Collateral") for
purposes of servicing, collection and foreclosure, and the Borrower acknowledges
that the Borrower will hold such Mortgage Collateral, and all proceeds and
payments therefrom, in trust as the Bank's security and for the benefit and
subject to the direction and control of the Bank, and upon the following
additional terms and conditions:

                           (a) At the Bank's request and sole option, the
Borrower shall immediately deliver to the Bank an Assignment of each item of
Mortgage Collateral in the Bank's form for the same. Further, at the Bank's
request and sole option, the Borrower will physically deliver to the Bank all
documentation as to Specific Mortgage Collateral and/or Blanket Mortgage
Collateral (including, without limitation, any participation certificates or
other evidence thereof) and/or endorse in favor of the Bank all or any portion
of same. Except as authorized by the Bank, the Borrower shall not withdraw any
Specific Mortgage Collateral prior to is payment in full of all Obligations. The
Borrower shall promptly notify the Bank in writing (i) whenever principal
payments in excess of

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ten percent (10%) of the remaining unpaid balance are made by Borrower's
customers on any item of Specific Mortgage Collateral, (ii) whenever any item of
Specific Mortgage Collateral is paid off in full by Borrower's customers or
involved in any foreclosure action, and/or (iii) whenever any building on
property serving as Specific Mortgage Collateral is damaged by casualty or
otherwise in excess of twenty-five percent (25%) of its appraised value (if the
Borrower does not reasonably believe that such building can be promptly
repaired). Such written notices shall not initially be required where a
Borrower's Blanket Mortgage Collateral provides collateral for the Obligations
(i.e., if Sections 2(c) or 2(d) above has been utilized by the Borrower).

                           (b) The aggregate of the (i) market value of
Securities Collateral and (ii) principal balances due under Mortgage Collateral
shall be maintained at all times by the Borrower in an amount not less than that
percentage of outstanding advances required by the Credit Policy.

                           (c) Upon written direction from the Bank, the
Borrower will deposit all collections from Mortgage Collateral in a separate
bank account designated as required by the Bank as a source of which to withdraw
interest and principal payments on the Obligations.

                           (d) Unless and until otherwise directed in writing by
the Bank after the occurrence of an event of default and only during the
continuation of such event of default (should the Bank have not accelerated the
maturity of the Obligation involved), the Borrower shall have the right to make
and retain all collections from time to time coming due on Mortgage Collateral,
to execute and deliver satisfactions of or releases of such Mortgage Collateral
paid in full, and to take all necessary legal action to enforce collection of
delinquent payments, including foreclosure, without disclosing this security
arrangement and trust, and to use all collections so made by the Borrower in its
ordinary course of business.

                           (e)(i) The Borrower shall keep and maintain all
Mortgage Collateral at all times free and clear of pledges, liens, participation
interests (unless taken or held by an affiliate of Borrower, of which the
Borrower owns or controls, directly or indirectly, 100% of the voting stock of
such affiliate), and encumbrances, unless the Bank approves, or is deemed to
have approved, any such pledge, lien, participation interest or encumbrance, as
provided in this Section 5(e)(i). Borrower shall promptly give the Bank specific
and detailed written notice of any security interest or participation in
Mortgage Collateral taken by third party lenders, affiliates or others. If at
the time of such notice, no outstanding advances by Bank to Borrower are secured
either wholly or partially by collateral pledged by Borrower or any affiliate of
Borrower and if the Bank does not reply in writing to such notice by Borrower
within thirty (30) days following receipt of it, such security interest or
participation of a third party lender or affiliate shall be deemed approved.

                           (ii) Whenever it is commercially reasonable, the
Borrower shall obtain the Bank's written approval prior to the actual sale or
transfer of (or the granting of any participation in) such Mortgage Collateral.
However, in case of pledge of Blanket Mortgage Collateral (i.e. notation by the
Borrower of Sections 2(c) or 2(d) above), and if the Bank has not yet demanded
or acquired physical possession of documentation related to such Mortgage
Collateral, and when it is not commercially reasonable to obtain a release of
such Mortgage Collateral prior to the sale or transfer of mortgages, then the
Borrower is not required to comply with this subsection 5(e)(ii) of the
Agreement provided the Borrower submits to the Bank within ten (10) business
days after the contractual sale or transfer date, or any earlier sale or
transfer date, a properly executed original Notice and Release Request in which
the Borrower warrants to the Bank that an aggregate pledged mortgage portfolio
equal in book value to at least that percentage of outstanding advances required
by the Credit Policy still remains unsold and not participated in or encumbered
by others.

                           (f) The buildings located on each mortgaged property
constituting Mortgage Collateral shall be covered by all risk hazard insurance
and by insurance against all other risks customary and generally required by
mortgage lenders in the area in which the mortgaged property is located for the
type of mortgage loan involved in an amount not less than the unpaid balance due
the Borrower by its customer on each such item of Mortgage Collateral. The
Borrower will cause such insurance policies to include the Borrower and its
"successors and assigns" as loss payee under a standard mortgagee endorsement to
evidence the Bank's mortgagee/assignee interest therein and, if the Bank so
requires, to give the Bank ten (10) days prior notice of any policy
cancellation. At the Bank's demand, the Borrower will physically deliver to the
Bank any such insurance policies. The Bank may cause any secured property to be
insured if the Borrower fails to do so, and any such expense shall be an
additional Obligation hereunder.

                  6. WARRANTIES AND FURTHER COVENANTS.

                           (a) Borrower hereby represents and warrants that the
Borrower and/or any pledging affiliate is the true and lawful owner of all the
Securities Collateral and/or Mortgage Collateral free and clear of all claims,
liens, encumbrances, rights of set-off, mortgages and security interests of any
nature whatsoever (except this


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security interest and as may be further specified below) and Borrower covenants
that it shall defend the Securities Collateral and/or the Mortgage Collateral
against the claims and demands of all persons.

                           (b) Borrower hereby represents and warrants that (i)
the existence of all necessary power to enter into and execute this Agreement,
(ii) this Agreement is not in violation of its Articles, Charter, Regulations or
By-Laws, or of any federal, state or local laws or administrative or judicial
rulings, (iii) no consent or approval of any securities exchange is necessary
for the valid pledge of the Securities Collateral under this Agreement, and (iv)
this Agreement is enforceable in accordance with its terms.

                           (c) Borrower hereby represents and warrants that it
is either a member of the Bank or a qualified and eligible nonmember mortgagee
with full powers to borrow hereunder.

                           (d) Borrower hereby agrees to execute and deliver
financing statements under the Uniform Commercial Code, and statements or
amendments thereof or supplements thereto, recordable Assignments of Mortgage
Collateral, and such other instruments as the Bank may from time to time require
in order to evidence, perfect, secure, preserve, protect and enforce the
security interest hereby granted. The Bank is hereby irrevocably appointed as
Attorney-In-Fact for the Borrower in all matters pertaining to all such
perfection, preservation, protection and enforcement and evidencing same
hereunder.

                           (e) Borrower hereby represents and warrants that to
the best of its knowledge the secured property, including any property subject
to the lien of any Mortgage Collateral, is free from any and all environmental
hazards. Borrower shall indemnify Bank, hold Bank harmless, and, at the option
of Bank, defend Bank with counsel satisfactory to Bank, from all liabilities,
costs, damages, claims or expenses (including attorneys' fees and environmental
consultant's fees), suffered, paid or incurred by Bank resulting from or arising
out of any requirement under any applicable federal, state or local law,
statute, regulation, order, judgment or decree requiring that any release of a
hazardous material, solid waste, pollutant or contaminant at any of the secured
property by remedied, cleaned up or lawfully disposed of.

                           (f) Except as permitted under Section 5(e) above, the
Borrower hereby agrees that it shall not (i) sell, offer to sell or otherwise
transfer the secured property, nor pledge, mortgage or create, or suffer to
exist a security interest claim, lien, encumbrance, right of set-off or other
security interest or collateral assignment of any kind whatsoever in the secured
property or the proceeds or products thereof in favor of any person other than
the Bank without prior written consent of the Bank, or (ii) transfer physical
possession of notes and mortgages constituting Mortgage Collateral hereunder to
any third party or affiliate without the prior written consent of the Bank.

                           (g) At any time that any advances to Borrower are
outstanding that are secured wholly or partially with collateral pledged by an
affiliate of Borrower pursuant to a PLEDGE AND SECURITY AGREEMENT (as permitted
under the Credit Policy), Borrower hereby agrees that it shall cause such
affiliate to comply with all terms and conditions of such PLEDGE AND SECURITY
AGREEMENT.

                           (h) All taxes, assessments and governmental charges
levied or assessed or imposed upon or with respect to the secured property,
including any property subject to the lien of any Mortgage Collateral, shall be
paid and if Borrower fails to promptly pay such taxes, assessments or
governmental charges, Bank may (but shall not be required to) pay the same and
any such expense shall be an additional Obligation hereunder.

                           (i) Borrower will notify Bank promptly in writing of
any changes in the location of its principal place of business or jurisdiction
of incorporation, organization or formation. Borrower shall promptly inform Bank
of any change in location of any of the secured property from the Borrower's
principal place of business or otherwise. Borrower shall promptly respond to any
inquiry by Bank concerning the location of Borrower's principal place of
business, jurisdiction of incorporation, organization or formation or the
location of any of the secured property.

                  7. EVENTS OF DEFAULT: ACCELERATION. Any one or more of the
following shall constitute events of default hereunder: (a) default by Borrower
in the payment or performance, when due or payable, of any of the Obligations;
(b) the making by the Borrower of any misrepresentation to the Bank hereunder,
or otherwise for the purpose of obtaining loan advances or an extension of same;
(c) failure of the Borrower after request by the Bank to furnish promptly
financial information or to permit promptly the inspection of books or records;
(d) failure of Borrower to perform or observe any of the provisions of this
Agreement or of any other instrument pertaining to the Obligations or secured
property (subject to a ten (10) day cure period after written notice from the
Bank is received by the Borrower); (e) issuance of an injunction or attachment
against property of the Borrower which the Bank in good faith considers
materially adverse to such Borrower's financial condition; (f) appointment of a
receiver or liquidator of any part of the property of the Borrower, or if the
management of Borrower is assumed by any supervisory authority; (g) the
commencement by or against the Borrower of any

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proceeding under any bankruptcy, arrangement, reorganization, insolvency or
similar law for the relief of debtors; (h) termination for any reason of
Borrower's membership in the Bank or its status as a nonmember mortgagee and/or
state housing finance agency eligible for advances hereunder; (i) an event of
default occurs under any PLEDGE AND SECURITY AGREEMENT between any affiliate of
Borrower and Bank; (j) the occurrence of such a change in the condition or
affairs (financial or otherwise) of the Borrower, or of an affiliate supplying
secured property securing the Obligations, as in the good faith opinion of the
Bank impairs the Bank's security or increases its risk; or (k) if the Bank in
good faith deems itself insecure. Upon occurrence of any of the events of
default and failure by the Borrower to cure within the applicable cure period,
if any, any or all of the Obligations shall, at the option of the Bank and
notwithstanding any time or credit allowed by any instrument evidencing or
document relating to the Obligations, be immediately due and payable without
notice or demand (except for the events of default noted in Subsections (j) and
(k) above, for which the Bank must give written notice to the Borrower). The
Bank may then, without first resorting to any other property securing the
Obligations from other parties (including, without limitation, property provided
by any affiliate of Borrower), exercise any one or more of the rights and
remedies granted pursuant to this Agreement and/or the Credit Policy and also
exercise any or all of the rights and remedies afforded to a secured party under
the Uniform Commercial Code as enacted in Ohio or the Borrower's state of
operation or to the Bank under the Act. In case of any event of default
hereunder, Borrower agrees, upon the request of the Bank, to promptly dissolve
or cause the dissolution of any subsidiary or affiliate providing secured
property under a PLEDGE AND SECURITY AGREEMENT and the distribution of such
secured property to Borrower. Upon repossession or recovery of the secured
property by the Bank, it may, after reasonable written notification to the
Borrower, sell the secured property at public or private sale, at which sale the
Bank may become the purchaser. The proceeds of sale of the secured property
shall be applied to the Obligations in such manner and order of priority as the
Bank may determine. Pending any such action, the Bank may liquidate the secured
property and/or continue to use and exercise rights of ownership pertaining to
the secured property. Borrower does hereby make, constitute and appoint Bank as
its true and lawful attorney-in-fact to deal with the secured property and, in
the Borrower's name and stead to sell, assign, collect, compromise, settle and
release of record any portion of the secured property as fully as Borrower could
do if acting for itself. The Borrower hereby agrees to be liable to the Bank for
any deficiency that may result upon such liquidation and sale of the secured
property and waives all claims for damages by reason of any seizure,
repossession, retention, use or sale of said secured property. The requirement
of reasonable notice, if necessary, shall be met if such notice is mailed,
postage prepaid, to the first of the places of business of he Borrower shown in
this Agreement at least ten (10) days before the time of the sale or other
disposition. While exercising its rights as a secured party hereunder, including
use and receipt of benefits from the secured property, and provided the Bank's
actions are commercially reasonable under the circumstances or do not constitute
negligence or willful misconduct, the Bank shall not be liable in any fashion to
the Borrower or third party (including without limitation Borrower's customers
or shareholders) for any damages arising from such use, or any obligations,
duties or liabilities of the Borrower in connection therewith (including without
limitation Borrower's contracts, agreements, guarantees, commitments or
warranties). Each of the rights, powers and remedies provided herein or now or
hereafter existing at law or in equity or otherwise shall be cumulative and
concurrent and shall be in addition to every other right, power or remedy
provided for in this Agreement or hereafter existing at law or in equity or
otherwise. The exercise of any such rights, powers or remedies shall not
preclude the simultaneous or later exercise of any or all other such rights,
powers or remedies.

                  8. WAIVERS: CONTINUED LIABILITY. The Bank shall not be deemed
to have waived any of its rights in this Agreement or to the secured property
unless such waiver is in writing and signed by the Bank and such waiver shall
not operate as a waiver of any other default or of the same default on a
subsequent occasion. No renewal or extension of time of payment of the
Obligations at any rate of interest, no release, surrender, exchange or
modification of the secured property, no release of any person primarily or
secondarily liable on the Obligations (including any maker, endorser, quarantor
or surety), no delay in enforcement of payment of the Obligations and no delay,
omission or forbearance in exercising any right or power with respect to the
Obligations, the secured property, or this Agreement shall affect the liability
of the Borrower to the Bank.

                  9. DURATION. The term of this Agreement shall commence with
the date hereof and end on the termination date, which is the date when the
Borrower has paid in full all of the Obligations secured hereby, and either: (i)
the Bank gives written notice to the Borrower that no further advances are to be
made hereunder, or (ii) the Borrower gives written notice to the Bank that it
does not intend to apply for further advances hereunder. Until such termination,
this Agreement shall be a continuing one, and after such termination any
liabilities hereunder of the Borrower to the Bank not satisfied prior to such
termination shall survive and remain in full force and effect until satisfied.

                  10. ATTORNEY-IN-FACT. Borrower hereby appoints the Bank its
irrevocable attorney-in-fact, with full power of substitution, in its name or
otherwise, but at the Borrower's sole cost and expense (i) to transfer any
shares of stock or Securities Collateral hereby or otherwise secured to Bank
into the name of the Bank or its designee or assignee, (ii) to endorse on behalf
of the Borrower any promissory notes or other instruments delivered by the
Borrower to the Bank, (iii) to execute and/or record such documents and
instruments as the Bank, in its sole judgment, deems necessary or appropriate to
further evidence or perfect or affect a transfer of the security

<PAGE>   6

interest granted to the Bank herein or otherwise, and (iv) to record this
Agreement as a power of attorney where the Bank deems appropriate.

                  11. NOTICE. (a) Any written notice, approval, or direction
provided for in this Agreement to be given by the Bank to the Borrower shall
include and be satisfied by notice given to the Borrower by: (i) hand delivery,
regular first class mail, or any other form of physical delivery, or (ii)
facsimile, whether or not receipt of such facsimile is confirmed with the
Borrower or a follow-up hard copy is mailed or otherwise physically delivered to
the Borrower, and (b) any written notice provided for in this Agreement to be
given by the Borrower to the Bank shall only include and be satisfied by notice
given to the Bank by: (i) registered or certified mail (postage prepaid, return
receipt requested) or some other form of delivery whereby receipt is confirmed,
or (ii) facsimile, but only if receipt by the Bank is confirmed by the Borrower
and a follow-up hard copy is delivered to the Bank by the means specified in
subsection (b)(i) of this Section 11.

                  12. GENERAL. All rights and liabilities hereunder shall be
governed and limited by and construed in accordance with the Act and the laws of
the State of Ohio (matters related to eligibility for advances and the rate of
interest assessed by the Bank on advances or other Obligations shall be governed
solely by the Act). This Agreement shall inure to the benefit and bind the Bank
and the Borrower and their respective successors and assigns. Any provision
hereof which may prove limited or unenforceable, under any laws or judicial
rulings shall not affect the validity or enforcement of the remainder of the
provision or of any other provision.

FEDERAL HOME LOAN BANK
OF CINCINNATI                            Borrower:

                                    THE MIDDLEFIELD BANKING COMPANY

By /s/
   ----------------------------
   its Senior Vice President        (Name of Borrower)

By /s/                              By /s/
  -----------------------------        -----------------------------------------
   its Assistant Vice President     [Signature of Officer Authorized By
                                    Board to Execute This Agreement]

         September 20, 2000         Thomas G. Caldwell   President & CEO
                                    --------------------------------------------
                                    Type Name of Authorized Officer and Title


                                    And /s/
                                        --------------------------------
                                    [Signature of Officer Authorized By
                                    Board to Execute This Agreement]

                                    James R. Heslop, II Executive Vice President
                                    --------------------------------------------
                                    Type Name of Authorized Officer and Title

Witnesses to Signature of
Borrower's Officers:                [IMPRESS CORPORATE SEAL HERE]

/s/
-------------------------------
R. E. West

/s/
-------------------------------
Jay T. Giles

<PAGE>   7

STATE OF Ohio         )
COUNTY OF Geauga      )  S:

         On this September 14, 2000, before me appeared Thomas G. Caldwell, to
me personally known, who being by me duly sworn, did say that he is President of
the above-named Borrower, a corporation; that the seal affixed to the foregoing
instrument is the seal of said corporation; that said instrument was signed and
sealed on behalf of said corporation by authority of its Board of Directors; and
said President acknowledged said instrument to be the free act and deed of said
corporation and his or her free act and deed as such officer, for the uses and
purposes in said instrument mentioned.


My commission expires:

GAIL A. NEIKIRK Notary Public
My Commission Expires May 20, 2001           Notary Public, /s/ Gail A. Neikirk
                                                            -------------------
                                                            (signature)

----------------------------------          County of Geauga
                                                      -------------------
                                            State of Ohio
                                                     --------------------


[IMPRESS NOTARY SEAL HERE]