Exhibit 13




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Statistical Summary
    
    
    2Decade of Progress
    
    
    4Letter to Our Shareholders
    
    
    8Letter from the Chairman
    
    
    10Middlefield Banc Corp. Board of Directors
    
    
    11Emerald Bank Directors & Officers
    
    
    14Emerald Bank Staff & Branch Locations
    
    
    15The Middlefield Banking Company Staff
    
    
    16The Middlefield Banking Company Officers
    
    
    17The Middlefield Banking Company Branch Locations
    
    
    18Financials
    
    
    21




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2000
    
    
    2001
    
    
    2002Interest Income
    
    $
    12,770,170
    
    
    $
    13,706,569
    
    
    $
    14,119,963Interest Expense
    
    
    5,909,884
    
    
    
    6,747,922
    
    
    
    6,148,086Net Interest Income
    
    
    6,860,286
    
    
    
    6,958,647
    
    
    
    7,971,877Provision for Loan Loss
    
    
    275,000
    
    
    
    170,000
    
    
    
    300,000Net Interest Income After Provision for Loan Losses
    
    
    6,585,286
    
    
    
    6,788,647
    
    
    
    7,671,877Noninterest Income, Including Security Gains/Losses
    
    
    982,663
    
    
    
    1,194,193
    
    
    
    1,143,217Noninterest Expense
    
    
    4,408,617
    
    
    
    4,741,374
    
    
    
    5,206,339Income Before Income Taxes
    
    
    3,159,332
    
    
    
    3,241,466
    
    
    
    3,608,755Income Taxes
    
    
    992,661
    
    
    
    970,859
    
    
    
    1,107,806Net Income
    
    $
    2,166,671
    
    
    $
    2,270,607
    
    
    $
    2,500,949Total Assets
    
    $
    176,488,813
    
    
    $
    197,857,964
    
    
    $
    226,245,533Deposits
    
    
    147,166,046
    
    
    
    167,382,728
    
    
    
    187,384,494Equity Capital
    
    
    18,243,362
    
    
    
    19,786,807
    
    
    
    21,746,408Loans Outstanding, Net
    
    
    133,266,893
    
    
    
    150,766,103
    
    
    
    172,642,646Allowance For Loan Losses
    
    
    2,037,322
    
    
    
    2,062,252
    
    
    
    2,300,485Net Charge Offs (Recoveries)
    
    
    (6,185
    )
    
    
    145,070
    
    
    
    61,767Full Time Employees (Average Equivalents)
    
    
    57
    
    
    
    64
    
    
    
    66Number of Offices
    
    
    4
    
    
    
    5
    
    
    
    5Earnings Per Share
    
    $
    1.50
    
    
    $
    1.54
    
    
    $
    1.68Dividends Per Share
    
    
    0.40
    
    
    
    0.52
    
    
    
    0.58Book Value Per Share
    
    
    12.96
    
    
    
    13.93
    
    
    
    15.35Dividends Pay-out Ratio
    
    
    27.47
    %
    
    
    34.00
    %
    
    
    34.30
    %Cash Dividends Paid
    
    $
    595,255
    
    
    $
    772,068
    
    
    $
    857,751Return on Average Assets
    
    
    1.31
    %
    
    
    1.22
    %
    
    
    1.17
    %Return on Average Equity
    
    
    12.83
    %
    
    
    11.89
    %
    
    
    12.08
    %




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##### 



2003
    
    
    2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009$
    14,647,163
    
    
    $
    15,732,536
    
    
    $
    17,378,504
    
    
    $
    19,494,550
    
    
    $
    24,872,675
    
    
    $
    26,037,812
    
    
    $
    26,050,5815,724,907
    
    
    
    5,768,898
    
    
    
    6,654,614
    
    
    
    8,567,442
    
    
    
    13,530,919
    
    
    
    14,058,084
    
    
    
    11,782,8258,922,256
    
    
    
    9,963,638
    
    
    
    10,723,890
    
    
    
    10,927,108
    
    
    
    11,341,756
    
    
    
    11,979,728
    
    
    
    14,267,756315,000
    
    
    
    174,000
    
    
    
    302,000
    
    
    
    60,000
    
    
    
    429,391
    
    
    
    608,000
    
    
    
    2,578,0478,607,256
    
    
    
    9,789,638
    
    
    
    10,421,890
    
    
    
    10,867,108
    
    
    
    10,912,365
    
    
    
    11,371,728
    
    
    
    11,689,7091,428,144
    
    
    
    1,779,231
    
    
    
    2,119,237
    
    
    
    2,427,455
    
    
    
    2,631,851
    
    
    
    2,226,506
    
    
    
    2,668,2806,105,450
    
    
    
    6,965,706
    
    
    
    7,424,640
    
    
    
    7,938,373
    
    
    
    9,372,650
    
    
    
    10,596,352
    
    
    
    12,649,5773,929,950
    
    
    
    4,603,163
    
    
    
    5,116,487
    
    
    
    5,356,190
    
    
    
    4,171,566
    
    
    
    3,001,882
    
    
    
    1,708,4121,131,330
    
    
    
    1,330,000
    
    
    
    1,415,156
    
    
    
    1,471,943
    
    
    
    796,223
    
    
    
    387,003
    
    
    
    (72,574
    )$
    2,798,620
    
    
    $
    3,273,163
    
    
    $
    3,701,331
    
    
    $
    3,884,247
    
    
    $
    3,375,343
    
    
    $
    2,614,879
    
    
    $
    1,780,986$
    262,369,448
    
    
    $
    291,213,986
    
    
    $
    311,214,191
    
    
    $
    340,603,704
    
    
    $
    434,273,056
    
    
    $
    467,846,934
    
    
    $
    558,657,769219,839,910
    
    
    
    239,885,451
    
    
    
    249,449,640
    
    
    
    271,050,193
    
    
    
    362,918,000
    
    
    
    394,819,601
    
    
    
    487,106,28423,504,314
    
    
    
    24,822,024
    
    
    
    27,289,365
    
    
    
    30,463,934
    
    
    
    34,961,384
    
    
    
    35,059,248
    
    
    
    36,707,271190,358,883
    
    
    
    213,029,852
    
    
    
    231,213,699
    
    
    
    246,341,647
    
    
    
    306,146,646
    
    
    
    318,018,530
    
    
    
    348,660,1372,521,270
    
    
    
    2,623,431
    
    
    
    2,841,098
    
    
    
    2,848,887
    
    
    
    3,299,276
    
    
    
    3,556,763
    
    
    
    4,936,57594,215
    
    
    
    71,839
    
    
    
    84,333
    
    
    
    52,211
    
    
    
    422,529
    
    
    
    350,513
    
    
    
    1,198,23572
    
    
    
    73
    
    
    
    75
    
    
    
    80
    
    
    
    91
    
    
    
    101
    
    
    
    1066
    
    
    
    6
    
    
    
    6
    
    
    
    8
    
    
    
    9
    
    
    
    10
    
    
    
    10$
    1.89
    
    
    $
    2.18
    
    
    $
    2.50
    
    
    $
    2.60
    
    
    $
    2.17
    
    
    $
    1.72
    
    
    $
    1.150.65
    
    
    
    0.72
    
    
    
    0.80
    
    
    
    0.87
    
    
    
    0.94
    
    
    
    1.03
    
    
    
    1.0416.49
    
    
    
    17.67
    
    
    
    19.25
    
    
    
    20.30
    
    
    
    22.56
    
    
    
    22.83
    
    
    
    23.4634.37
    %
    
    
    32.72
    %
    
    
    31.69
    %
    
    
    33.43
    %
    
    
    43.07
    %
    
    
    60.25
    %
    
    
    90.28
    %$
    961,901
    
    
    $
    1,070,833
    
    
    $
    1,173,044
    
    
    $
    1,298,567
    
    
    $
    1,453,707
    
    
    $
    1,575,482
    
    
    $
    1,607,9111.13
    %
    
    
    1.17
    %
    
    
    1.23
    %
    
    
    1.22
    %
    
    
    0.85
    %
    
    
    0.58
    %
    
    
    0.36
    %12.39
    %
    
    
    13.36
    %
    
    
    14.43
    %
    
    
    13.59
    %
    
    
    10.06
    %
    
    
    7.91
    %
    
    
    4.90
    %
 NOTES:
    
    (1) The above per share amounts have been restated to reflect a two for one stock split
effected in 2000 and 5% stock dividends paid in 2002, 2003, 2004, 2005, 2006 and 2007.




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President and Chief Executive Officer
 To our Shareholders and Friends




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President and Chief Executive Officer




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 Chairman, Board of Directors
 
 Chairmans Report to the Shareholders
       
 Chairman, Board of Directors




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Board of Directors
 (PHOTO OF RICHARD T. COYNE)
    
    Richard T. Coyne  1997Chairman, Board of Directors, 
Middlefield Banc Corp. 
The Middlefield Banking Company
Retired: Jaco Products and 
Capital Plastics
    
    (PHOTO OF CAROLYN J. TURK)
    
    Carolyn J. Turk, C.P.A.  2004
Controller 
Molded Fiber Glass Companies(PHOTO OF FRANCES H. FRANK)
    
    Frances H. Frank  1995
Secretary/Treasurer 
The Frank Agency, Inc.
    
    (PHOTO OF WILLIAM J. SKIDMORE)
    
    William J. Skidmore  2007
Northeast Ohio Senior District Manager 
Waste Management of Ohio, Inc.(PHOTO OF THOMAS G. CALDWELL)
    
    Thomas G. Caldwell  1997President and Chief Executive Officer 
Middlefield Banc Corp. 
The Middlefield Banking Company
    
    (PHOTO OF KENNETH E. JONES)
    
    Kenneth E. Jones  2008
President 
Chesapeake Financial Advisors(PHOTO OF JAMES R. HESLOP)
    
    James R. Heslop, II  2001Executive Vice President 
Chief Operating Officer 
Middlefield Banc
Corp. 
The Middlefield Banking Company
    
    (PHOTO OF ROBERT W. TOTH)
    
    Robert W. Toth  2009
Retired: Gold Key Processing, Ltd(PHOTO OF JAMES J. MCCASKEY)
    
    James J. McCaskey  2004
President 
McCaskey Landscape and Design,
LLC
    
    (PHOTO OF ERIC W. HUMMEL)
    
    Eric W. Hummel*  2009
President
Hummel Construction
 *
    
    denotes The Middlefield Banking
Company Director only




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Board of Directors
    
    OfficersKenneth E. Jones  2004
    
    James L. Long  2008Chairman, Board of Directors, Emerald Bank
    
    President and Chief Executive OfficerPresidentChesapeake Financial Advisors
    
    Donald L. Stacy  2007Chief Financial Officer and TreasurerGeorge J. Kontogiannis, AIA  2004Chief Executive Officer
    
    Joe T. Glassco  2009The Kontogiannis Companies
    
    Vice PresidentCommercial LenderJoseph C. Zanetos  2004President
    
    Charles T. Woodson  2008Anthony-Thomas Candy Co.
    
    Assistant Vice PresidentWesterville Branch ManagerClayton W. Rose, III, C.P.A.  2006Shareholder
    
    Laura E. Neale  2010Rea & Associates, Inc.
    
    Assistant Vice PresidentCommercial LenderThomas G. Caldwell  2007President and Chief Executive Officer
    
    Barbara Howard  2004Middlefield Banc Corp.
    
    Administrative OfficerThe Middlefield Banking Company
    
    AccountingRichard T. Coyne  2007
    
    Jessica L. Vituccio  2009Chairman, Board of Directors, Middlefield Banc Corp.
    
    Administrative OfficerThe Middlefield Banking Company
    
    Loan SpecialistRetired: Jaco Products and Capital PlasticsJames L. Long  2008President and Chief Executive OfficerEmerald Bank




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Staff
    
    Branch LocationsDublin Branch:

Valorie Thorpe  2004  Branch Supervisor
Elaine Gaub  2005  Customer Services
Marcia Boatwright  2009  Customer ServicesWesterville Branch:

Lisa Stokes  2006  Branch Supervisor
Rebekah Bolton  2008  Customer Services
Tracy Needham  2008  Customer Services
    
    (IMAGE)Dublin BranchDrive up ATM6215 Perimeter DriveDublin, Ohio 43017614.793.4631  fax: 614.793.8922(IMAGE)Westerville BranchDrive up ATM17 North State StreetWesterville, Ohio 43081614.890.7832  fax: 614.890.4633




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StaffMain Office:
Louise Fenselon  1984  Head Teller
Bonnie Steele  1985  Customer Services
Diana Koller  1998  Teller
Rachel Reese  2005  Receptionist
Amanda Howes  2006  Teller
Jenna Janssen  2006  Teller*
Kristina Stephens  2006  Customer Services
Linda Chandler  2007  Teller
Katie Wolfert  2007  Teller*
Brenda Bowden  2008  Teller
Benjamin Yeater  2009  Teller*West Branch:
Patti Haendel  1982  Customer Services
Rachel Lilly  1985  Head Teller
Amy Kothera  2006  Teller
Jodi Fisher  2008  Teller
Linda Hammel  2008  Teller
Bethany Pentek  2008  Teller
Amy Blair  2009  Teller*
Karrie Simcox  2009  Teller*Garrettsville Branch:
Gretchen Cram  2008  Branch Manager
Vickie Moss  1998  Teller
Colleen Steele  1998  Head Teller
Dawn Semich  2005  Customer Services
LynnRae Derthick  2006  Teller
Leah McPhail  2006  Teller*
Donna Marcello  2009  TellerChardon Branch:
Jean Carter  2009  Branch Manager
Amanda DiMeolo  2001  Customer Services
Gretchen Mihalic  2001  Teller*
Kim Koynock  2005  Teller*
Beverly Palinsky  2005  Teller*
Dottie Brown  2006  Head Teller
Dianne Knuth  2009  Teller*Orwell Branch:
Jessica Slusher  2006  Teller*
Lisa Swango  2006  Customer Services
Michelle Scott  2007  Teller
Melissa Gay  2008  Teller*
Denise Smith  2009  Teller*
    
    Mantua Branch:
Rebecca Reinard  2002  Head Teller
Jodie Lawless  2004  Customer Services
Melissa Mathews  2009  Teller*Newbury Branch:
Kathy Shanholtzer  2007  Branch Manager
Diane Thomas  2006  Teller*
Susan Grosik  2008  Teller
Helen Milburn  2008  Customer Services
Marlene Stefancin  2009  Teller*Cortland Branch:
Jeanette Meardith  2006  Teller
Onita Kocka  2008  Teller*
Sherry Krok  2008  Customer Services
Dane Bliss  2009  Teller*
Shannon Smith  2009  Teller*Loan Department:
Helen Stowe  1985  Loan Administrative Assistant
Jane Armstrong  1998  Lender
Vivian Helmick  1998  Loan Administrative Assistant
Carolyn Fackler  2001  Loan Administrative Assistant
Sarah Brook  2004  Loan Administrative Assistant
Jamie Peck  2003  Loan Collection Manager
Sue Trumbull  2005  Loan Administrative Assistant
Joan Limpert  2006  Loan Administrative Assistant
Brian Martinko  2006  Lender
Darleen Beaver  2007  Loan Receptionist
Terry Lehmann  2009  Credit AnalystOperations:
Karen Westover  1983  Bookkeeper
Pamela Malcuit  1989  Bookkeeper
Donna Williams  1990  Bookkeeper
Lauren Harth  1995  Audit Assistant*
Tara Morgan  1997  Proof Operator
Bonnie Hofstetter  1998  Courier*
Lisa Sanborn  2000  Bookkeeper
Melody Askey  2005  Compliance Assistant
Marcia Dziczkowski  2008  Float Teller
David Harth  2008  Facility Maintenance
Carrie Reiter  2008  Courier*
Dale Moore  2009  Computer Support Technician
Michael Wolf  2009  Accounting SpecialistFinancial Services:
Thomas Hart  2004  Financial Consultant
 *
    
    denotes part time




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OfficersThomas G. Caldwell  1986
    
    Thomas Munson  2003President and Chief Executive Officer
    
    Vice President/LendingJames R. Heslop, II  1996
    
    Matthew Bellin  2006Executive Vice President
    
    Vice PresidentChief Operating Officer
    
    Commercial LenderTeresa M. Hetrick  1996
    
    Felicia Hough  2009Senior Vice President
    
    Vice PresidentOperations/Administration
    
    Regional Branch AdministrationJay P. Giles  1998
    
    Karen Branham  1983Senior Vice President
    
    Assistant Vice PresidentSenior Lender
    
    Bookkeeping ManagerDonald L. Stacy  1999
    
    Gail Neikirk  1983Senior Vice President
    
    Assistant Vice PresidentChief Financial Officer
    
    Executive SecretaryDennis E. Linville  2006
    
    Thomas R. Neikirk  1994Senior Vice President
    
    Assistant Vice PresidentArea Executive
    
    West Branch ManagerKathleen M. Johnson  1971
    
    Marlin J. Moschell  2000Vice President
    
    Assistant Vice PresidentChief Accounting Officer
    
    Orwell Lending OfficerJoann Vance  1986
    
    Kathy Vanek  1998Vice President
    
    Banking OfficerHuman Resource Administrator
    
    Cortland Branch ManagerJack L. Lester  1990
    
    Joan Sweet  2002Vice President
    
    Banking OfficerCompliance and Security Officer
    
    Mantua Branch ManagerAlfred F. Thompson, Jr.  1996
    
    Kevin Mitchell  2007Vice President
    
    Banking OfficerLoan Administration
    
    Main Office ManagerSharon R. Jarold  2001Vice PresidentCommercial Lender




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(IMAGE)
    
    (IMAGE)Main OfficeWalk up ATM
    
    Chardon BranchDrive up ATM15985 East High Street, P.O. Box 35
    
    348 Center Street, P.O. Box 1078Middlefield, Ohio 44062
    
    Chardon, Ohio 44024888.801.1666  440.632.1666  fax: 440.632.1700
    
    888.801.1666  440.286.1222  fax: 440.286.1111(IMAGE)
    
    (IMAGE)Garrettsville BranchDrive up ATM
    
    Newbury BranchDrive up ATM8058 State Street
    
    11110 Kinsman Road, Suite 1, P.O. Box 208Garrettsville, Ohio 44231
    
    Newbury, Ohio 44065888.801.2121  330.527.2121  fax: 330.527.4210
    
    888.801.1666  440.564.7000  fax: 440.564.7004




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(IMAGE)
    
    (IMAGE)Middlefield West BranchDrive up ATM
    
    Orwell BranchDrive up ATM15545 West High Street, P.O. Box 35
    
    30 South Maple Street, P.O. Box 66Middlefield, Ohio 44062
    
    Orwell, Ohio 44076888.801.1666  440.632.1666  fax: 440.632.9781
    
    888.801.1666  440.437.7200  fax: 440.437.1111(IMAGE)
    
    (IMAGE)Mantua BranchWalk up ATM
    
    Cortland BranchDrive up ATM10519 Main Street, P.O. Box 648
    
    3450 Niles-Cortland Road, P.O. Box 636Mantua, Ohio 44255
    
    Cortland, Ohio 44410877.274.0881  330.274.0881  fax: 330.274.0883
    
    888.801.1666  330.637.3208  fax: 330.637.3207




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---



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Financial Table of ContentsConsolidated Financial Statements
    
    
    22Notes to Consolidated Financial Statements
    
    
    26Managements Discussion and Analysis
    
    
    56Shareholder Information
    
    
    74




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##### 



December 31,Consolidated Balance Sheet
    
    2009
    
    
    2008ASSETSCash and due from banks
    
    $
    12,908,859
    
    
    $
    9,795,248Federal funds sold
    
    
    28,122,892
    
    
    
    7,548,000Interest-bearing deposits in other institutions
    
    
    120,885
    
    
    
    112,215Cash and cash equivalents
    
    
    41,152,636
    
    
    
    17,455,463Investment securities available for sale
    
    
    136,711,100
    
    
    
    104,270,366Loans
    
    
    353,596,712
    
    
    
    321,575,293Less allowance for loan losses
    
    
    4,936,575
    
    
    
    3,556,763Net loans
    
    
    348,660,137
    
    
    
    318,018,530Premises and equipment
    
    
    8,394,369
    
    
    
    8,448,915Goodwill
    
    
    4,558,687
    
    
    
    4,558,687Bank-owned life insurance
    
    
    7,706,476
    
    
    
    7,440,687Accrued interest and other assets
    
    
    11,474,364
    
    
    
    7,654,287TOTAL ASSETS
    
    $
    558,657,769
    
    
    $
    467,846,935LIABILITIESDeposits:Noninterest-bearing demand
    
    $
    44,386,654
    
    
    $
    42,357,154Interest-bearing demand
    
    
    38,111,042
    
    
    
    26,404,660Money market
    
    
    56,451,504
    
    
    
    27,845,438Savings
    
    
    107,358,352
    
    
    
    68,968,844Time
    
    
    240,798,732
    
    
    
    229,243,506Total deposits
    
    
    487,106,284
    
    
    
    394,819,602Short-term borrowings
    
    
    6,799,555
    
    
    
    1,886,253Other borrowings
    
    
    25,864,508
    
    
    
    33,903,019Accrued interest and other liabilities
    
    
    2,180,151
    
    
    
    2,178,813TOTAL LIABILITIES
    
    
    521,950,498
    
    
    
    432,787,687STOCKHOLDERS EQUITYCommon stock, no par value; 10,000,000 shares
authorized,
1,754,112 and 1,725,381 shares issued
    
    
    27,919,228
    
    
    
    27,301,403Retained earnings
    
    
    14,959,428
    
    
    
    14,786,353Accumulated other comprehensive income (loss)
    
    
    562,222
    
    
    
    (294,901
    )Treasury stock, at cost; 189,530 shares in 2009 and 2008
    
    
    (6,733,607
    )
    
    
    (6,733,607
    )TOTAL STOCKHOLDERS EQUITY
    
    
    36,707,271
    
    
    
    35,059,248TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    558,657,769
    
    
    $
    467,846,935




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##### 



Year Ended December 31,Consolidated Statement of Income
    
    2009
    
    
    2008
    
    
    2007INTEREST INCOMEInterest and fees on loans
    
    $
    20,270,987
    
    
    $
    21,426,372
    
    
    $
    21,063,258Interest-bearing deposits in other institutions
    
    
    14,561
    
    
    
    12,468
    
    
    
    155,550Federal funds sold
    
    
    20,557
    
    
    
    135,104
    
    
    
    498,040Investment securities:Taxable interest
    
    
    3,794,149
    
    
    
    2,538,237
    
    
    
    1,265,673Tax-exempt interest
    
    
    1,881,752
    
    
    
    1,810,319
    
    
    
    1,773,292Dividends on FHLB stock
    
    
    68,575
    
    
    
    115,313
    
    
    
    116,121TOTAL INTEREST INCOME
    
    
    26,050,581
    
    
    
    26,037,813
    
    
    
    24,871,934INTEREST EXPENSEDeposits
    
    
    10,296,404
    
    
    
    12,352,211
    
    
    
    11,633,010Short-term borrowings
    
    
    34,110
    
    
    
    46,084
    
    
    
    92,720Other borrowings
    
    
    918,600
    
    
    
    1,120,491
    
    
    
    1,269,910Trust preferred securities
    
    
    533,711
    
    
    
    539,298
    
    
    
    535,279TOTAL INTEREST EXPENSE
    
    
    11,782,825
    
    
    
    14,058,084
    
    
    
    13,530,919NET INTEREST INCOME
    
    
    14,267,756
    
    
    
    11,979,729
    
    
    
    11,341,015Provision for loan losses
    
    
    2,578,047
    
    
    
    608,000
    
    
    
    429,391NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
    
    
    11,689,709
    
    
    
    11,371,729
    
    
    
    10,911,624NONINTEREST INCOMEService charges on deposit accounts
    
    
    1,905,130
    
    
    
    1,888,059
    
    
    
    1,954,992Investment securities gains (losses), net
    
    
    (14,323
    )
    
    
    (344,049
    )
    
    
    7,942Earnings on bank-owned life insurance
    
    
    265,788
    
    
    
    287,305
    
    
    
    280,638Other income
    
    
    511,685
    
    
    
    395,191
    
    
    
    389,020TOTAL NONINTEREST INCOME
    
    
    2,668,280
    
    
    
    2,226,506
    
    
    
    2,632,592NONINTEREST EXPENSESalaries and employee benefits
    
    
    5,938,239
    
    
    
    4,911,671
    
    
    
    4,458,075Occupancy expense
    
    
    928,425
    
    
    
    885,904
    
    
    
    745,935Equipment expense
    
    
    508,875
    
    
    
    539,040
    
    
    
    525,250Data processing costs
    
    
    916,990
    
    
    
    803,230
    
    
    
    699,185Ohio state franchise tax
    
    
    493,200
    
    
    
    468,000
    
    
    
    424,873Federal deposit insurance expense
    
    
    707,328
    
    
    
    187,867
    
    
    
    49,209Other expense
    
    
    3,156,520
    
    
    
    2,800,641
    
    
    
    2,470,123TOTAL NONINTEREST EXPENSE
    
    
    12,649,577
    
    
    
    10,596,353
    
    
    
    9,372,650Income before income taxes
    
    
    1,708,412
    
    
    
    3,001,882
    
    
    
    4,171,566Income taxes
    
    
    (72,574
    )
    
    
    387,003
    
    
    
    796,223NET INCOME
    
    $
    1,780,986
    
    
    $
    2,614,879
    
    
    $
    3,375,343EARNINGS PER SHAREBasic
    
    $
    1.15
    
    
    $
    1.72
    
    
    $
    2.17Diluted
    
    
    1.15
    
    
    
    1.69
    
    
    
    2.14DIVIDENDS DECLARED PER SHARE
    
    $
    1.04
    
    
    $
    1.03
    
    
    $
    0.94




---



##### 



AccumulatedOther
    
    
    
    
    
    
    TotalConsolidated Statement of
    
    Common Stock
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury
    
    
    Stockholders
    
    
    ComprehensiveChanges in Stockholders Equity
    
    Shares
    
    
    Amount
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Stock
    
    
    Equity
    
    
    Income (Loss)Balance, December 31, 2006
    
    $
    1,519,887
    
    
    $
    19,507,257
    
    
    $
    14,685,971
    
    
    $
    (520,987
    )
    
    $
    (3,208,307
    )
    
    $
    30,463,934Net income
    
    
    
    
    
    
    
    
    
    
    3,375,343
    
    
    
    
    
    
    
    
    
    
    
    3,375,343
    
    
    $
    3,375,343Other comprehensive income:Unrealized gain on available-for-sale securities,
net of reclassification adjustment, net of taxes
of $241,100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    468,018
    
    
    
    
    
    
    
    468,018
    
    
    
    468,018Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    3,843,361Exercise of stock options
    
    
    538
    
    
    
    14,182
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,182Expense related to stock options
    
    
    
    
    
    
    26,435
    
    
    
    12,695
    
    
    
    
    
    
    
    
    
    
    
    39,130Purchase of treasury stock (56,665 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,174,419
    )
    
    
    (2,174,419
    )Common stock issued as a result of the
acquisition of Emerald Bank
    
    
    92,447
    
    
    
    3,662,750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,662,750Five percent stock dividend
(including cash paid for fractional shares)
    
    
    73,547
    
    
    
    2,857,301
    
    
    
    (2,873,346
    )
    
    
    
    
    
    
    
    
    
    
    (16,045
    )Dividend reinvestment and purchase plan
    
    
    15,127
    
    
    
    582,198
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    582,198Cash dividends ($.94 per share)
    
    
    
    
    
    
    
    
    
    
    (1,453,707
    )
    
    
    
    
    
    
    
    
    
    
    (1,453,707
    )Balance, December 31, 2007
    
    $
    1,701,546
    
    
    $
    26,650,123
    
    
    $
    13,746,956
    
    
    $
    (52,969
    )
    
    $
    (5,382,726
    )
    
    $
    34,961,384Net income
    
    
    
    
    
    
    
    
    
    
    2,614,879
    
    
    
    
    
    
    
    
    
    
    
    2,614,879
    
    
    $
    2,614,879Other comprehensive income:Unrealized loss on available-for-sale securities,
net of reclassification adjustment, net of tax
benefit of $124,632
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (241,932
    )
    
    
    
    
    
    
    (241,932
    )
    
    
    (241,932
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,372,947Exercise of stock options
    
    
    992
    
    
    
    19,642
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,642Expense related to stock options
    
    
    
    
    
    
    15,048
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,048Purchase of treasury stock (37,785 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,350,881
    )
    
    
    (1,350,881
    )Dividend reinvestment and purchase plan
    
    
    22,843
    
    
    
    616,590
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    616,590Cash dividends ($1.03 per share)
    
    
    
    
    
    
    
    
    
    
    (1,575,482
    )
    
    
    
    
    
    
    
    
    
    
    (1,575,482
    )Balance, December 31, 2008
    
    $
    1,725,381
    
    
    $
    27,301,403
    
    
    $
    14,786,353
    
    
    $
    (294,901
    )
    
    $
    (6,733,607
    )
    
    $
    35,059,248Net income
    
    
    
    
    
    
    
    
    
    
    1,780,986
    
    
    
    
    
    
    
    
    
    
    
    1,780,986
    
    
    $
    1,780,986Other comprehensive income:Unrealized gains on available-for-sale securities,
net of taxes of $441,548
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    857,123
    
    
    
    
    
    
    
    857,123
    
    
    
    857,123Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,638,109Expense related to stock options
    
    
    
    
    
    
    60,588
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60,588Dividend reinvestment and purchase plan
    
    
    28,731
    
    
    
    557,237
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    557,237Cash dividends ($1.04 per share)
    
    
    
    
    
    
    
    
    
    
    (1,607,911
    )
    
    
    
    
    
    
    
    
    
    
    (1,607,911
    )Balance, December 31, 2009
    
    $
    1,754,112
    
    
    $
    27,919,228
    
    
    $
    14,959,428
    
    
    $
    562,222
    
    
    $
    (6,733,607
    )
    
    $
    36,707,271
 2009
    
    
    2008
    
    
    2007Components of comprehensive income (loss):Change in net unrealized gain (loss)
on investments available for sale
    
    
    
    $
    847,670
    
    
    $
    (469,004
    )
    
    $
    472,771Realized losses (gains) included in net income,
net of taxes of $4,870, $116,976, and $2,448
    
    
    
    
    9,453
    
    
    
    227,072
    
    
    
    (4,753
    )TOTAL
    
    
    
    $
    857,123
    
    
    $
    (241,932
    )
    
    $
    468,018




---



##### 



Year Ended December 31,Consolidated Statement of Cash Flows
    
    2009
    
    
    2008
    
    
    2007OPERATING ACTIVITIESNet income
    
    $
    1,780,986
    
    
    $
    2,614,879
    
    
    $
    3,375,343Adjustments to reconcile net income to net cash provided by
operating activities:Provision for loan losses
    
    
    2,578,047
    
    
    
    608,000
    
    
    
    429,391Depreciation and amortization
    
    
    679,870
    
    
    
    645,186
    
    
    
    597,741Amortization of premium and discount on investment securities
    
    
    (482,959
    )
    
    
    182,656
    
    
    
    226,766Amortization of deferred loan fees, net
    
    
    (67,503
    )
    
    
    (143,673
    )
    
    
    (65,763
    )Investment securities (gains) losses, net
    
    
    14,323
    
    
    
    344,049
    
    
    
    (7,942
    )Earnings on bank-owned life insurance
    
    
    (265,788
    )
    
    
    (287,305
    )
    
    
    (280,638
    )Deferred income taxes
    
    
    (469,190
    )
    
    
    (269,947
    )
    
    
    97,308Expense related to stock option
    
    
    60,588
    
    
    
    15,048
    
    
    
    26,435Loss on other real estate owned
    
    
    182,796
    
    
    
    
    
    
    
    Decrease (increase) in accrued interest receivable
    
    
    35,144
    
    
    
    94,061
    
    
    
    (292,056
    )Increase (decrease) in accrued interest payable
    
    
    (393,940
    )
    
    
    (210,461
    )
    
    
    540,144Increase in prepaid federal deposit insurance
    
    
    (2,499,346
    )
    
    
    (43,064
    )
    
    
    (19,841
    )Other, net
    
    
    (19,235
    )
    
    
    (352,559
    )
    
    
    (332,855
    )Net cash provided by operating activities
    
    
    1,133,793
    
    
    
    3,196,870
    
    
    
    4,294,033INVESTING ACTIVITIESInvestment securities available for sale:Proceeds from repayments and maturities
    
    
    20,673,671
    
    
    
    16,912,691
    
    
    
    10,583,584Proceeds from sale of securities
    
    
    815,655
    
    
    
    2,953,089
    
    
    
    Purchases
    
    
    (52,162,754
    )
    
    
    (39,061,652
    )
    
    
    (32,990,009
    )Investment securities held to maturity:Proceeds from sale of securities
    
    
    
    
    
    
    
    
    
    
    102,942Increase in loans, net
    
    
    (34,493,122
    )
    
    
    (13,388,057
    )
    
    
    (20,959,699
    )Acquisition of subsidiary bank
    
    
    
    
    
    
    
    
    
    
    (1,828,301
    )Purchase of Federal Home Loan Bank stock
    
    
    (14,100
    )
    
    
    (142,100
    )
    
    
    (91,100
    )Purchase of premises and equipment
    
    
    (466,768
    )
    
    
    (1,407,631
    )
    
    
    (570,065
    )Proceeds from the sale of other real estate owned
    
    
    100,000
    
    
    
    
    
    
    
    61,229Deposit acquisition premium
    
    
    
    
    
    
    
    
    
    
    (2,124,212
    )Net cash used for investing activities
    
    
    (65,547,418
    )
    
    
    (34,133,660
    )
    
    
    (47,815,631
    )FINANCING ACTIVITIESNet increase in deposits
    
    
    92,286,682
    
    
    
    25,804,674
    
    
    
    38,528,910Increase (decrease) in short-term borrowings, net
    
    
    4,913,302
    
    
    
    375,645
    
    
    
    (99,131
    )Proceeds from other borrowings
    
    
    
    
    
    
    13,500,000
    
    
    
    2,000,000Repayment of other borrowings
    
    
    (8,038,511
    )
    
    
    (11,992,300
    )
    
    
    (8,967,419
    )Purchase of treasury stock
    
    
    
    
    
    
    (1,350,881
    )
    
    
    (2,174,419
    )Exercise of stock options
    
    
    
    
    
    
    19,642
    
    
    
    14,182Proceeds from dividend reinvestment and purchase plan
    
    
    557,237
    
    
    
    616,590
    
    
    
    582,198Tax effect of stock options
    
    
    
    
    
    
    
    
    
    
    12,695Cash dividends
    
    
    (1,607,911
    )
    
    
    (1,575,482
    )
    
    
    (1,469,752
    )Net cash received from deposit acquisition
    
    
    
    
    
    
    5,179,043
    
    
    
    19,270,054Net cash provided by financing activities
    
    
    88,110,798
    
    
    
    30,576,931
    
    
    
    47,697,318Increase (decrease) in cash and cash equivalents
    
    
    23,697,173
    
    
    
    (359,859
    )
    
    
    4,175,720CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
    
    17,455,463
    
    
    
    17,815,322
    
    
    
    13,639,602CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    41,152,636
    
    
    $
    17,455,463
    
    
    $
    17,815,322SUPPLEMENTAL INFORMATIONCash paid during the year for:Interest on deposits and borrowings
    
    $
    12,176,765
    
    
    $
    14,268,545
    
    
    $
    12,910,196Income taxes
    
    
    275,000
    
    
    
    600,000
    
    
    
    850,000Noncash investing transactions:Transfers from loans to other real estate owned
    
    $
    1,872,170
    
    
    $
    1,106,278
    
    
    $
    78,394Loans to facilitate the sale of other real estate owned
    
    
    531,203
    
    
    
    
    
    
    
    SUMMARY OF BUSINESS ACQUISITIONFair value of tangible assets acquired
    
    $
    
    
    
    $
    
    
    
    $
    42,657,925Fair value of core deposit intangible acquired
    
    
    
    
    
    
    
    
    
    
    103,781Fair value of liabilities assumed
    
    
    
    
    
    
    
    
    
    
    (38,408,610
    )Stock issued for the purchase of acquired companys common stock
    
    
    
    
    
    
    
    
    
    
    (3,662,750
    )Cash paid in the acquisition
    
    
    
    
    
    
    
    
    
    
    (3,887,110
    )Deferred tax asset
    
    
    
    
    
    
    
    
    
    
    889,361Goodwill recognized
    
    $
    
    
    
    $
    
    
    
    $
    (2,307,403
    )




---



##### 



1.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Nature of Operations and Basis of Presentation
    Investment Securities




---



##### 



Loans
   Allowance for Loan Losses




---



##### 



Premises and Equipment
  Goodwill
  Intangible Assets
  Bank-Owned Life Insurance (BOLI)
  Income Taxes
  Earnings Per Share
  Stock-Based Compensation




---



##### 



Expected
    
    
    
    
    
    
    
    
    
    
    Expected LifeGrant Year
    
    Dividend Yield
    
    
    Risk-Free Interest Rate
    
    
    Expected Volatility
    
    
    (in years)2007
    
    
    2.53
    
    
    
    3.70 - 4.80
    
    
    
    4.09
    
    
    
    9.942008
    
    
    8.54
    
    
    
    3.53 - 3.73
    
    
    
    33.29
    
    
    
    9.94
   Cash Flow Information
  Advertising Costs
  Reclassification of Comparative Amounts
  Recent Accounting Pronouncements
 Generally Accepted Accounting Principles  FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting
Principles




---



##### 



Consolidation
 Fair Value Measurements and
Disclosures
 Financial Instruments
 Investments Debt and Equity
Securities
 Fair Value Measurements and Disclosures (Topic
820 Measuring Liabilities at Fair Value
 Subsequent Events




---



##### 



2.
    
    MERGERS AND ACQUISITIONS
   2007Interest income
    
    $
    25,712,096Interest expense
    
    
    14,041,702Net interest income
    
    
    11,670,394Provision for loan losses
    
    
    475,493Net interest income after provisions for loan losses
    
    
    11,194,901Noninterest income
    
    
    2,659,299Noninterest expense
    
    
    10,385,875Income before income taxes
    
    
    3,468,325Provision for income taxes
    
    
    639,923Net income including restructuring charges
    
    
    2,828,402Restructuring charges of $418,848, net of tax benefit of $142,408
    
    
    276,440Net income excluding restructuring charges
    
    $
    3,104,842Net loss per share including restructuring chargesBasic
    
    $
    1.82Diluted
    
    $
    1.79Net income per share excluding restructuringBasic
    
    $
    2.00Diluted
    
    $
    1.97
  Twelve Months Ended December 31,2007Compensation and benefits
    
    $
    40,092Professional fees
    
    
    221,389Acceleration of contracts
    
    
    157,367Total
    
    $
    418,848




---



##### 



3.
    
    EARNINGS PER SHARE
  2009
    
    
    2008
    
    
    2007Weighted-average common shares outstanding
    
    
    1,736,769
    
    
    
    1,710,861
    
    
    
    1,666,265Average treasury stock shares
    
    
    (189,530
    )
    
    
    (177,888
    )
    
    
    (110,667
    )Weighted-average common shares and common stock equivalents
used to calculate basic earnings per share
    
    
    1,547,239
    
    
    
    1,532,973
    
    
    
    1,555,598Additional common stock equivalents (stock options)
used to calculate diluted earnings per share
    
    
    740
    
    
    
    13,440
    
    
    
    21,649Weighted-average common shares and common stock equivalents
used to calculate diluted earnings per share
    
    
    1,547,979
    
    
    
    1,546,413
    
    
    
    1,577,247
  4.
    
    STOCK DIVIDEND




---



##### 



5.
    
    INVESTMENT SECURITIES AVAILABLE FOR SALE
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairDecember 31, 2009
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueU.S. government agency securities
    
    $
    18,656,862
    
    
    $
    38,001
    
    
    $
    (365,326
    )
    
    $
    18,329,537Obligations of states and
political subdivisions:Taxable
    
    
    3,450,994
    
    
    
    9,948
    
    
    
    (86,131
    )
    
    
    3,374,811Tax-exempt
    
    
    52,751,674
    
    
    
    942,871
    
    
    
    (349,048
    )
    
    
    53,345,497Mortgage-backed securities
    
    
    60,055,436
    
    
    
    1,816,587
    
    
    
    (1,129,518
    )
    
    
    60,742,505Total debt securities
    
    
    134,914,966
    
    
    
    2,807,407
    
    
    
    (1,930,023
    )
    
    
    135,792,350Equity securities
    
    
    944,283
    
    
    
    80,000
    
    
    
    (105,533
    )
    
    
    918,750Total
    
    $
    135,859,249
    
    
    $
    2,887,407
    
    
    $
    (2,035,556
    )
    
    $
    136,711,100
 Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairDecember 31, 2008
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueU.S. government agency securities
    
    $
    4,376,650
    
    
    $
    126,912
    
    
    $
    
    
    
    $
    4,503,562Obligations of states and
political subdivisions:Taxable
    
    
    499,528
    
    
    
    
    
    
    
    (3,278
    )
    
    
    496,250Tax-exempt
    
    
    44,328,318
    
    
    
    405,958
    
    
    
    (1,050,244
    )
    
    
    43,684,032Mortgage-backed securities
    
    
    54,568,407
    
    
    
    1,042,038
    
    
    
    (1,046,085
    )
    
    
    54,564,360Total debt securities
    
    
    103,772,903
    
    
    
    1,574,908
    
    
    
    (2,099,607
    )
    
    
    103,248,204Equity securities
    
    
    944,283
    
    
    
    141,079
    
    
    
    (63,200
    )
    
    
    1,022,162Total
    
    $
    104,717,186
    
    
    $
    1,715,987
    
    
    $
    (2,162,807
    )
    
    $
    104,270,366
  Amortized
    
    
    FairCost
    
    
    ValueDue in one year or less
    
    $
    1,630,140
    
    
    $
    1,659,476Due after one year through five years
    
    
    7,052,906
    
    
    
    7,396,783Due after five years through ten years
    
    
    23,240,506
    
    
    
    23,519,817Due after ten years
    
    
    102,991,414
    
    
    
    103,216,274Total
    
    $
    134,914,966
    
    
    $
    135,792,350




---



##### 



Less than Twelve Months
    
    
    Twelve Months or Greater
    
    
    TotalGross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    GrossFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedDecember 31, 2009
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesU.S. government agency securities
    
    $
    17,133,678
    
    
    $
    (365,326
    )
    
    $
    
    
    
    $
    
    
    
    $
    17,133,678
    
    
    $
    (365,326
    )Obligations of states and political subdivisions
    
    
    21,593,529
    
    
    
    (314,599
    )
    
    
    1,416,832
    
    
    
    (120,580
    )
    
    
    23,010,361
    
    
    
    (435,179
    )Mortgage-backed securities
    
    
    18,509,047
    
    
    
    (333,823
    )
    
    
    4,063,906
    
    
    
    (795,695
    )
    
    
    22,572,953
    
    
    
    (1,129,518
    )Equity securities
    
    
    580,450
    
    
    
    (67,883
    )
    
    
    8,300
    
    
    
    (37,650
    )
    
    
    588,750
    
    
    
    (105,533
    )Total
    
    $
    57,816,704
    
    
    $
    (1,081,631
    )
    
    $
    5,489,038
    
    
    $
    (953,925
    )
    
    $
    63,305,742
    
    
    $
    (2,035,556
    )
 Less than Twelve Months
    
    
    Twelve Months or Greater
    
    
    TotalGross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    GrossFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedDecember 31, 2008
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesObligations of states and political subdivisions
    
    $
    17,777,295
    
    
    $
    (561,005
    )
    
    $
    7,820,417
    
    
    $
    (492,517
    )
    
    $
    25,597,712
    
    
    $
    (1,053,522
    )Mortgage-backed securities
    
    
    16,107,618
    
    
    
    (966,793
    )
    
    
    5,062,619
    
    
    
    (79,292
    )
    
    
    21,170,237
    
    
    
    (1,046,085
    )Equity securities
    
    
    221,500
    
    
    
    (28,500
    )
    
    
    11,250
    
    
    
    (34,700
    )
    
    
    232,750
    
    
    
    (63,200
    )Total
    
    $
    34,106,413
    
    
    $
    (1,556,298
    )
    
    $
    12,894,286
    
    
    $
    (606,509
    )
    
    $
    47,000,699
    
    
    $
    (2,162,807
    )
  Investments -
Debt and Equity Securities Investments  Debt
and Equity Securities




---



##### 




    
    The length of time and the extent to which the fair value has been less than the
amortized cost basis;
 
    
    Changes in the near term prospects of the underlying collateral of a security such as
changes in default rates, loss severity given default, and significant changes in prepayment
assumptions;
 
    
    The level of cash flows generated from the underlying collateral supporting the
principal and interest payments of the debt securities; and
 
    
    Any adverse change to the
credit conditions and liquidity of the issuer, taking into consideration the latest information
available about the overall financial condition of the issuer, credit ratings, recent
legislation and government actions affecting the issuers industry, and actions taken by the
issuer to deal with the present economic climate.




---



##### 



6.
    
    LOANS
  2009
    
    
    2008Commercial and industrial
    
    $
    56,968,994
    
    
    $
    66,523,227Real estate  construction
    
    
    7,837,226
    
    
    
    7,964,892Real estate  mortgage:Residential
    
    
    205,073,341
    
    
    
    199,354,277Commercial
    
    
    78,762,847
    
    
    
    42,789,470Consumer installment
    
    
    4,954,304
    
    
    
    4,943,427353,596,712
    
    
    
    321,575,293Less allowance for loan losses
    
    
    4,936,575
    
    
    
    3,556,763Net loans
    
    $
    348,660,137
    
    
    $
    318,018,530
    2009
    
    
    200890 days or more past due and accruing interest
    
    $
    1,766,438
    
    
    $
    2,226,632Non-accrual loans
    
    
    14,519,026
    
    
    
    6,254,748Total nonperforming loans
    
    $
    16,285,464
    
    
    $
    8,481,380
   2009
    
    
    2008Impaired loans without a related allowance for loan
loss
    
    $
    4,296,251
    
    
    $
    Impaired loans with a related allowance for loan loss
    
    
    2,067,076
    
    
    
    2,661,300Related allowance for loan loss
    
    
    570,572
    
    
    
    439,340Average recorded investment in impaired loans
    
    
    3,841,894
    
    
    
    1,886,661Interest income recognized
    
    
    32,801
    
    
    
    13,078




---



##### 



7.
    
    ALLOWANCE FOR LOAN LOSSES
  2009
    
    
    2008
    
    
    2007Balance, January 1
    
    $
    3,556,763
    
    
    $
    3,299,276
    
    
    $
    2,848,887Add:Additions from acquisitions
    
    
    
    
    
    
    
    
    
    
    436,063Provisions charged to
operations
    
    
    2,578,047
    
    
    
    608,000
    
    
    
    429,391Recoveries
    
    
    88,862
    
    
    
    64,353
    
    
    
    13,839Less loans charged off
    
    
    1,287,097
    
    
    
    414,866
    
    
    
    428,904Balance, December 31
    
    $
    4,936,575
    
    
    $
    3,556,763
    
    
    $
    3,299,276
 8.
    
    PREMISES AND EQUIPMENT
  2009
    
    
    2008Land and land improvements
    
    $
    1,897,876
    
    
    $
    1,896,376Building and leasehold improvements
    
    
    8,953,633
    
    
    
    8,858,066Furniture, fixtures, and equipment
    
    
    4,481,546
    
    
    
    4,111,85315,333,055
    
    
    
    14,866,295Less accumulated depreciation and amortization
    
    
    6,938,686
    
    
    
    6,417,380Total
    
    $
    8,394,369
    
    
    $
    8,448,915
  9.
    
    GOODWILL AND INTANGIBLE ASSETS




---



##### 



2010
    
    $
    39,5182011
    
    
    39,5182012
    
    
    39,5182013
    
    
    39,5182014
    
    
    39,518Thereafter
    
    
    115,752Total
    
    $
    313,342
 10.
    
    OTHER ASSETS
  2009
    
    
    2008FHLB stock
    
    $
    1,887,200
    
    
    $
    1,873,100Accrued interest on investment securities
    
    
    670,875
    
    
    
    528,067Accrued interest on loans
    
    
    740,354
    
    
    
    918,306Deferred tax asset, net
    
    
    1,795,512
    
    
    
    1,767,873Prepaid federal deposit insurance
    
    
    2,562,251
    
    
    
    62,905Other
    
    
    3,818,172
    
    
    
    2,504,036Total
    
    $
    11,474,364
    
    
    $
    7,654,287
 11.
    
    DEPOSITS
    Within three months
    
    $
    7,458,530
    
    
    
    9.06
    %Beyond three but within six months
    
    
    10,924,554
    
    
    
    13.27Beyond six but within twelve months
    
    
    26,542,350
    
    
    
    32.23Beyond one year
    
    
    37,419,796
    
    
    
    45.44Total
    
    $
    82,345,230
    
    
    
    100.00
    %




---



##### 



12.
    
    SHORT-TERM BORROWINGS
  2009
    
    
    2008
    
    
    2007Balance at year-end
    
    $
    6,799,555
    
    
    $
    1,886,253
    
    
    $
    1,510,607Average balance outstanding
    
    
    2,280,815
    
    
    
    2,967,069
    
    
    
    2,383,902Maximum month-end balance
    
    
    7,405,872
    
    
    
    6,057,893
    
    
    
    5,768,057Weighted-average rate at year-end
    
    
    3.47
    %
    
    
    1.10
    %
    
    
    2.96
    %Weighted-average rate during the year
    
    
    1.50
    %
    
    
    1.55
    %
    
    
    3.89
    %
   13.
    
    OTHER BORROWINGS
  Weighted-Maturity range
    
    
    average
    
    
    Stated interest rate rangeDescription
    
    from
    
    
    to
    
    
    interest
    
    
    from
    
    
    to
    
    
    2009
    
    
    2008Fixed rate
    
    
    11/17/10
    
    
    
    12/27/10
    
    
    
    4.59
    %
    
    
    3.87
    %
    
    
    5.07
    %
    
    $
    1,250,000
    
    
    $
    4,250,000Fixed rate amortizing
    
    
    02/01/12
    
    
    
    09/04/28
    
    
    
    3.95
    
    
    
    2.70
    
    
    
    4.48
    
    
    
    12,366,508
    
    
    
    17,405,019Convertible
    
    
    07/28/10
    
    
    
    10/09/12
    
    
    
    5.30
    
    
    
    4.14
    
    
    
    6.45
    
    
    
    4,000,000
    
    
    
    4,000,000Junior subordinated
debt
    
    
    12/21/37
    
    
    
    12/21/37
    
    
    
    6.58
    
    
    
    6.58
    
    
    
    6.58
    
    
    
    8,248,000
    
    
    
    8,248,000Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    25,864,508
    
    
    $
    33,903,019
  2009Weighted-Year Ending December 31,
    
    Amount
    
    
    Average Rate2010
    
    $
    6,543,543
    
    
    
    4.82
    %2011
    
    
    2,496,362
    
    
    
    3.932012
    
    
    3,854,264
    
    
    
    4.042013
    
    
    1,361,829
    
    
    
    3.952014
    
    
    984,222
    
    
    
    3.99Beyond 2014
    
    
    10,624,288
    
    
    
    6.01$
    25,864,508
    
    
    
    5.03
    %




---



##### 



14.
    
    OTHER LIABILITIES
  2009
    
    
    2008Accrued interest payable
    
    $
    905,174
    
    
    $
    1,299,114Other
    
    
    1,274,977
    
    
    
    879,699Total
    
    $
    2,180,151
    
    
    $
    2,178,813
 15.
    
    INCOME TAXES
  2009
    
    
    2008
    
    
    2007Current payable
    
    $
    396,616
    
    
    $
    656,950
    
    
    $
    698,915Deferred
    
    
    (469,190
    )
    
    
    (269,947
    )
    
    
    97,308Total provision (benefit)
    
    $
    (72,574
    )
    
    $
    387,003
    
    
    $
    796,223




---



##### 



2009
    
    
    2008Deferred tax assets:Allowance for loan losses
    
    $
    1,530,254
    
    
    $
    1,114,868Net unrealized loss on securities
    
    
    
    
    
    
    151,919Supplemental retirement plan
    
    
    149,104
    
    
    
    134,121Origination costs
    
    
    
    
    
    
    7,811Alternative minimum tax credits
    
    
    267,564
    
    
    
    65,637Investment security basis adjustment
    
    
    157,897
    
    
    
    127,993Intangibles
    
    
    
    
    
    
    45,295Deferred origination fees, net
    
    
    17,871
    
    
    
    Net operating losses
    
    
    398,547
    
    
    
    502,676Other
    
    
    78,367
    
    
    
    Gross deferred tax assets
    
    
    2,599,604
    
    
    
    2,150,320Deferred tax liabilities:Deferred origination costs, net
    
    
    
    
    
    
    29,523Premises and equipment
    
    
    215,119
    
    
    
    83,425Net unrealized gain on securities
    
    
    289,632
    
    
    
    FHLB stock dividends
    
    
    224,904
    
    
    
    224,904Intangibles
    
    
    62,661
    
    
    
    Other
    
    
    11,776
    
    
    
    44,595Gross deferred tax liabilities
    
    
    804,092
    
    
    
    382,447Net deferred tax assets
    
    $
    1,795,512
    
    
    $
    1,767,873
   2009
    
    
    2008
    
    
    2007% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofPre-tax
    
    
    
    
    
    
    Pre-tax
    
    
    
    
    
    
    Pre-taxAmount
    
    
    Income
    
    
    Amount
    
    
    Income
    
    
    Amount
    
    
    IncomeProvision at statutory rate
    
    $
    580,860
    
    
    
    34.0
    %
    
    $
    1,020,640
    
    
    
    34.0
    %
    
    $
    1,418,332
    
    
    
    34.0
    %Tax-free income
    
    
    (728,850
    )
    
    
    (42.7
    )
    
    
    (713,193
    )
    
    
    (23.8
    )
    
    
    (702,123
    )
    
    
    (16.8
    )Nondeductible interest expense
    
    
    73,505
    
    
    
    4.3
    
    
    
    96,250
    
    
    
    3.2
    
    
    
    102,830
    
    
    
    2.5Other
    
    
    1,911
    
    
    
    (0.1
    )
    
    
    (16,694
    )
    
    
    (0.7
    )
    
    
    (22,816
    )
    
    
    (0.6
    )Actual tax expense (benefit)
and effective rate
    
    $
    (72,574
    )
    
    
    (4.3
    )%
    
    $
    387,003
    
    
    
    12.7
    %
    
    $
    796,223
    
    
    
    19.1
    %




---



##### 



16.
    
    EMPLOYEE BENEFITS
 Retirement Plan
  Supplemental Retirement Plan
   2009
    
    
    2008
    
    
    2007Components of net periodic pension costsService cost
    
    $
    6,129
    
    
    $
    12,656
    
    
    $
    11,991Interest cost
    
    
    12,842
    
    
    
    12,813
    
    
    
    12,189Net periodic pension cost
    
    $
    18,971
    
    
    $
    25,469
    
    
    $
    24,180




---



##### 



Executive Deferred Compensation Plan
  Stock Option and Restricted Stock Plan
   Weighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Exercise2009
    
    
    Price
    
    
    2008
    
    
    PriceOutstanding, January 1
    
    
    110,465
    
    
    $
    27.21
    
    
    
    88,211
    
    
    $
    28.04Granted
    
    
    
    
    
    
    
    
    
    
    24,837
    
    
    
    23.71Exercised
    
    
    
    
    
    
    
    
    
    
    (992
    )
    
    
    19.80Forfeited
    
    
    (11,246
    )
    
    
    30.34
    
    
    
    (1,591
    )
    
    
    23.48Outstanding, December
31
    
    
    99,219
    
    
    
    26.85
    
    
    
    110,465
    
    
    
    27.21Exercisable at year-end
    
    
    99,219
    
    
    
    26.85
    
    
    
    85,628
    
    
    
    28.22
  Outstanding
    
    
    ExercisableContractual
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Average
    
    
    Exercise
    
    
    
    
    
    
    ExerciseGrant Date
    
    Price
    
    
    Shares
    
    
    Life
    
    
    Price
    
    
    Shares
    
    
    PriceDecember 11, 2000
    
    $
    17.90
    
    
    
    10,142
    
    
    
    0.95
    
    
    $
    17.90
    
    
    
    10,142
    
    
    $
    17.90December 9, 2002
    
    
    22.33
    
    
    
    9,426
    
    
    
    2.94
    
    
    
    22.33
    
    
    
    9,426
    
    
    
    22.33December 8, 2003
    
    
    24.29
    
    
    
    20,663
    
    
    
    3.94
    
    
    
    24.29
    
    
    
    20,663
    
    
    
    24.29May 12, 2004
    
    
    27.35
    
    
    
    907
    
    
    
    4.33
    
    
    
    27.35
    
    
    
    907
    
    
    
    27.35December 13, 2004
    
    
    30.45
    
    
    
    12,958
    
    
    
    4.95
    
    
    
    30.45
    
    
    
    12,958
    
    
    
    30.45December 14, 2005
    
    
    36.73
    
    
    
    8,485
    
    
    
    5.95
    
    
    
    36.73
    
    
    
    8,485
    
    
    
    36.73December 10, 2006
    
    
    40.24
    
    
    
    3,675
    
    
    
    6.95
    
    
    
    40.24
    
    
    
    3,675
    
    
    
    40.24April 19, 2007
    
    
    37.33
    
    
    
    3,639
    
    
    
    7.31
    
    
    
    37.33
    
    
    
    3,639
    
    
    
    37.73May 16, 2007
    
    
    37.48
    
    
    
    1,337
    
    
    
    7.41
    
    
    
    37.48
    
    
    
    1,337
    
    
    
    37.48December 10, 2007
    
    
    37.00
    
    
    
    3,150
    
    
    
    7.95
    
    
    
    37.00
    
    
    
    3,150
    
    
    
    37.00January 2, 2008
    
    
    36.25
    
    
    
    1,337
    
    
    
    8.12
    
    
    
    36.25
    
    
    
    1,337
    
    
    
    36.25November 10, 2008
    
    
    23.00
    
    
    
    23,500
    
    
    
    8.95
    
    
    
    23.00
    
    
    
    23,500
    
    
    
    23.0099,219
    
    
    
    
    
    
    
    
    
    
    
    99,219




---



##### 



17.
    
    COMMITMENTS
  2009
    
    
    2008Commitments to extend credit
    
    $
    59,497,589
    
    
    $
    56,648,649Standby letters of credit
    
    
    351,125
    
    
    
    1,357,173Total
    
    $
    59,848,714
    
    
    $
    58,005,822
   18.
    
    REGULATORY RESTRICTIONS
 Loans
  Dividends




---



##### 



19.
    
    REGULATORY CAPITAL
     Middlefield Banc Corp.
    
    
    The Middlefield Banking Co.
    
    
    Emerald BankDecember 31,
    
    
    December 31,
    
    
    December 31,2009
    
    
    2009
    
    
    2009Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioTotal Capital
 (to Risk-Weighted Assets)Actual
    
    $
    43,548,978
    
    
    
    12.34
    %
    
    $
    34,837,744
    
    
    
    11.47
    %
    
    $
    7,067,261
    
    
    
    14.91
    %For Capital Adequacy Purposes
    
    
    28,242,856
    
    
    
    8.00
    
    
    
    24,305,760
    
    
    
    8.00
    
    
    
    3,792,899
    
    
    
    8.00To Be Well Capitalized
    
    
    35,303,570
    
    
    
    10.00
    
    
    
    30,382,200
    
    
    
    10.00
    
    
    
    4,741,124
    
    
    
    10.00Tier I Capital 
(to Risk-Weighted Assets)Actual
    
    $
    39,121,139
    
    
    
    11.08
    %
    
    $
    31,639,717
    
    
    
    10.41
    %
    
    $
    6,460,474
    
    
    
    13.63
    %For Capital Adequacy Purposes
    
    
    14,121,428
    
    
    
    4.00
    
    
    
    12,152,880
    
    
    
    4.00
    
    
    
    1,896,450
    
    
    
    4.00To Be Well Capitalized
    
    
    21,182,142
    
    
    
    6.00
    
    
    
    18,229,320
    
    
    
    5.00
    
    
    
    2,844,674
    
    
    
    6.00Tier I Capital
 (to Average Assets)Actual
    
    $
    39,121,139
    
    
    
    7.99
    %
    
    $
    31,639,717
    
    
    
    7.45
    %
    
    $
    6,460,474
    
    
    
    10.29
    %For Capital Adequacy Purposes
    
    
    19,583,492
    
    
    
    4.00
    
    
    
    16,984,228
    
    
    
    4.00
    
    
    
    2,510,359
    
    
    
    4.00To Be Well Capitalized
    
    
    24,479,365
    
    
    
    5.00
    
    
    
    21,230,285
    
    
    
    5.00
    
    
    
    3,137,949
    
    
    
    5.00




---



##### 



Middlefield Banc Corp.
    
    
    The Middlefield Banking Co.
    
    
    Emerald BankDecember 31,
    
    
    December 31,
    
    
    December 31,2008
    
    
    2008
    
    
    2008Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioTotal Capital 
(to Risk-Weighted Assets)Actual
    
    $
    42,281,067
    
    
    
    13.57
    %
    
    $
    32,793,489
    
    
    
    12.30
    %
    
    $
    7,472,699
    
    
    
    16.73
    %For Capital Adequacy Purposes
    
    
    24,931,715
    
    
    
    8.00
    
    
    
    21,324,640
    
    
    
    8.00
    
    
    
    3,572,686
    
    
    
    8.00To Be Well Capitalized
    
    
    31,164,644
    
    
    
    10.00
    
    
    
    26,655,800
    
    
    
    10.00
    
    
    
    4,465,857
    
    
    
    10.00Tier I Capital
 (to Risk-Weighted Assets)Actual
    
    $
    38,689,258
    
    
    
    12.41
    %
    
    $
    29,956,378
    
    
    
    11.24
    %
    
    $
    6,912,474
    
    
    
    15.48
    %For Capital Adequacy Purposes
    
    
    12,465,858
    
    
    
    4.00
    
    
    
    10,662,320
    
    
    
    4.00
    
    
    
    1,786,343
    
    
    
    4.00To Be Well Capitalized
    
    
    18,698,787
    
    
    
    6.00
    
    
    
    15,993,480
    
    
    
    6.00
    
    
    
    2,679,514
    
    
    
    6.00Tier I Capital 
(to Average Assets)Actual
    
    $
    38,689,258
    
    
    
    8.66
    %
    
    $
    29,956,378
    
    
    
    7.69
    %
    
    $
    6,912,474
    
    
    
    12.91
    %For Capital Adequacy Purposes
    
    
    17,860,169
    
    
    
    4.00
    
    
    
    15,578,777
    
    
    
    4.00
    
    
    
    2,142,047
    
    
    
    4.00To Be Well Capitalized
    
    
    22,325,211
    
    
    
    5.00
    
    
    
    19,473,471
    
    
    
    5.00
    
    
    
    2,677,558
    
    
    
    5.00
 20.
    
    REORGANIZATION




---



##### 



21.
    
    FAIR VALUE DISCLOSURE MEASUREMENTS
  Level I:
    
    Quoted prices are available in active markets for identical assets or liabilities as
of the reported date.Level II:
    
    Pricing inputs are other than the quoted prices in active markets, which are either
directly or indirectly observable as of the reported date. The nature of these assets and
liabilities includes items for which quoted prices are available but traded less frequently and
items that are fair-valued using other financial instruments, the parameters of which can be
directly observed.Level III:
    
    Valuations derived from valuation techniques in which one or more significant inputs
or significant value drivers are unobservable.
   December 31, 2009Level I
    
    
    Level II
    
    
    Level III
    
    
    TotalAssets Measured on a Recurring Basis:U.S. government agency securities
    
    $
    
    
    
    $
    18,329,537
    
    
    $
    
    
    
    $
    18,329,537Obligations of states and political subdivisions
    
    
    
    
    
    
    56,720,308
    
    
    
    
    
    
    
    56,720,308Mortgage-backed securities
    
    
    
    
    
    
    60,742,505
    
    
    
    
    
    
    
    60,742,505Total debt securities
    
    
    
    
    
    
    135,792,350
    
    
    
    
    
    
    
    135,792,350Equity securities
    
    
    918,750
    
    
    
    
    
    
    
    
    
    
    
    918,750Total
    
    $
    918,750
    
    
    $
    135,792,350
    
    
    $
    
    
    
    $
    136,711,100
 December 31, 2008Level I
    
    
    Level II
    
    
    Level III
    
    
    TotalAssets Measured on a Recurring Basis:U.S. government agency securities
    
    $
    
    
    
    $
    4,503,562
    
    
    $
    
    
    
    $
    4,503,562Obligations of states and political subdivisions
    
    
    
    
    
    
    44,180,282
    
    
    
    
    
    
    
    44,180,282Mortgage-backed securities
    
    
    
    
    
    
    47,884,210
    
    
    
    6,680,150
    
    
    
    54,564,360Total debt securities
    
    
    
    
    
    
    96,568,054
    
    
    
    6,680,150
    
    
    
    103,248,204Equity securities
    
    
    1,022,162
    
    
    
    
    
    
    
    
    
    
    
    1,022,162Total
    
    $
    1,022,162
    
    
    $
    96,568,054
    
    
    $
    6,680,150
    
    
    $
    104,270,366




---



##### 



Available-for-SaleSecuritiesBalance, December 31, 2008
    
    $
    6,680,150Total gains or losses (realized/unrealized)Included in earnings
    
    
    Included in other comprehensive gain (loss)
    
    
    (468,742
    )Purchases, issuances, and settlements
    
    
    (1,120,525
    )Net transfers in and/or out of Level III
    
    
    (5,090,883
    )Balance, December 31, 2009
    
    $
    The amount of total gains or losses for the period included in earnings attributable to
the change in unrealized gains or losses relating to assets still held at the reporting date
    
    $
    




---



##### 



December 31, 2009Level I
    
    
    Level II
    
    
    Level III
    
    
    TotalAssets Measured on a Nonrecurring Basis:Impaired loans
    
    $
    
    
    
    $
    1,347,893
    
    
    $
    148,611
    
    
    $
    1,496,504Other real estate owned
    
    
    
    
    
    
    2,164,452
    
    
    
    
    
    
    
    2,164,452
 December 31, 2008Level I
    
    
    Level II
    
    
    Level III
    
    
    TotalAssets Measured on a Nonrecurring Basis:Impaired loans
    
    $
    
    
    
    $
    1,194,594
    
    
    $
    1,027,366
    
    
    $
    2,221,960Other real estate owned
    
    
    
    
    
    
    1,106,281
    
    
    
    
    
    
    
    1,106,281
 22.
    
    FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS
  December 31,2009
    
    
    2008Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairValue
    
    
    Value
    
    
    Value
    
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    41,152,636
    
    
    $
    41,152,636
    
    
    $
    17,455,463
    
    
    $
    17,455,463Investment securities available for sale
    
    
    136,711,100
    
    
    
    136,711,100
    
    
    
    104,270,366
    
    
    
    104,270,366Net loans
    
    
    348,660,137
    
    
    
    332,401,339
    
    
    
    318,018,530
    
    
    
    317,010,526Bank-owned life insurance
    
    
    7,706,476
    
    
    
    7,706,476
    
    
    
    7,440,687
    
    
    
    7,440,687Federal Home Loan Bank stock
    
    
    1,887,200
    
    
    
    1,887,200
    
    
    
    1,873,100
    
    
    
    1,873,100Accrued interest receivable
    
    
    1,411,229
    
    
    
    1,411,229
    
    
    
    1,446,373
    
    
    
    1,446,373Financial liabilities:Deposits
    
    $
    487,106,284
    
    
    $
    491,435,879
    
    
    $
    394,819,602
    
    
    $
    399,946,594Short-term borrowings
    
    
    6,799,555
    
    
    
    6,799,555
    
    
    
    1,886,253
    
    
    
    1,886,253Other borrowings
    
    
    25,864,508
    
    
    
    27,356,052
    
    
    
    33,903,019
    
    
    
    35,771,019Accrued interest payable
    
    
    905,174
    
    
    
    905,174
    
    
    
    1,299,114
    
    
    
    1,299,114




---



##### 



Cash and Cash Equivalents, Federal Home Loan Bank Stock, Accrued Interest Receivable, Accrued
Interest Payable, and Short-Term Borrowings
  Bank-Owned Life Insurance
  Investment Securities Available for Sale
  Loans
  Deposits and Other Borrowed Funds
  Commitments to Extend Credit




---



##### 



23.
    
    PARENT COMPANY
  December 31,CONDENSED BALANCE SHEET
    
    2009
    
    
    2008ASSETSCash and due from banks
    
    $
    979,069
    
    
    $
    695,025Interest-bearing deposits in other institutions
    
    
    120,885
    
    
    
    112,215Investment securities available for sale
    
    
    918,750
    
    
    
    1,022,162Investment in non-bank subsidiary
    
    
    4,543,601
    
    
    
    Investment in subsidiary banks
    
    
    43,951,175
    
    
    
    41,435,443Other assets
    
    
    248,000
    
    
    
    248,000TOTAL ASSETS
    
    $
    50,761,480
    
    
    $
    43,512,845LIABILITIESTrust preferred securities
    
    $
    8,248,000
    
    
    $
    8,248,000Other borrowings
    
    
    5,700,000
    
    
    
    Other liabilities
    
    
    106,209
    
    
    
    205,597STOCKHOLDERS EQUITY
    
    
    36,707,271
    
    
    
    35,059,248TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    50,761,480
    
    
    $
    43,512,845
 Year Ended December 31,CONDENSED STATEMENT OF INCOME
    
    2009
    
    
    2008
    
    
    2007INCOMEDividends from subsidiary bank
    
    $
    2,188,989
    
    
    $
    2,184,241
    
    
    $
    2,018,050Interest income
    
    
    8,670
    
    
    
    10,029
    
    
    
    154,199Other
    
    
    
    
    
    
    5,108
    
    
    
    6,965TOTAL INCOME
    
    
    2,197,659
    
    
    
    2,199,378
    
    
    
    2,179,214EXPENSESInterest expense
    
    
    547,220
    
    
    
    539,298
    
    
    
    535,280Other
    
    
    265,951
    
    
    
    379,076
    
    
    
    269,861TOTAL INCOME
    
    
    813,171
    
    
    
    918,374
    
    
    
    805,141Income before income tax benefit
    
    
    1,384,488
    
    
    
    1,281,004
    
    
    
    1,374,073Income tax benefit
    
    
    (273,229
    )
    
    
    (322,991
    )
    
    
    (218,952
    )Income before equity in undistributed net income of subsidiaries
    
    
    1,657,717
    
    
    
    1,603,995
    
    
    
    1,593,025Equity in undistributed net income of subsidiaries
    
    
    123,269
    
    
    
    1,010,884
    
    
    
    1,782,318NET INCOME
    
    $
    1,780,986
    
    
    $
    2,614,879
    
    
    $
    3,375,343




---



##### 



Year Ended December 31,CONDENSED STATEMENT OF CASH FLOWS
    
    2009
    
    
    2008
    
    
    2007OPERATING ACTIVITIESNet income
    
    $
    1,780,986
    
    
    $
    2,614,879
    
    
    $
    3,375,343Adjustments to reconcile net income to net cash provided by operating activities:Equity in undistributed net income of Middlefield Banking Company
    
    
    (1,604,534
    )
    
    
    (981,770
    )
    
    
    (1,749,538
    )Equity in undistributed net income of Emerald Bank
    
    
    1,324,766
    
    
    
    (29,114
    )
    
    
    (32,780
    )Equity in undistributed net income of EMORECO
    
    
    156,499
    
    
    
    
    
    
    
    Expense related to stock options
    
    
    60,588
    
    
    
    15,048
    
    
    
    26,435Other
    
    
    (124,817
    )
    
    
    168,526
    
    
    
    76,419Net cash provided by operating activities
    
    
    1,593,488
    
    
    
    1,787,569
    
    
    
    1,695,879INVESTING ACTIVITIESInvestment in subsidiary bank
    
    
    (1,250,000
    )
    
    
    
    
    
    
    Investment in non-bank subsidiary
    
    
    (4,700,100
    )
    
    
    
    
    
    
    Purchase of investment securities
    
    
    
    
    
    
    
    
    
    
    (250,000
    )Net assets of Emerald Bank acquired
    
    
    
    
    
    
    
    
    
    
    (5,912,621
    )Net cash used for investing activities
    
    
    (5,950,100
    )
    
    
    
    
    
    
    (6,162,621
    )FINANCING ACTIVITIESIncrease in short-term borrowings, net
    
    
    5,700,000
    
    
    
    
    
    
    
    Purchase of treasury stock
    
    
    
    
    
    
    (1,350,881
    )
    
    
    (2,174,419
    )Exercise of stock options
    
    
    
    
    
    
    19,642
    
    
    
    14,182Proceeds from dividend reinvestment and purchase plan
    
    
    557,236
    
    
    
    616,589
    
    
    
    582,198Tax effect of stock options
    
    
    
    
    
    
    
    
    
    
    12,695Cash dividends
    
    
    (1,607,910
    )
    
    
    (1,575,482
    )
    
    
    (1,469,752
    )Net cash provided by (used for) financing activities
    
    
    4,649,326
    
    
    
    (2,290,132
    )
    
    
    (3,035,096
    )Increase (decrease) in cash
    
    
    292,714
    
    
    
    (502,563
    )
    
    
    (7,501,838
    )CASH AT BEGINNING OF YEAR
    
    
    807,240
    
    
    
    1,309,803
    
    
    
    8,811,641CASH AT END OF YEAR
    
    $
    1,099,954
    
    
    $
    807,240
    
    
    $
    1,309,803
 24.
    
    SUBSEQUENT EVENTS




---



##### 



FDIC RegulationsDecember 31,Capital Ratios
    
    Adequately Capitalized
    
    
    Well Capitalized
    
    
    2009
    
    
    2008Leverage
    
    
    4.00
    %
    
    
    5.00
    % (1)
    
    
    10.29
    %
    
    
    12.91
    %Risk-Based Capital:Tier 1
    
    
    4.00
    
    
    
    6.00
    
    
    
    13.63
    
    
    
    15.48Total
    
    
    8.00
    
    
    
    10.00
    
    
    
    14.91
    
    
    
    16.73
 (1)
    
    9 percent required by MOU




---



##### 



25.
    
    SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
 Three Months EndedMarch 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,2009
    
    
    2009
    
    
    2009
    
    
    2009Total interest income
    
    $
    6,323,983
    
    
    $
    6,305,172
    
    
    $
    6,647,639
    
    
    $
    6,773,787Total interest expense
    
    
    3,110,539
    
    
    
    2,934,633
    
    
    
    2,861,258
    
    
    
    2,876,395Net interest income
    
    
    3,213,444
    
    
    
    3,370,539
    
    
    
    3,786,381
    
    
    
    3,897,392Provision for loan losses
    
    
    154,000
    
    
    
    260,000
    
    
    
    1,346,000
    
    
    
    818,047Net interest income after provision for loan losses
    
    
    3,059,444
    
    
    
    3,110,539
    
    
    
    2,440,381
    
    
    
    3,079,345Total noninterest income
    
    
    623,451
    
    
    
    636,220
    
    
    
    690,460
    
    
    
    718,149Total noninterest expense
    
    
    2,995,788
    
    
    
    3,302,997
    
    
    
    3,039,951
    
    
    
    3,310,841Income before income taxes
    
    
    687,107
    
    
    
    443,762
    
    
    
    90,890
    
    
    
    486,653Income taxes
    
    
    84,000
    
    
    
    (17,000
    )
    
    
    (122,574
    )
    
    
    (17,000
    )Net income
    
    $
    603,107
    
    
    $
    460,762
    
    
    $
    213,464
    
    
    $
    503,653Per share data:Net incomeBasic
    
    $
    0.39
    
    
    $
    0.30
    
    
    $
    0.14
    
    
    $
    0.32Diluted
    
    
    0.39
    
    
    
    0.30
    
    
    
    0.14
    
    
    
    0.32Average shares outstandingBasic
    
    
    1,536,930
    
    
    
    1,541,960
    
    
    
    1,551,056
    
    
    
    1,547,239Diluted
    
    
    1,541,247
    
    
    
    1,543,538
    
    
    
    1,551,069
    
    
    
    1,547,979
 Three Months EndedMarch 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,2008
    
    
    2008
    
    
    2008
    
    
    2008Total interest income
    
    $
    6,588,203
    
    
    $
    6,512,636
    
    
    $
    6,550,445
    
    
    $
    6,386,529Total interest expense
    
    
    3,757,986
    
    
    
    3,513,850
    
    
    
    3,398,663
    
    
    
    3,387,585Net interest income
    
    
    2,830,217
    
    
    
    2,998,786
    
    
    
    3,151,782
    
    
    
    2,998,944Provision for loan losses
    
    
    75,000
    
    
    
    95,000
    
    
    
    187,000
    
    
    
    251,000Net interest income after provision for loan losses
    
    
    2,755,217
    
    
    
    2,903,786
    
    
    
    2,964,782
    
    
    
    2,747,944Total noninterest income
    
    
    637,451
    
    
    
    637,217
    
    
    
    680,247
    
    
    
    271,591Total noninterest expense
    
    
    2,515,672
    
    
    
    2,578,974
    
    
    
    2,729,581
    
    
    
    2,772,126Income before income taxes
    
    
    876,996
    
    
    
    962,029
    
    
    
    915,448
    
    
    
    247,409Income taxes
    
    
    140,000
    
    
    
    179,000
    
    
    
    211,000
    
    
    
    (142,997
    )Net income
    
    $
    736,996
    
    
    $
    783,029
    
    
    $
    704,448
    
    
    $
    390,406Per share data:Net incomeBasic
    
    $
    0.48
    
    
    $
    0.51
    
    
    $
    0.46
    
    
    $
    0.26Diluted
    
    
    0.47
    
    
    
    0.51
    
    
    
    0.46
    
    
    
    0.25Average shares outstandingBasic
    
    
    1,548,043
    
    
    
    1,530,255
    
    
    
    1,523,044
    
    
    
    1,530,686Diluted
    
    
    1,568,380
    
    
    
    1,548,607
    
    
    
    1,525,373
    
    
    
    1,532,597




---



##### 








---



##### 



Overview
     Significant Financial Events in 2009




---



##### 



Critical Accounting Policies
 Allowance for loan losses
    Valuation of Securities




---



##### 




    
    The length of time and the extent to which the fair value has been less than the amortized
cost basis;
 
    
    Changes in the near term prospects of the underlying collateral of a security such as
changes in default rates, loss severity given default and significant changes in prepayment
assumptions;
    
    The level of cash flows generated from the underlying collateral supporting the
principal and interest payments of the debt securities; and
    
    Any adverse change to the credit
conditions and liquidity of the issuer, taking into consideration the latest information
available about the overall financial condition of the issuer, credit ratings, recent legislation
and government actions affecting the issuers industry and actions taken by the issuer to deal
with the present economic climate.
   Income Taxes




---



##### 



Changes in Financial Condition
 General.
   Cash on hand, Interest-earning deposits and Federal funds sold.
 Securities.
   Loans receivable.




---



##### 



FHLB stock.
 Goodwill.
  Bank-owned life insurance.
 Deposits.




---



##### 



Borrowed funds.
 Stockholders equity.
  Average balance sheet and yield/rate analysis.




---



##### 



For The Year Ended December 31,2009
    
    
    2008
    
    
    2007Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Yield/Cost
    
    
    Balance
    
    
    Interest
    
    
    Yield/Cost
    
    
    Balance
    
    
    Interest
    
    
    Yield/Cost(Dollars in thousands)
    
    
    (Dollars in thousands)
    
    
    (Dollars in thousands)Interest-earning assets:Loans receivable
    
    $
    335,714
    
    
    $
    20,271
    
    
    
    6.04
    %
    
    $
    317,226
    
    
    $
    21,426
    
    
    
    6.75
    %
    
    $
    288,022
    
    
    $
    21,063
    
    
    
    7.31
    %Investments securities (3)
    
    
    110,142
    
    
    
    5,676
    
    
    
    6.03
    %
    
    
    96,277
    
    
    
    4,349
    
    
    
    5.48
    %
    
    
    74,820
    
    
    
    3,040
    
    
    
    5.28
    %Interest-bearing deposits
with other banks
    
    
    16,078
    
    
    
    104
    
    
    
    0.64
    %
    
    
    7,701
    
    
    
    263
    
    
    
    3.41
    %
    
    
    13,829
    
    
    
    770
    
    
    
    5.57
    %Total interest-earning assets
    
    
    461,934
    
    
    
    26,051
    
    
    
    5.85
    %
    
    
    421,204
    
    
    
    26,038
    
    
    
    6.40
    %
    
    
    376,671
    
    
    
    24,873
    
    
    
    6.85
    %Noninterest-earning assets
    
    
    33,777
    
    
    
    
    
    
    
    
    
    
    
    29,658
    
    
    
    
    
    
    
    
    
    
    
    21,307Total assets
    
    
    495,711
    
    
    
    
    
    
    
    
    
    
    
    450,862
    
    
    
    
    
    
    
    
    
    
    
    397,979Interest-bearing liabilities:Interest-bearing demand
deposits
    
    $
    32,609
    
    
    
    318
    
    
    
    0.98
    %
    
    $
    24,178
    
    
    
    297
    
    
    
    1.23
    %
    
    $
    15,541
    
    
    
    359
    
    
    
    2.31
    %Money market deposits
    
    
    37,200
    
    
    
    760
    
    
    
    2.04
    %
    
    
    25,042
    
    
    
    783
    
    
    
    3.13
    %
    
    
    25,057
    
    
    
    1,026
    
    
    
    4.09
    %Savings deposits
    
    
    87,295
    
    
    
    1,371
    
    
    
    1.57
    %
    
    
    70,868
    
    
    
    1,363
    
    
    
    1.92
    %
    
    
    68,882
    
    
    
    1,695
    
    
    
    2.46
    %Certificates of deposit
    
    
    225,821
    
    
    
    7,847
    
    
    
    3.47
    %
    
    
    216,732
    
    
    
    9,912
    
    
    
    4.57
    %
    
    
    172,552
    
    
    
    8,581
    
    
    
    4.97
    %Borrowings
    
    
    32,071
    
    
    
    1,486
    
    
    
    4.63
    %
    
    
    36,229
    
    
    
    1,702
    
    
    
    4.70
    %
    
    
    36,639
    
    
    
    1,870
    
    
    
    5.10
    %Total interest-bearing
liabilities
    
    
    414,996
    
    
    
    11,783
    
    
    
    2.84
    %
    
    
    373,049
    
    
    
    14,058
    
    
    
    3.77
    %
    
    
    318,671
    
    
    
    13,531
    
    
    
    4.25
    %Noninterest-bearing liabilitiesOther liabilities
    
    
    44,358
    
    
    
    
    
    
    
    
    
    
    
    44,762
    
    
    
    
    
    
    
    
    
    
    
    45,769Stockholders equity
    
    
    36,357
    
    
    
    
    
    
    
    
    
    
    
    33,051
    
    
    
    
    
    
    
    
    
    
    
    33,539Total liabilities and
stockholders equity
    
    $
    495,711
    
    
    
    
    
    
    
    
    
    
    $
    450,862
    
    
    
    
    
    
    
    
    
    
    $
    397,979Net interest income
    
    
    
    
    
    $
    14,268
    
    
    
    
    
    
    
    
    
    
    $
    11,980
    
    
    
    
    
    
    
    
    
    
    $
    11,342Interest rate spread (1)
    
    
    
    
    
    
    
    
    
    
    3.01
    %
    
    
    
    
    
    
    
    
    
    
    2.63
    %
    
    
    
    
    
    
    
    
    
    
    2.60
    %Net yield on interest-earning
assets (2)
    
    
    
    
    
    
    
    
    
    
    3.30
    %
    
    
    
    
    
    
    
    
    
    
    3.06
    %
    
    
    
    
    
    
    
    
    
    
    3.25
    %Ratio of average interest-earning assets to average
interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    111.31
    %
    
    
    
    
    
    
    
    
    
    
    112.91
    %
    
    
    
    
    
    
    
    
    
    
    118.20
    %
 (1)
    
    Interest rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing liabilities.(2)
    
    Net yield on interest-earning assets represents net interest
income as a percentage of average interest-earning assets.(3)
    
    Tax equivalent adjustments to interest income for tax-exempt securities were $969, $932, and
$931 for 2009, 2008, and 2007 respectively.




---



##### 



2009 versus 2008
    
    
    2008 versus 2007Increase (decrease) due to
    
    
    Increase (decrease) due toVolume
    
    
    Rate
    
    
    Total
    
    
    Volume
    
    
    Rate
    
    
    Total(Dollars in thousands)
    
    
    (Dollars in thousands)Interest-earning assets:Loans receivable
    
    $
    1,249
    
    
    $
    (2,404
    )
    
    $
    1,155
    
    
    $
    2,136
    
    
    $
    (1,773
    )
    
    $
    363Investments securities
    
    
    760
    
    
    
    567
    
    
    
    1,327
    
    
    
    1,133
    
    
    
    176
    
    
    
    1,309Interest-bearing deposits with other banks
    
    
    286
    
    
    
    (445
    )
    
    
    (159
    )
    
    
    (341
    )
    
    
    (166
    )
    
    
    (507
    )Total interest-earning assets
    
    
    2,294
    
    
    
    (2,281
    )
    
    
    13
    
    
    
    2,928
    
    
    
    (1,763
    )
    
    
    1,165Interest-bearing liabilities:Interest-bearing demand deposits
    
    
    104
    
    
    
    (83
    )
    
    
    21
    
    
    
    200
    
    
    
    (262
    )
    
    
    (62
    )Money market deposits
    
    
    381
    
    
    
    (403
    )
    
    
    (23
    )
    
    
    (1
    )
    
    
    (242
    )
    
    
    (243
    )Savings deposits
    
    
    315
    
    
    
    (307
    )
    
    
    8
    
    
    
    49
    
    
    
    (381
    )
    
    
    (332
    )Certificates of deposit
    
    
    415
    
    
    
    (2,481
    )
    
    
    (2,065
    )
    
    
    2,197
    
    
    
    (866
    )
    
    
    1,331Borrowings
    
    
    (195
    )
    
    
    (20
    )
    
    
    (216
    )
    
    
    (21
    )
    
    
    (147
    )
    
    
    (168
    )Total interest-bearing liabilities
    
    
    1,020
    
    
    
    (3,294
    )
    
    
    (2,275
    )
    
    
    2,424
    
    
    
    (1,898
    )
    
    
    527Net interest income
    
    $
    1,274
    
    
    $
    1,013
    
    
    $
    2,288
    
    
    $
    504
    
    
    $
    134
    
    
    $
    638
 Changes in Results of Operations
 2009 Results Compared to 2008 Results
 General.
 Net interest income.




---



##### 



Interest income.
  Interest expense.
 Loan loss provision.




---



##### 



Noninterest income.
 Noninterest expense.
 Provision for income taxes.
 2008 Results Compared to 2007 Results
 General.
 Net interest income.




---



##### 



Interest income.
  Interest expense.
 Loan loss provision.
 Noninterest income.




---



##### 



Noninterest expense.
 Provision for income taxes.
 Asset and Liability Management
   Interest Rate Sensitivity Simulation Analysis




---



##### 



Net interest income simulation.
 Portfolio equity simulation.
  Increase
    
    
    Decrease+200 BP
    
    
    -200 BPNet interest incomeincrease (decrease)
    
    
    0.25
    %
    
    
    6.98
    %Portfolio equityincrease (decrease)
    
    
    (25.75
    )%
    
    
    7.25
    %
 Allowance for loan losses.




---



##### 



For the Years Ended December 31,2009
    
    
    2008
    
    
    2007(Dollars in thousands)Allowance balance at beginning of period
    
    $
    3,557
    
    
    $
    3,299
    
    
    $
    2,849Addition from acquisition
    
    
    
    
    
    
    
    
    
    
    436Loans charged off:Commercial and industrial
    
    
    (217
    )
    
    
    (278
    )
    
    
    (251
    )Real estate  construction
    
    
    
    
    
    
    
    
    
    
    Real estate  mortgage:Residential
    
    
    (768
    )
    
    
    (2
    )
    
    
    (26
    )Commercial
    
    
    (81
    )
    
    
    
    
    
    
    Consumer installment
    
    
    (221
    )
    
    
    (135
    )
    
    
    (151
    )Total loans charged off
    
    
    (1,287
    )
    
    
    (415
    )
    
    
    (428
    )Recoveries of loans previously charged off:Commercial and industrial
    
    
    33
    
    
    
    30
    
    
    
    Real estate  construction
    
    
    
    
    
    
    
    
    
    
    Real estate  mortgage:Residential
    
    
    
    
    
    
    2
    
    
    
    Commercial
    
    
    
    
    
    
    
    
    
    
    Consumer installment
    
    
    56
    
    
    
    33
    
    
    
    13Total recoveries
    
    
    89
    
    
    
    65
    
    
    
    13Net loans charged off
    
    
    (1,198
    )
    
    
    (350
    )
    
    
    (415
    )Provision for loan losses
    
    
    2,578
    
    
    
    608
    
    
    
    429Allowance balance at end of period
    
    $
    4,937
    
    
    $
    3,557
    
    
    $
    3,299Loans outstanding:Average
    
    $
    335,714
    
    
    $
    317,226
    
    
    $
    288,022End of period
    
    
    353,597
    
    
    
    321,575
    
    
    
    309,446Ratio of allowance for loan losses to loans outstanding at end of period
    
    
    1.40
    %
    
    
    1.11
    %
    
    
    1.07
    %Net charge offs to average loans
    
    
    (0.36
    )
    
    
    (0.11
    )
    
    
    (0.14
    )




---



##### 



At December 31,2009
    
    
    2008
    
    
    2007Percent of
    
    
    
    
    
    
    Percent of
    
    
    
    
    
    
    Percent ofLoans in Each
    
    
    
    
    
    
    Loans in Each
    
    
    
    
    
    
    Loans in EachCategory to
    
    
    
    
    
    
    Category to
    
    
    
    
    
    
    Category toAmount
    
    
    Total Loans
    
    
    Amount
    
    
    Total Loans
    
    
    Amount
    
    
    Total Loans(Dollars in thousands)
    
    
    (Dollars in thousands)
    
    
    (Dollars in thousands)Type of Loans:Commercial and industrial
    
    $
    864
    
    
    
    16.1
    %
    
    $
    961
    
    
    
    20.7
    %
    
    $
    1,060
    
    
    
    21.7
    %Real estate  construction
    
    
    
    
    
    
    2.2
    
    
    
    
    
    
    
    2.5
    
    
    
    99
    
    
    
    2.2Real estate  mortgage:Residential
    
    
    2,816
    
    
    
    58.0
    
    
    
    2,048
    
    
    
    62.0
    
    
    
    1,527
    
    
    
    62.5Commercial
    
    
    1,198
    
    
    
    22.3
    
    
    
    521
    
    
    
    13.3
    
    
    
    512
    
    
    
    11.9Consumer installment
    
    
    59
    
    
    
    1.4
    
    
    
    27
    
    
    
    1.5
    
    
    
    101
    
    
    
    1.7Unallocated
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    4,937
    
    
    
    100
    %
    
    $
    3,557
    
    
    
    100
    %
    
    $
    3,299
    
    
    
    100
    %
 Non-performing assets.




---



##### 



At December 31,2009
    
    
    2008
    
    
    2007(Dollars in thousands)Loans accounted for on a non-accrual basis:Commercial and industrial
    
    $
    2,960
    
    
    $
    1,530
    
    
    $
    1,231Real estate  construction
    
    
    248
    
    
    
    469
    
    
    
    643Real estate  mortgage:Residential
    
    
    10,134
    
    
    
    3,902
    
    
    
    1,825Commercial
    
    
    1,175
    
    
    
    351
    
    
    
    33Consumer installment
    
    
    2
    
    
    
    2
    
    
    
    12Total non-accrual loans
    
    
    14,519
    
    
    
    6,254
    
    
    
    3,744Accruing loans which are contractually
past due 90 days or more:Commercial and industrial
    
    
    9
    
    
    
    558
    
    
    
    574Real estate  construction
    
    
    205
    
    
    
    
    
    
    
    Real estate  mortgage:Residential
    
    
    441
    
    
    
    1,659
    
    
    
    1,333Commercial
    
    
    1,112
    
    
    
    
    
    
    
    Consumer installment
    
    
    
    
    
    
    9
    
    
    
    11Total accruing loans which are contractually past due 90 days or more
    
    
    1,766
    
    
    
    2,226
    
    
    
    1,918Total non-performing loans
    
    $
    16,285
    
    
    $
    8,480
    
    
    $
    5,662Real estate owned
    
    
    2,164
    
    
    
    1,106
    
    
    
    Total non-performing assets
    
    $
    18,450
    
    
    $
    9,586
    
    
    $
    5,662Total non-performing loans to total loans
    
    
    4.61
    %
    
    
    2.64
    %
    
    
    1.83
    %Total non-performing loans to total assets
    
    
    2.92
    %
    
    
    1.81
    %
    
    
    1.30
    %Total non-performing assets to total assets
    
    
    3.30
    %
    
    
    2.05
    %
    
    
    1.30
    %




---



##### 



Liquidity and Capital Resources
 Liquidity.




---



##### 



Capital Resources.
  Market Price of and Dividends on the Registrants Common Equity and Related Stockholder Matters
  CashHigh
    
    
    Low
    
    
    DividendsBid
    
    
    Bid
    
    
    per share2009First Quarter
    
    $
    22.50
    
    
    $
    20.00
    
    
    $
    0.260Second Quarter
    
    $
    23.00
    
    
    $
    19.50
    
    
    $
    0.260Third Quarter
    
    $
    19.50
    
    
    $
    15.25
    
    
    $
    0.260Fourth Quarter
    
    $
    24.00
    
    
    $
    14.99
    
    
    $
    0.2602008First Quarter
    
    $
    37.25
    
    
    $
    36.00
    
    
    $
    0.250Second Quarter
    
    $
    37.00
    
    
    $
    30.00
    
    
    $
    0.260Third Quarter
    
    $
    29.25
    
    
    $
    21.00
    
    
    $
    0.260Fourth Quarter
    
    $
    28.00
    
    
    $
    20.00
    
    
    $
    0.260




---



##### 



Corporate Headquarters
  
 Form 10-K and 10-Q Availability
  
 Market Makers
  
 Notice of Annual Meeting
  
 Transfer Agent and Registrar
 
 Independent Auditors
 
 Internet Information
  Dividend Payment Dates




---



##### 



Dividend Reinvestment and Stock Purchase Plan
  Direct Deposit of Dividends
  Market for Middlefields Common Equity & Related Stockholder Matters
  CashHigh
    
    
    Low
    
    
    DividendsBid
    
    
    Bid
    
    
    per share2009First Quarter
    
    $
    22.50
    
    
    $
    20.00
    
    
    $
    0.260Second Quarter
    
    $
    23.00
    
    
    $
    19.50
    
    
    $
    0.260Third Quarter
    
    $
    19.50
    
    
    $
    15.25
    
    
    $
    0.260Fourth Quarter
    
    $
    24.00
    
    
    $
    14.99
    
    
    $
    0.2602008First Quarter
    
    $
    37.25
    
    
    $
    36.00
    
    
    $
    0.250Second Quarter
    
    $
    37.00
    
    
    $
    30.00
    
    
    $
    0.260Third Quarter
    
    $
    29.25
    
    
    $
    21.00
    
    
    $
    0.260Fourth Quarter
    
    $
    28.00
    
    
    $
    20.00
    
    
    $
    0.260




---



##### 








---



##### 



Main Office
15985 East High Street
440.632.1666
    
    Mantua Branch
10519 Main Street
330.274.0881
    
    Newbury Branch
11110 Kinsman Road
440.564.7000West Branch
15545 West High Street
440.632.1666
    
    Chardon Branch
348 Center Street
440.286.1222
    
    Cortland Branch
3450 Niles-Cortland Road
330.637.3208Garrettsville Branch
8058 State Street
330.527.2121
    
    Orwell Branch
30 South Maple Street
440.437.7200(EMERALD LOGO)Dublin Branch
6215 Perimeter Drive
614.793.4631
    
    Westerville Branch
17 North State Street
614.890.7832




---



##### 








---



##### 



MANAGEMENTS ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
      By:
    
    /s/ Thomas G. CaldwellThomas G. CaldwellPresident and Chief Executive Officer(Principal Executive Officer)
  By:
    
    /s/ Donald L. StacyDonald L. StacyTreasurer(Principal Financial & Accounting Officer)