##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20552
 FORM
10 - Q
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2008
 Commission File Number 33-23094
 
 Middlefield Banc Corp.
 (Exact name of registrant as specified in its charter)
 Ohio
    
    34 - 1585111(State or other jurisdiction of incorporation 
or organization)
    
    (IRS Employer Identification No.)
 15985 East High Street, Middlefield, Ohio 44062-9263
(Address of principal executive offices)
 (440) 632-1666
(Registrants telephone number, including area code)
 Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 YES þ NO o
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
 Large accelerated filer oAccelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company þ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 YES o NO þ
 State the number of shares outstanding of each of the issuers classes of common equity as of the latest practicle date:
 Class: Common Stock, without par value
Outstanding at May 10, 2008: 1,522,691




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##### 



MIDDLEFIELD BANC CORP.
 INDEX
 PART I    FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsConsolidated Balance Sheet (Unaudited) as of
March 31, 2008 and December 31, 2007Consolidated Statement of Income (Unaudited)
for the Three Months ended March 31, 2008
and 2007Consolidated Statement of Changes in Stockholders Equity (Unaudited)
for the Three Months ended March 31, 2008Consolidated Statement of Cash Flows (Unaudited)
for the Three Months ended March 31, 2008 and 2007Notes to Unaudited Consolidated Financial StatementsItem 2.
    
    Managements Discussion and Analysis of
Financial Condition and Results of OperationsItem 3.
    
    Quantitative and Qualitative Disclosures About Market RiskItem 4.
    
    Controls and ProceduresPART II    OTHER INFORMATIONItem 1.
    
    Legal ProceedingsItem 1A.
    
    Risk FactorsItem 2.
    
    Unregistered sales of equity securities and use of
proceedsItem 3.
    
    Default Upon Senior SecuritiesItem 4.
    
    Submissions of Matters to a Vote of Security HoldersItem 5.
    
    Other InformationItem 6.
    
    Exhibits and Reports on Form 8 - KSIGNATURESEX-31EX-31.1EX-32EX-99




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March 31,
    
    
    December 312008
    
    
    2007ASSETSCash and due from banks
    
    $
    9,733,382
    
    
    $
    9,072,972Federal funds sold
    
    
    4,090,687
    
    
    
    8,631,963Interest-bearing deposits in other institutions
    
    
    110,387
    
    
    
    110,387Cash and cash equivalents
    
    
    13,934,456
    
    
    
    17,815,322Investment securities available for sale
    
    
    98,848,546
    
    
    
    85,967,764Loans
    
    
    314,915,193
    
    
    
    309,445,922Less allowance for loan losses
    
    
    3,351,137
    
    
    
    3,299,276Net loans
    
    
    311,564,056
    
    
    
    306,146,646Premises and equipment
    
    
    7,371,350
    
    
    
    7,044,685Goodwill
    
    
    4,371,207
    
    
    
    4,371,206Bank-owned life insurance
    
    
    7,223,471
    
    
    
    7,153,381Accrued interest and other assets
    
    
    6,424,829
    
    
    
    5,774,052TOTAL ASSETS
    
    $
    449,737,915
    
    
    $
    434,273,056LIABILITIESDeposits:Noninterest-bearing demand
    
    $
    39,525,150
    
    
    $
    41,348,219Interest-bearing demand
    
    
    24,092,145
    
    
    
    19,566,035Money market
    
    
    24,036,386
    
    
    
    22,684,041Savings
    
    
    73,299,591
    
    
    
    76,895,857Time
    
    
    216,819,834
    
    
    
    202,423,848Total deposits
    
    
    377,773,106
    
    
    
    362,918,000Short-term borrowings
    
    
    2,090,086
    
    
    
    1,510,607Other borrowings
    
    
    32,423,165
    
    
    
    32,395,319Accrued interest and other liabilities
    
    
    2,202,547
    
    
    
    2,487,746TOTAL LIABILITIES
    
    
    414,488,904
    
    
    
    399,311,672STOCKHOLDERS EQUITYCommon stock, no par value; 10,000,000 shares authorized,
1,707,015 and 1,701,546 shares issued
    
    
    26,848,601
    
    
    
    26,650,123Retained earnings
    
    
    14,096,814
    
    
    
    13,746,956Accumulated other comprehensive income
    
    
    179,015
    
    
    
    (52,969
    )Treasury stock, at cost; 165,208 shares in 2008 and
151,745 shares in 2007
    
    
    (5,875,419
    )
    
    
    (5,382,726
    )TOTAL STOCKHOLDERS EQUITY
    
    
    35,249,011
    
    
    
    34,961,384TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    449,737,915
    
    
    $
    434,273,056




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##### Table of Contents



Three Months EndedMarch 31,2008
    
    
    2007INTEREST INCOMEInterest and fees on loans
    
    $
    5,455,274
    
    
    $
    4,530,229Interest-bearing deposits in
other institutions
    
    
    5,203
    
    
    
    55,889Federal funds sold
    
    
    79,304
    
    
    
    131,235Investment securities:Taxable interest
    
    
    565,079
    
    
    
    266,114Tax-exempt interest
    
    
    453,943
    
    
    
    382,785Dividends on FHLB stock
    
    
    29,400
    
    
    
    25,495Total interest income
    
    
    6,588,203
    
    
    
    5,391,747INTEREST EXPENSEDeposits
    
    
    3,333,980
    
    
    
    2,314,671Short-term borrowings
    
    
    9,895
    
    
    
    152,292Other borrowings
    
    
    414,111
    
    
    
    312,335Total interest expense
    
    
    3,757,986
    
    
    
    2,779,298NET INTEREST INCOME
    
    
    2,830,217
    
    
    
    2,612,449Provision for loan losses
    
    
    75,000
    
    
    
    45,000NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES
    
    
    2,755,217
    
    
    
    2,567,449NONINTEREST INCOMEService charges on deposit accounts
    
    
    465,528
    
    
    
    451,947Earnings on bank-owned life insurance
    
    
    70,088
    
    
    
    72,079Other income
    
    
    101,835
    
    
    
    97,602Total noninterest income
    
    
    637,451
    
    
    
    621,628NONINTEREST EXPENSESalaries and employee benefits
    
    
    1,194,419
    
    
    
    1,104,908Occupancy expense
    
    
    231,183
    
    
    
    169,230Equipment expense
    
    
    146,110
    
    
    
    121,791Data processing costs
    
    
    209,280
    
    
    
    151,248Ohio state franchise tax
    
    
    117,000
    
    
    
    96,000Other expense
    
    
    617,680
    
    
    
    630,525Total noninterest expense
    
    
    2,515,672
    
    
    
    2,273,702Income before income taxes
    
    
    876,996
    
    
    
    915,375Income taxes
    
    
    140,000
    
    
    
    163,000NET INCOME
    
    $
    736,996
    
    
    $
    752,375EARNINGS PER SHAREBasic
    
    $
    0.48
    
    
    $
    0.50Diluted
    
    
    0.47
    
    
    
    0.49DIVIDENDS DECLARED PER SHARE
    
    $
    0.250
    
    
    $
    0.224




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##### Table of Contents



AccumulatedOther
    
    
    
    
    
    
    TotalCommon
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury
    
    
    Stockholders
    
    
    ComprehensiveStock
    
    
    Earnings
    
    
    Loss
    
    
    Stock
    
    
    Equity
    
    
    IncomeBalance, December 31, 2007
    
    $
    26,650,123
    
    
    $
    13,746,956
    
    
    $
    (52,969
    )
    
    $
    (5,382,726
    )
    
    $
    34,961,384Net income
    
    
    
    
    
    
    736,996
    
    
    
    
    
    
    
    
    
    
    
    736,996
    
    
    $
    736,996Other comprehensive income:Unrealized loss on
available for sale
securities net of tax benefit of $119,504
    
    
    
    
    
    
    
    
    
    
    231,984
    
    
    
    
    
    
    
    231,984
    
    
    
    231,984Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    968,980Stock based compensation expense
recognized in earnings
    
    
    3,762
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,762Purchase of treasury stock (13,463 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (492,693
    )
    
    
    (492,693
    )Dividend reinvestment and purchase plan
    
    
    194,716
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    194,716Cash dividends ($0.25 per share)
    
    
    
    
    
    
    (387,138
    )
    
    
    
    
    
    
    
    
    
    
    (387,138
    )Balance, March 31, 2008
    
    $
    26,848,601
    
    
    $
    14,096,814
    
    
    $
    179,015
    
    
    $
    (5,875,419
    )
    
    $
    35,249,011




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##### Table of Contents



Three Months EndedMarch 31,2008
    
    
    2007OPERATING ACTIVITIESNet income
    
    $
    736,996
    
    
    $
    752,375Adjustments to reconcile net income to
net cash provided by operating activities:Provision for loan losses
    
    
    75,000
    
    
    
    45,000Depreciation and amortization
    
    
    126,213
    
    
    
    114,947Amortization of premium and
discount on
investment
securities
    
    
    49,451
    
    
    
    54,805Amortization of deferred loan fees, net
    
    
    (27,932
    )
    
    
    (4,436
    )Earnings on bank-owned life insurance
    
    
    (70,088
    )
    
    
    (72,079
    )Compensation for stock option expense
    
    
    3,762
    
    
    
    Increase in accrued interest receivable
    
    
    (442,313
    )
    
    
    (454,521
    )Increase (decrease) in accrued interest payable
    
    
    (40,545
    )
    
    
    112,025Other, net
    
    
    (533,826
    )
    
    
    (962,728
    )Net cash used for operating activities
    
    
    (123,283
    )
    
    
    (414,612
    )INVESTING ACTIVITIESInvestment securities available for sale:Proceeds from repayments and maturities
    
    
    5,565,823
    
    
    
    1,200,126Purchases
    
    
    (18,144,564
    )
    
    
    (8,783,756
    )Investment securities held to maturity:Proceeds from repayments and maturities
    
    
    
    
    
    
    5,954Increase in loans, net
    
    
    (5,464,478
    )
    
    
    (5,687,505
    )Purchase of Federal Home Loan Bank stock
    
    
    (38,800
    )
    
    
    (22,700
    )Purchase of premises and equipment
    
    
    (452,880
    )
    
    
    (61,123
    )Net cash used for investing activities
    
    
    (18,534,899
    )
    
    
    (13,349,004
    )FINANCING ACTIVITIESNet increase in deposits
    
    
    14,855,106
    
    
    
    16,475,633Increase in short-term borrowings, net
    
    
    579,479
    
    
    
    655,619Repayment of other borrowings
    
    
    (972,154
    )
    
    
    (1,319,559
    )Proceeds from other borrowings
    
    
    1,000,000
    
    
    
    Purchase of Treasury Stock
    
    
    (492,693
    )
    
    
    Proceeds from dividend reinvestment & purchase plan
    
    
    194,716
    
    
    
    205,206Cash dividends
    
    
    (387,138
    )
    
    
    (329,351
    )Net cash provided by financing activities
    
    
    14,777,316
    
    
    
    15,687,548Increase (decrease) in cash and cash equivalents
    
    
    (3,880,866
    )
    
    
    1,923,932CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD
    
    
    17,815,322
    
    
    
    13,639,602CASH AND CASH EQUIVALENTS
AT END OF PERIOD
    
    $
    13,934,456
    
    
    $
    15,563,534SUPPLEMENTAL INFORMATIONCash paid during the year for:Interest on
deposits and
borrowings
    
    $
    3,798,531
    
    
    $
    2,667,274Income taxes
    
    
    150,000
    
    
    
    450,000




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Business Combinations
 Fair Value Measurements Application
of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address
Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13 Partial
Deferral of the Effective Date of Statement 157
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115 Fair Value
Measurements
 Non-controlling Interests in Consolidated Financial
Statements  an amendment of ARB No. 51
 Disclosures about Derivative Instruments and Hedging
Activities Accounting for
Derivative Instruments and Hedging Activities




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Weighted-
    
    
    
    
    
    
    Weighted-average
    
    
    
    
    
    
    averageExercise
    
    
    
    
    
    
    Exercise2008
    
    
    Price
    
    
    2007
    
    
    PriceOutstanding, January 1
    
    
    88,211
    
    
    $
    28.34
    
    
    
    77,287
    
    
    $
    26.23Granted
    
    
    1,337
    
    
    
    36.25
    
    
    
    
    
    
    
    Exercised
    
    
    (175
    )
    
    
    23.70
    
    
    
    (565
    )
    
    
    25.10Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding, March 31
    
    
    89,373
    
    
    $
    28.47
    
    
    
    76,722
    
    
    $
    26.24




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##### Table of Contents



For the ThreeMonths EndedMarch 31,2008
    
    
    2007Weighted average common shares
outstanding
    
    
    1,702,587
    
    
    
    1,597,250Average treasury stock shares
    
    
    (154,544
    )
    
    
    (95,080
    )Weighted average common shares and
common stock equivalents used to
calculate basic earnings per share
    
    
    1,548,043
    
    
    
    1,502,170Additional common stock equivalents
(stock options) used to calculate
diluted earnings per share
    
    
    20,337
    
    
    
    22,495Weighted average common shares and
common stock equivalents used
to calculate diluted earnings per share
    
    
    1,568,380
    
    
    
    1,524,665




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##### Table of Contents



For the Three MonthsEnded March 31,2008
    
    
    2007Unrealized holding gains arising during
the period on securities held
    
    
    231,984
    
    
    
    28,204Reclassification adjustment for gains included in net income
    
    
    
    
    
    
    Net change in unrealized gains during the period
    
    
    231,984
    
    
    
    28,204Unrealized holding losses, beginning of period
    
    
    (52,969
    )
    
    
    (520,987
    )Unrealized holding gain (losses), end of period
    
    
    179,015
    
    
    
    (492,783
    )Net income
    
    
    736,996
    
    
    
    752,375Other comprehensive income, net of tax:Unrealized holding gains arising during the period
    
    
    231,984
    
    
    
    28,204Comprehensive income
    
    
    968,980
    
    
    
    780,579
  Fair Value Measurements
  Quoted Prices in Active
    
    Significant OtherMarkets for Identical
    
    Observable Inputs
    
    Balance as ofAssets (Level 1)
    
    (Level 2)
    
    31-Mar-08Securities
available-for-sale
    
    $
    1,327,310
    
    
    $
    97,521,236
    
    
    $
    98,848,546




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##### Table of Contents



Three Months Ended2008
    
    
    2007Interest Income
    
    $
    6,588,203
    
    
    $
    6,097,961Interest Expense
    
    
    3,757,986
    
    
    
    3,205,328Net Interest Income
    
    
    2,830,217
    
    
    
    2,892,633Provision for loan losses
    
    
    75,000
    
    
    
    91,102Net Interest Income after provision for loan losses
    
    
    2,755,217
    
    
    
    2,801,531Non Interest Income
    
    
    637,451
    
    
    
    643,786Non Interest Expense
    
    
    2,515,672
    
    
    
    2,794,199Income before income taxes
    
    
    876,996
    
    
    
    651,118Provision for income taxes
    
    
    140,000
    
    
    
    163,000Net income
    
    $
    736,996
    
    
    $
    488,118EARNINGS PER SHAREBasic
    
    $
    0.48
    
    
    $
    0.32Diluted
    
    
    0.47
    
    
    
    0.32
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  CHANGES IN FINANCIAL CONDITION
 General.




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##### Table of Contents



Cash and cash equivalents.
 Investment securities.
 Loans receivable.
 Non-performing assets.
 Deposits.
 Borrowed funds.
 Stockholders equity.




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##### Table of Contents



RESULTS OF OPERATIONS
 General.
 Net interest income.
  Interest income.
   Interest expense.




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##### Table of Contents



Provision for loan losses.
 Non-interest income.
 Non-interest expense.
 Provision for income taxes.
 CRITICAL ACCOUNTING ESTIMATES
  Average Balance Sheet and Yield/Rate Analysis.
 Analysis of Changes in Net Interest Income.
 For the Three Months Ended March 31,2008
    
    
    2007(4)
    
    
    
    
    
    
    
    
    
    
    (4)Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest (1)
    
    
    Yield/Cost
    
    
    Balance
    
    
    Interest (1)
    
    
    Yield/Cost(Dollars in thousands)
    
    
    (Dollars in thousands)Interest-earning assets:Loans receivable
    
    
    311,236
    
    
    $
    5,455
    
    
    
    7.03
    %
    
    
    252,303
    
    
    $
    4,530
    
    
    
    7.28
    %Investments securities
    
    
    94,357
    
    
    
    1,024
    
    
    
    5.35
    %
    
    
    65,419
    
    
    
    705
    
    
    
    5.59
    %Interest-bearing deposits with other banks
    
    
    9,402
    
    
    
    109
    
    
    
    4.64
    %
    
    
    11,053
    
    
    
    156
    
    
    
    5.72
    %Total interest-earning assets
    
    
    414,994
    
    
    
    6,588
    
    
    
    6.59
    %
    
    
    328,775
    
    
    
    5,391
    
    
    
    6.89
    %Noninterest-earning assets
    
    
    32,307
    
    
    
    
    
    
    
    
    
    
    
    19,842Total assets
    
    $
    447,301
    
    
    
    
    
    
    
    
    
    
    $
    348,617Interest-bearing liabilities:




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##### Table of Contents



For the Three Months Ended March 31,2008
    
    
    2007(4)
    
    
    
    
    
    
    
    
    
    
    (4)Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest (1)
    
    
    Yield/Cost
    
    
    Balance
    
    
    Interest (1)
    
    
    Yield/Cost(Dollars in thousands)
    
    
    (Dollars in thousands)Interest  bearing demand deposits
    
    
    21,072
    
    
    
    74
    
    
    
    1.41
    %
    
    $
    12,062
    
    
    
    69
    
    
    
    2.32
    %Money market deposits
    
    
    23,048
    
    
    
    205
    
    
    
    3.57
    %
    
    
    22,975
    
    
    
    256
    
    
    
    4.52
    %Savings deposits
    
    
    72,391
    
    
    
    443
    
    
    
    2.45
    %
    
    
    52,845
    
    
    
    205
    
    
    
    1.57
    %Certificates of deposit
    
    
    214,372
    
    
    
    2,612
    
    
    
    4.89
    %
    
    
    152,178
    
    
    
    1,785
    
    
    
    4.76
    %Borrowings
    
    
    34,475
    
    
    
    424
    
    
    
    4.93
    %
    
    
    37,130
    
    
    
    464
    
    
    
    5.07
    %Total interest-bearing liabilities
    
    
    365,357
    
    
    
    3,758
    
    
    
    4.13
    %
    
    
    277,190
    
    
    
    2,779
    
    
    
    4.07
    %Noninterest-bearing liabilitiesOther liabilities
    
    
    46,839
    
    
    
    
    
    
    
    
    
    
    
    40,857Stockholders equity
    
    
    35,105
    
    
    
    
    
    
    
    
    
    
    
    30,570Total liabilities and stockholders equity
    
    $
    447,301
    
    
    
    
    
    
    
    
    
    
    $
    348,617Net interest income
    
    
    
    
    
    $
    2,830
    
    
    
    
    
    
    
    
    
    
    $
    2,612Interest rate spread (2)
    
    
    
    
    
    
    
    
    
    
    2.47
    %
    
    
    
    
    
    
    
    
    
    
    2.83
    %Net yield on interest-earning assets (3)
    
    
    
    
    
    
    
    
    
    
    2.96
    %
    
    
    
    
    
    
    
    
    
    
    3.46
    %Ratio of average interest-earning assets to
average interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    113.59
    %
    
    
    
    
    
    
    
    
    
    
    118.61
    %
 
 (1)
    
    Interest income and expense are for the period that banking operations were in effect.(2)
    
    Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.(3)
    
    Net yield on interest-earning assets represents net interest income as a percentage of average interest-earning assets.(4)
    
    Average yields are computed using annualized interest income and expense for the periods. 2008 versus 2007Increase (decrease) due toVolume
    
    
    Rate
    
    
    Total(Dollars in thousands)Interest-earning assets:Loans receivable
    
    
    1,058
    
    
    
    -133
    
    
    
    925Investments securities
    
    
    399
    
    
    
    -80
    
    
    
    319Interest-bearing deposits with other banks
    
    
    -23
    
    
    
    -24
    
    
    
    -47Total interest-earning assets
    
    
    1,434
    
    
    
    -237
    
    
    
    1,197Interest-bearing liabilities:Interest  bearing demand deposits
    
    
    52
    
    
    
    -46
    
    
    
    5Money market deposits
    
    
    1
    
    
    
    -52
    
    
    
    -51Savings deposits
    
    
    76
    
    
    
    162
    
    
    
    238Certificates of deposit
    
    
    730
    
    
    
    98
    
    
    
    827Borrowings
    
    
    -33
    
    
    
    -7
    
    
    
    -40Total interest-bearing liabilities
    
    
    825
    
    
    
    154
    
    
    
    979Net interest income
    
    $
    609
    
    
    
    ($391
    )
    
    $
    218
 LIQUIDITY




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##### Table of Contents



REGULATORY MATTERS
  REGULATORY CAPITAL REQUIREMENTS




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##### Table of Contents



Middlefield Banc Corp.
    
    The Middlefield Banking Co.
    
    Emerald BankMarch 31,
    
    March 31,
    
    March 31,2008
    
    2008
    
    2008Amount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioTotal Capital
(to Risk-weighted Assets)Actual
    
    $
    42,542,606
    
    
    
    14.45
    
    
    $
    32,231,668
    
    
    
    12.65
    
    
    $
    7,820,079
    
    
    
    19.68For Capital Adequacy Purposes
    
    
    23,556,886
    
    
    
    8.00
    
    
    
    20,375,920
    
    
    
    8.00
    
    
    
    3,179,200
    
    
    
    8.00To Be Well Capitalized
    
    
    29,446,108
    
    
    
    10.00
    
    
    
    25,469,900
    
    
    
    10.00
    
    
    
    3,974,000
    
    
    
    10.00Tier I Capital
(to Risk-weighted Assets)Actual
    
    $
    39,020,570
    
    
    
    13.25
    
    
    $
    29,372,184
    
    
    
    11.53
    %
    
    $
    7,328,427
    
    
    
    18.44For Capital Adequacy Purposes
    
    
    11,778,443
    
    
    
    4.00
    
    
    
    10,187,960
    
    
    
    4.00
    
    
    
    1,589,600
    
    
    
    4.00To Be Well Capitalized
    
    
    17,667,665
    
    
    
    6.00
    
    
    
    15,281,940
    
    
    
    5.00
    
    
    
    2,384,400
    
    
    
    6.00Tier I Capital
(to Average Assets)Actual
    
    $
    39,020,570
    
    
    
    8.92
    
    
    $
    29,372,184
    
    
    
    7.66
    
    
    $
    7,328,427
    
    
    
    14.27For Capital Adequacy Purposes
    
    
    17,503,409
    
    
    
    4.00
    
    
    
    15,344,739
    
    
    
    4.00
    
    
    
    2,054,154
    
    
    
    4.00To Be Well Capitalized
    
    
    21,879,261
    
    
    
    5.00
    
    
    
    19,180,924
    
    
    
    5.00
    
    
    
    2,567,692
    
    
    
    5.00
 
 Item 3 Quantitative and Qualitative Disclosures about Market Risk
 ASSET AND LIABILITY MANAGEMENT
    Net interest income simulation.
 Portfolio equity simulation.




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##### Table of Contents



Increase
    
    Decrease+200
    
    -200BP
    
    BPNet interest income  increase (decrease)
    
    
    (0.2
    )%
    
    
    (0.6
    )%Portfolio equity  increase (decrease)
    
    
    (14.1
    )%
    
    
    (2.9
    )%
 
  Controls and Procedures Disclosure
   Changes in Internal Control over Financial Reporting




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##### Table of Contents



Total Number of
    
    Maximum Number ofShares Purchased
    
    Shares that May YetTotal Number of
    
    Average Price Paid
    
    Part of Publicly
    
    Be Purchased UnderDate
    
    Shares Purchased
    
    Per Share
    
    Announced Program
    
    the ProgramJanuary 31, 2008
    
    
    1,190
    
    
    
    37.25
    
    
    
    1,100
    
    
    
    18,349March 6, 2008
    
    
    1,387
    
    
    
    36.70
    
    
    
    11,500
    
    
    
    6,849March 12, 2008
    
    
    1,186
    
    
    
    36.60
    
    
    
    1,027
    
    
    
    5,822March 18, 2008
    
    
    9,700
    
    
    
    36.50
    
    
    
    1,000
    
    
    
    4,822




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##### Table of Contents



exhibitnumber
    
    description
    
    location2
    
    Agreement and Plan of Merger among
Middlefield Banc Corp., EB Interim
Bank, and Emerald Bank, dated as of
November 15, 2007, as amended by
Amendment No. 1
    
    Incorporated by
reference to the
prospectus/proxy
statement, Appendix
A, contained in
Part I of Form S-4
Registration
Statement Amendment
No. 1 filed on
February 9, 2008.
Disclosure
schedules referred
to in the Agreement
and Plan of Merger
are omitted in
reliance on Item
601(b)(2) of
Regulation S-K.
Upon request of the
SEC, Middlefield
Banc Corp. will
furnish
supplementally to
the SEC a copy of
the disclosure
schedules3.1
    
    Second Amended and Restated Articles
of Incorporation of Middlefield Banc
Corp., as amended
    
    Incorporated by
reference to
Exhibit 3.1 of
Middlefield Banc
Corp.s Annual
Report on Form 10-K
for the Fiscal Year
Ended December 31,
2005, filed on
March 29, 20073.2
    
    Regulations of Middlefield Banc Corp.
    
    Incorporated by
reference to
Exhibit 3.2 of
Middlefield Banc
Corp.s
registration
statement on Form
10 filed on April
17, 20014
    
    Specimen stock certificate
    
    Incorporated by
reference to
Exhibit 3.2 of
Middlefield Banc
Corp.s
registration
statement on Form
10 filed on April
17, 20014.1
    
    Amended and Restated Trust
Agreement, dated as of December 21,
2007, between Middlefield Banc
Corp., as Depositor, Wilmington
Trust Company, as Property Trustee,
Wilmington Trust Company, as
Delaware Trustee, and Administrative
Trustees
    
    Incorporated by
reference to
Exhibit 4.1 of
Middlefield Banc
Corp.s Form 8-K
Current Report
filed on December
27, 20074.2
    
    Junior Subordinated Indenture, dated
as of December 21, 2007, between
Middlefield Banc Corp. and
Wilmington Trust Company
    
    Incorporated by
reference to
Exhibit 4.2 of
Middlefield Banc
Corp.s Form 8-K
Current Report
filed on December
27, 2007




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##### Table of Contents



exhibitnumber
    
    description
    
    location4.3
    
    Guarantee Agreement, dated as of
December 21, 2007, between
Middlefield Banc Corp. and
Wilmington Trust Company
    
    Incorporated by
reference to
Exhibit 4.3 of
Middlefield Banc
Corp.s Form 8-K
Current Report
filed on December
27, 200799
    
    Report of independent registered
public accounting firm.
    
    filed herewith31
    
    Rule 13a-14(a) certification of
Chief Executive Officer
    
    filed herewith31.1
    
    Rule 13a-14(a) certification of
Chief Financial Officer
    
    filed herewith32
    
    Rule 13a-14(b) certification
    
    filed herewith




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##### Table of Contents



SIGNATURES
  MIDDLEFIELD BANC CORP.Date:   May 13, 2008
    By:

/s/ Thomas G. CaldwellThomas G. CaldwellPresident and Chief Executive OfficerDate:   May 13, 2008
    By:

/s/ Donald L. StacyDonald L. StacyPrincipal Financial and Accounting Officer