Middlefield Banc (MBCN) 8-K Middlefield Banc Corp. Posts Strong Growth and Third Quarter Earnings

EXHIBIT 99

15985 East High Street
P. O. Box 35
Middlefield, Ohio 44062
Phone: 440/632-1666     FAX: 440/632-1700
www.middlefieldbank.com

PRESS RELEASE

Contact:  James R. Heslop, 2nd
Executive Vice President/Chief Operating Officer
(440) 632-1666 Ext. 3219
jheslop@middlefieldbank.com

Middlefield Banc Corp. Posts Strong Growth and Third Quarter Earnings

MIDDLEFIELD, OHIO, October 21, 2009¨¨¨¨ Middlefield Banc Corp. (Pink Sheets: MBCN), parent of The Middlefield Banking Company and Emerald Bank, today announced the following results for the third quarter ended September 30, 2009.

• Total assets increased $50.1 million, or 10.7%, from December 31, 2008

• Equity to assets stood at 7.24% following an increase in equity of $2.4 million from December 31, 2008

• Total deposits stood at $447.9 million, an increase of 13.5% from year-end 2008

• Net interest income increased $1.4 million, or 15.5% from the same nine month period of 2008

• Diluted earnings per common share for the third quarter were $0.14.

The company reported that earnings for the third quarter ended September 30, 2009, were $213,000 compared to earnings of $704,000 for the same period in the prior year. The reduced earnings were primarily the result of provision charges to increase loan loss reserves and an increase in FDIC premiums due to higher rates for all FDIC insured banks. The same factors contributed to a decrease in nine month earnings from $2,224,000 for the 2008 period to $1,277,000 for the 2009 nine month period.

Annualized returns on average equity (“ROE”) and average assets (“ROA”) for the quarter were 2.34% and 0.17%, respectively, compared with 8.77% and 0.63% for the third quarter of 2008. ROE and ROA were 4.72% and 0.35%, respectively, for the nine-month period of 2009. Comparable results for the 2008 nine-month period were 8.78% and 0.66%, respectively.

“We are pleased to report positive earnings for the quarter and year-to-date periods,” stated Thomas G. Caldwell, President and Chief Executive Officer, “Looking forward, we remain cautiously optimistic. Throughout the credit crisis and recession, we have continued to maintain a “well capitalized” equity position, while diversifying our asset base and improving our core liquidity. While we continue to see

continued improvement in our net interest margin, our focus remains on the successful resolution of our problem assets.”

“Following our acquisition of Emerald Bank, we recognized the need for a change in that affiliate’s management. I am pleased with the effort put forth by our new management team as they continue to identify problem assets within the portfolio, while continuing to prudently grow the bank. While the efforts have led us to take a provision expense of $1.8 million for the first nine months, we are growing comfortable that each credit within the portfolio has been properly reviewed and assessed.”

Asset Quality

The provision for loan losses for the three and nine month periods ended September 30, 2009 increased 620% and 393% to $1,346,000 and $1,760,000 compared to the $187,000 and $357,000, respectively, for the comparable periods of 2008. “The economics of the communities that we serve are reflected in our asset quality numbers,” said Donald L. Stacy, Chief Financial Officer of Middlefield Banc Corp. “In our northeastern Ohio markets, credit issues are tied to owner occupied residential properties and are a reflection of current unemployment rates. Our central Ohio market is reporting delinquencies tied to non-owner occupied residential properties.”

The following table summarizes asset quality and reserve coverage ratios as of the end of the last five quarters.

Asset Quality History

(Dollars in thousands)

	9/30/2009			6/30/2009			3/31/2009			12/31/2008			9/30/2008
Nonperforming loans	$	14,368		$	14,023		$	13,370		$	8,481		$	6,749
Real estate owned		1,775			1,967			1,331			1,106			1,108
Nonperforming assets	$	16,143		$	15,991		$	14,701		$	9,587		$	7,857
Allowance for loan losses	$	4,422		$	3,668		$	3,621		$	3,557		$	3,614
Ratios
Nonperforming loans to total loans		4.15	%		4.18	%		4.16	%		2.64	%		2.11	%
Nonperforming assets to total assets		3.12	%		3.33	%		3.14	%		2.11	%		1.76	%
Allowance for loan losses to total loans		1.28	%		1.09	%		1.13	%		1.11	%		1.13	%
Allowance for loan losses to nonperforming loans		30.78	%		26.16	%		27.08	%		41.94	%		53.55	%

The increased loan loss provision, which has significantly outpaced loan charge-offs, has substantially strengthened the allowance for loan losses. The ratio of the allowance for loan losses to total loans increased to 1.28% of total loans at September 30, 2009 compared to the 1.09% reported at June 30, 2009 and 1.13% at September 30, 2008.

Net Interest Income

Net interest income for the third quarter of 2009 increased $635,000, or 20.1%, to $3,786,000 compared to $3,152,000 in the third quarter of 2008. The net interest margin increased 26 basis points to 3.46% compared to the 3.20% reported for the year-ago quarter. Net interest income for the nine months ended September 30, 2009 increased by $1,390,000, or 15.5%, to $10,370,000 compared to the $8,981,000 for the first nine months of 2008. The net interest margin for the first nine months of 2009 stood at 3.31%, a 23 basis point increase from the 3.08% reported for the nine month period of 2008.

The improvement in net interest income reflects strong core deposit growth and the implementation of new pricing strategies. Total deposits at September 30, 2009 stood at $447.9 million, representing an increase of 13.5% from the year-end 2008 figure. Savings account deposits accounted for growth of $30.4 million, with Money Market deposits increasing $14.2 million.

Non-Interest Income and Operating Expenses

Non-interest income remained relatively flat for both the three and nine month periods. Service charges on deposit accounts decreased $4,500 for the three months of 2009 compared to 2008, and $23,500 for the nine month periods. Earnings on bank-owned life insurance were lower, reflective of the current interest rate environment.

Operating expenses increased by 11.4%, or $310,000 for the quarter and $1,515,000, or 19.4% for the nine month period, when compared to the same periods of 2008. Expense increases in salaries and employee benefits, occupancy expense, and data processing costs are all directly related to the growth of the company. The Middlefield Banking Company opened its Cortland office in June 2008, while Emerald Bank acquired an office in Westerville in November 2008. Both of these actions, while expanding the company’s footprint, contributed to the higher expense levels. The premium for FDIC insurance increased 20.1% in the third quarter of 2009 over the same period of 2008 and 350.8% for the nine month period of 2009 over 2008.

Balance Sheet Growth

The company’s total assets ended the third quarter of 2009 at $517.9 million, an increase of 10.7% over the $467.8 million in total assets reported at December 31, 2008. Net loans at September 30, 2009, were $341.5 million, up $23.5 million, or 7.4%, over the $318.0 million reported at December 31, 2008. Total deposits at September 30, 2009, were $447.9 million, or 13.5% greater than the deposit level of $394.8 million at December 31, 2008.

The investment portfolio, which is entirely classified as available for sale, stood at $116.9 million at September 30, 2009. This figure represented growth within that portfolio of $12.6 million during the nine-month period. Stockholders’ equity at September 30, 2009, was $37.5 million, or 7.24% of total assets. Book value per share as of September 30, 2009 was $24.07.

Dividends

In the first nine months of 2009, Middlefield paid cash dividends of $0.78 per share. This represents only a slight increase over the $0.77 per share paid during the first nine months of 2008.

Middlefield Banc Corp. headquartered in Middlefield, Ohio is a multi-bank holding company with total assets of $517.9 million. The company’s lead bank, The Middlefield Banking Company, operates full

service banking centers and a UVEST Financial Services^® brokerage office serving Chardon, Cortland, Garrettsville, Mantua, Middlefield, Newbury, and Orwell. The company also serves the central Ohio market through its Emerald Bank subsidiary, with offices in Dublin and Westerville, Ohio. Additional information is available atwww.middlefieldbank.com andwww.emeraldbank.com

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

MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
September 30, 2009 and 2008 and December 31, 2008

	(unaudited)				(unaudited)
	September 30,		December 31,		September 30,
Balance Sheet (period end)	2009		2008		2008
Assets
Cash and due from banks	$	11,143,127	$	9,795,248	$	8,263,756
Federal funds sold		19,533,878		7,548,000		4,570,827
Interest-bearing deposits in other institutions		120,885		112,215		112,215
Cash and cash equivalents		30,797,890		17,455,463		12,946,798
Investment securities available for sale		116,880,660		104,270,366		96,371,351
Loans:		345,918,924		321,575,293		320,151,943
Less: allowance for loan losses		4,422,250		3,556,763		3,613,857
Net loans		341,496,674		318,018,530		316,538,086
Premises and equipment		8,256,905		8,448,915		8,018,503
Goodwill		4,558,687		4,558,687		4,371,205
Bank-owned life insurance		7,637,731		7,440,687		7,371,180
Accrued interest receivable and other assets		8,317,212		7,654,287		8,450,812
Total Assets	$	517,945,759		467,846,935		454,067,935

	September 30,			December 31,			September 30,
	2009			2008			2008
Liabilities and Stockholders’ Equity
Non-interest bearing demand deposits	$	40,963,722		$	42,357,154		$	40,929,373
Interest bearing demand deposits		34,877,418			26,404,660			27,409,745
Money market accounts		42,078,988			27,845,438			26,831,740
Savings deposits		99,322,206			68,968,844			69,835,964
Time deposits		230,686,676			229,243,506			214,957,328
Total Deposits		447,929,010			394,819,602			379,964,150
Short-term borrowings		1,667,967			1,886,253			1,693,699
Other borrowings		28,772,173			33,903,019			36,687,924
Other liabilities		2,097,903			2,178,813			2,340,455
Total Liabilities		480,467,053			432,787,687			420,686,228
Common equity		27,759,557			27,301,403			27,159,602
Retained earnings		14,860,713			14,786,353			14,793,600
Accumulated other comprehensive income (loss)		1,592,043			(294,901	)		(1,837,888	)
Treasury stock		(6,733,607	)		(6,733,607	)		(6,733,607	)
Total Stockholders’ Equity		37,478,706			35,059,248			33,381,707
Total Liabilities and Stockholders’ Equity	$	517,945,759		$	467,846,935		$	454,067,935

MIDDLEFIELD BANC CORP.
Consolidated Selected Financial Highlights
September 30, 2009 and 2008
(unaudited)

	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2009			2008		2009			2008
INTEREST INCOME
Interest and fees on loans	$	5,175,354		$	5,425,266	$	15,079,662		$	16,273,630
Interest-bearing deposits in other institutions		2,293			1,949		11,800			10,790
Federal funds sold		3,936			22,181		10,977			124,467
Investment securities
Taxable interest		975,580			622,184		2,752,897			1,793,645
Tax-exempt interest		474,629			449,351		1,374,847			1,360,226
Dividends on FHLB Stock		15,847			29,514		46,611			88,526
Total interest income		6,647,639			6,550,445		19,276,794			19,651,284
INTEREST EXPENSE
Deposits		2,501,502			2,948,998		7,776,369			9,381,666
Short term borrowings		4,987			17,610		15,161			34,793
Other borrowings		354,769			432,055		1,114,899			1,254,040
Total interest expense		2,861,258			3,398,663		8,906,429			10,670,499
NET INTEREST INCOME		3,786,381			3,151,782		10,370,365			8,980,785
Provision for loan losses		1,346,000			187,000		1,760,000			357,000
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		2,440,381			2,964,782		8,610,365			8,623,785
NONINTEREST INCOME
Service charges on deposits		488,747			493,228		1,394,312			1,417,789
Net securities gains (losses)		0			25,728		0			34,508
Earnings on bank-owned life insurance		68,413			75,336		197,044			217,798
Other income		133,300			85,925		358,775			284,820
Total non-interest income		690,460			680,247		1,950,131			1,954,915
NONINTEREST EXPENSE
Salaries and employee benefits		1,395,388			1,322,026		4,303,972			3,643,199
Occupancy expense		215,768			203,298		691,538			643,884
Equipment expense		151,742			150,334		425,175			435,770
Data processing costs		224,615			193,033		692,362			591,098
Ohio state franchise tax		123,300			117,000		369,900			351,000
FDIC assessment		86,108			71,702		529,268			117,394
Other operating expense		843,030			672,188		2,326,521			2,041,882
Total non-interest expense		3,039,951			2,729,581		9,338,736			7,824,227
Income before income taxes		90,890			915,448		1,221,760			2,754,473
Provision (benefit) for income taxes		(122,574	)		211,000		(55,574	)		530,000
NET INCOME	$	213,464		$	704,448	$	1,277,334		$	2,224,473

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2009			2008			2009			2008
Per common share data
Net income per common share — basic	$	0.14		$	0.46		$	0.83		$	1.45
Net income per common share — diluted	$	0.14		$	0.46		$	0.83		$	1.44
Dividends declared	$	0.26		$	0.26		$	0.78		$	0.77
Book value per share(period end)	$	24.07		$	21.83		$	24.07		$	21.83
Tangible book value per share (period end)	$	21.15		$	18.97		$	21.15		$	18.97
Dividend payout ratio		188.77	%		56.19	%		94.18	%		52.95	%
Average shares outstanding — basic		1,551,056			1,523,044			1,543,577			1,533,741
Average shares outstanding — diluted		1,551,056			1,525,373			1,544,704			1,546,400
Period ending shares outstanding		1,556,774			1,529,292			1,556,774			1,529,292
Selected ratios
Return on average assets		0.17	%		0.63	%		0.35	%		0.66	%
Return on average equity		2.34	%		8.77	%		4.72	%		8.78	%
Yield on earning assets		5.92	%		6.42	%		5.97	%		6.48	%
Cost of interest bearing liabilities		2.72	%		3.62	%		2.97	%		3.85	%
Net interest spread		3.20	%		2.80	%		3.00	%		2.64	%
Net interest margin		3.46	%		3.20	%		3.31	%		3.08	%
Efficiency (1)		64.39	%		67.17	%		71.68	%		67.24	%
Equity to assets at period end		7.24	%		7.35	%		7.24	%		7.35	%

(1) The efficiency ratio is calculated by dividing non-interest expense less amortization of intangibles by the sum of net interest income on a fully taxable equivalent basis plus non-interest income.

	September 30,			September 30,
Asset quality data	2009			2008
Non-accrual loans	$	11,312,822		$	3,421,782
90 day past due and accruing		3,054,951			3,327,162
Non-performing loans		14,367,773			6,748,944
Other real estate owned		1,775,082			1,107,547
Non-performing assets	$	16,142,855		$	7,856,491
Allowance for loan losses	$	4,422,250		$	3,613,857
Allowance for loan losses/total loans		1.28	%		1.13	%
Net charge-offs:
Quarter-to-date	$	592		$	8
Year-to-date		895			42
Net charge-offs to average loans
Quarter-to-date		0.17	%		0.00	%
Year-to-date		0.27	%		0.01	%
Non-performing loans/total loans		4.15	%		2.11	%
Allowance for loan losses/non-performing loans		30.78	%		46.00	%