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 June 30, 2006

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	(IRS Employer Identification No.)
or organization)

15985 East High Street, Middlefield, Ohio 44062-9263
(Address of principal executive offices)

(440) 632-1666
(Registrant’s telephone number, including area code)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or 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, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o Non-accelerated filer 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 August 10, 2006: 1,445,546

MIDDLEFIELD BANC CORP.

INDEX

	Page
	Number
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet (Unaudited) as of June 30, 2006 and December 31, 2005
Consolidated Statement of Income (Unaudited) for the Six and Three Months ended June 30, 2006 and 2005
Consolidated Statement of Changes in Stockholders’ Equity (Unaudited)
Consolidated Statement of Cash Flows (Unaudited) for the Six and Three Months ended June 30, 2006 and 2005
Notes to Unaudited Consolidated Financial Statements
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered sales of equity securities and use of proceeds
Item 3. Default Upon Senior Securities
Item 4. Submissions of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8 - K
SIGNATURES
EX-31
EX-31.1
EX-32
EX-99.2

MIDDLEFIELD BANC CORP.

CONSOLIDATED BALANCE SHEET

(Unaudited)

	June 30,			December 31
	2006			2005
ASSETS
Cash and due from banks	$	5,062,693		$	5,294,641
Interest-bearing deposits in other institutions		533,772			526,523
Cash and cash equivalents		5,596,465			5,821,164
Investment securities available for sale		54,372,565			57,887,130
Investment securities held to maturity (estimated market value of $222,691 and $232,967)		215,829			221,453
Loans		240,402,350			234,054,797
Less allowance for loan losses		2,952,858			2,841,098
Net loans		237,449,492			231,213,699
Premises and equipment		6,527,452			6,624,776
Bank-owned life insurance		6,746,154			5,632,982
Accrued interest and other assets		4,240,637			3,812,987
TOTAL ASSETS	$	315,148,594		$	311,214,191
LIABILITIES
Deposits:
Noninterest-bearing demand	$	39,476,009			39,782,375
Interest-bearing demand		9,893,791			9,362,399
Money market		11,898,950			13,078,829
Savings		60,044,039			66,495,057
Time		132,962,984			120,730,980
Total deposits		254,275,773			249,449,640
Short-term borrowings		2,962,647			6,710,914
Other borrowings		28,590,484			26,578,211
Accrued interest and other liabilities		1,225,271			1,186,061
TOTAL LIABILITIES		287,054,175			283,924,826
STOCKHOLDERS’ EQUITY
Common stock, no par value; 10,000,000 shares authorized, 1,445,546 and 1,427,170 shares issued		16,377,352			15,976,335
Retained earnings		16,131,950			14,959,891
Accumulated other comprehensive loss		(1,239,265	)		(677,088	)
Treasury stock, at cost; 94,297 shares in 2006 and 89,333 shares in 2005		(3,175,618	)		(2,969,773	)
TOTAL STOCKHOLDERS’ EQUITY		28,094,419			27,289,365
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	315,148,594		$	311,214,191

See accompanying unaudited notes to the consolidated financial statements.

MIDDLEFIELD BANC CORP

CONSOLIDATED STATEMENT OF INCOME

(Unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2006		2005		2006			2005
INTEREST INCOME
Interest and fees on loans	$	4,219,061	$	3,675,850	$	8,204,679		$	7,218,766
Interest-bearing deposits in other institutions		4,272		1,969		7,393			3,940
Federal funds sold		5,358		14,192		8,937			23,656
Investment securities:
Taxable interest		289,841		355,833		595,811			719,510
Tax-exempt interest		248,440		211,688		493,591			395,140
Dividends on FHLB stock		23,341		15,151		40,538			29,583
Total interest income		4,790,313		4,274,683		9,350,949			8,390,595
INTEREST EXPENSE
Deposits		1,677,832		1,369,098		3,218,694			2,664,364
Short-term borrowings		61,827		15,375		122,650			34,229
Other borrowings		297,890		244,470		570,864			478,061
Total interest expense		2,037,549		1,628,943		3,912,208			3,176,654
NET INTEREST INCOME		2,752,764		2,645,740		5,438,741			5,213,941
Provision for loan losses		75,000		60,000		150,000			120,000
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		2,677,764		2,585,740		5,288,741			5,093,941
NONINTEREST INCOME
Service charges on deposit accounts		435,842		388,549		848,684			742,022
Investment securities losses, net		—		—		(5,868	)		—
Earnings on bank-owned life insurance		59,950		52,901		113,172			102,979
Other income		98,863		85,065		188,993			162,618
Total noninterest income		594,655		526,515		1,144,981			1,007,619
NONINTEREST EXPENSE
Salaries and employee benefits		835,105		808,287		1,830,049			1,824,696
Occupancy expense		113,544		124,465		267,847			259,363
Equipment expense		100,473		106,789		192,686			215,114
Data processing costs		158,279		148,998		336,786			297,998
Ohio state franchise tax		90,000		90,000		180,000			180,000
Other expense		600,631		567,762		1,126,395			1,082,345
Total noninterest expense		1,898,032		1,846,301		3,933,763			3,859,516
Income before income taxes		1,374,387		1,265,954		2,499,959			2,242,044
Income taxes		386,587		349,000		694,587			611,000
NET INCOME	$	987,800	$	916,954	$	1,805,372		$	1,631,044
EARNINGS PER SHARE
Basic	$	0.73	$	0.68	$	1.34		$	1.22
Diluted		0.72		0.67		1.32			1.20
DIVIDENDS DECLARED PER SHARE	$	0.235	$	0.210	$	0.470		$	0.419

See accompanying unaudited notes to the consolidated financial statements.

MIDDLEFIELD BANC CORP.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

						Accumulated
						Other						Total
	Common		Retained			Comprehensive			Treasury			Stockholders’			Comprehensive
	Stock		Earnings			Loss			Stock			Equity			Income
Balance, December 31, 2005	$	15,976,335	$	14,959,891		$	(677,088	)	$	(2,969,773	)	$	27,289,365
Net income				1,805,372									1,805,372		$	1,805,372
Other comprehensive income:
Unrealized loss on available for sale securities net of tax benefit of $289,600							(562,177	)					(562,177	)		(562,177	)
Comprehensive income															$	1,243,195
Common stock issued		253,463											253,463
Purchase of treasury stock										(205,845	)		(205,845	)
Dividend reinvestment plan		147,554											147,554
Cash dividends ($0.47 per share)				(633,313	)								(633,313	)
Balance, June 30, 2006	$	16,377,352	$	16,131,950		$	(1,239,265	)	$	(3,175,618	)	$	28,094,419

See accompanying unaudited notes to the consolidated financial statements.

MIDDLEFIELD BANC CORP.

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

	Three Months Ended
	June 30,			June 30,
	2006			2005
OPERATING ACTIVITIES
Net income	$	1,805,372		$	1,631,044
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		150,000			120,000
Investment securities losses, net		5,868			—
Depreciation and amortization		217,047			222,400
Amortization of premium and discount on investment securities		118,879			129,083
Amortization of deferred loan costs (fees)		(38,569	)		(73,659	)
Earnings on bank-owned life insurance		(113,172	)		(102,979	)
Increase in accrued interest receivable		83,472			(92,821	)
Increase in accrued interest payable		67,380			77,359
Other, net		(199,086	)		(591,151	)
Net cash provided by operating activities		2,097,192			1,319,276
INVESTING ACTIVITIES
Increase in interest-bearing deposits in other institutions, net		—			(3,730	)
Investment securities available for sale:
Proceeds from repayments and maturities		2,990,431			4,511,959
Proceeds from sale of securities		664,838			—
Purchases		(1,117,254	)		(7,832,576	)
Investment securities held to maturity:
Proceeds from repayments and maturities		5,643			—
Increase in loans, net		(6,347,224	)		(7,825,604	)
Purchase of Federal Home Loan Bank stock		(50,600	)		(29,500	)
Purchase of bank-owned life insurance		(1,000,000	)		—
Purchase of premises and equipment		(119,723	)		(166,904	)
Net cash used for investing activities		(4,973,889	)		(11,346,355	)
FINANCING ACTIVITIES
Net increase in deposits		4,826,133			9,312,251
Decrease in short-term borrowings, net		(3,748,267	)		31,117
Repayment of other borrowings		(1,987,727	)		(987,360	)
Proceeds from other borrowings		4,000,000			3,000,000
Purchase of Treasury Stock		(205,845	)		175,653
Common stock issued		253,463			140,584
Proceeds from dividend reinvestment plan		147,554			—
Cash dividends		(633,313	)		(558,241	)
Net cash provided by financing activities		2,651,998			11,114,004
Increase in cash and cash equivalents		(224,699	)		1,086,925
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		5,821,164			5,311,776
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	5,596,465		$	6,398,701
SUPPLEMENTAL INFORMATION
Cash paid during the year for:
Interest on deposits and borrowings	$	3,844,828		$	3,099,295
Income taxes		625,000			600,000

See accompanying notes to unaudited consolidated financial statements.

MIDDLEFIELD BANC CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — BASIS OF PRESENTATION

The consolidated financial statements of Middlefield Banc Corp. (“Middlefield”) includes its wholly owned subsidiary, The Middlefield Banking Company (the “Bank”). All significant inter-company items have been eliminated.

The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles and the instructions for Form 10-Q and Article 10 of Regulation S-X. In Management’s opinion, the financial statements include all adjustments, consisting of normal recurring adjustments, that Middlefield considers necessary to fairly state Middlefield’s financial position and the results of operations and cash flows. The balance sheet at December 31, 2005, has been derived from the audited financial statements at that date but does not include all of the necessary informational disclosures and footnotes as required by U. S. generally accepted accounting principles. The accompanying financial statements should be read in conjunction with the financial statements and notes thereto included with Middlefield’s Form 10-K (File No. 33-23094). The results of Middlefield’s operations for any interim period are not necessarily indicative of the results of Middlefield’s operations for any other interim period or for a full fiscal year.

NOTE 2 — STOCK-BASED COMPENSATION

The Company maintains a stock option plan for key officers, employees, and non-employee directors. Had compensation expense for the stock option plans been recognized in accordance with the fair value accounting provisions of FAS No. 123, Accounting for Stock-Based Compensation, net income applicable to common stock, basic, and diluted net income per common share would have been as follows:

	Three Months Ended June 30,		Six Months Ended June 30,
	2005		2005
Net income, as reported:	$	916,954	$	1,631,044
Less proforma expense related to stock options		28,519		57,038
Proforma net income	$	888,435	$	1,574,006
Basic net income per common share:
As reported	$	0.68	$	1.22
Pro forma		0.66		1.18
Diluted net income per common share:
As reported	$	0.67	$	1.20
Pro forma		0.65		1.16

For purposes of computing pro forma results, the Company estimated the fair values of stock options using the Black-Scholes option-pricing model. The model requires the use of subjective assumptions that can materially affect fair value estimates. Therefore, the pro forma results are estimates of results of operations as if compensation expense had been recognized for the stock option plans.

As of June 30, 2006, there was no recognized compensation cost related to vested share-based compensation awards granted.

				Weighted-
				average
				Exercise
	2006			Price
Outstanding, January 1		74,305		$	28.13
Granted		—			—
Exercised		(2,289	)		25.42
Forfeited		—			—
Outstanding, June 30		72,016		$	28.21

NOTE 3 — EARNINGS PER SHARE

Middlefield provides dual presentation of Basic and Diluted earnings per share. Basic earnings per share utilizes net income as reported as the numerator and the actual average shares outstanding as the denominator. Diluted earnings per share includes any dilutive effects of options, warrants, and convertible securities.

There are no convertible securities that would affect the numerator in calculating basic and diluted earnings per share; therefore, net income as presented on the Consolidated Statement of Income (Unaudited) will be used as the numerator. The following tables set forth the composition of the weighted-average common shares (denominator) used in the basic and diluted earnings per share computation.

	For the Three						For the Six
	Months Ended						Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
Weighted average common shares outstanding		1,437,670			1,428,975			1,439,528			1,426,620
Average treasury stock shares		(91,058	)		(89,333	)		(90,884	)		(89,333	)
Weighted average common shares and common stock equivalents used to calculate basic earnings per share		1,346,612			1,339,642			1,348,644			1,337,287
Additional common stock equivalents (stock options) used to calculate diluted earnings per share		22,253			20,642			21,860			19,468
Weighted average common shares and common stock equivalents used to calculate diluted earnings per share		1,368,865			1,360,284			1,370,504			1,356,755

NOTE 4 — COMPREHENSIVE INCOME

The components of comprehensive income consist exclusively of unrealized gains and losses on available for sale securities. For the six months ended June 30, 2006, this activity is shown under the heading Comprehensive Income as presented in the Consolidated Statement of Changes in Stockholders’ Equity (Unaudited).

The following shows the components and activity of comprehensive income during the periods ended June 30, 2006 and 2005 (net of the income tax effect):

	For the Six Months						For the Three Months
	Ended June 30,						Ended June 30,
	2006			2005			2006			2005
Unrealized holding losses arising during the period on securities held	$	(558,304	)	$	26,816		$	(492,200	)	$	421,698
Reclassification adjustment for gains included in net income, net of tax		(3,873	)		—			—			—
Net change in unrealized losses during the period		(562,177	)		26,816			(492,200	)		421,698
Unrealized holding (losses) gains, beginning of period		(677,088	)		(28,683	)		(747,065	)		(423,565	)
Unrealized holding losses, end of period	$	(1,239,265	)	$	(1,867	)	$	(1,239,265	)	$	(1,867	)
Net income	$	1,805,372		$	1,631,044		$	987,800		$	916,954
Other comprehensive income, net of tax:
Unrealized holding losses arising during the period		(562,177	)		26,816			(492,200	)		421,698
Comprehensive income	$	1,243,195		$	1,657,860		$	495,600		$	1,338,652

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis provides further detail to the financial condition and results of operations of the Company. The MD&A should be read in conjunction with the notes and financial statements presented in this report.

CHANGES IN FINANCIAL CONDITION

General. The Company’s total assets increased by $3.9 million or 1.3% from December 31, 2005 to June 30, 2006 to a balance of $315.2 million. Loans receivable and bank-owned life insurance increased $6.4 million, $1.1 million respectively. The increase in total assets reflects a corresponding increase in total liabilities of $3.1 million or 1.1% and an increase in stockholders’ equity of $805,000 or 3%. The increase in total liabilities was primarily the result of growth in deposits of $4.8 million along with an increase in borrowings from the Federal Home Loan Bank of Cincinnati. The increase in stockholders’ equity was the result of increases in common stock and retained earnings of $401,000 and $1.2 million, respectively, as well as decreases in comprehensive loss and treasury stock of $562,000 and $206,000 respectively.

Cash on hand and due from banks. Cash on hand and due from banks represent cash equivalents. Cash equivalents declined a combined $225,000 or 3.9% to $5.6 million at June 30, 2006 from $5.8 million at December 31, 2005. Deposits from customers into savings and checking accounts, loan and security repayments and proceeds from borrowed funds typically increase these accounts. Decreases result from customer withdrawals, new loan originations, security purchases and repayments of borrowed funds. The decrease for the first six months can principally be attributed to increases in loans.

Securities. The Company’s securities portfolio decreased by $3.5 million or 6.1% to $54.6 million at June 30, 2006 from $58.1 million at December 31, 2005. During the first half of the year ended June 30, 2006 the Company recorded purchases of available for sale securities of

$1.1 million, consisting of purchases of government agencies and municipal bonds. Offsetting the purchases of securities were repayments and maturities of securities of $3.0 million during the six months ended June 30, 2006. In addition, the securities portfolio decreased approximately $562,000 due to decreases in the market value. These fair value adjustments represent temporary fluctuations resulting from changes in market rates in relation to average yields in the available for sale portfolio. If securities are held to their respective maturity dates, no fair value gain or loss is realized.

Loans receivable. The loans receivable category consists primarily of single family mortgage loans used to purchase or refinance personal residences located within the Company’s market area and commercial real estate loans used to finance properties that are used in the borrowers businesses or to finance investor-owned rental properties, and to a lesser extent commercial and consumer loans. Net loans receivable increased $6.4 million or 2.7% to $240.4 million at June 30, 2006 from $234.1 million at December 31, 2005. Included in this increase were increases in mortgage loans of $5.0 million or 3.8% and commercial loans of $1.2 million or 1.6%, as well as a decrease in consumer loans of $237,000 during the six months ended June 30, 2006. The Corporation’s lending philosophy is to focus on the commercial loans and to attempt to grow the portfolio. To attract and build the commercial loan portfolio, the Corporation has taken a proactive approach in contacting new and current clients to ensure that the Corporation is servicing its client’s needs. These lending relationships generally offer more attractive returns than residential loans and also offer opportunities for attracting larger balance deposit relationships. However, the shift in loan portfolio mix from residential real estate to commercial oriented loans may increase credit risk.

Non-performing loans. Non-performing loans included non-accrual loans, renegotiated loans, loans 90 days or more past due, other real estate loans, and repossessed assets. A loan is classified, as non-accrual when, in the opinion of management, there are serious doubts about collectibility of interest and principal. At the time the accrual of interest is discontinued, future income is recognized only when cash is received. Renegotiated loans are those loans which terms have been renegotiated to provide a reduction or deferral of principal or interest as a result of the deterioration of the borrower. Non-performing loans amounted to $2.0 million or 0.82% and $1.5 million or 0.73% of total loans at June 30, 2006 and December 31, 2005, respectively. The increase for the first half of the year was due in part to a loan secured by commercial real estate with minimal loss anticipated.

Deposits. The Company considers various sources when evaluating funding needs, including but not limited to deposits, which are a significant source of funds totaling $254.3 million or 89% of the Company’s total funding sources at June 30, 2006. Total deposits increased $4.8 million or 1.9% to $254.3 million at June 30, 2006 from $249.5 million at December 31, 2005. The increase in deposits is primarily related to the growth of certificates of deposits that totaled $133.0 million at June 30, 2006 an increase of $12.2 million or 10.1% for the year. Saving deposits and money market accounts decreased $6.5 million, or 9.7% and $1.2 million, or 9.0% respectively, while interest-bearing demand increased $531,000, or 5.7%, during the six months ended June 30, 2006.

Borrowed funds. The Company utilizes short and long-term borrowings as another source of funding used for asset growth and liquidity needs. These borrowings primarily include FHLB advances and repurchase agreements. Short-term borrowings declined $3.8 million or 55.9% to $3.0 million at June 30, 2006 from $6.7 million at December 31, 2005 while FHLB advances increased $2.0 million or 7.6%. The increase in FHLB advances was a result of the funding needs to support the growth of the loan and investment portfolio during the first half of the year.

Stockholders’ equity. Stockholders’ equity increased $805,000 or 3.0% to $28.1 million at June 30, 2006 from $27.3 million at December 31, 2005. The increase in stockholders’ equity was the result of increases in retained earnings and common stock of $1.2 million and $401,000 million, respectively, as well as, decreases in accumulated other comprehensive loss and treasury stock of $562,000 and $206,000 respectively. The decrease of accumulated other comprehensive loss was the result of a reduction in the mark to market of the Company’s securities available for sale portfolio. The decline in treasury stock was the result of the purchase of 4,964 shares of the bank’s common stock at an average price of $41.47 since December 31, 2005.

RESULTS OF OPERATIONS

General. The Company recorded net income of $988,000 and $1,805,000 for the three and six months ended June 30, 2006, respectively, as compared to net income of $917,000 and $1,631,000, respectively, for the same periods in the prior year. The $71,000, or 7.7% increase in net income for the quarter ended June 30, 2006, as compared to the same period in the prior year was primarily attributable to an increase in net interest income after provision for loan losses of $92,000 and a increase in non-interest income of $68,000, partially offset by a increase in non-interest expense of $52,000 and an increase in provision for income taxes of $38,000.

Net interest income. Net interest income, the primary source of revenue for the Company, is determined by the Company’s interest rate spread, which is defined as the difference between income on earning assets and the cost of funds supporting those assets, and the relative amounts of interest earning assets and interest bearing liabilities. Management periodically adjusts the mix of assets and liabilities, as well as the rates earned or paid on those assets and liabilities in order to manage and improve net interest income. The level of interest rates and changes in the amount and composition of interest earning assets and liabilities affect the Company’s net interest income. Historically from an interest rate risk perspective, it has been management’s perception that differing interest rate environments can cause sensitivity to the Company’s net interest income, these being extended low long-term interest rates or rapidly rising short-term interest rates. Net interest income

increased $107,000 or 4.1% to $2.8 million for the three months ended June 30, 2006, compared to $2.6 million for the same period in the prior year. This increase in net interest income can be attributed to an increase in interest income of $516,000, partially offset by an increase in interest expense of $409,000. Net interest income increased $225,000, or 4.3%, for the six months ended June 30, 2006 compared to the same period in the prior year. This increase in net interest income can be attributed to an increase in interest income of $960,000, partially offset by a increase in interest expense of $736,000. The increase in net interest income for the first six months caused a slight improvement in the bank’s net interest margin. This was a result in an increase in the cost of interest-bearing liabilities of 56 basis points to 3.32% for the quarter ended June 30, 2006 compared to 2.76% for the same period in the prior year and an increase of 49 basis points to 3.20% for the six months ended June 30, 2005 compared to 2.71% for the same period in the prior year. This increase in the cost of funds was offset by an increase in the yield on interest earning assets of 47 basis points to 6.63% for the quarter ended June 30, 2006 compared to 6.16% for the same period in the prior year and for the six months ended June 30, 2006 and an increase of 43 basis points to 6.54% for the six months ended June 30, 2005 compared to 6.11% for the same period in the prior year

Interest income. Interest income increased $516,000, or 12.1%, for the three months ended June 30, 2006, compared to the same period in the prior year. This increase can be attributed to an increases in interest earned on loans receivable of $543,000 partially offset by a decline in interest income on securities of $29,000. Interest income increased $960,000, or 11.5%, for the six months ended June 30, 2006, compared to the same period in the prior year. This increase can be attributed to an increases in interest earned on loans receivable of $986,000 partially offset by a decline in interest income on securities of $25,000.

Interest earned on loans receivable increased $543,000, or 14.8%, for the three months ended June 30, 2006, compared to the same period in the prior year. This increase was attributable to an increase in the average balance of loans outstanding of $17.0 million, or 7.7%, to $238.2 million for the three months ended June 30, 2006 compared to $221.2 million for the same period in the prior year. Loan interest income was enhanced by an increase in the yield on the loans to 7.08% for the three months ended June 30, 2006 from 6.65% for the same period in the prior year.

For the six months ended June 30, 2006, interest earned on loans receivable increased $986,000, or 13.7%, , compared to the same period in the prior year. This increase was attributable to an increase in the average balance of loans outstanding of $16.9 million, or 7.7%, to $236.0 million for the six months ended June 30, 2006 compared to $219.1 million for the same period in the prior year. Loan interest income was enhanced by an increase in the yield on the loans to 6.95% for the six months ended June 30, 2006 from 6.59% for the same period in the prior year.

Interest earned on securities declined $29,000, or 5.2%, for the three months ended June 30, 2006, compared to the same period in the prior year. This decrease was primarily the result of a decline in the average balance of the securities portfolio of $3.4 million, or 5.7%, to $57.0 million at June 30, 2006 from $60.4 million for the same period in the prior year. The decline in interest income on securities was partially offset by the increase in the tax equivalent yield on securities to 4.69% for the three months ended June 30, 2006 from 4.48% for the same period in the prior year.

Interest earned on securities declined $25,000, or 2.3%, for the six months ended June 30, 2006, compared to the same period in the prior year. This decrease was primarily the result of a decline in the average balance of the securities portfolio of $1.3 million, or 2.2%, to $57.7 million at June 30, 2006 from $59.0 million for the same period in the prior year. The decline in interest income on securities was partially offset by the increase in the tax equivalent yield on securities to 4.70% for the six months ended June 30, 2006 from 4.47% for the same period in the prior year.

Interest expense. Interest expense increased $408,000, or 25.1%, for the three months ended June 30, 2006, compared to the same period in the prior year. This increase in interest expense can be attributed to increases in interest incurred on deposits, short-term borrowing and other borrowing $309,000, $46,000 and $53,000, respectively. For the six months ended June 30, 2006 interest expense increased $736,000, or 23.2% compared to the same period in the prior year. This increase in interest expense can be attributed to increases in interest incurred on deposits, short-term borrowing and other borrowing $554,000, $88,000 and $93,000, respectively.

Interest incurred on deposits, the largest component of the Company’s interest-bearing liabilities, increased $309,000, or 22.6%, for the three months ended June 30, 2006, compared to the same period in the prior year. This increase was primarily attributable to an increase in the cost of interest-bearing deposits to 3.14% from 2.58% for the quarters ended June 30, 2006 and 2005, respectively. Additionally the average balance of interest-bearing deposits increased by $1.8 million, or .83%, to $213.8 million for the three months ended June 30, 2006, compared to $212.0 million for the same period in the prior year. The Company diligently monitors the interest rates on its products as well as the rates being offered by its competition and utilizing rate surveys to keep its total interest expense costs down. For the six months ended June 30, 2006 interest incurred on deposits, increased $554,000, or 20.8%, compared to the same period in the prior year. This increase was primarily attributable to an increase in the cost of interest-bearing deposits to 3.02% for the six months ended June 30, 2006 compared to 2.54% for the same period in the prior year. In addition the increase in the cost of interest-bearing deposits was also attributed to an increase in the average balance of interest-bearing deposits of $3.0 million, or 1.5%, to $213.0 million for the six months ended June 30, 2005, compared to $210.0 million for the same period in the prior year.

Interest incurred on borrowed funds, increased $100,000, or 38.4%, for the three months ended June 30, 2006, compared the same period in the prior year. This increase was primarily attributable to the increase in the cost of these funds to 4.50% from 4.24% for the quarters ended June 30, 2006 and 2005, respectively. Adding to the cost of these funds was a rise in the average balance of borrowed funds of $7.5 million, or 30.6%, to $32.0 million for the three months ended June 30, 2004, compared to $24.5 million for the same period in the prior year. This increase is reflected in the quarterly rate volume report presented below which depicts that the increase to the costs associated with the interest-bearing liabilities.

For the six months ended June 30, 2006, interest incurred on borrowed funds increased $181,000, or 35.4%, compared to the same period in the prior year. This increase was attributable to the rise in the average balance of borrowed funds of $6.9 million, or 28.0%, to $31.5 million for the six months ended June 30, 2006, compared to $24.6 million for the six months ended June 30, 2005. Adding to the expense of these funds was a rise in the cost to 4.41% for the six months ended June 30, 2006, compared to 4.16% for the same period in the prior year.

Provision for loan losses. The provision for loan losses is the result of normal operations for the quarter and YTD. In determining the appropriate level of allowance for loan losses, management considers historical loss experience, the financial condition of borrowers, economic conditions (particularly as they relate to markets where the Company originates loans), the status of non-performing assets, the estimated underlying value of the collateral and other factors related to the collectability of the loan portfolio. The Company’s total allowance for losses on loans at June 30, 2006 and December 31, 2005 amounted to $3.0 million or 1.23% and $2.8 million or 1.21%, respectively, of the Company’s total loan portfolio. The Company’s allowance for losses on loans as a percentage of non-performing loans was 149.8% and 156.6% at June 30, 2006 and December 31, 2005, respectively.

Non-interest income. Non-interest income increased $68,000 or 13.0% to $595,000 for the three months ended June 30, 2006, compared to $527,000 for the same period in the prior year. This increase can be attributed primarily to increases in fees and service charges, earnings on bank-owned life insurance (BOLI) and other income of $47,000, $7,000 and $14,000, respectively.

For the six months ended June 30, 2006, non-interest income increased $137,000 or 13.6% to $1.1 million, compared to $1.0 million for the same period in the prior year. This increase is attributed to increases in fees and service charges, earnings on bank-owned life insurance (BOLI) and other income of $107,000, $10,000 and $26,000, respectively. Partially offsetting the increase in non-interest income was a $6,000 loss on the sale of investments during the first quarter.

Service charges on deposit accounts increased $47,000 or 12.2% to $436,000 for the three months ended June 30, 2006, compared to $388,000 for the same period in the prior year. Revenue from overdraft accounts represented the majority of this quarterly growth. Other income and earnings on BOLI increased $14,000 and $7,000 respectively for the same period in the prior year. For the six months ended June 30, 2006, service charges on deposit accounts increased $107,000 or 14.4% compared to the same period in the prior year. Ninety five percent of this increase for the first six months came from charges on over-drafted accounts.

Non-interest expense. Non-interest expense increased $52,000 or 2.8% to $1.9 million for the three months ended June 30, 2006, from $1.8 million for the same period in the prior year. This increase was the result of increases salary and employee benefits and other expenses of $27,000 and $33,000 respectively. The increase to compensation and employee benefits is primarily related to increases in health care costs and retirement plans as well as normal salary increases between the periods.

For the six months ended June 30, 2006 non-interest expense increased $74,000 or 1.9% for the same period in the prior year. This increase was the result of increases in other expense and data processing costs of $44,000 and $39,000, respectively. The change in other cost was in part due to the expense of updating and improving the Bank’s website. The change in data processing cost was due to the added expense of new accounts and products for the period.

Provision for income taxes. The Company recognized $695,000 in income tax expense, which reflected an effective tax rate of 27.8% for the six months, ended June 30, 2006, as compared to $611,000 with an effective tax rate of 27.3% for the respective 2005 period.

CRITICAL ACCOUNTING ESTIMATES

The Company’s critical accounting estimates involving the more significant judgments and assumptions used in the preparation of the consolidated financial statements as of June 30, 2006, have remained unchanged from December 31, 2005.

Average Balance Sheet and Yield/Rate Analysis. The following table sets forth, for the periods indicated, information concerning the total dollar amounts of interest income from interest-earning assets and the resultant average yields, the total dollar amounts of interest expense on interest-bearing liabilities and the resultant average costs, net interest income, interest rate spread and the net interest margin earned on average

interest-earning assets. For purposes of this table, average balances are calculated using monthly averages and the average loan balances include non-accrual loans and exclude the allowance for loan losses, and interest income includes accretion of net deferred loan fees. Interest and yields on tax-exempt securities (tax-exempt for federal income tax purposes) are shown on a fully tax equivalent basis utilizing a federal tax rate of 34%. Yields and rates have been calculated on an annualized basis utilizing monthly interest amounts.

	For the Three Months Ended June 30,
	2006							2005
					(3)							(3)
	Average				Average			Average				Average
	Balance		Interest		Yield/Cost			Balance		Interest		Yield/Cost
	(Dollars in thousands)							(Dollars in thousands)
Interest-earning assets:
Loans receivable	$	238,237	$	4,219		7.08	%	$	221,197	$	3,676		6.65	%
Investments securities		56,977		538		4.69	%		60,387		567		4.48	%
Interest-bearing deposits with other banks		2,411		33		5.47	%		3,219		31		3.85	%
Total interest-earning assets		297,625		4,790		6.63	%		284,803		4,274		6.16	%
Noninterest-earning assets		16,360							16,815
Total assets	$	313,985						$	301,618
Interest-bearing liabilities:
Interest-bearing demand deposits	$	11,035		35		1.27	%	$	8,715		18		0.83	%
Money market deposits		12,494		77		2.47	%		15,958		75		1.88	%
Savings deposits		58,969		231		1.57	%		71,888		260		1.45	%
Certificates of deposit		131,253		1,335		4.07	%		115,420		1,016		3.52	%
Borrowings		32,034		360		4.50	%		24,534		260		4.24	%
Total interest-bearing liabilities		245,785		2,038		3.32	%		236,515		1,629		2.76	%
Noninterest-bearing liabilities
Other liabilities		40,105							39,505
Stockholders’ equity		28,095							25,598
Total liabilities and stockholders’ equity	$	313,985						$	301,618
Net interest income			$	2,752						$	2,645
Interest rate spread (1)						3.31	%						3.40	%
Net yield on interest-earning assets (2)						3.88	%						3.87	%
Ratio of average interest-earning assets to average interest-bearing liabilities						121.09	%						120.42	%

(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)	Average yields are computed using annualized interest income and expense for the periods.

	For the Six Months Ended June 30,
	2006							2005
					(3)							(3)
	Average				Average			Average				Average
	Balance		Interest		Yield/Cost			Balance		Interest		Yield/Cost
	(Dollars in thousands)							(Dollars in thousands)
Interest-earning assets:
Loans receivable	$	235,986	$	8,205		6.95	%	$	219,070	$	7,219		6.59	%
Investments securities		57,666		1,090		4.70	%		58,966		1,115		4.47	%
Interest-bearing deposits with other banks		2,372		56		4.72	%		3,207		57		3.55	%
Total interest-earning assets		296,024		9,351		6.54	%		281,243		8,391		6.11	%
Noninterest-earning assets		16,070							15,978
Total assets		312,094							297,221
Interest-bearing liabilities:
Interest-bearing demand deposits		10,663		64		1.20	%		9,280		34		0.73	%
Money market deposits		12,888		155		2.41	%		15,929		147		1.85	%
Savings deposits		60,500		476		1.57	%		72,875		533		1.46	%
Certificates of deposit		128,943		2,523		3.91	%		111,866		1,951		3.49	%
Borrowings		31,490		694		4.41	%		24,613		512		4.16	%
Total interest-bearing liabilities		244,484		3,912		3.20	%		234,563		3,177		2.71	%
Noninterest-bearing liabilities

	For the Six Months Ended June 30,
	2006							2005
					(3)							(3)
	Average				Average			Average				Average
	Balance		Interest		Yield/Cost			Balance		Interest		Yield/Cost
	(Dollars in thousands)							(Dollars in thousands)
Other liabilities		39,702							38,126
Stockholders’ equity		27,908							24,532
Total liabilities and stockholders’ equity	$	312,094						$	297,221
Net interest income			$	5,439						$	5,214
Interest rate spread (1)						3.34	%						3.40	%
Net yield on interest-earning assets (2)						3.88	%						3.85	%
Ratio of average interest-earning assets to average interest-bearing liabilities						121.08	%						119.90	%

(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)	Average yields are computed using annualized interest income and expense for the periods.

Analysis of Changes in Net Interest Income. The following tables analyzes the changes in interest income and interest expense, between the three and six month periods ended June 30, 2006 and 2005, in terms of: (1) changes in volume of interest-earning assets and interest-bearing liabilities and (2) changes in yields and rates. The table reflects the extent to which changes in the Company’s interest income and interest expense are attributable to changes in rate (change in rate multiplied by prior period volume), changes in volume (changes in volume multiplied by prior period rate) and changes attributable to the combined impact of volume/rate (change in rate multiplied by change in volume). The changes attributable to the combined impact of volume/rate are allocated on a consistent basis between the volume and rate variances. Changes in interest income on securities reflects the changes in interest income on a fully tax equivalent basis.

		Three Months ended,
		June 30,
		2006 versus 2005
		Increase (decrease) due to
		Volume				Rate				Total
		(Dollars in thousands)
Interest-earning assets:
Loans receivable		$	74			$	469			$	543
Investments securities	(	$	7	)	(	$	22	)	(	$	29	)
Interest-bearing deposits with other banks	(	$	13	)		$	15			$	2
Total interest-earning assets			54				462				516
Interest-bearing liabilities:
Interest-bearing demand deposits		$	10			$	7			$	17
Money market deposits	(	$	20	)		$	22			$	2
Savings deposits	(	$	16	)	(	$	13	)	(	$	29	)
Certificates of deposit		$	87			$	232			$	319
Borrowings		$	19			$	81			$	100
Total interest-bearing liabilities			80				329				409
Net interest income	(	$	26	)		$	133			$	107

		Six Months ended,
		June 30,
		2006 versus 2005
		Increase (decrease) due to
		Volume			Rate			Total
		(Dollars in thousands)
Interest-earning assets:
Loans receivable		$	61		$	925		$	986
Investments securities	(	$	3	)		(22	)		(25	)
Interest-bearing deposits with other banks	(	$	10	)		9			(1	)
Total interest-earning assets			49			911			960

		Six Months ended,
		June 30,
		2006 versus 2005
		Increase (decrease) due to
		Volume			Rate			Total
		(Dollars in thousands)
Interest-bearing liabilities:
Interest-bearing demand deposits		$	6			24			30
Money market deposits	(	$	17	)		25			8
Savings deposits	(	$	14	)		(43	)		(57	)
Certificates of deposit		$	73			499			572
Borrowings		$	17			165			182
Total interest-bearing liabilities			65			670			735
Net interest income	(	$	17	)	$	242		$	225

LIQUIDITY

Management’s objective in managing liquidity is maintaining the ability to continue meeting the cash flow needs of its customers, such as borrowings or deposit withdrawals, as well as its own financial commitments. The principal sources of liquidity are net income, loan payments, maturing and principal reductions on securities and sales of securities available for sale, federal funds sold and cash and deposits with banks. Along with its liquid assets, the Company has additional sources of liquidity available to ensure that adequate funds are available as needed. These include, but are not limited to, the purchase of federal funds, and the ability to borrow funds under line of credit agreements with correspondent banks and a borrowing agreement with the Federal Home Loan Bank of Cincinnati, Ohio and the adjustment of interest rates to obtain depositors. Management feels that it has the capital adequacy, profitability and reputation to meet the current and projected needs of its customers.

For the six months ended June 30, 2006, the adjustments to reconcile net income to net cash from operating activities consisted mainly of depreciation and amortization of premises and equipment, the provision for loan losses, net amortization of securities and net changes in other assets and liabilities. Cash and cash equivalents increased as a result of the purchasing of government agency securities. For a more detailed illustration of sources and uses of cash, refer to the condensed consolidated statements of cash flows.

INFLATION

Substantially all of the Company’s assets and liabilities relate to banking activities and are monetary in nature. The consolidated financial statements and related financial data are presented in accordance with U.S. GAAP. GAAP currently requires the Company to measure the financial position and results of operations in terms of historical dollars, with the exception of securities available for sale, impaired loans and other real estate loans that are measured at fair value. Changes in the value of money due to rising inflation can cause purchasing power loss.

Management’s opinion is that movements in interest rates affect the financial condition and results of operations to a greater degree than changes in the rate of inflation. It should be noted that interest rates and inflation do effect each other, but do not always move in correlation with each other. The Company’s ability to match the interest sensitivity of its financial assets to the interest sensitivity of its liabilities in its asset/liability management may tend to minimize the effect of changes in interest rates on the Company’s performance.

REGULATORY MATTERS

The Company is subject to the regulatory requirements of The Federal Reserve System as a one-bank holding company. The affiliate bank is subject to regulations of the Federal Deposit Insurance Corporation (FDIC) and the State of Ohio, Division of Financial Institutions.

REGULATORY CAPITAL REQUIREMENTS

The Company is subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and prompt corrective action regulations involve quantitative measures of assets, liabilities and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings and other factors and the regulators can lower classifications in certain cases. Failure to meet various capital requirements can initiate regulatory action that could have a direct material effect on the Banks’ operations.

The prompt corrective action regulations provide five classifications, including well capitalized, adequately capitalized,

undercapitalized, significantly undercapitalized and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion and plans for capital restoration are required.

The minimum requirements are:

	Total			Tier 1			Tier 1
	Capital to			Capital to			Capital to
	Risk-Weighted			Risk-Weighted			Average
	Assets			Assets			Assets
Well capitalized		10.00	%		6.00	%		5.00	%
Adequately capitalized		8.00	%		4.00	%		4.00	%
Undercapitalized		6.00	%		3.00	%		3.00	%

The following table illustrates the Company’s risk-weighted capital ratios at June 30, 2006:

	June 30,
(in thousands)	2006
Risk-Weighted Capital Ratios
Tier 1 Capital	$	29,304
Total risk-based capital	$	32,038
Risk-weighted assets	$	219,036
Average total assets	$	313,991
Tier 1 capital to average assets		9.33	%
Tier 1 risk-based capital ratio		13.38	%
Total risk-based capital ratio		14.63	%

Item 3 Quantitative and Qualitative Disclosures about Market Risk

ASSET AND LIABILITY MANAGEMENT

The primary objective of the Company’s asset and liability management function is to maximize the Company’s net interest income while simultaneously maintaining an acceptable level of interest rate risk given the Company’s operating environment, capital and liquidity requirements, performance objectives and overall business focus. The principal determinant of the exposure of the Company’s earnings to interest rate risk is the timing difference between the repricing and maturity of interest-earning assets and the repricing or maturity of its interest-bearing liabilities. The Company’s asset and liability management policies are designed to decrease interest rate sensitivity primarily by shortening the maturities of interest-earning assets while at the same time extending the maturities of interest-bearing liabilities. The Board of Directors of the Company continues to believe in strong asset/liability management in order to insulate the Company from material and prolonged increases in interest rates. As a result of this policy, the Company emphasizes a larger, more diversified portfolio of residential mortgage loans in the form of mortgage-backed securities. Mortgage-backed securities generally

increase the quality of the Company’s assets by virtue of the insurance or guarantees that back them, are more liquid than individual mortgage loans and may be used to collateralize borrowings or other obligations of the Company.

The Company’s Board of Directors has established an Asset and Liability Management Committee consisting of four outside directors, the President and Chief Executive Officer, Executive/Vice President/ Chief Operating Officer, Senior Vice President/Chief Financial Officer and Senior Vice President/Commercial Lending. This committee, which meets quarterly, generally monitors various asset and liability management policies and strategies, which were implemented by the Company over the past few years. These strategies have included: (i) an emphasis on the investment in adjustable-rate and shorter duration mortgage-backed securities; (ii) an emphasis on the origination of single-family residential adjustable-rate mortgages (ARMs), residential construction loans and commercial real estate loans, which generally have adjustable or floating interest rates and/or shorter maturities than traditional single-family residential loans, and consumer loans, which generally have shorter terms and higher interest rates than mortgage loans; (iii) increase the duration of the liability base of the Company by extending the maturities of savings deposits, borrowed funds and repurchase agreements.

The Company has established the following guidelines for assessing interest rate risk:

Net interest income simulation. Given a 200 basis point parallel and gradual increase or decrease in market interest rates, net interest income may not change by more than 10% for a one-year period.

	Increase			Decrease
	+200			-200
	BP			BP
Net interest income — increase (decrease)		6.3	%		(7.3	)%
Portfolio equity — increase (decrease)		(5.2	)%		3.41	%

Portfolio equity simulation. Portfolio equity is the net present value of the Company’s existing assets and liabilities. Given a 200 basis point immediate and permanent increase or decrease in market interest rates, portfolio equity may not correspondingly decrease or increase by more than 20% of stockholders’ equity.

The following table presents the simulated impact of a 200 basis point upward and a 200 basis point downward shift of market interest rates on net interest income and the change in portfolio equity. This analysis was done assuming that the interest-earning asset and interest-bearing liability levels at June 30, 2006 remained constant. The impact of the market rate movements was developed by simulating the effects of rates changing gradually over a one-year period from the June 30, 2006 levels for net interest income. The impact of market rate movements was developed by simulating the effects of an immediate and permanent change in rates at June 30, 2006 for portfolio equity:

ITEM 4.

Controls and Procedures Disclosure

The Corporation maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Corporation’s reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

As of the end of the period covered by this quarterly report, an evaluation was carried out under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(e) and 15d-14(e) under the Securities Exchange Act of 1934). Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are, to the best of their knowledge, effective to ensure that information required to be disclosed by the Corporation in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. Subsequent to the date of their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that there were no significant changes in internal control or in other factors that could significantly affect its internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

A material weakness is a significant deficiency (as defined in Public Company Accounting Oversight Board Auditing Standard No. 2), or a combination of significant deficiencies, that results in there being more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by management or employees in the normal course of performing their assigned functions.

Changes in Internal Control over Financial Reporting

There have not been any changes in the Corporation’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the Corporation’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

None

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

   On May 9, 2006, the Corporation announced the adoption of a stock repurchase program that authorizes the repurchase of up to 4.9% or approximately 67,328 shares of its outstanding common stock in the open market or in privately negotiated transactions. This program expires in May 2007.

The following table summarizes the treasury stock purchased by the issuer during the second quarter of 2006:

							Maximum Number
					Total Number of		of
					Shares Purchased as		Shares that May Yet
	Total Number of		Average Price Paid		Part of Publicly		Be Purchased Under
Date	Shares Purchased		Per Share		Announced Program		the Program
May 4, 2006		1,408	$	41.38		—		—
May 22, 2006		2,090	$	41.78		2,090		65,238
June 1, 2006		105	$	42.50		105		65,133
TOTAL		3,603	$	41.64		2,195

Item 3. Defaults by the Company on its senior securities

None

Item 4. Submission of matters to a vote of security holders

The following represents the results of matters submitted to a vote of the stockholders at the annual meeting held on May 10, 2006:

(a) The following directors were elected to a three year term expiring in 2009:

Name	Shares For		Shares Withheld
Richard Coyne		940,932		11,266
James Heslop, II		941,328		10,870
Donald E. Villers		940,029		12,169

(b) The recommendation of the Board of Directors to ratify the appointment of S. R. Snodgrass, A.C. as the Company’s independent auditors, as described in the Proxy Statement for the Annual Meeting, was approved with 944,278 shares in favor, and 1,354 shares against, and 6,566 shares abstaining.

Item 5. Other information

None

Item 6. Exhibits

(a) The following exhibits are included in this Report or incorporated herein by reference:

3.1	Second Amended and Restated Articles of Incorporation of Middlefield Banc Corp. *
3.2	Regulations of Middlefield Banc Corp. *
4	Specimen Stock Certificate *
10.1	1999 Stock Option Plan of Middlefield Banc Corp. *
10.2	Severance Agreement of President and Chief Executive Officer *
10.3	Severance Agreement of Executive Vice President *
10.4	Severance Agreement of Vice President *
10.5	Federal Home Loan Bank of Cincinnati Agreement for Advances and Security Agreement dated September 14, 2000
10.7	Director Retirement Agreement with Richard T. Coyne *
10.8	Director Retirement Agreement with Francis H. Frank *
10.9	Director Retirement Agreement with Thomas C. Halstead *
10.10	Director Retirement Agreement with George F. Hasman *
10.11	Director Retirement Agreement with Donald D. Hunter *
10.12	Director Retirement Agreement with Martin S. Paul *
10.13	Director Retirement Agreement with Donald E. Villers *
10.14	DBO Agreement with Donald L. Stacy **
10.15	DBO Agreement with Jay P. Giles **
10.16	DBO Agreement with Alfred S. Thompson, Jr. **
10.17	DBO Agreement with Nancy C. Snow **
10.18	DBO Agreement with Teresa M. Hetrick **
10.19	DBO Agreement with Jack L. Lester **
10.20	DBO Agreement with James R. Heslop, II **
10.21	DBO Agreement with Thomas G. Caldwell **

31.1	Certification Pursuant to Section 302 of the Securities Exchange Act of 1934 — Thomas G. Caldwell
31.2	Certification Pursuant to Section 302 of the Securities Exchange Act of 1934 — Donald L. Stacy
32	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1	Form of Indemnification Agreement with directors of Middlefield Banc Corp. and executive officers of Middlefield Banc Corp. and The Middlefield Banking Company ***
99.2	Independent Accountants Report

*	Incorporated by reference to the identically numbered exhibit to the December 31, 2001 Form 10-K (File No. 033-23094) filed with the SEC on March 28, 2002.
**	Incorporated by reference to the identically numbered exhibit to the December 31, 2003 Form 10-K (File No. 000-32561) filed with the SEC on March 30, 2004.
***	Incorporated by reference to the identically numbered exhibit to Amendment No. 1 of the registration statement on Form 10 (File No. 033-23094) filed on June 14, 2001 .

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned and hereunto duly authorized.

	MIDDLEFIELD BANC CORP.
Date: August 10, 2006	By: /s/ Thomas G. Caldwell
	Thomas G. Caldwell
	President and Chief Executive Officer
Date: August 10, 2006	By: /s/ Donald L. Stacy
	Donald L. Stacy
	Principal Financial and Accounting Officer