8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

April 26, 2007
(Date of Report: Date of earliest event reported)

Middlefield Banc Corp.

(Exact name of registrant as specified in its charter)

Ohio
(State or other jurisdiction of incorporation)

000-32561
(Commission File Number)

34-1585111
(I.R.S. Employer Identification Number)

15985 East High Street
Middlefield, Ohio 44062
(Address of principal executive offices, including zip code)

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

(not applicable)
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

     o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

     o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

     o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

     o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

     The following information is furnished under Item 2.02. On April 26, 2007, Middlefield Banc Corp. issued a press release announcing financial results for the first quarter ended March 31, 2007. A copy of the press release is attached hereto as Exhibit 99 and is incorporated herein by this reference.

     The information contained or incorporated by reference in this current report on Form 8-K may contain forward-looking statements, including certain plans, expectations, goals, and projections, which are subject to numerous assumptions, risks, and uncertainties. Actual results could differ materially from those contained or implied by such statements for a variety of factors, including: changes in economic conditions; movements in interest rates; competitive pressures on product pricing and services; success and timing of business strategies; the nature, extent, and timing of governmental actions and reforms; and extended disruption of vital infrastructure. All forward-looking statements included in this current report on Form 8-K are based on information available at the time of the report. Middlefield Banc Corp. assumes no obligation to update any forward-looking statement.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

     (c) Exhibits.

The following exhibits are furnished herewith:

EXHIBITS

     (99) April 26, 2007 press release of Middlefield Banc Corp.

SIGNATURES

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

	MIDDLEFIELD BANC CORP.
Date: April 30, 2007	/s/ James R. Heslop, II
	Executive Vice President and COO

EX-99

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. Reports First Quarter 2007 Earnings

MIDDLEFIELD, OHIO, April 26, 2007 uuuu Middlefield Banc Corp. (Pink Sheets: MBCN) today announced first quarter 2007 net income of $752,000, a decline of 8.0% from the $818,000 reported for the first quarter of 2006. Diluted earnings per share were $0.52, down 8.4% from first quarter 2006 earnings of $0.57 per share.

“We had anticipated that earnings would be lower than last year in the first quarter,” commented President and Chief Executive Officer Thomas G. Caldwell. “The reduction in our net interest margin was the primary factor in the decline and was directly the result of strong pricing competition, higher deposit costs, and a general slowdown in economic activity.”

Mr. Caldwell continued, “Our net income has also been impacted by anticipated increases in non-interest expenses. The first three months of 2007 marked the first full quarter of operation for our Newbury banking center, as well as our Cortland loan production office. Although having a negative earnings impact, we are pleased that these facilities have broadened the coverage of our market.”

The company’s total assets ended the first quarter of 2007 at $357.2 million, an increase of 14.3% over the $340.9 million in total assets reported at December 31, 2006. Net loans at March 31, 2007, were $252.0 million, up $5.6 million, or 2.3%, over the $246.3 million reported at December 31, 2006. Total deposits at March 31, 2007, were $287.5 million, or 6.1% greater than the deposit level of $271.1 million at December 31, 2006.

Annualized returns on average equity (“ROE”) and average assets (“ROA”) for the first quarter of 2007 were 9.98% and 0.87%, respectively. The comparable results for the first quarter of 2006 were 11.79% and 1.05%.

Highlights for the first quarter of 2007 include:

• Net interest income was $2.61 million, a decrease of 2.8% from the $2.69 million reported for the comparable period of 2006. The net interest margin was 3.46% for the first quarter of 2007, down from the 3.89% reported for the first quarter of 2006. The decline is primarily attributable to higher deposit costs associated with the current interest rate environment. Deposit growth at the bank has primarily been in products such as time deposits and money market accounts, which generally higher interest costs than other deposit alternatives. The bank offered a special money market promotion during the first quarter of 2007, which was tied to the grand opening of the Newbury banking office.

• Non-interest income increased $72,000 for the three-month period of 2007over the comparable 2006 period. This increase of 13.1% was primarily the result of higher service charge revenue associated with an increase in the number of deposit accounts, expanded ATM/Debit card usage, and an increase in revenue from investment services. Earnings on bank-owned life insurance was $19,000 higher during the first quarter of 2007 than the same period of 2006.

• Non-interest expense for the first quarter of 2007 was 11.7%, or $238,000, higher than the first quarter of 2006. Increases in salary and employee benefits of $110,000, occupancy expense of $15,000, and equipment expense of $30,000, were largely attributable to the opening of the Newbury banking office and the Cortland loan production office. Other expense items contributing to the increase were franchise tax, certain maintenance contracts, and increased ATM costs.

• Total deposit growth for the first quarter of 2007 was $16.5 million. With promotional efforts directed to the bank’s money market account, deposits in those accounts increased $11.6 million, while time deposits increased $5.6 million and interest-bearing deposit accounts grew $1.5 million. Offsetting this growth were declines in non-interest bearing deposits of $1.6 million and savings accounts of $0.6 million. Net loans at March 31, 2007, stood at $252.0 million, reflecting an increase of $5.6 million for the quarter. Increases were seen in all loan categories with the exception of installment loans.

• Provision for loan losses was $45,000 for the 2007 first quarter, which was in line with the company’s plan. While lower than the $75,000 provision during the first quarter of 2006, this amount was in keeping with the company’s intention to reduce the unallocated portion of its loan loss reserve. The provision is maintained at a level to absorb management’s estimate of probable inherent credit losses within the bank’s loan portfolio. At March 31, 2007, the allowance for loan losses as a percentage of total loans was 1.09%, which was down from the 1.22% reported at March 31, 2006. The ratio of non-performing loans to total loans stood at 0.67% at March 31, 2007. This was a reduction of 23.0% from the March 31, 2006 ratio of 0.87%.

• Stockholders’ equity at March 31, 2007, was $31.1 million, or 8.71% of total assets. Book value as of March 31, 2007 was $21.76. This was an increase of $2.16 over the March 31, 2006 book value.

• In the first quarter of 2007, Middlefield paid a cash dividend of $0.24 per share. This represents an increase of 7.1% over the cash dividend paid during the first quarter of 2006. The 2006 cash dividend amount has been adjusted to reflect the 5% stock dividend paid by the company during the fourth quarter of 2006.

“Although our earnings results are not in line with what we have historically reported, they do exceed our plan for the first quarter of 2007, “ commented Donald L. Stacy, Chief Financial Officer and Treasurer of Middlefield Banc Corp. “The continued nature of the yield curve, as well as market pricing, has worked to compress our net interest margin. The additional overhead associated with our expansion is integral to our long-term growth efforts and is, we believe, within reasonable expectations.”

“Our anticipation is that these factors will continue to impact our earnings level as we move further into 2007,” Stacy continued. “We remain committed, however, to the short-term expense necessary to provide long-term reward for our shareholders.”

Middlefield Banc Corp. is a financial holding company headquartered in Middlefield, Ohio. Its subsidiary, The Middlefield Banking Company, operates full service banking centers and a UVEST Financial Services^® brokerage office serving Chardon, Garrettsville, Mantua, Middlefield, Newbury, and Orwell, as well as a loan production office in Cortland, Ohio. On April 19, 2007, Middlefield Banc Corp. completed its acquisition of Emerald Bank, headquartered in Dublin, Ohio. Further information is available at www.middlefieldbank.com.

This announcement contains forward-looking statements that involve risk and uncertainties, including changes in general economic and financial market conditions and the Company’s ability to execute its business plans. Although management believes the expectations reflected in such statements are reasonable, actual results may differ materially.

MIDDLEFIELD BANC CORP.
CONSOLIDATED BALANCE SHEET

	March 31,		December 31
	2007		2006
ASSETS
Cash and due from banks	$	6,811,047	$	6,893,148
Federal funds sold		8,200,000		6,200,000
Interest-bearing deposits in other institutions		552,487		546,454
Cash and cash equivalents		15,563,534		13,639,602
Investment securities available for sale		70,619,693		63,048,135
Investment securities held to maturity (estimated market value of $127,663 and $134,306)		119,899		125,853
Loans		254,776,398		249,190,534
Less allowance for loan losses		2,787,810		2,848,887
Net loans		251,988,588		246,341,647
Premises and equipment		6,688,641		6,742,465
Bank-owned life insurance		6,944,822		6,872,743
Accrued interest and other assets		5,278,668		4,081,259

	March 31,			December 31
	2007			2006
TOTAL ASSETS	$	357,203,845		$	340,851,704
LIABILITIES
Deposits:
Noninterest-bearing demand	$	39,375,477		$	41,002,573
Interest-bearing demand		13,241,825			11,724,173
Money market		26,306,872			14,738,767
Savings		53,622,139			54,246,499
Time		154,979,513			149,338,181
Total deposits		287,525,826			271,050,193
Short-term borrowings		2,265,357			1,609,738
Federal funds purchased		—			—
Other borrowings		34,793,179			36,112,738
Accrued interest and other liabilities		1,499,115			1,615,101
TOTAL LIABILITIES		326,083,477			310,387,770
STOCKHOLDERS’ EQUITY
Common stock, no par value; 10,000,000 shares authorized, 1,525,324 and 1,519,887 shares issued		19,712,463			19,507,257
Retained earnings		15,108,995			14,685,971
Accumulated other comprehensive income		(492,783	)		(520,987	)
Treasury stock, at cost; 95,080 shares in 2007 and in 2006		(3,208,307	)		(3,208,307	)
TOTAL STOCKHOLDERS’ EQUITY		31,120,368			30,463,934
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	357,203,845		$	340,851,704

MIDDLEFIELD BANC CORP.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)

	Three Months Ended
	March 31,
	2007		2006
INTEREST INCOME
Interest and fees on loans	$	4,530,229	$	3,985,618
Interest-bearing deposits in other institutions		55,889		3,121
Federal funds sold		131,235		3,579
Investment securities:
Taxable interest		266,114		305,970
Tax-exempt interest		382,785		245,151
Dividends on FHLB stock		25,495		17,197
Total interest income		5,391,747		4,560,636

	Three Months Ended
	March 31,
	2007		2006
INTEREST EXPENSE
Deposits		2,314,671		1,540,862
Short term borrowings		152,292		60,823
Other borrowings		312,335		272,974
Total interest expense		2,779,298		1,874,659
NET INTEREST INCOME		2,612,449		2,685,977
Provision for loan losses		45,000		75,000
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		2,567,449		2,610,977
NONINTEREST INCOME
Service charges on deposit accounts		451,947		412,842
Investment securities losses, net		—		(5,868	)
Earnings on bank-owned life insurance		72,079		53,222
Other income		97,602		90,130
Total noninterest income		621,628		550,326
NONINTEREST EXPENSE
Salaries and employee benefits		1,104,908		994,944
Occupancy expense		169,230		154,303
Equipment expense		121,791		92,213
Data processing costs		151,248		178,507
Ohio state franchise tax		96,000		90,000
Other expense		630,525		525,764
Total noninterest expense		2,273,702		2,035,731
Income before income taxes		915,375		1,125,572
Income taxes		163,000		308,000
NET INCOME	$	752,375	$	817,572
EARNINGS PER SHARE
Basic	$	0.53	$	0.58
Diluted		0.52		0.57
DIVIDENDS DECLARED PER SHARE	$	0.240	$	0.224

MIDDLEFIELD BANC CORP.
SELECTED CONSOLIDATED FINANCIAL INFORMATION

	For the Three Months Ended March 31,
	2007			2006			% Change
Per share (1)
Earnings per common share — Basic	$	0.53		$	0.58			-8.40	%
Earnings per common share — Diluted		0.52			0.57			-8.39	%
Cash dividends paid		0.24			0.22			7.14	%
Book value (end of period)		21.76			19.60			10.99	%
Shares Outstanding
Average — Basic		1,426,111			1,419,305			0.48	%
Average — Diluted		1,447,534			1,440,771			0.47	%
Actual (end of period)		1,430,244			1,422,729			0.53	%
Key performance ratios
Return on average assets		0.87	%		1.05	%		-16.97	%
Return on average equity		9.98	%		11.79	%		-15.37	%
Net interest margin		3.46	%		3.89	%		-10.98	%
Yield on earning assets		6.89	%		6.49	%		6.25	%
Efficiency ratio		66.28	%		61.34	%		8.06	%
Net charge-offs to average loans (actual for the period)		0.04	%		0.01	%		0.00	%
Net charge-offs to average loans (annualized)		0.17	%		0.05	%		0.00	%
Total allowance for loan losses to nonperforming loans		162.95	%		140.40	%		16.06	%
Nonperforming loans to total loans		0.67	%		0.87	%		-23.02	%
Total allowance for loan losses to total loans		1.09	%		1.22	%		-10.66	%
Equity to assets at period end		8.71	%		8.92	%		-2.37	%
At period end (in 000s)
Total assets	$	357,204		$	312,577			14.28	%
Total deposits		287,526			254,268			13.08	%
Net loans receivable		251,989			232,895			8.20	%
Securities		70,740			56,104			26.09	%
Shareholders equity		31,120			27,892			11.57	%

(1) Per share data has been restated to reflect the five percent stock dividend paid in 2006.

MIDDLEFIELD BANC CORP.
SUPPLEMENTAL DETAIL

CHARGE-OFFS

	For the Three Months
	Ended March 31,
	2007		2006
Loan charge-offs	$	113	$	32
Recoveries on loans		7		4
Net loan charge-offs		106		28