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

July 20, 2016

(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)

001-36613

(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:

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

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

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

¨ 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 July 20, 2016, Middlefield Banc Corp. issued a press release announcing financial results for the three month and six month periods ended June 30, 2016. 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 July 20, 2016 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: July 22, 2016	/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.bank

PRESS RELEASE

Company Contact:	Investor and Media Contact:
Thomas G. Caldwell President/Chief Executive Officer Middlefield Banc Corp. (440) 632-1666 Ext. 3200 tcaldwell@middlefieldbank.com	Andrew M. Berger Managing Director SM Berger & Company, Inc. (216) 464-6400 andrew@smberger.com

Middlefield Banc Corp. Reports 2016 First Half Financial Results

MIDDLEFIELD, OHIO, July 20, 2016 ¿¿¿¿ Middlefield Banc Corp. (NASDAQ: MBCN) today reported financial results for the 2016 first-half and second quarter ended June 30, 2016.

2016 First Half Financial Highlights versus 2015 First Half:

• Net income was up 8.9% to $3.4 million

• Earnings per diluted share increased 14.0% to $1.73 per diluted share

• Total net loans increased 17.8% to $573.4 million

• Total interest income improved 4.6% to $14.8 million

• Tangible stockholders’ equity improved 11.3 % to $32.47 per share

• Tier 1 capital ratio remains strong at 9.11%

“The significant growth we experienced for the 2016 first half reflects an excellent second quarter of increased productivity from our new lenders, business managers and the recently opened Mentor LPO,” stated Thomas G. Caldwell, President and Chief Executive Officer. “These investments in our workforce and geographic expansion, helped us grow net loans at June 30, 2016 by 17.8% compared with the same period last year, which in turn allowed us to improve our efficiency ratio from 67.79% to 65.99%.

“I am pleased to report significant improvements in profitability for the 2016 first half as net income per diluted common share increased 14.0% to $1.73 and our tangible book value increased 11.3% to $32.47 per share. Net income for the 2016 second quarter increased 28.0% to a record $1.9 million, or $0.94 per diluted share, from $1.5 million, or $0.73 per diluted share for the 2015 second quarter. We are making progress executing the strategic plan we created last year as we grow our banking footprint, and increase our market share. We remain optimistic 2016 will experience asset and loan growth, and improved profitability.”

Annualized returns on average equity (“ROE”) and average assets (“ROA”) for the 2016 six-month period were 10.62% and 0.92%, respectively, compared with 9.92% and 0.91% for the same period last year. For the 2016 second quarter returns on average equity (“ROE”) and average assets (“ROA”) were 11.78% and 1.03% respectively, compared with 9.54% and 0.85% for the 2015 second quarter.

Mr. Caldwell continued: “During the quarter, we began construction on a new branch in Sunbury, Ohio, which we expect to open in the 2016 third quarter. This will be our 11^th full-service banking location and our third office in Central Ohio. We are excited to expand our presence in Central Ohio to Delaware County, which is 20 miles north of Columbus and is the fastest growing suburban county in the State of Ohio, and the 21^st fastest in the U.S. As we grow our franchise, I am encouraged with our direction. Our two distinct Ohio markets have strong demographics and stable economies. We are working hard to grow Middlefield’s presence within our local communities, while providing our customers with a community bank that is safe, strong and committed.”

Income Statement

For the 2016 first half, net interest income increased 3.5% to $12.7 million, compared to $12.2 million for the same period last year. Year-to-date, the net interest margin was 3.82%, compared to 3.92% for the same period last year. Net interest income for the 2016 second quarter was $6.3 million, compared to $6.1 million for the 2015 second quarter. The net interest margin for the 2016 second quarter was 3.78%, compared to 3.83% for the same period of 2015. The 4.3% increase in net interest income for the 2016 second quarter was largely a result of an 8.1% increase in interest and fees on loans.

For the 2016 first half, noninterest income increased 18.4% to $2.1 million, compared to $1.8 million for the same period last year. Noninterest income for the 2016 second quarter was up 21.9% to $1.2 million primarily a result of gains on the sales of investment securities.

For the 2016 first half, noninterest expense increased 2.2% to $10.3 million, compared to $10.0 million for the same period last year. The increase in noninterest expenses were modest through the 2016 first half primarily because of a 5.8% reduction in 2016’s second quarter expenditures. Operating costs in the 2016 second quarter declined to $4.9 million from the 2015 second quarter’s $5.2 million and were down 7.9% from the 2016 first quarter.

“Our asset quality remains strong, as year-to-date net charge-offs have declined 62.1% from the same period last year,” said Donald L. Stacy, Chief Financial Officer. “The 22.0% year-over-year increase in second quarter nonperforming loans is mainly due to the 17.6% increase in our loan portfolio over this same time. Economic trends in our local communities remain stable and we continue to focus on managing risk and maintaining high quality lending practices. We had $21.1 million in cash and cash equivalents on our balance sheet at June 30, 2016 and net loans to total deposits of 91.3%. We were able to leverage the increase in noninterest expenses we experienced in the 2016 first quarter, and actually reduced operating costs sequentially and year-over-year. As a result, profitability increased significantly with strong improvements in ROA and ROE during the quarter. We expect stable profitability throughout the remainder of 2016 as we control expenses and grow our base of earning assets.”

Balance Sheet

Total assets at June 30, 2016 increased 7.7% to $760.1 million, from $705.5 million at June 30, 2015. Net loans at June 30, 2016 were $573.4 million, compared to $486.5 million at June 30, 2015. The 17.8% year-over-year increase in net loans was a result of loan growth in both residential and commercial mortgages, which increased 15.1% and 25.3%, respectively, as well as a 10.1% increase in commercial and industrial loans, partially offset by a 3.7% decline in real estate construction loans and a 17.5% decline in consumer installment loans.

Total deposits at June 30, 2016 increased 0.7% to $628.0 million from $623.5 million at June 30, 2015. The company continued to proactively manage its cost of funds and control deposit growth. The investment portfolio, which is entirely classified as available for sale, was $129.3 million June 30, 2016, compared with $157.6 million at June 30, 2015.

Stockholders’ Equity and Dividends

At June 30, 2016 tangible stockholders’ equity was $73.0 million an increase of 21.3% from $60.2 million at June 30, 2015. On a per share basis, tangible stockholders’ equity increased 11.3% to $32.47 at June 30, 2016 from $29.16 at June 30, 2015. Through the first six months of 2016, the company paid cash dividends of $0.54 per share, which was an increase of 1.9% over the same period last year. The dividend payout ratio for the 2016 six-month period was 32.4% compared to 34.7% for the same period last year.

At June 30, 2016, the company had a Tier 1 leverage ratio of 8.99%, down from 9.56% at June 30, 2015.

Asset Quality

The provision for loan losses for the 2016 second quarter was $0.1 million versus no provision for the same period last year. Nonperforming assets at June 30, 2016 were $10.6 million, compared to $10.1 million at June 30, 2015. Net charge-offs for the 2016 second quarter were $0.1 million, or 0.07% of average loans, annualized, compared to $0.1 million, or 0.08% of average loans, annualized for the same 2015 period. Year-to-date net charge-offs were $0.2 million, or 0.08% of average loans, annualized compared to $0.6 million, or 0.25% of average loans, annualized for the same period last year. The allowance for loan losses at June 30, 2016 stood at $6.4 million, or 1.10% of total loans, compared to $6.3 million or 1.29% of total loans at June 30, 2015.

The following table provides a summary of asset quality and reserve coverage ratios.

Asset Quality History

(dollars in thousands)

	6/30/2016			6/30/2015			12/31/2015			12/31/2014			12/31/2013
Nonperforming loans	$	9,491		$	7,777		$	10,263		$	9,048		$	12,290
Real estate owned	$	1,142		$	2,308		$	1,412		$	2,590		$	2,698
Nonperforming assets	$	10,633		$	10,085		$	11,675		$	11,638		$	14,988
Allowance for loan losses	$	6,366		$	6,346		$	6,385		$	6,846		$	7,046
Ratios:
Nonperforming loans to total loans		1.64	%		1.58	%		1.92	%		1.92	%		2.82	%
Nonperforming assets to total assets		1.40	%		1.43	%		1.59	%		1.72	%		2.32	%
Allowance for loan losses to total loans		1.10	%		1.29	%		1.20	%		1.45	%		1.62	%
Allowance for loan losses to nonperforming loans		67.07	%		81.60	%		62.21	%		75.66	%		57.33	%

Middlefield Banc Corp., headquartered in Middlefield, Ohio, is a bank holding company with total assets of $760.1 million at June 30, 2016. The bank operates 10 full service banking centers and an LPL Financial^® brokerage office serving Chardon, Cortland, Dublin, Garrettsville, Mantua, Middlefield, Newbury, Orwell, and Westerville. The Bank also operates a Loan Production Office in Mentor, Ohio. Additional information is available at www.middlefieldbank.bank.

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

June 30, 2016 and 2015

(Dollar amounts in thousands)

(unaudited)

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2016		2015			2016		2015
INTEREST INCOME
Interest and fees on loans	$	6,317	$	5,842		$	12,490	$	11,685
Interest-bearing deposits in other institutions		15		12			27		20
Federal funds sold		5		5			9		8
Investment securities
Taxable interest		290		379			630		774
Tax-exempt interest		750		805			1,540		1,564
Dividends on stock		28		23			57		50
Total interest income		7,405		7,066			14,753		14,101
INTEREST EXPENSE
Deposits		889		874			1,744		1,705
Short term borrowings		115		33			235		70
Other borrowings		20		23			37		46
Trust preferred securities		42		60			75		52
Total interest expense		1,066		990			2,091		1,873
NET INTEREST INCOME		6,339		6,076			12,662		12,228
Provision for loan losses		105		—			210		105
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		6,234		6,076			12,452		12,123
NONINTEREST INCOME
Service charges on deposits		491		470			938		911
Investment securities gains, net		252		22			303		46
Earnings on bank-owned life insurance		97		92			196		161
Gains on sale of loans		106		120			193		173
Other income		227		258			452		467
Total noninterest income		1,173		962			2,082		1,758
NONINTEREST EXPENSE
Salaries and employee benefits		2,283		2,560			5,063		4,920
Occupancy expense		292		291			627		640
Equipment expense		210		241			479		457
Data processing costs		322		261			594		511
Ohio state franchise tax		162		75			262		150
Federal deposit insurance expense		132		120			264		232
Professional fees		218		277			510		596
Loss (gain) on sale of other real estate owned		56		(40	)		68		48
Advertising expense		203		195			398		391
Other real estate expense		85		268			131		333
Directors Fees		121		127			228		245
Core deposit intangible amortization		10		10			20		20
Appraiser fees		119		—			220		—
ATM fees		98		88			194		172
Other operating expense		604		744			1,195		1,313
Total noninterest expense		4,915		5,217			10,253		10,028
Income before income taxes		2,492		1,821			4,281		3,853
Provision for income taxes		566		316			868		720
NET INCOME	$	1,926	$	1,505		$	3,413	$	3,133

MIDDLEFIELD BANC CORP.

Consolidated Selected Financial Highlights

June 30, 2016 and 2015 and December 31, 2015

Balance Sheet (period end)	June 30, 2016			December 31, 2015			June 30, 2015
(Dollar amounts in thousands)	(unaudited)						(unaudited)
Assets
Cash and due from banks	$	21,127		$	22,421		$	20,311
Federal funds sold		1,000			1,329			2,340
Cash and cash equivalents		22,127			23,750			22,651
Investment securities available for sale		129,295			146,520			157,577
Loans held for sale		496			1,107			398
Loans:		579,716			533,710			492,893
Less: reserve for loan losses		6,366			6,385			6,346
Net loans		573,350			527,325			486,547
Premises and equipment		9,727			9,772			10,019
Goodwill		4,559			4,559			4,559
Core deposit intangible		56			76			96
Bank-owned life insurance		13,337			13,141			13,253
Other real estate owned		1,142			1,412			2,308
Accrued interest receivable and other assets		6,019			7,477			8,110
Total Assets	$	760,108		$	735,139		$	705,518
	June 30, 2016			December 31, 2015			June 30, 2015
Liabilities and Stockholders’ Equity
Non-interest bearing demand deposits	$	126,045		$	116,498		$	109,732
Interest bearing demand deposits		64,361			57,219			59,128
Money market accounts		81,596			78,856			73,425
Savings deposits		173,014			180,653			179,353
Time deposits		183,024			191,221			201,886
Total Deposits		628,040			624,447			623,524
Fed funds purchased		414			—			—
Short-term borrowings		41,841			35,825			4,517
Other borrowings		9,825			9,939			10,465
Other liabilities		2,407			2,624			2,200
Total Liabilities		682,527			672,835			640,706
Common equity		47,675			36,191			35,854
Retained earnings		39,545			37,236			34,570
Accumulated other comprehensive income		3,879			2,395			1,122
Treasury stock		(13,518	)		(13,518	)		(6,734	)
Total Stockholders’ Equity		77,581			62,304			64,812
Total Liabilities and Stockholders’ Equity	$	760,108		$	735,139		$	705,518

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
Per common share data
Net income per common share - basic	$	0.94		$	0.73		$	1.74		$	1.52
Net income per common share - diluted	$	0.94		$	0.73		$	1.73		$	1.52
Dividends declared	$	0.27		$	0.27		$	0.54		$	0.53
Book value per share (period end)	$	34.53		$	31.42		$	34.53		$	31.42
Tangible book value per share (period end)	$	32.47		$	29.16		$	32.47		$	29.16
Dividend payout ratio		31.00	%		36.74	%		32.35	%		34.70	%
Average shares outstanding - basic		2,051,137			2,058,986			1,964,657			2,056,338
Average shares outstanding - diluted		2,059,411			2,068,313			1,973,179			2,065,928
Period ending shares outstanding		2,246,904			2,062,649			2,246,904			2,062,649
Selected ratios
Return on average assets		1.03	%		0.85	%		0.92	%		0.91	%
Return on average equity		11.78	%		9.54	%		10.62	%		9.92	%
Yield on earning assets		4.37	%		4.41	%		4.42	%		4.48	%
Cost of interest bearing liabilities		0.77	%		0.75	%		0.76	%		0.72	%
Net interest spread		3.60	%		3.66	%		3.66	%		3.76	%
Net interest margin		3.78	%		3.83	%		3.82	%		3.92	%
Efficiency		62.23	%		70.00	%		65.99	%		67.79	%
Tier 1 capital to average assets		8.99	%		9.56	%		8.99	%		9.56	%
	June 30, 2016			June 30, 2015
Commercial and industrial	$	60,451		$	54,927
Real estate - construction		16,039			16,647
Real estate - mortgage:
Residential		251,553			218,584
Commercial		247,176			197,284
Consumer installment		4,497			5,451
	$	579,716		$	492,893
Asset quality data	June 30, 2016			June 30, 2015
(Dollar amounts in thousands)
Non-accrual loans	$	6,662		$	5,780
Troubled debt restructuring		2,829			1,997
Nonperforming loans		9,491			7,777
Other real estate owned		1,142			2,308
Nonperforming assets	$	10,633		$	10,085
Allowance for loan and lease losses	$	6,366		$	6,346
Allowance for loan and lease losses/total loans		1.10	%		1.29	%
Net charge-offs:
Quarter-to-date		96			101
Year-to-date		229			605
Net charge-offs to average loans, annualized
Quarter-to-date		0.07	%		0.08	%
Year-to-date		0.08	%		0.25	%
Nonperforming loans/total loans		1.64	%		1.58	%
Allowance for loan and lease losses/nonperforming loans		67.07	%		81.60	%