Middlefield Banc Corp. Reports 19.15% Increase in First Quarter EPS to $0.56

MIDDLEFIELD, OHIO  Middlefield Banc Corp. (Pink Sheets: MBCN) reported consolidated net income for the first quarter of 2003 of $653,000. This represents an increase of 18.92% over the $549,000 recorded in the comparable quarter of 2002. First quarter 2003 earnings were $0.56 per diluted share, an increase of 19.15% from the $0.47 reported for 2002.

For the first quarter of 2003, returns on average common equity (ROE) and average assets (ROA) were 11.93% and 1.12%, respectively, compared to 11.01% and 1.09% for the prior year.

Commenting on the first quarter 2003 results, Thomas G. Caldwell, President and Chief Executive Officer, remarked, "The results of this quarter are reflective of our commitment to providing excellent service and products to our communities. It is gratifying to be able to report the positive increase in earnings as well as substantial asset growth."

"Our strong performance is particularly noteworthy in light of weakened economic conditions and historic low interest rates. These factors have worked to affect our asset quality and compress our net interest margin. However, we believe that we are well positioned to continue a positive return to our shareholders."

Net interest income on a fully tax equivalent basis was $2.136 million for the first quarter of 2003, which compares to $1.890 million for the first quarter of 2002. This increase of 13.04% was primarily attributable to a reduction in the cost of funding. For 2003, the net interest margin for the quarter was 3.94%, identical to that of the same quarter of 2002.

Noninterest income reflected moderate growth of 5.94% to $277,000. Noninterest expense for the period was $1.365 million, an increase over the year-ago three months of 8.41%. Staffing costs were up for 2003 as the subsidiary bank prepares to open a new banking office. Also contributing to the increase are costs associated with increased use of the bank’s Internet transactional banking site, www.middlefieldbank.com, as well as marketing expenses related to the introduction of a new corporate logo for both Middlefield Banc Corp. and its banking subsidiary.

"Our Chardon office has now completed eighteen months of operation and is beginning to show some profitability. We also have hired and trained staff for our new Orwell office. In light of this additional overhead, as well as our growing Internet banking, we are very pleased to report an improved efficiency ratio," commented Donald L. Stacy, Treasurer and Chief Financial Officer. "The fact that we have been able to show positive results in this area is evidence of our overall attention to costs within the organization."

Total assets as of March 31, 2003, were $240,086,224, which is an increase of 17.62% from March 31, 2002. Net loans were up 12.61% to $177,043,622, while deposits were $194,702,460, an increase of 13.85%. Shareholders’ equity at quarter end was $22,028,678, an increase of 9.64% from March 31, 2002.

First quarter loan loss provision was $105,000, representing an increase of 40.00% from the first quarter of 2002. Net loans charged off for the quarter were $16,000, or 0.04% of average loans outstanding on an annualized basis. The allowance stands at 1.33%. Non-performing loans were 0.38% of total loans.

Headquartered in Middlefield, Ohio, Middlefield Banc Corp. is a one-bank holding company for The Middlefield Banking Company. The Middlefield Banking Company operates five full service banking offices in Chardon, Garrettsville, Mantua and Middlefield, Ohio. A sixth office is scheduled to open in Orwell, Ashtabula County.

The information contained in this press release contains forward-looking statements regarding future performance which are not historical facts and which involve risk and uncertainties. Actual results and performance could differ materially from those contemplated by these forward looking statements.