Middlefield Banc Corp. 8-K

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

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

The following information is furnished under Item 12. On July 19, 2004, Middlefield Banc Corp. issued a press release announcing financial results for the second quarter ended June 30, 2004. 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.

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.

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

MIDDLEFIELD, OHIO, July 19, 2004 wwww Middlefield Banc Corp. (Pink Sheets: MBCN) today reported net earnings for the three months ended June 30, 2004 of $908,518, or $0.74 per diluted share. The second quarter 2004 earnings represent an increase of 47.7% over the $614,950, or $0.51 per diluted share, in net earnings that the company recorded for the quarter ended June 30, 2003.

For the six months ended June 30, 2004, Middlefield Banc Corp. recorded net earnings of $1,593,776, or $1.29 per diluted share, an increase of 25.7% over the $1,267,696, or $1.04 per diluted share, in net earnings for the first six months of 2003.

The company’s total assets ended the second quarter of 2004 at $280.5 million, an increase of 12.2% over the $249.9 million in total assets recorded at June 30, 2003, and 2.5% over the $273.5 million in assets on the books at March 31, 2004. Net loans at June 30, 2004 were $200.5 million, up 11.4% over the $179.9 million in net loans at June 30, 2003. The investment portfolio at June 30, 2004, stood at $55.6 million, an increase of 37.4% from the June 30, 2003 balance of $40.5 million.

Funding for the asset growth was centered in a 14.5% increase in deposit totals in the year-to-year comparison. At mid-year 2004, deposits were $236.0 million, which was $29.9 million more that June 30, 2003’s $206.1 million. Other funding sources, including Federal Home Loan Bank borrowings experienced a decline in the mid-year comparison.

Return on average assets (ROA) was 1.31% and 1.17%, respectively, for the second quarter and year-to-date 2004, as compared to 1.01% and 1.07% for both periods of 2003. Return on average equity (ROE) was 14.94% for the quarter and 13.33% for the first six months of 2004. This compares to 2003 figures of 11.78% and 11.75%. The company’s

net interest margin for the quarter and year-to-date are 3.90% and 3.94%, respectively. These compare to 3.84% for both periods in 2003.

In reviewing Middlefield Banc Corp.’s results for the first six months, President and CEO Thomas G. Caldwell said, “We are generally pleased with the results to this point in the year. Although our total loan growth slowed in the second quarter, our focus on net interest margin, while dealing with pressure from low interest rates, benefited our bottom line. While our level of non-performing assets has risen slightly, this is attributable to a few distinct lending relationships that are being addressed. Our recoveries have once again outpaced our charge-offs and are reflective of our resolution efforts.”

Commenting on the outlook for Middlefield Banc Corp., Caldwell noted, “A key focus for us is building our revenue areas not directly related to net interest income and expansion into market areas having high potential. While doing this, we remain focused on controlling our non-interest expenses. We are also pleased that loan demand started to increase near the end of the second quarter. Coupled with the higher interest rate environment, our outlook for the remainder of 2004 is positive.”

Non-interest income showed a 35.7% increase for the quarter and a 39.2% upward movement for the first six months. In addition to normal service charge increases, the primary components of the overall increase were the income from bank-owned life insurance as well as the implementation of an overdraft privilege program during the second quarter of 2004.

Non-interest expense for the second quarter was $1.7 million, nominally above the $1.6 million recorded for the comparable quarter of 2003. The six-month figures for 2004 and 2003 are $3.5 million and $2.9 million, respectively. In addition to normal salary adjustments, the increase was driven by higher health insurance costs, the addition of a new branch office during the second quarter of 2003, and increased marketing as the bank subsidiary expands market presence.

Middlefield Banc Corp. and The Middlefield Banking Company are headquartered in Middlefield, Ohio. The bank operates full service banking centers and a UVEST Financial Services® brokerage office serving Chardon, Garrettsville, Mantua, Middlefield, and Orwell, Ohio.

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.


	June 2004			March 2004			June 2003
Earnings:
Net interest income	$	2,477,236		$	2,415,857		$	2,175,419
Provision for loan losses		30,000			30,000			105,000
Non-interest income		485,889			396,719			358,102
Security (losses) gains		0			0			0
Non-interest expense		1,682,607			1,781,318			1,613,208
Federal income taxes		342,000			316,000			200,363

Net income	$	908,518		$	685,258		$	614,950

Per share:
Basic earnings		0.74			0.56			0.51
Diluted earnings		0.74			0.56			0.51
Common dividends	$	257,818		$	257,002		$	231,025
Book value		19.80			19.88			18.71
Weighted average shares outstanding:
Basic		1,228,039			1,224,453			1,214,057
Diluted		1,235,829			1,231,269			1,217,239
Period end balance sheet:
Assets	$	280,479,893		$	273,508,774		$	249,885,875
Securities		56,189,796			51,084,891			40,507,881
Total loans		203,103,305			201,925,285			182,418,551
Allowance for loan losses		2,595,791			2,545,450			2,512,866
Deposits		236,038,287			228,482,609			206,115,632
Total shareholders’ equity		24,315,949			24,340,651			22,709,943
Total capital ratio		8.67	%		8.90	%		9.09	%
Average balance sheet:
Assets	$	276,994,334		$	267,939,010		$	244,241,700
Earning assets		260,052,997			249,542,182			228,518,674
Loans		201,722,951			195,705,724			181,863,235
Deposits		232,269,556			222,942,737			200,987,836
Shareholders’ equity		24,328,300			23,922,157			20,882,567


Key ratios (%):
Return on average assets (ROA)		1.31	%		1.02	%		1.01	%
Return on average shareholders’ equity (ROE)		14.94	%		11.46	%		11.78	%
Net interest margin		3.90	%		4.00	%		3.84	%
Net overhead		1.84	%		2.22	%		2.20	%
Efficiency ratio		56.78	%		63.33	%		63.67	%
Credit quality:
Non-accrual loans	$	432,308		$	263,000		$	509,545
Restructured loans		0			0			0
90 day past due and accruing		654,944			516,000			0

Non-performing loans		1,087,252			779,000			509,545
Other real estate owned		0			0			0

Non-performing assets	$	1,087,252		$	779,000		$	509,545

Charge-offs	$	10,340		$	11,620		$	10,710
Recoveries		30,680			5,800			28,965


Net charge-offs (recoveries)	$	(20,340	)	$	5,820		$	(18,255	)

Allowance for loan losses as a percent of period-end loans (%)		1.28	%		1.26	%		1.38	%
Net charge-offs (annualized) as a percent of average loans (%)		-0.02	%		0.01	%		-0.02	%
Non-performing loans as a percent of loans		0.54	%		0.39	%		0.28	%
Non-performing assets as a percent of assets		0.39	%		0.28	%		0.20	%

Middlefield Banc Corp.
Financial Highlights
Year-to-Date Data (Dollars in thousands, except per share)

	June 2004			March 2004			June 2003
Earnings:
Net interest income	$	4,893,093		$	2,415,857		$	4,311,909
Provision for loan losses		60,000			30,000			210,000
Non-interest income		882,608			396,719			634,139
Security (losses) gains		0			0			542
Non-interest expense		3,463,925			1,781,318			2,923,966
Federal income taxes		658,000			316,000			544,928


Net income	$	1,593,776		$	685,258		$	1,267,696


Per share:
Basic earnings		1.30			0.56			1.05
Diluted earnings		1.29			0.56			1.04
Common dividends	$	514,820		$	257,002		$	462,334
Book value		19.83			19.88			18.71
Weighted average shares outstanding:
Basic		1,226,394			1,224,453			1,213,997
Diluted		1,233,697			1,231,269			1,216,821
Period end balance sheet:
Assets	$	280,479,893		$	273,508,774		$	249,885,875
Securities		56,189,797			51,084,891			40,507,882
Total loans		203,103,305			201,925,285			182,418,551
Allowance for loan losses		2,595,791			2,545,450			2,512,866
Deposits		236,038,287			228,482,609			206,115,632
Total shareholders’ equity		24,315,949			24,340,651			22,709,943
Total capital ratio		8.67	%		8.90	%		9.09	%
Average balance sheet:
Assets	$	271,424,671		$	267,939,010		$	237,073,107
Earning assets		255,319,528			249,542,182			225,224,016
Loans		198,714,337			195,705,724			178,782,048
Deposits		227,606,146			222,942,737			194,162,968
Shareholders’ equity		23,910,132			23,922,157			21,581,058
Key ratios (%):
Return on average assets (ROA)		1.17	%		1.02	%		1.07	%
Return on average shareholders’ equity (ROE)		13.33	%		11.46	%		11.75	%
Net interest margin		3.94	%		4.00	%		3.84	%
Net overhead		2.02	%		2.22	%		2.03	%
Efficiency ratio		59.97	%		63.33	%		59.11	%
Credit quality:
Non-accrual loans	$	432,308		$	263,000		$	509,545
Restructured loans		0			0			0
90 day past due and accruing		654,944			516,000			0

Non-performing loans		1,087,252			779,000			509,545
Other real estate owned		0			0			0

Non-performing assets	$	1,087,252		$	779,000		$	509,545



Charge-offs	$	21,959		$	11,620		$	28,319
Recoveries		36,480			5,800			30,700

Net charge-offs (recoveries)	$	(14,521	)	$	5,820		$	(2,381	)

Allowance for loan losses as a percent of period-end loans (%)		1.28	%		1.26	%		1.38	%
Net charge-offs (annualized) as a percent of average loans (%)		-0.01	%		0.01	%		0.00	%
Non-performing loans as a percent of loans		0.54	%		0.39	%		0.28	%
Non-performing assets as a percent of assets		0.39	%		0.28	%		0.20	%


	June 2004		March 2004		June 2003
INTEREST INCOME
Loans (including fees)	$	3,385,891	$	3,297,718	$	3,209,192
Deposits in other institutions		1,662		339		4,719
Securities:
Taxable		339,046		357,477		275,853
Exempt from federal income taxes		137,608		125,303		113,502
Federal funds sold and other temp. investments		12,055		5,107		9,906
Dividends on FHLB stock		12,935		12,984		12,926

Total interest income		3,889,197		3,798,928		3,626,098
INTEREST EXPENSE
Deposits		1,208,525		1,187,799		1,236,828
Federal funds purchased and securities sold under agreement to repurchase		181		658		1,049
Federal Home Loan Bank advances		203,255		194,614		212,802

Total interest expense		1,411,961		1,383,071		1,450,679

Net interest income		2,477,236		2,415,857		2,175,419
Provision for loan losses		30,000		30,000		105,000

Net interest income after provision for loan losses		2,447,236		2,385,857		2,070,419
NON-INTEREST INCOME
Service charges on deposit accounts		381,121		281,479		251,910
Security gains (losses)		0		0		0
Other operating income		104,768		115,240		106,192


Total non-interest income		485,889		396,719		358,102
NON-INTEREST EXPENSE
Salaries and employee benefits		790,815		920,803		810,919
Net occupancy		118,839		144,481		106,492
Equipment		99,274		93,986		57,586
Data processing costs		84,616		129,345		70,958
Ohio state franchise tax		82,500		82,500		75,000
Other expense		506,563		410,203		492,253

Total non-interest expense		1,682,607		1,781,318		1,613,208

Income before federal income taxes		1,250,518		1,001,258		815,313
Income tax expense		342,000		316,000		200,363


Net income	$	908,518	$	685,258	$	614,950

NET INCOME PER COMMON SHARE:
Basic	$	0.74	$	0.56	$	0.48
Diluted	$	0.74	$	0.56	$	0.48


	June 2004		March 2004		June 2003
INTEREST INCOME
Loans (including fees)	$	6,683,609	$	3,297,718	$	6,339,180
Deposits in other institutions		2,001		339		11,820
Securities:
Taxable		696,523		357,477		584,461
Exempt from federal income taxes		262,911		125,303		233,092
Federal funds sold and other temp, investments		17,162		5,107		19,213
Dividends on FHLB stock		25,919		12,984		25,855

Total interest income		7,688,125		3,798,928		7,213,621
INTEREST EXPENSE
Deposits		2,396,324		1,187,799		2,482,187
Federal funds purchased and securities sold under agreement to repurchase		839		658		3,339
Federal Home Loan Bank advances		397,869		194,614		416,186

Total interest expense		2,795,032		1,383,071		2,901,712

Net interest income		4,893,093		2,415,857		4,311,909
Provision for loan losses		60,000		30,000		210,000


Net interest income after provision for loan losses		4,833,093		2,385,857		4,101,909
NON-INTEREST INCOME
Service charges on deposit accounts		662,600		281,479		490,561
Security gains (losses)		0		0		542
Other operating income		220,008		115,240		143,578

Total non-interest income		882,608		396,719		634,681
NON-INTEREST EXPENSE
Salaries and employee benefits		1,711,618		920,803		1,457,390
Net occupancy		263,320		144,481		205,044
Equipment		193,260		93,986		137,612
Data processing costs		213,961		129,345		187,430
Ohio state franchise tax		165,000		82,500		150,050
Other expense		916,766		410,203		786,440

Total non-interest expense		3,463,925		1,781,318		2,923,966

Income before federal income taxes		2,251,776		1,001,258		1,812,624
Income tax expense		658,000		316,000		544,928


Net income	$	1,593,776	$	685,258	$	1,267,696

NET INCOME PER COMMON SHARE:
Basic	$	1.30	$	0.56	$	1.05
Diluted	$	1.29	$	0.56	$	1.04


	June 2004		March 2004		June 2003
ASSETS
Cash and due from banks	$	4,900,236	$	2,894,259	$	6,102,703
Federal funds sold and other temp. investments.		4,221,065		5,505,000		8,809,402
Securities:
Available for sale		54,901,165		49,772,770		37,241,937
Held to maturity		747,567		1,312,121		3,265,945

Total securities		55,648,732		51,084,891		40,507,882
Loans:		203,103,305		201,925,285		182,418,551
Less: reserve for loan losses		2,595,791		2,545,450		2,512,866

Net loans		200,507,514		199,379,835		179,905,685


Premises and equipment		6,704,260			6,706,848			6,908,111
Accrued interest receivable and other assets		8,498,086			7,937,941			7,652,092

Total assets	$	280,479,893		$	273,508,774		$	249,885,875

LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Demand — non-interest bearing	$	34,973,397		$	29,889,636		$	29,595,597
Demand — interest bearing		22,299,891			25,397,464			21,096,468
Savings		75,001,599			71,017,095			54,867,549
Time deposits		103,763,401			102,178,414			100,556,018

Total deposits		236,038,288			228,482,609			206,115,632
Federal funds purchased and securities sold under agreements to repurchase		115,102			436			399,176
Accrued expenses and other liabilities		932,556			957,511			667,174
Federal Home Loan Bank advances		19,077,999			19,727,567			19,993,950

Total liabilities		256,163,945			249,168,123			227,175,932
Shareholders’ equity:
Common stock, no par value; 5,000,000 shares authorized		10,286,211			10,153,493			8,006,055
Retained earnings		16,164,824			15,514,124			15,856,470
Accumulated other comprehensive income		(390,178	)		417,943			592,327
Treasury stock		(1,744,909	)		(1,744,909	)		(1,744,909	)

Total shareholders’ equity		24,315,948			24,340,651			22,709,943

Total liabilities and shareholders’ equity	$	280,479,893		$	273,508,774		$	249,885,875

Miscellaneous data:
Common shares issued		1,286,792			1,282,732			1,273,918
Treasury shares		55,309			55,309			55,309
Bank owned life insurance (in other assets)	$	5,317,241		$	5,269,381		$	5,068,286

GRAPHIC 3 l08747aimage.jpg GRAPHIC begin 644 l08747aimage.jpg M_]C_X``02D9)1@`!`0$`8`!@``#__@`<4V]F='=A[E.A]-*1*#6/"V$N\5+]"(B\)A$1`$1$`1 M$0!$1`$1$`1$0!$1`$1$`1$0!$1`$1$`1$0!$1`$1$`1$0!$1`$1$`1$0!$1 M`%2G:#=-WC"V`[F97#86]3TT.H^9*NE[VQQND>>5K022?(+YXOVGWLA8MR'; MII7//7?B=K10O+9S?4)9!1_2P.R:_P!`;;ZG&% M+D:YPF)B<&C?0C\CH_@KN4;EDBW@S[59^!$14FT(B(`B(@"(B`__T+F1$0!$ M1`$1$`1$0!$1`8;[OV>7N[#=`^#V^'R64R1DC>9C@X>H*Z3UV6(RUX^!6ED9 M/1F]EQ;Z$>!7GP#?HM97RP.FSMU_:"V+)&2MYF.#AZA>Z#I8G95KR3R'3(VE MQ6!A,PW*UR7`-E:3S-'T^BU?&&1Y6,Q\;OO>W)KT\A^?R6DP=XT<@QV],?[+ ME8H_QTR3OZVJ/T6&BZL<'L#AX$;795FL+#R62AQE?O)3S/=T9&/%Y7&3R<&+ MK&:8[<>C&#Q<5$*LEC-Y@3SGF(/0>3?0!24?ME%MO5]8_+)I2F?/68^77/KV MN7PVLA><,0AA:P>07HHER^`B(AZ$1$`1$0!$1`$1$!IN+KQQ_"N0G:[E>82Q MIWKJ[V1_-40K7[5;G*?M!;MM6%S]D>9]D?S/R5P*`=D]$QXV[>OQ=]%/U1<] MF;^%#K2O["(BJ-@1$0!$1`$1$`1$0!$1`$1$`1$0!$1`%YS0,GC+'C>UZ(@( M]9JOK2/VEU5KI6O+.4;.E(YHF31ED@V#]%"L[8CBG-*.5KR/:<0 M?+R7F>2,I=5IJ[<\MNS)8E=S/D.RO'S7="`?%7J6'-G4GY1-N&LA]KH"-Y_: M1]"LW)Y2#%UC+*=N/1C`>KBH)0S`PED3.VYKNG)YE>=S(S9.P;,S^8GP`\&C MT"BHZRW_`"'"'7_DBZ32M@@DF?OEC:7'7H!M=UHN-+@I<(Y&38!? M$8AL'][V?S4$M>&VU3/;.J]#7_MO_YEMN&NT2_D+CYD#6O-5H@V3H;V>FAYK:ZHM?!P(\JU/6])_FNU*Y).Z+#PQ MPPM.A+*WF>_W@>`^JC_Z]\3_`-;2?X&?Z+.QO9KGK]83R""H'#;63N(1X!>QH;(WW^A5CVL[C*>*;E)[;&U7M#F/!WS[&P`/,^Y?/ZR9LA:LTZU*65S MH*W-W3/X>8[*\E2F_!.KFSA%J7G\)EENU/(SR%F*KQU8AX/D'.\_D/JM'^O7 M$_\`6TG^!G^BS,7V<9W)5FV'"&HUPVT6'$.(^`!U^*U?$'#&1X;G8RZQKF2? M^C?9Z M?):970612,-\N]LF3VEQO!PSPO2QN.B9:NNO'II:6?C M_B::4R#(F(']R.-H`^86%@N&=]UMANQMDL;=' MY`%6#PIQQ4XC)K2L%6Z!ONR[8>/[)_)4S)&^*1T#Y^KEV5R\O4?1BX`=X$?,%5MQ[QE+?MR8K'3EM.+V97,/_G.\^H_=_FLD8.3P[%O M(C7#O^_!(L]VF8['O=!C8_M\S3HO#M1CX'][\.GO4-M]HW$EIQ++4=8;V&PQ M#I\]E1=;?"\+9C/'=*J>Z\YI#RL'X^?X+4JX17DY$N3?;+$_^C(_7KB?^MI/ M\#/]%E5>TCB2MKGL16`-])HAU^6BL_\`V49K^FT?\3_^58%?@3,UL]1JWJ3C M7EF;SRQGF8&[V[9\NF_%-K?X>]>5%_9;F+LS7,76LV8A%+-$U[V`[#21O2RU MP``-#P"Y6([J\((B(>A$1`$1$`1$0'!(`V3H!85C*11;;%^T=Z^2QLC':,AY MG%\?D`.@6O46P>E[)2&%\LS^6-HV6MZ!02>P^>R^=QT]QW\/:\>\E MFFYK(T3]WTTIYY*_>?7X\GH2^Q)WLGX#T"]6N+3[)TN%D4JYL6&MUTVO6\*8 MQ&,11-8/(+(@=,R0&$N#OSW'BAPC6<6ZDLETSSZ[.A]`%HMED3E\.M3M6_7DDZ@O:P6_H&F#KF^U=/ M77*[?Y*=*L>UJYS726*%=J@'ZKPG746V]?_`(N4U5;=K5SVL=1`\GRN.O@!^?T66I;-'6Y;RF17 M"GO9E(:<.:R#A^S@@:3UUU',?R4"4XH`8GLINVB0V3)S=VP]-D`ZU\FO^JUV M>5GZ<;C>)]OQ-D(>]TDCI'GF^FFL.WX.ZM8#\FK2)!9K(W3-L448Y6,:-`!0KLIJ,CP=NV/OS3\AZ>31 MT_S%3I9KI;+#K\*I0K4OMA$14FT(B(`B(@"(B`(B(`B(@."-C16#D*]5E:2Q M)[`C:7$A9ZBW&&1TUF/C=X^W)KZ#\_DO4M>%=L^D7(AMLRS6))G]2\[^"QR0 MT;*V+&.D<&M&R?)9=WAJ5E!EX;]@^V-="#YJY^/!QU"4MD::O6,KQ)(--'@% MES5XYH^1P\/#W+EL@;T<.7W^2]%`U04>N(UCF/@=W;^OH[U4DP-!W*).0DGP M6%%4%M_(X;"FF%=!#"VN0&O:-`^JC*6^"[CTJ,G(YKXM[M&7H/1;**O%"-,: M/BO5%$V!41Q?<^W<5Y&8.YFB8QM.]]&^ST]W17?>LMIT+%IWA#$YYZZ\!M?/ M#WND>Y[SMSB22?,K30O+9R_49>(Q.8HS+*R-OB]P:/Q7T13KMJ4H*S``V&-L M8`.]`#2I'@ND;_%V/BY=ADO>N\>@:.;R^"O1>7ORD>^G1_C*05(\>W/MG&%T M@[;"6Q-Z?P@;^NU=U8=:MS67ZYII'/.O4G:4+RV M/499%1/(#9T%]#8RF,?BZM('?<0MCV#OP&E1_"M07N*<=7(!:9VN<"==&^T? MH%?2]O?PCSTZ/B4C_]*YE2_:+=^U\7V&C[M=C8A^`V?J2KGI\0>GR^:KA;+A_-S\/Y>*_`T/Y=M?&3 MH/:?$?\`?FO9Q[1:(\>Q5V*3+^7265D,3Y97AD;&ESG..@T#Q)41B[4.'WUN M\D%J.0#K%W>R3[CO7\E$.+./[&=B=2HL?5I.^]L^W*/0Z\![EDC5)L[-G+JC M'4]-%Q)E?TUQ!;O@GDD?J,'R:.@^@6M:USW!K07.<=``;)*X4T[..''9+*#* M3M_W:F[;=C[\GD/P\?DM;:A$XL(RNLS[9UX^Q1Q%+!5.7V8JSF%WD7[!=]3] M5#5<7:/AG9/ATV8F[EHDRZ]6?O?31_!4ZHU2V)=S*^EO]%L=E5B-_#UFN#[< M5DN'.(K7#>2%NN!(QPY98B=![?R/H59-7M/P$T6YQ9KO\VN MCYOD1O\`)465R[:C=Q>37[:C)XT3%%!+_:MC(=MHTI[+A^\\B-I_F?HI7@KM MC(X2I=M,8R6Q&)"UG@`>H^FE4X22UFN%U-@ZOE]J37IY#_O MT73!X'E#9IF@^:LB^JTQ7)VSZ+X0P6!Y`)YA[^H4CDACEA="]H+'-+2/<5W: MT-``&@%RH-Z:H045B*UR--]"]+6D&^0]"?,>16(&D'V#KW*8\78[O:S+T;?: MB]E_]W_\/\U'<34-JXT:V&J[4XZ./R`E`BE.GCP/JMBM!-0GKGF`)`\" M%GX^_P!\.ZE.I!X>]$2-=QU/)#PC=;"Q[Y)@(@&MYO$C?TVJ7^P7/Z)/_P`, MKZ)170MZ+,,7(XOO2[-X5=V6XN5N9MW)XGQ]S"&MYVD;+C_H/JK11%&QL%<\I<"WVB0/QZ;5KHBC.79Z744JF'5,T_%MS M[!PKD;&MGN2P=-]7>R/YJAU]`YV@,G@[M+6S-"X-']K73ZZ7S\YI:XM<""#H M@^2OH^&0.#=['[C2X_P"8*4\&\40<7\.PY:&,PESG,DB) MWR.!\-^?31_%>2LZS9.KB^[1%;GV53PMA9KW$M&"Q4D,/>AT@?'[):.I!WY' M6EF<7<%7,';EL58))L<3MLC?:,?N=Z?'P\%8.'XR@S=C.FJR)M+$D1LMR2AK M)9-.+][^ZT:;U\]K84\L3P[%D%A>)96L!?RCF`V>O4^2CN9XMFM\3GAW"Y;'T7P5S-//"E?Q)J0"""-@^2K7BWLYE,[[^"C#F/.W MU0=%I\RWW>Y3;&Y?O<-^DIV-=%Y&;B]1[;3"V.2*DLU;-.4Q6J\L$@\6 M2L+3\BO)6WVA<02XVM5JXZQC)+EBQ'"ZK8C[Z1XV3Z`#J5O,KCL M;1Q-JY'BL:7UX72?MHFM9[(V=D-)`T/1:%?_`$<]^G/?$BD*>/N9"7NJ56:P M_P!(V%VOCKP5_P"-K?8\95KR721G]TN:6CI\#T4VMY/'T)(X[EZM6?+TC;-,UA?\``$]?%566=S7Q^,J= M>[IE(L.7,8R`SB;(U(S6UWX?.T=UOPYMGIORVNTV2H5JC+D]ZO%6>`63/E:U MC@?`AQ.CM5&LRD7DVU7=4^UMGC=7+.\$K7`M+=;WOTTHQBN*,OQ,);F!QM7] M%M2`EB+18;B&:7%3VN(*\.'D@M25SWLVHW M\IT'-]`9Z+3R\6\/PWXJ M4N8ILEF@,["Z9H:6;`!YMZZD]!YZ/HMN""-CJ$!RB(@-6W#L==DL3.[QSW;+ MB/+R`]P"V;6AH``T`N40BHI?`1$0D=)8F3POBD&VO!!'N6LQ6$9C7D\W/KP) M'BMLB:1<4WH1$0D<$`C1&UC34(I#S-'(X>!"RD0'_].XX@YK`UYV1Y^J[HB` M(B(`B(@"(B`*A^+:'Z-XIR%<#3>^+V#T:[V@/JKX57=J6-WF\?8A:.\ML,6O M#;FD:_S#Y*ZEY+#!SX=JM_#M=NU^'.QWN)K4<-G*1.;&USF[<)'!KB`?'3'; M/HM='6N8+.9;AW%2Q5L'EX8K_P"D6N`CJURW4KAY#FUH?@=JVJM=E2I#6C&F M0L#&[]`-+V54GKTV5QZP4?PHJD,+_LRXU?1Q[+,DLD$L\6#PL0Q5&:NX"65S3S3AA\@!]XCH/3IN[$7A,H?!9V MO'6X4Q-\VG8R.&6[+!W1W#G#DWRCRSU!Z^UR[]X.U9^2A MNV,?+%CK;*=IP`CG?%WH9UZGEV-]-^:P^&\$WA_%FJ;#K5B:9]BS8NE?FJ MN7JX.S>$ERUDJO\`1`4?E\3C>YX]XF^S M[@@G%6O"=/8)B&M=(6DZ)W)L$^',==5GXS+XF/BB"'.1R2U,=A*\6*JSP$NG M+FM#BV,CJ\_=^"N%$!HLECG3<`W,;1HFL^3&20PU=@F,F,@,V"1T/11S@;C' MA_&<%U*.1OQ8^WC8C#9K6?VH*N9$!1UN#!#)<;4*56.:]9?'0QM($/>#KVBP'[K0X -----END PRIVACY-ENHANCED MESSAGE-----


		MIDDLEFIELD BANC CORP.

Date: July 20, 2004		/s/ James R. Heslop, II

		Executive Vice President and COO


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