10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.   20552

FORM 10 - Q

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012

Commission File Number 000-32561

Middlefield Banc Corp.

(Exact name of registrant as specified in its charter)

Ohio	34 - 1585111
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

15985 East High Street, Middlefield, Ohio  44062-9263

(Address of principal executive offices)

(440) 632-1666

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for 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 [√]  NO [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES   [√]  NO [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definition of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  [ ]    Accelerated filer  [ ]    Non-accelerated filer [  ]   Small reporting company [√]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES [ ]   NO [√]

State the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date:

Class:  Common Stock, without par value

Outstanding at November 5, 2012:  1,983,491

1

MIDDLEFIELD BANC CORP.

INDEX

		Page Number
PART I - FINANCIAL INFORMATION
	Item 1. Financial Statements
	Consolidated Balance Sheet (Unaudited) as of September 30, 2012 and December 31, 2011	3
	Consolidated Statement of Income (Unaudited) for the Three and Nine Months ended September 30, 2012 and 2011	4
	Consolidated Statement of Comprehensive Income (Unaudited) for the Three and Nine Months ended September 30, 2012	5
	Consolidated Statement of Changes in Stockholders' Equity (Unaudited) for the Nine Months ended September 30, 2012	6
	Consolidated Statement of Cash Flows (Unaudited) for the Nine Months ended September 30, 2012 and 2011	7
	Notes to Unaudited Consolidated Financial Statements	8
	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	31
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	44
	Item 4. Controls and Procedures	46
PART II - OTHER INFORMATION
	Item 1. Legal Proceedings	47
	Item 1A. Risk Factors	47
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	47
	Item 3. Default Upon Senior Securities	47
	Item 4. Mine Safety Disclosures	47
	Item 5. Other Information	47
	Item 6. Exhibits and Reports on Form 8 - K	47
SIGNATURES		55
Exhibit 31.1
Exhibit 31.2
Exhibit 32

2

MIDDLEFIELD BANC CORP.

CONSOLIDATED BALANCE SHEET

(Dollar amounts in thousands)

(Unaudited)

	September 30, 2012			December 31, 2011
ASSETS
Cash and due from banks	$	32,735		$	15,730
Federal funds sold		19,871			18,660
Cash and cash equivalents		52,606			34,390
Investment securities available for sale		179,140			193,977
Loans		409,175			401,880
Less allowance for loan losses		7,173			6,819
Net loans		402,002			395,061
Premises and equipment		8,701			8,264
Goodwill		4,559			4,559
Bank-owned life insurance		8,465			8,257
Accrued interest and other assets		8,708			10,043
TOTAL ASSETS	$	664,181		$	654,551
LIABILITIES
Deposits:
Noninterest-bearing demand	$	70,505		$	63,348
Interest-bearing demand		65,164			55,853
Money market		72,831			75,621
Savings		174,273			167,207
Time		201,965			218,933
Total deposits		584,738			580,962
Short-term borrowings		6,518			7,392
Other borrowings		15,836			16,831
Accrued interest and other liabilities		2,003			2,113
TOTAL LIABILITIES		609,095			607,298
STOCKHOLDERS' EQUITY
Common stock, no par value; 10,000,000 shares authorized, 2,172,934 and 1,951,868 shares issued		34,082			31,240
Retained earnings		21,736			18,206
Accumulated other comprehensive income		6,002			4,541
Treasury stock, at cost; 189,530 shares		(6,734	)		(6,734	)
TOTAL STOCKHOLDERS' EQUITY		55,086			47,253
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	664,181		$	654,551

See accompanying notes to the unaudited consolidated financial statements.

3

MIDDLEFIELD BANC CORP.

CONSOLIDATED STATEMENT OF INCOME

(Dollar amounts in thousands, except per share data)

(Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
INTEREST INCOME
Interest and fees on loans	$	5,810	$	5,555	$	16,988	$	16,255
Interest-bearing deposits in other institutions		7		4		19		8
Federal funds sold		6		-		13		13
Investment securities:
Taxable interest		749		1,220		2,455		3,832
Tax-exempt interest		749		724		2,249		2,124
Dividends on stock		21		25		73		76
Total interest income		7,342		7,528		21,797		22,308
INTEREST EXPENSE
Deposits		1,418		1,836		4,349		5,877
Short term borrowings		61		59		219		177
Other borrowings		78		100		244		313
Trust preferred securities		45		139		122		412
Total interest expense		1,602		2,134		4,934		6,779
NET INTEREST INCOME		5,740		5,394		16,863		15,529
Provision for loan losses		143		920		1,193		2,485
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		5,597		4,474		15,670		13,044
NONINTEREST INCOME
Service charges on deposit accounts		481		455		1,383		1,299
Investment securities gains (losses), net		152		6		448		(16	)
Earnings on bank-owned life insurance		71		70		208		209
Other income		164		155		640		487
Total noninterest income		868		686		2,679		1,979
NONINTEREST EXPENSE
Salaries and employee benefits		1,705		1,754		5,255		5,388
Occupancy expense		233		242		703		737
Equipment expense		186		175		557		488
Data processing costs		184		162		574		515
Ohio state franchise tax		160		126		417		351
Federal deposit insurance expense		250		176		751		673
Professional fees		270		181		670		577
Losses on other real estate owned		188		195		238		498
Other expense		946		895		2,780		2,676
Total noninterest expense		4,122		3,906		11,945		11,903
Income before income taxes		2,343		1,254		6,404		3,120
Income taxes		494		175		1,392		319
NET INCOME	$	1,849	$	1,079	$	5,012	$	2,801
EARNINGS PER SHARE
Basic	$	0.93	$	0.63	$	2.66	$	1.69
Diluted		0.93		0.63		2.65		1.69
DIVIDENDS DECLARED PER SHARE	$	0.26	$	0.26	$	0.78	$	0.78

See accompanying notes to the unaudited consolidated financial statements.

4

MIDDLEFIELD BANC CORP.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Dollar amounts in thousands)

(Unaudited)

	Three Months Ended September 30						Nine Months Ended September 30
	2012			2011			2012			2011
Net income	$	1,849		$	1,079		$	5,012		$	2,801
Other comprehensive income:
Net unrealized holding gain on available for sale securities		838			3,238			2,662			6,746
Tax effect		(285	)		(1,124	)		(905	)		(2,294	)
Reclassification adjustment for (gains) losses included in net income		(152	)		(6	)		(448	)		16
Tax effect		52			2			152			(5	)
Total other comprehensive income		453			2,110			1,461			4,463
Comprehensive income	$	2,302		$	3,189		$	6,473		$	7,264

See accompanying notes to the unaudited consolidated financial statements.

5

MIDDLEFIELD BANC CORP.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

(Dollar amounts in thousands, except dividend per share amount)

(Unaudited)

	Common Stock		Retained Earnings			Accumulated Other Comprehensive Income		Treasury Stock			Total Stockholders' Equity
Balance, December 31, 2011	$	31,240	$	18,206		$	4,541	$	(6,734	)	$	47,253
Net income				5,012								5,012
Comprehensive income							1,461					1,461
Stock-based compensation expense (1,722 shares)		32										32
Common stock issuance (196,635 shares), net of issuance costs of $816		2,329										2,329
Dividend reinvestment and purchase plan (22,708 shares)		481										481
Cash dividends ($0.78 per share)				(1,482	)							(1,482	)
Balance, September 30, 2012	$	34,082	$	21,736		$	6,002	$	(6,734	)	$	55,086

See accompanying notes to the unaudited consolidated financial statements.

6

MIDDLEFIELD BANC CORP.

CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollar amounts in thousands)

(Unaudited)

	Nine Months Ended September 30,
	2012			2011
OPERATING ACTIVITIES
Net income	$	5,012		$	2,801
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		1,193			2,485
Investment securities (gains) losses, net		(448	)		16
Depreciation and amortization		663			639
Amortization of premium and discount on investment securities		674			247
Amortization of deferred loan fees, net		(139	)		(120	)
Earnings on bank-owned life insurance		(208	)		(209	)
Deferred income taxes		220			(173	)
Stock-based compensation expense		32			59
Losses on other real estate owned		238			498
Increase in accrued interest receivable		(364	)		(384	)
Decrease in accrued interest payable		(88	)		(73	)
Decrease in prepaid federal deposit insurance		633			642
Other, net		(95	)		(746	)
Net cash provided by operating activities		7,323			5,682
INVESTING ACTIVITIES
Investment securities available for sale:
Proceeds from repayments and maturities		40,227			56,940
Proceeds from sale of securities		27,426			24,305
Purchases		(50,828	)		(77,429	)
Increase in loans, net		(8,826	)		(18,217	)
Proceeds from the sale of other real estate owned		542			777
Purchase of premises and equipment		(883	)		(321	)
Net cash provided by (used for) investing activities		7,658			(13,945	)
FINANCING ACTIVITIES
Net increase in deposits		3,776			21,987
Decrease in short-term borrowings, net		(874	)		(724	)
Repayment of other borrowings		(995	)		(1,366	)
Common stock issuance		2,329			2,210
Proceeds from dividend reinvestment & purchase plan		481			414
Cash dividends		(1,482	)		(1,306	)
Net cash provided by financing activities		3,235			21,215
Increase in cash and cash equivalents		18,216			12,952
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		34,390			30,635
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	52,606		$	43,587
SUPPLEMENTAL INFORMATION
Cash paid during the year for:
Interest on deposits and borrowings	$	5,022		$	6,852
Income taxes		1,250			515
Non-cash investing transactions:
Transfers from loans to other real estate owned	$	916		$	1,146

See accompanying notes to the unaudited consolidated financial statements.

7

MIDDLEFIELD BANC CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

The consolidated financial statements of Middlefield Banc Corp. ("Company") include its two bank subsidiaries, The Middlefield Banking Company (“MB”) and Emerald Bank (“EB”), and a non-bank asset resolution subsidiary EMORECO, Inc. 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 the Company considers necessary to fairly state the Company’s financial position and the results of operations and cash flows.  The consolidated balance sheet at December 31, 2011, 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 consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included with Middlefield’s Form 10-K for the year ended December 31, 2011 (File No. 000-32561). 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.

Recent Accounting Pronouncements

In September 2011, the FASB issued ASU 2011-08, Intangibles – Goodwill and Other Topics (Topic 350), Testing Goodwill for Impairment.  The objective of this Update is to simplify how entities, both public and nonpublic, test goodwill for impairment.  The amendments in the Update permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350.  The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent.  Under the amendments in this Update, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount.  The amendments in this Update apply to all entities, both public and nonpublic, that have goodwill reported in their financial statements and are effective for interim and annual goodwill impairment tests performed for fiscal years beginning after December 15, 2011.  Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011, if an entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance.  This ASU did not have a significant impact on the Company’s financial statements.

In December 2011, the FASB issued ASU 2011-11, Balance Sheet (Topic 210):  Disclosures about Offsetting Assets and Liabilities.  The amendments in this Update affect all entities that have financial instruments and derivative instruments that are either (1) offset in accordance with either Section 210-20-45 or Section 815-10-45 or (2) subject to an enforceable master netting arrangement or similar agreement.  The requirements amend the disclosure requirements on offsetting in Section 210-20-50.  This information will enable users of an entity's financial statements to evaluate the effect or potential effect of netting arrangements on an entity's financial position, including the effect or potential effect of rights of setoff associated with certain financial instruments and derivative instruments in the scope of this Update.  An entity is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods.  An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented.  This ASU is not expected to have a significant impact on the Company’s financial statements.

8

NOTE 2 - STOCK-BASED COMPENSATION

The Company has no unvested stock options outstanding and no unrecognized stock-based compensation costs outstanding as of September 30, 2012.

Stock option activity during the nine months ended September 30, 2012 and 2011 is as follows:

	2012			Weighted- average Exercise Price		2011			Weighted- average Exercise Price
Outstanding, January 1		88,774		$	26.81		89,077		$	27.87
Granted		-			-		9,000			17.55
Exercised		-			-		-			-
Forfeited		(420	)		36.86		(7,549	)		29.22
Outstanding, September 30		88,354		$	26.76		90,528		$	26.73
Exercisable, September 30		88,354		$	26.76		81,528		$	27.75

9

NOTE 3 - EARNINGS PER SHARE

The Company provides dual presentation of Basic and Diluted earnings per share.  Basic earnings per share uses 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 denominator in calculating basic and diluted earnings per share. 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 Months Ended September 30,						For the Nine Months Ended September 30,
	2012			2011			2012			2011
Weighted average common shares outstanding		2,167,711			1,894,207			2,077,027			1,847,945
Average treasury stock shares		(189,530	)		(189,530	)		(189,530	)		(189,530	)
Weighted average common shares and common stock equivalents used to calculate basic earnings per share		1,978,181			1,704,677			1,887,497			1,658,415
Additional common stock equivalents (stock options) used to calculate diluted earnings per share		5,682			-			4,236			-
Weighted average common shares and common stock equivalents used to calculate diluted earnings per share		1,983,863			1,704,677			1,891,733			1,658,415

The average share price for the quarter ended September 30, 2012 was $22.85 while the year-to-date average price was $21.08.  Options to purchase 88,354 shares of common stock, at prices ranging from $17.55 to $40.24, were outstanding at September 30, 2012.  Of those options, 9,000 were considered dilutive based on the average market price exceeding the strike price for the nine months ended September 30, 2012.  The three month period ended with 17,536 shares considered dilutive.  In accordance with the subscription agreement entered into by an institutional investor, there was also an additional 11,332 shares, at $16 per share, considered dilutive for the three and nine-months ended September 30, 2012.  The remaining options had no dilutive effect on the earnings per share.

The average share price for the quarter ended September 30, 2011 was $17.23 while the year-to-date average price was $17.36.  The options to purchase 90,528 shares of common stock at prices ranging from $17.55 to $40.24 were outstanding during the three and nine months ended September 30, 2011 but were not included in the computation of diluted earnings per share as they were anti-dilutive due to the strike price being greater than the average market price.

10

NOTE 4 - FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for an asset or liability in an orderly transaction between market participants at the measurement date. The three broad levels within the fair value hierarchy are as follows:

Level I:     Quoted prices are available in active markets for identical assets or liabilities as of the reported date.

Level II:    Pricing inputs are other than the quoted prices in active markets, which are either directly or indirectly observable as of the reported date.  The nature of these assets and liabilities includes items for which quoted prices are available but traded less frequently and items that are fair-valued using other financial instruments, the parameters of which can be directly observed.

Level III:   Assets and liabilities that have little to no pricing observability as of the reported date.  These items do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.

The following tables present the assets measured on a recurring basis on the Consolidated Balance Sheet at their fair value as of September 30, 2012 and December 31, 2011 by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

			September 30, 2012
(Dollar amounts in thousands)	Level I		Level II		Level III		Total
Assets Measured on a Recurring Basis:
U.S. government agency securities	$	-	$	17,268	$	-	$	17,268
Obligations of states and political subdivisions		-		92,668		-		92,668
Mortgage-backed securities in government-sponsored entities				62,467				62,467
Private-label mortgage-backed securities		-		5,986		-		5,986
Total debt securities		-		178,389		-		178,389
Equity securities in financial institutions		5		746		-		751
Total	$	5	$	179,135	$	-	$	179,140

11

			December 31, 2011
	Level I		Level II		Level III		Total
Assets Measured on a Recurring Basis:
U.S. government agency securities	$	-	$	31,933	$	-	$	31,933
Obligations of states and political subdivisions		-		88,400		-		88,400
Mortgage-backed securities in government-sponsored entities				65,573				65,573
Private-label mortgage-backed securities		-		7,321		-		7,321
Total debt securities		-		193,227		-		193,227
Equity securities in financial institutions		5		745		-		750
Total	$	5	$	193,972	$	-	$	193,977

The Company obtains fair values from an independent pricing service which represent either quoted market prices for the identical securities (Level 1 inputs) or fair values determined by pricing models using a market approach that considers observable market data, such as interest rate volatilities, LIBOR yield curve, credit spreads and prices from market makers and live trading systems (Level 2).

Financial instruments are considered Level III when their values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.  In addition to these unobservable inputs, the valuation models for Level III financial instruments typically also rely on a number of inputs that are readily observable either directly or indirectly.  Level III financial instruments also include those for which the determination of fair value requires significant management judgment or estimation.  The Company has no securities considered to be Level III as of September 30, 2012 and December 31, 2011.

The Company uses prices compiled by third party vendors due to the recent stabilization in the markets along with improvements in third party pricing methodology that have narrowed the variances between third party vendor prices and actual market prices.

The following tables present the assets measured on a nonrecurring basis on the Consolidated Balance Sheet at their fair value as of September 30, 2012 and December 31, 2011, by level within the fair value hierarchy. Impaired loans that are collateral dependent are written down to fair value through the establishment of specific reserves. Techniques used to value the collateral that secure the impaired loan include: quoted market prices for identical assets classified as Level I inputs; observable inputs, employed by certified appraisers, for similar assets classified as Level II inputs. In cases where valuation techniques included inputs that are unobservable and are based on estimates and assumptions developed by management based on the best information available under each circumstance, the asset valuation is classified as Level III inputs.

12

			September 30, 2012
(Dollar amounts in thousands)	Level I		Level II		Level III		Total
Assets Measured on a non-recurring Basis:
Impaired loans	$	-	$	-	$	14,258	$	14,258
Other real estate owned		-		-		2,332		2,332

			December 31, 2011
	Level I		Level II		Level III		Total
Assets Measured on a non-recurring Basis:
Impaired loans	$	-	$	-	$	16,535	$	16,535
Other real estate owned		-		-		2,196		2,196

The following table presents additional quantitative information about assets measured at fair value on a non-recurring basis and for which the Company uses Level III inputs to determine fair value:

	Quantitative Information about Level III Fair Value Measurements
(unaudited, in thousands)	Estimate		Valuation Techniquest	Unobservable Input	Range (Weighted Average)
September 30, 2012
Impaired loans	$	14,258	Appraisal of collateral (1)	Appraisal adjustments (2)	0%	to	-75.0%	(-31.9%)
				Liquidation expenses (2)	0%	to	-45.8%	(-1.5%)
Other real estate owned	$	2,332	Appraisal of collateral (1), (3)

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various level 3 inputs which are not identifiable.

(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

(3) Includes qualitative adjustments by management and estimated liquidation expenses.

13

The estimated fair value of the Company’s financial instruments is as follows:

	September 30, 2012
	Carrying Value		Level I		Level II		Level III		Total Fair Value
	(in thousands)
Financial assets:
Cash and cash equivalents	$	52,606	$	52,606	$	-	$	-	$	52,606
Investment securities
Available for sale		179,140		5		179,135		-		179,140
Net loans		402,002		-		-		394,070		394,070
Bank-owned life insurance		8,465		8,465				-		8,465
Federal Home Loan Bank stock		1,887		1,887				-		1,887
Accrued interest receivable		2,598		2,598		-		-		2,598
Financial liabilities:
Deposits	$	584,738	$	382,773	$	-	$	207,336	$	590,109
Short-term borrowings		6,518		6,518		-		-		6,518
Other borrowings		15,836		-		-		16,240		16,240
Accrued interest payable		557		557		-		-		557

	September 30, 2012				December 31, 2011
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(in thousands)
Financial assets:
Cash and cash equivalents	$	52,606	$	52,606	$	34,390	$	34,390
Investment securities
Available for sale		179,140		179,140		193,977		193,977
Net loans		402,002		394,070		395,061		382,542
Bank-owned life insurance		8,465		8,465		8,257		8,257
Federal Home Loan Bank stock		1,887		1,887		1,887		1,887
Accrued interest receivable		2,598		2,598		2,234		2,234
Financial liabilities:
Deposits	$	584,738	$	590,109	$	580,962	$	587,178
Short-term borrowings		6,518		6,518		7,392		7,392
Other borrowings		15,836		16,240		16,831		17,327
Accrued interest payable		557		557		645		645

Financial instruments are defined as cash, evidence of ownership interest in an entity, or a contract which creates an obligation or right to receive or deliver cash or another financial instrument from/to a second entity on potentially favorable or unfavorable terms.

Fair value is defined as the amount at which a financial instrument could be exchanged in a current transaction between willing parties other than in a forced liquidation sale.  If a quoted market price is available for a financial instrument, the estimated fair value would be calculated based upon the market price per trading unit of the instrument.

14

If no readily available market exists, the fair value estimates for financial instruments should be based upon management’s judgment regarding current economic conditions, interest rate risk, expected cash flows, future estimated losses, and other factors as determined through various option pricing formulas or simulation modeling.  Since many of these assumptions result from judgments made by management based upon estimates which are inherently uncertain, the resulting estimated fair values may not be indicative of the amount realizable in the sale of a particular financial instrument.  In addition, changes in assumptions on which the estimated fair values are based may have a significant impact on the resulting estimated fair values.

As certain assets such as deferred tax assets and premises and equipment are not considered financial instruments, the estimated fair value of financial instruments would not represent the full value of the Company.

The Company employed simulation modeling in determining the estimated fair value of financial instruments for which quoted market prices were not available based upon the following assumptions:

Cash and Cash Equivalents, Federal Home Loan Bank Stock, Accrued Interest Receivable, Accrued Interest Payable, and Short-Term Borrowings

The fair value is equal to the current carrying value.

Bank-Owned Life Insurance

The fair value is equal to the cash surrender value of the life insurance policies.

Investment Securities Available-for-sale

The fair value of investment securities is equal to the available quoted market price.  If no quoted market price is available, fair value is estimated using the quoted market price for similar securities. 

Loans

The fair value is estimated by discounting future cash flows using current market inputs at which loans with similar terms and qualities would be made to borrowers of similar credit quality.  Where quoted market prices were available, primarily for certain residential mortgage loans, such market rates were used as estimates for fair value.

Deposits and Other Borrowings

The fair values of certificates of deposit and other borrowed funds are based on the discounted value of contractual cash flows.  The discount rates are estimated using rates currently offered for similar instruments with similar remaining maturities.  Demand, savings, and money market deposits are valued at the amount payable on demand.

Commitments to Extend Credit

These financial instruments are generally not subject to sale, and estimated fair values are not readily available. The carrying value, represented by the net deferred fee arising from the unrecognized commitment or letter of credit, and the fair value, determined by discounting the remaining contractual fee over the term of the commitment using fees currently charged to enter into similar agreements with similar credit risk, are not considered material for disclosure.

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NOTE 5 - INVESTMENT SECURITIES AVAILABLE-FOR-SALE

The amortized cost and fair values of securities available-for-sale are as follows:

	September 30, 2012
(Dollar amounts in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. government agency securities	$	16,733	$	537	$	(2	)	$	17,268
Obligations of states and political subdivisions:
Taxable		8,198		864		-			9,062
Tax-exempt		78,808		4,827		(29	)		83,606
Mortgage-backed securities in government-sponsored entities		60,139		2,328		-			62,467
Private-label mortgage-backed securities		5,418		570		(2	)		5,986
Total debt securities		169,296		9,126		(33	)		178,389
Equity securities in financial institutions		750		1		-			751
Total	$	170,046	$	9,127	$	(33	)	$	179,140

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. government agency securities	$	31,520	$	427	$	(14	)	$	31,933
Obligations of states and political subdivisions:
Taxable		8,207		766		-			8,973
Tax-exempt		75,807		3,681		(61	)		79,427
Mortgage-backed securities in government-sponsored entities		63,808		1,819		(54	)		65,573
Private-label mortgage-backed securities		7,005		411		(95	)		7,321
Total debt securities		186,347		7,104		(224	)		193,227
Equity securities in financial institutions		750		-		-			750
Total	$	187,097	$	7,104	$	(224	)	$	193,977

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The amortized cost and fair value of debt securities at September 30, 2012, by contractual maturity, are shown below.  Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

(Dollar amounts in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	3,003	$	3,038
Due after one year through five years		4,834		5,093
Due after five years through ten years		14,682		15,545
Due after ten years		146,777		154,713
Total	$	169,296	$	178,389

Proceeds from the sales of securities available-for-sale and the gross realized gains and losses are as follows:

	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2012			2011		2012			2011
Proceeds from sales	$	5,622		$	14,233	$	27,426		$	24,305
Gross realized gains		154			6		462			21
Gross realized losses		(2	)		-		(14	)		(37	)

Gross realized losses for the nine months ended September 30, 2011 were the result of other-than-temporary impairment (“OTTI”) taken on equity securities.

Investment securities with an approximate carrying value of $55,600,000 and $55,800,000 at September 30, 2012 and 2011, respectively, were pledged to secure deposits and other purposes as required by law.

The following tables show the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position.

	September 30, 2012
	Less than Twelve Months					Twelve Months or Greater					Total
(Dollar amounts in thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. government agency securities	$	1,998	$	(2	)	$	-	$	-		$	1,998	$	(2	)
Obligations of states and political subdivisions		1,671		(29	)		-		-			1,671		(29	)
Private-label mortgage-backed securities		-		-			370		(2	)		370		(2	)
Total	$	3,669	$	(31	)	$	370	$	(2	)	$	4,039	$	(33	)

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	December 31, 2011
	Less than Twelve Months					Twelve Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. government agency securities	$	1,986	$	(14	)	$	-	$	-		$	1,986	$	(14	)
Obligations of states and political subdivisions		2,707		(40	)		919		(21	)		3,626		(61	)
Mortgage-backed securities in government sponsored entities		8,992		(54	)		-		-			8,992		(54	)
Private-label mortgage-backed securities		1,628		(42	)		398		(53	)		2,026		(95	)
Equity securities in financial institutions		-		-
Total	$	15,313	$	(150	)	$	1,317	$	(74	)	$	16,630	$	(224	)

There were 7 securities that were considered temporarily impaired at September 30, 2012.

On a quarterly basis, the Company performs an assessment to determine whether there have been any events or economic circumstances indicating that a security with an unrealized loss has suffered OTTI. A debt security is considered impaired if the fair value is less than its amortized cost basis at the reporting date. OTTI losses are recognized in earnings when the Company has the intent to sell the debt security or it is more likely than not that it will be required to sell the debt security before recovery of its amortized cost basis. However, even if the Company does not expect to sell a debt security, it must evaluate expected cash flows to be received and determine if a credit loss has occurred.

An unrealized loss is generally deemed to be other than temporary and a credit loss is deemed to exist if the present value of the expected future cash flows is less than the amortized cost basis of the debt security. As a result, the credit loss component of an OTTI is recorded as a component of investment securities gains (losses) in the accompanying Consolidated Statement of Income, while the remaining portion of the impairment loss is recognized in other comprehensive income, provided the Company does not intend to sell the underlying debt security and it is “more likely than not” that the Company will not have to sell the debt security prior to recovery.

Debt securities issued by U.S. government agencies, U.S. government-sponsored enterprises, and state and political subdivisions accounted for more than 96% of the total available-for-sale portfolio as of September 30, 2012 and no credit losses are expected, given the explicit and implicit guarantees provided by the U.S. federal government and the lack of significant unrealized loss positions within the obligations of state and political subdivisions’ security portfolio. The Company’s assessment was concentrated mainly on private-label collateralized mortgage obligations of approximately $5.4 million for which the Company evaluates credit losses on a quarterly basis. The gross unrealized gain position related to these private-label collateralized mortgage obligations amounted to $570,000 and the gross unrealized loss position was $2,000 on September 30, 2012. The Company considered the following factors in determining whether a credit loss exists and the period over which the debt security is expected to recover:

• The length of time and the extent to which the fair value has been less than the amortized cost basis.

• Changes in the near term prospects of the underlying collateral of a security such as changes in default rates, loss severity given default and significant changes in prepayment assumptions;

• The level of cash flows generated from the underlying collateral supporting the principal and interest payments of the debt securities; and

• Any adverse change to the credit conditions and liquidity of the issuer, taking into consideration the latest information available about the overall financial condition of the issuer, credit ratings, recent legislation and government actions affecting the issuer’s industry and actions taken by the issuer to deal with the present economic climate.

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For the three and nine months ended September 30, 2012, there were no available-for-sale debt securities with an unrealized loss that suffered OTTI.

NOTE 6 - LOANS AND RELATED ALLOWANCE FOR LOAN LOSSES

Major classifications of loans are summarized as follows (in thousands):

	September 30, 2012			December 31, 2011
Commercial and industrial	$	65,323		$	59,185
Real estate - construction		21,322			21,545
Real estate - mortgage:
Residential		205,433			208,139
Commercial		112,867			108,502
Consumer installment		4,230			4,509
		409,175			401,880
Less allowance for loan losses		(7,173	)		(6,819	)
Net loans	$	402,002		$	395,061

The Company’s primary business activity is with customers located within its local trade area, eastern Geauga County, and contiguous counties to the north, east, and south.  The Company also serves the central Ohio market with offices in Dublin and Westerville, Ohio.  Commercial, residential, consumer, and agricultural loans are granted.  Although the Company has a diversified loan portfolio, loans outstanding to individuals and businesses are dependent upon the local economic conditions in the Company’s immediate trade area.

The following tables summarize the primary segments of the loan portfolio and allowance for loan losses (in thousands):

					Real Estate- Mortgage
September 30, 2012	Commercial and industrial		Real estate- construction		Residential		Commercial		Consumer installment		Total
Individually evaluated for impairment	$	4,414	$	4,383	$	3,734	$	7,021	$	-	$	19,553
Collectively evaluated for impairment		60,909		16,939		201,699		105,846		4,230		389,622
Total loans	$	65,323	$	21,322	$	205,433	$	112,867	$	4,230	$	409,175

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					Real estate- Mortgage
December 31, 2011	Commercial and industrial		Real estate- construction		Residential		Commercial		Consumer installment		Total
Individually evaluated for impairment	$	4,492	$	867	$	4,882	$	6,491	$	-	$	16,732
Collectively evaluated for impairment		54,693		20,678		203,257		102,011		4,509		385,148
Total loans	$	59,185	$	21,545	$	208,139	$	108,502	$	4,509	$	401,880

					Real Estate- Mortgage
September 30, 2012	Commercial and industrial		Real estate- construction		Residential		Commercial		Consumer installment		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1,096	$	442	$	482	$	955	$	-	$	2,975
Collectively evaluated for impairment		608		3		2,471		1,100		16		4,198
Total ending allowance balance	$	1,704	$	445	$	2,953	$	2,055	$	16	$	7,173

					Real Estate- Mortgage
December 31, 2011	Commercial and industrial		Real estate- construction		Residential		Commercial		Consumer installment		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	595	$	237	$	685	$	185	$	-	$	1,702
Collectively evaluated for impairment		701		201		3,046		1,121		48		5,117
Total ending allowance balance	$	1,296	$	438	$	3,731	$	1,306	$	48	$	6,819

The Company’s loan portfolio is segmented to a level that allows management to monitor risk and performance.  The portfolio is segmented into Commercial and Industrial (“C&I”), Real Estate Construction, Real Estate - Mortgage which is further segmented into Residential and Commercial real estate, and Consumer Installment Loans.  The C&I loan segment consists of loans made for the purpose of financing the activities of commercial customers.  The residential mortgage loan segment consists of loans made for the purpose of financing the purchase or equity line of residences.  The commercial mortgage loan segment consists of loans made for the purposed of financing the activities of commercial real estate owners and operators. The consumer loan segment consists primarily of installment loans and overdraft lines of credit connected with customer deposit accounts.

Management evaluates individual loans in all of the commercial segments for possible impairment if the loan is greater than $150,000 and if the loan either is in nonaccrual status, or is risk rated Special Mention or Substandard.  Loans are considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.  Factors considered by management in evaluating impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.  Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.  The Company does not separately evaluate individual consumer and residential mortgage loans for impairment, unless such loans are part of a larger relationship that is impaired.

Once the determination has been made that a loan is impaired, the determination of whether a specific allocation of the allowance is necessary is measured by comparing the recorded investment in the loan to the fair value of the loan using one of three methods:  (a) the present value of expected future cash flows discounted at the loan’s effective interest rate; (b) the loan’s observable market price; or (c) the fair value of the collateral less selling costs.  The method is selected on a loan-by loan basis, with management primarily utilizing the fair value of collateral method.  The evaluation of the need and amount of a specific allocation of the allowance and whether a loan can be removed from impairment status is made on a quarterly basis.  The Company’s policy for recognizing interest income on impaired loans does not differ from its overall policy for interest recognition.

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The following tables present impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary (in thousands):

September 30, 2012
Impaired Loans
	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial and industrial	$	978	$	978	$	-
Real estate - construction		203		203		-
Real estate - mortgage:
Residential		1,859		1,863		-
Commercial		1,306		1,311		-
Consumer installment		30		30		-
Total	$	4,376	$	4,385	$	-
With an allowance recorded:
Commercial and industrial	$	2,896	$	2,899	$	840
Real estate - construction		3,986		3,986		442
Real estate - mortgage:
Residential		2,451		2,458		556
Commercial		3,524		3,533		1,137
Total	$	12,857	$	12,876	$	2,975
Total:
Commercial and industrial	$	3,874	$	3,877	$	840
Real estate - construction		4,189		4,189		442
Real estate - mortgage:
Residential		4,310		4,321		556
Commercial		4,830		4,844		1,137
Consumer installment		30		30		-
Total	$	17,233	$	17,261	$	2,975

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December 31, 2011
Impaired Loans
	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial and industrial	$	1,172	$	1,172	$	-
Real estate - construction		4,250		4,250		-
Real estate - mortgage:
Residential		3,188		3,193		-
Commercial		2,528		2,536		-
Consumer installment		24		24		-
Total	$	11,162	$	11,175	$	-
With an allowance recorded:
Commercial and industrial	$	658	$	658	$	203
Real estate - construction		271		271		125
Real estate - mortgage:
Residential		1,813		1,817		547
Commercial		4,332		4,344		827
Total	$	7,074	$	7,090	$	1,702
Total:
Commercial and industrial	$	1,830	$	1,831	$	203
Real estate - construction		4,521		4,521		125
Real estate - mortgage:
Residential		5,001		5,010		547
Commercial		6,861		6,880		827
Consumer installment		24		24		-
Total	$	18,237	$	18,266	$	1,702

The following tables present average recorded investment and related interest income recognized for impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary (in thousands):

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	For the Three Months Ended September 30, 2012				For the Three Months Ended September 30, 2011
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Total:
Commercial and industrial	$	2,535	$	139	$	3,295	$	11
Real estate - construction		2,305		-		630		15
Real estate - mortgage:
Residential		3,622		85		997		23
Commercial		3,597		200		4,899		86
Consumer installment		13		1		25		-

	For the Nine Months Ended September 30, 2012				For the Nine Months Ended September 30, 2011
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Total:
Commercial and industrial	$	2,170	$	170	$	3,266	$	93
Real estate - construction		2,400		113		624		15
Real estate - mortgage:
Residential		3,764		169		793		68
Commercial		3,985		324		4,081		188
Consumer installment		27		2		13		4

Management uses a nine point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first five categories are considered not criticized, and are aggregated as “Pass” rated. The criticized rating categories used by management generally follow bank regulatory definitions. The Special Mention category includes assets that are currently protected but are potentially weak, resulting in an undue and unwarranted credit risk, but not to the point of justifying a Substandard classification.  Loans in the Substandard category have well-defined weaknesses that jeopardize the liquidation of the debt, and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected.  All loans greater than 90 days past due are considered Substandard.  Loans in the doubtful category exhibit similar weaknesses found in the substandard loans, though the weaknesses are more pronounced. Such loans are static and collection in full is improbable. However, these loans are not yet rated as loss because certain events may occur which would salvage the debt.  Any portion of a loan that has been charged off is placed in the Loss category.

To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Company has a structured loan rating process with several layers of internal and external oversight.  Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as bankruptcy, repossession, or death occurs to raise awareness of a possible credit event.  The Company’s Commercial Loan Officers are responsible for the timely and accurate risk rating of the loans in their portfolios at origination and on an ongoing basis.  The Credit Department performs an annual review of all commercial relationships $200,000 or greater.  Confirmation of the appropriate risk grade is included in the review on an ongoing basis.  The Company has an experienced Loan Review Department that continually reviews and assesses loans within the portfolio.  The Company engages an external consultant to conduct loan reviews on a semi-annual basis. Generally, the external consultant reviews commercial relationships greater than $250,000 and/or criticized relationships greater than $125,000.  Detailed reviews, including plans for resolution, are performed on loans classified as Substandard on a quarterly basis.  Loans in the Special Mention and Substandard categories that are individually evaluated for impairment are given separate consideration in the determination of the allowance.

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The following table presents the classes of the loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system (in thousands):

	Pass		Special Mention		Substandard		Doubtful		Total Loans
September 30, 2012
Commercial and industrial	$	60,439	$	407	$	4,477	$	-	$	65,323
Real estate - construction		16,913		-		4,409		-		21,322
Real estate - mortgage:
Residential		191,710		868		12,855		-		205,433
Commercial		104,030		2,176		6,661		-		112,867
Consumer installment		4,208		2		20		-		4,230
Total	$	377,300	$	3,453	$	28,422	$	-	$	409,175

December 31, 2011	Pass		Special Mention		Substandard		Doubtful		Loans
Commercial and industrial	$	53,645	$	1,104	$	4,363	$	73	$	59,185
Real estate - construction		20,883		-		662		-		21,545
Real estate - mortgage:
Residential		192,534		1,100		14,505		-		208,139
Commercial		100,536		443		7,523		-		108,502
Consumer installment		4,495		6		8		-		4,509
Total	$	372,093	$	2,653	$	27,061	$	73	$	401,880

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due.

Loans are placed on non-accrual status when it is determined that the asset for which payment in full of interest or principal is not expected.  The accrual of interest is resumed when the Company expects to collect all contractual principal and interest due and the borrower has demonstrated a sustained period of repayment performance in accordance with the contractual terms.

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The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans (in thousands):

			Still Accruing
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days+ Past Due		Total Past Due		Non- Accrual		Total Loans
September 30, 2012
Commercial and industrial	$	62,529	$	1,221	$	372	$	10	$	1,603	$	1,191	$	65,323
Real estate - construction		20,647		-		-		-		-		675		21,322
Real estate - mortgage:
Residential		195,547		885		363		-		1,248		8,638		205,433
Commercial		109,932		140		97		79		316		2,619		112,867
Consumer installment		4,148		69		1		-		70		12		4,230
Total	$	392,803	$	2,315	$	833	$	89	$	3,237	$	13,135	$	409,175

			Still Accruing
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days+ Past Due		Total Past Due		Non- Accrual		Total Loans
December 31, 2011
Commercial and industrial	$	57,291	$	258	$	16	$	44	$	318	$	1,576	$	59,185
Real estate - construction		20,862		20		-		-		20		663		21,545
Real estate - mortgage:
Residential		193,732		2,624		863		275		3,762		10,645		208,139
Commercial		104,086		83		412		-		495		3,921		108,502
Consumer installment		4,408		60		41		-		101		-		4,509
Total	$	380,379	$	3,045	$	1,332	$	319	$	4,696	$	16,805	$	401,880

An allowance for loan losses (“ALL”) is maintained to absorb losses from the loan portfolio.  The ALL is based on management’s continuing evaluation of the risk characteristics and credit quality of the loan portfolio, assessment of current economic conditions, diversification and size of the portfolio, adequacy of collateral, past and anticipated loss experience, and the amount of nonperforming loans.

The Company’s methodology for determining the ALL is based on the requirements of ASC Section 310-10-35 for loans individually evaluated for impairment (discussed above) and ASC Subtopic 450-20 for loans collectively evaluated for impairment, as well as the Interagency Policy Statements on the Allowance for Loan and Lease Losses and other bank regulatory guidance.   The total of the two components represents the Company’s ALL.

Loans that are collectively evaluated for impairment are analyzed with general allowances being made as appropriate.  For general allowances, historical loss trends are used in the estimation of losses in the current portfolio.  These historical loss amounts are modified by other qualitative factors.

The classes described above, which are based on the purpose code assigned to each loan, provide the starting point for the ALL analysis.  Management tracks the historical net charge-off activity at the purpose code level.  A historical charge-off factor is calculated using a defined number of consecutive historical quarters. All loan pools currently use a rolling 8 quarters period.

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Management has identified a number of additional qualitative factors which it uses to supplement the historical charge-off factor because these factors are likely to cause estimated credit losses associated with the existing loan pools to differ from historical loss experience.  The additional factors that are evaluated quarterly and updated using information obtained from internal, regulatory, and governmental sources are: national and local economic trends and conditions; levels of and trends in delinquency rates and non-accrual loans; trends in volumes and terms of loans; effects of changes in lending policies; experience, ability, and depth of lending staff; value of underlying collateral; and concentrations of credit from a loan type, industry and/or geographic standpoint.

Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in order to make appropriate and timely adjustments to the ALL.  When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ALL.

The following tables summarize the primary segments of the loan portfolio as of the three and nine months ended September 30, 2012 and 2011 (in thousands):

	Commercial and industrial			Real estate- construction		Real estate- residential mortgage			Real estate- commercial mortgage			Consumer installment			Total
ALL balance at December 31, 2011	$	1,296		$	438	$	3,731		$	1,306		$	48		$	6,819
Charge-offs		(88	)		-		(668	)		(123	)		(62	)		(941	)
Recoveries		70			-		15			-			17			102
Provision		426			7		(125	)		872			13			1,193
ALL balance at September 30, 2012	$	1,704		$	445	$	2,953		$	2,055		$	16		$	7,173

	Commercial and industrial			Real estate- construction			Real estate- residential mortgage			Real estate- commercial mortgage			Consumer installment			Total
ALL balance at December 31, 2010	$	962		$	188		$	3,434		$	1,543		$	94		$	6,221
Charge-offs		(503	)		(6	)		(461	)		(266	)		(11	)		(1,247	)
Recoveries		75			-			18			-			22			115
Provision		384			75			1,372			616			38			2,485
ALL balance at September 30, 2011	$	918		$	257		$	4,363		$	1,893		$	143		$	7,574

	Commercial and industrial			Real estate- construction			Real estate- residential mortgage			Real estate- commercial mortgage			Consumer installment			Total
ALL balance at June 30, 2012	$	1,626		$	504		$	4,109		$	1,492		$	21		$	7,752
Charge-offs		(60	)		-			(570	)		(70	)		(40	)		(740	)
Recoveries		1			-			12			-			5			18
Provision		137			(59	)		(598	)		633			30			143
ALL balance at September 30, 2012	$	1,704		$	445		$	2,953		$	2,055		$	16		$	7,173

	Commercial and industrial			Real estate- construction		Real estate- residential mortgage			Real estate- commercial mortgage			Consumer installment		Total
ALL balance at June 30, 2011	$	957		$	229	$	3,791		$	1,921		$	129	$	7,027
Charge-offs		(232	)				(121	)		(86	)				(439	)
Recoveries		49					15						2		66
Provision		144			28		678			58			12		920
ALL balance at September 30, 2011	$	918		$	257	$	4,363		$	1,893		$	143	$	7,574

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The following tables summarize troubled debt restructurings (in thousands):

Modifications

Three Months Ended September 30, 2012

	Number of Contracts						Pre-Modification Outstanding
Troubled Debt Restructurings	Rate Forgiveness		Other		Total		Recorded Investment
Commercial and industrial		-		2		2	$	13
Real estate- mortgage:
Residential		1		6		7		619
Consumer Installment		-		1		1		6

Troubled Debt Restructurings subsequently defaulted	Number of Contracts		Recorded Investment
Commercial and industrial		1	$	30
Real estate- mortgage:
Residential		1		20

Modifications

Nine Months Ended September 30, 2012

	Number of Contracts
Troubled Debt Restructurings	Rate Forgiveness		Other		Total		Pre-Modification Outstanding Recorded Investment
Commercial and industrial		1		8		9	$	243
Real estate- mortgage:
Residential		2		8		10		946
Consumer Installment		-		2		2		11

Troubled Debt Restructurings subsequently defaulted	Number of Contracts		Recorded Investment
Commercial and industrial		2	$	60
Real estate- mortgage:
Residential		1		20

The Company does not forgive principal upon troubled debt restructuring.  Therefore, the post-modification outstanding recorded investment equals pre-modification outstanding recorded investment for each timeframe and category.

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NOTE 7 – COMMON STOCK ISSUANCE

Middlefield Banc Corp. entered into an August 15, 2011 Stock Purchase Agreement with Banc Opportunity Fund LLC.  The Stock Purchase Agreement provides for the purchase by Bank Opportunity Fund of up to 24.99% of our common stock.  The Stock Purchase Agreement was amended by the First Amendment, dated September 29, 2011, the Second Amendment, dated October 20, 2011, the Third Amendment, dated November 28, 2011, the Fourth Amendment, dated December 21, 2011, the Fifth Amendment, dated April 17, 2012, and by the Sixth Amendment, dated August 23, 2012.

As amended by the Fifth Amendment on April 17, 2012, the Stock Purchase Agreement provides for Bank Opportunity Fund’s ownership to reach 24.99% in three stages: (1) ownership of 4.9%, which occurred with the purchase by a Bank Opportunity Fund affiliate of 93,050 shares at $16 per share on April 17, 2012, (2) ownership of 9.9%, which occurred on April 30, 2012 with the purchase by the affiliate of 103,585 shares at $16 per share, and (3) ownership of 24.99% by the purchase of additional shares, currently estimated to be approximately 400,000 additional shares, which cannot occur unless Bank Opportunity Fund obtains regulatory approval, unless our stockholders approve the acquisition of shares by Bank Opportunity Fund, and unless the other conditions contained in the amended Stock Purchase Agreement are satisfied.  The first sale of shares to Bank Opportunity Fund, on April 17, 2012, yielded gross proceeds of $1,488,800 and the second sale, on April 30, yielded gross proceeds of $1,657,360.  Associated issuance costs totaled $816,000 as of September 30, 2012.  As amended by the Sixth Amendment, the purchase price for the additional shares in the third and final stage will be the greater of $19 per share or 75% of tangible book value per share.

Completion of the third and final stage is subject to regulatory approval on the part of the Federal Reserve Bank of Cleveland and the Ohio Division of Financial Institutions.  Additionally, Bank Opportunity Fund cannot own 20% or more of our common stock unless stockholders first approve that ownership level, acting at a special meeting in accordance with the Ohio Control Share Acquisition Act.  As amended by the Sixth Amendment, the deadline for completion of the third and final stage is November 30, 2012, with a 45-day extension beyond that date unless the Federal Reserve or the Ohio Division of Financial Institutions advises Bank Opportunity Fund that the necessary regulatory approvals are unlikely to be received.

Bank Opportunity Fund currently is entitled by the terms of the amended Stock Purchase Agreement to designate one director for service on the board of Middlefield Banc Corp. and on the board of each of its subsidiary banks.  By the terms of the April 17, 2012 Amended and Restated Purchaser’s Rights and Voting Agreement with Bank Opportunity Fund, as amended by the amendment dated as of August 23, 2012, our directors and executive officers are required to vote shares they hold for approval of the acquisition of shares by Bank Opportunity Fund and in favor of election of Bank Opportunity Fund’s director nominee.

Bank Opportunity Fund LLC is a Delaware limited liability company, established by its managing member Bank Acquisitions LLC, also a Delaware limited liability company.  Bank Opportunity Fund was formed to invest primarily in U. S. banks, thrifts, and their holding companies.  Bank Opportunity Advisors LLC, another Delaware limited liability company, is the investment adviser for Bank Opportunity Fund.  Bank Acquisitions LLC as managing member and Bank Opportunity Advisors LLC as investment adviser manage the day-to-day operations and investment activities of Bank Opportunity Fund.  Bank Acquisitions LLC controls Bank Opportunity Fund.

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The proposed sale of additional shares to Bank Opportunity Fund is the final part of a private offering of our stock that began in 2010 and continued into 2011.  Relying on the SEC’s private offering exemption in Regulation D Rule 506, we conducted the private offering without registration under the Securities Act of 1933, offering and selling our shares solely to those qualifying as accredited investors, as defined in Regulation D.  The subscription agreement entered into by an institutional investor that purchased 85,200 shares on August 12, 2011 in the private offering provides that – when the sale of shares to Bank Opportunity Fund is completed – the institutional investor will buy more shares from us so that the institutional investor maintains its ownership interest at 4.9%.  The investor may, however, purchase the shares on the open market to maintain the 4.9% ownership interest.  Accordingly, completion of the transaction with Bank Opportunity Fund obligates the institutional investor to purchase additional shares, which we currently estimate to be approximately 33,700 shares.  Because the subscription agreement right to purchase shares at $16 is significantly less than the current trading price for Middlefield Banc Corp. stock, we expect the investor will purchase these shares from us.

We give no assurance that the conditions to completion of the sale of stock to Bank Opportunity Fund will be satisfied by January 14, 2013, which is the final day of the 45-day extension of the November 30, 2012 deadline established by the Sixth Amendment of the Stock Purchase Agreement, or that the transaction will be completed at all.  We are optimistic that Bank Opportunity Fund will obtain regulatory approval for its acquisition of additional shares, however.  We have not yet fixed the date for the special meeting at which we will ask stockholders – in accordance with the Ohio Control Share Acquisition Act – to consider and vote upon the sale of shares to Bank Opportunity Fund.  We currently expect to hold the special meeting before the end of the first quarter of 2013, and we expect to complete the sale of shares to Bank Opportunity Fund promptly after that meeting, assuming stockholders approve the sale.

This summary of the Stock Purchase Agreement, as amended, and related transactions is qualified in its entirety by reference to (1) the Form 8-K Current Report that we filed with the SEC on August 18, 2011, (2) the August 15, 2011 Stock Purchase Agreement (exhibit 10.26 to the Form 8-K Current Report filed on August 18, 2011), (3) the First, Second, Third, and Fourth Amendments of the Stock Purchase Agreement (exhibits 10.26.1, 10.26.2, 10.26.3, and 10.26.4 to our Form 10-K Annual Report for the year ended December 31, 2011), (4) the Form 8-K Current Report that we filed with the SEC on March 27, 2012, (5) the Form 8-K Current Report that we filed with the SEC on April 23, 2012, (6) the Fifth Amendment of the Stock Purchase Agreement and the Amended and Restated Purchaser’s Rights and Voting Agreement (exhibits 10.26.6 and 10.28 to the Form 8-K Current Report filed on April 23, 2012), (7) the Form 8-K Current Report that we filed with the SEC on May 4, 2012, (8) the Form 8-K Current Report that we filed with the SEC on August 7, 2012, (9) the Form 8-K Current Report that we filed with the SEC on August 24, 2012, and (10) the Sixth Amendment of the Stock Purchase Agreement and the Amendment of the Amended and Restated Purchaser’s Rights and Voting Agreement (exhibits 10.26.7 and 10.28.1 to the Form 8-K Current Report filed on August 24, 2012).

Forward-looking statements.  This Form 10-Q includes forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995.  Forward-looking statements include but are not limited to statements about anticipated operating and financial performance, such as loan originations, operating efficiencies, loan sales, charge-offs and loan loss provisions, growth opportunities, interest rates, and deposit growth.  Words such as “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “project,” “plan,” and similar expressions are intended to identify forward-looking statements.  These statements involve risks and uncertainties that could cause actual results to differ materially, including without limitation delays in obtaining or failure to receive required regulatory approvals, including approval by the Superintendent of the Ohio Division of Financial Institutions and by the Board of Governors of the Federal Reserve System, the possibility that fewer than the required number of the Middlefield’s stockholders vote in accordance with the Ohio Control Share Acquisition Act to approve the sale of shares to Bank Opportunity Fund, the occurrence of events that would have a material adverse effect on Middlefield as described in the Stock Purchase Agreement, as amended, and other uncertainties associated with the transactions described in this Form 10-Q.  Additional factors that could cause actual results to differ materially are discussed in Middlefield’s filings with the Securities and Exchange Commission, including, without limitation, Middlefield’s Form 10-K Annual Report, its Form 10-Q Quarterly Reports, and its Form 8-K Current Reports.  Forward-looking statements are based on Middlefield’s beliefs, plans, objectives, goals, assumptions, expectations, estimates, and intentions as of the date the statements are made.  You must exercise caution because Middlefield cannot give any assurance that its beliefs, plans, objectives, goals, assumptions, expectations, estimates, and intentions will be realized.  Middlefield does not undertake a duty to update any forward-looking statements in this Form 10-Q.

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Additional information and where to find it. This communication may be deemed to be solicitation material.  Middlefield will file with the SEC a proxy statement and other documents regarding the transaction with Bank Opportunity Fund.  MIDDLEFIELD STOCKHOLDERS ARE URGED TO READ ALL RELEVANT DOCUMENTS TO BE FILED WITH THE SEC, INCLUDING MIDDLEFIELD’S PROXY STATEMENT, BECAUSE THE PROXY STATEMENT AND OTHER DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION, INCLUDING INFORMATION ABOUT THE TRANSACTION WITH BANK OPPORTUNITY FUND.  Members of the public will be able to obtain the proxy statement and other relevant documents free of charge at the SEC’s website, http://www.sec.gov, and Middlefield’s stockholders will receive information at an appropriate time about how to obtain the proxy statement and other transaction-related documents for free from Middlefield.  The proxy statement and other documents are not currently available.  Middlefield and its directors, executive officers, certain members of management, and employees may have interests in the transaction or be deemed to be participants in the solicitation of proxies of Middlefield’s stockholders to approve the transaction with Bank Opportunity Fund.  Information regarding the participants and their interest in the solicitation is set forth in the proxy statement filed by Middlefield with the SEC on April 9, 2012, for the 2012 Annual Meeting.  Stockholders may obtain additional information regarding the interests of participants by reading the proxy statement relating to the transaction when the proxy statement becomes available.

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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 at September 30, 2012 were $664.2 million, an increase of $9.6 million or 1.5% from December 31, 2011.  Investment securities available-for-sale decreased $14.8 million while cash and due from banks and net loans increased $17.0 million and $6.9 million, respectively. The increase in total assets coincided with an increase in total liabilities of $1.8 million or .3%.  Stockholders’ equity increased $7.8 million or 16.6%.

Cash on hand and due from banks. Cash on hand, due from banks, and Federal funds sold represent cash and cash equivalents. Cash and cash equivalents increased $18.2 million or 53.0% to $52.6 million at September 30, 2012 from $34.4 million at December 31, 2011.  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.

Investment securities.  Investment securities available-for-sale on September 30, 2012 totaled $179.1 million, a decrease of $14.8 million or 7.6% from $194.0 million at December 31, 2011. During this period the Company recorded sales, repayments, calls, and maturities of available-for-sale securities of $66.8 million, consisting of mortgage-backed securities, municipal and U. S. government bonds.  Offsetting the outflow of securities were purchases of $50.8 million.

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, construction and consumer loans. Net loans receivable increased $6.9 million or 1.8% to $402.0 million as of September 30, 2012 from $395.1 million at December 31, 2011. Included in this amount was an increase in the commercial and industrial loan portfolio segment of $6.1 million or 10.4% as well as the commercial real estate mortgage of $4.4 million or 4.0% during the nine months ended September 30, 2012. The Company’s lending philosophy centers around the growth of the commercial loan portfolio. The Company has taken a proactive approach in servicing the needs of both new and current clients. These 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.

Allowance for Loan Losses and Asset Quality. The allowance for loan losses increased to $7.2 million, or 1.8% of total loans, at September 30, 2012, compared to $6.8 million, or 1.7%, at December 31, 2011. The amount of allowance for loan losses is a continuation of the Company’s approach to accurately measure credits identified as troubled in quarters past.  Year-to-date net loan charge-offs totaled $839,000 compared to $1.1 million for the same period the year prior.  To maintain the adequacy of the allowance for loan losses, the Company recorded provisions for loan losses of $1.2 million year-to-date, versus $2.5 million for year-to-date September 30, 2011.

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Management analyzes the adequacy of the allowance for loan losses regularly through reviews of the performance of the loan portfolio considering economic conditions, changes in interest rates and the effect of such changes on real estate values and changes in the amount and composition of the loan portfolio. The allowance for loan losses is a material estimate that is particularly susceptible to significant changes in the near term. Such evaluation, which includes a review of all loans for which full collectability may not be reasonably assured, considers among other matters, historical loan loss experience, the estimated fair value of the underlying collateral, economic conditions, current interest rates, trends in the borrower’s industry and other factors that management believes warrant recognition in providing for an appropriate allowance for loan losses. Future additions to the allowance for loan losses will be dependent on these factors. Additionally, the Company uses an outside party to conduct an independent review of commercial and commercial real estate loans. The Company uses the results of this review to help determine the effectiveness of the existing policies and procedures, and to provide an independent assessment of the allowance for loan losses allocated to these types of loans. Management believes that the allowance for loan losses was appropriately stated at September 30, 2012. Based on the variables involved and the fact that management must make judgments about outcomes that are uncertain, the determination of the allowance for loan losses is considered a critical accounting policy.

Nonperforming assets.  Nonperforming assets includes non-accrual loans, troubled debt restructurings (“TDRs”), loans 90 days or more past due, assets purchased by EMORECO from EB, other real estate, and repossessed assets. A loan is classified as non-accrual when, in the opinion of management, there are serious doubts about collectability of interest and principal. Accrual of interest is discontinued on a loan when management believes, after considering economic and business conditions, the borrower’s financial condition is such that collection of principal and interest is doubtful.  Payments received on nonaccrual loans are applied against principal according to management’s shadow accounting system. The shadow accounting system tracks interest on nonaccrual loan payments as though current.  The shadow account splits principal and interest on payments while the actual account undergoes only a principal reduction. TDRs are those loans which the Company, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to the borrower that the Company would not otherwise consider. The Company has 47 TDRs with a total balance of $4.7 million as of September 30, 2012. Nonperforming loans amounted to $15.4 million, or 3.8% of total loans, and $24.5 million or 6.1% of total loans at September 30, 2012 and December 31, 2011, respectively.  The decrease in nonperforming loans has occurred partly due to improved performance of previously classified TDRs.  A TDR that yields a market interest rate at the time of restructuring and is in compliance with its modified terms is no longer reported as TDR in calendar years after the year in which the restructuring took place. To be in compliance with its modified terms, a loan that is a TDR must not be in nonaccrual status and must be current or less than 30 days past due on its contractual principal and interest payments under the modified repayment terms.  Nonperforming loans secured by real estate totaled $13.6 million as of September 30, 2012, down $9.2 million from $22.8 million at December 31, 2011. Real estate owned is initially recorded at the lower of carrying cost or fair value less cost to sell and continually monitored for changes in fair value.

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Asset Quality History

(Dollar amounts in thousands)

(Dollar amounts in thousands)	9/30/2012			6/30/2012			3/31/2012			12/31/2011			9/30/2011
Nonperforming loans	$	15,404		$	17,177		$	17,677		$	24,546		$	22,725
Real estate owned		2,332			1,986			2,125			2,196			2,173
Nonperforming assets		17,736			19,163			19,802			26,742			24,898
Allowance for loan losses		7,173			7,752			7,267			6,819			7,574
Ratios
Nonperforming loans to total loans		3.76	%		4.18	%		4.37	%		6.11	%		5.85	%
Nonperforming assets to total assets		2.67	%		2.95	%		3.01	%		4.09	%		3.77	%
Allowance for loan losses to total loans		1.75	%		1.89	%		1.80	%		1.70	%		1.95	%
Allowance for loan losses to nonperforming loans		46.57	%		45.13	%		41.11	%		27.78	%		33.33	%

A major factor in determining the appropriateness of the allowance for loan losses is the type of collateral which secures the loans. Of the total nonperforming loans at September 30, 2012, 88.4% were secured by real estate. Although real estate collateral does not insure against all losses, the real estate typically provides for at least partial recovery, even in a distressed-sale and declining-value environment.  In response to the poor economic conditions which have eroded the performance of the Company’s loan portfolio, additional resources have been allocated to the loan workout process. The Company’s objective is to minimize the future loss exposure to the Company.

Deposits. The Company considers various sources when evaluating funding needs, including but not limited to deposits, which are a significant source of funds totaling $584.7 million or 96.3% of the Company’s total funding sources at September 30, 2012. Total deposits increased $3.8 million or .6% to $584.7 million at September 30, 2012 from $581.0 million at December 31, 2011. The increase in deposits is related to additions to demand and savings accounts of $13.7 million or 7.0%, and $7.1 million or 4.2%, respectively, at September 30, 2012.  These increases were partially offset by decreases in time and money market accounts of $17.0 million or 7.8%, and $2.8 million or 3.7%, respectively, during the nine months ended September 30, 2012.

Borrowed funds. The Company uses short and long-term borrowings as another source of funding used for asset growth and liquidity needs. These borrowings primarily include Federal Home Loan Bank of Cincinnati (“FHLB”) advances, junior subordinated debt, short-term borrowings from other banks and repurchase agreements. Short-term borrowings decreased $874,000 or 11.8% to $6.5 million as of September 30, 2012.  This decline largely resulted from a decrease of $632,000 in EB repurchase accounts.  Other borrowings, representing advances from the FHLB, declined $995,000 or 5.9%, to $15.8 million for the nine months ended September 30, 2012.  The decline in FHLB advances was the result of scheduled principal payments.

Stockholders’ equity. Stockholders’ equity increased $7.8 million or 16.6% to $55.1 million at September 30, 2012 from $47.3 million at December 31, 2011. This increase was the result of increases in retained earnings, common stock, and accumulated other comprehensive income of $3.5 million, $2.8 million, and $1.5 million, respectively. The increase in common stock was principally the result of a private offering of 196,635 shares pursuant to the Stock Purchase Agreement (as amended) and described more completely in Note 7 to the financial statements included within this Form 10-Q.  Additional shares of 22,708 were offered via the Company’s dividend reinvestment plan at an average price of $21.16 since December 31, 2011.  The increase in accumulated other comprehensive income relates to increases in the fair value of the Company’s securities available-for-sale portfolio.

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RESULTS OF OPERATIONS

General.   Net income for the nine months ended September 30, 2012, was $5.0 million, a $2.2 million, or 78.9% increase from the $2.8 million earned during the same period in 2011.  Diluted earnings per share for the third quarter of 2012 was $0.93 compared to $0.63 for the same period in 2011.  Diluted earnings per share for the nine months ended September 30, 2012 was $2.65 compared to $1.69 for the same period in 2011.

The Company’s annualized return on average assets (ROA) and return on average equity (ROE) for the three months ended September 30, 2012 were 1.12% and 16.57%, respectively, compared with 0.66% and 11.11% for the same period in 2011.  For the first nine months of 2012, the Company’s ROA and ROE were 1.02% and 15.26%, respectively, compared with 0.59% and 9.82% for the same period of 2011.

The Company’s earnings for the three and nine months ended September 30, 2012 were positively impacted by a decrease in deposit interest expense and provision for loan losses. This was partially offset by a decrease in interest income on securities.

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 goal to maintain a balance between steady net interest income growth and the risks associated with interest rate fluctuations.

Net interest income for the three months ended September 30, 2012 totaled $5.7 million, an increase of 6.4% from the $5.4 million reported for the comparable period of 2011. The net interest margin was 4.02% for the third quarter of 2012, up from the 3.75% reported for the same quarter of 2011. The increase is primarily attributable to lower interest-bearing liability costs, which decreased 36 basis points to 1.20%. Deposit growth at the Banks has primarily been in products such as savings and interest-bearing demand accounts, which generally carry lower interest costs than other deposit alternatives.

Net interest income for the nine months ended September 30, 2012 totaled $16.9 million, an increase of 8.6% from the $15.5 million reported for the comparable period of 2011. The net interest margin was 3.95% for the year-to-date 2012, up from the 3.69% reported for the same quarter of 2011. The increase is primarily attributable to lower interest-bearing liability costs, which decreased 45 basis points to 1.23%. Deposit growth at the Banks has primarily been in products such as savings and interest-bearing demand accounts, which generally carry lower interest costs than other deposit alternatives.

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Interest income.  Interest income decreased $186,000, or 2.5%, for the three months ended September 30, 2012, compared to the same period in the prior year.  This can be attributed to a decrease in interest earned on investment securities of $446,000, or 22.9%, partially offset by an increase in interest and fees on loans of $255,000, or 4.6%.  This increase was attributable to a $24.3 million or 6.3% increase in the average balance of loans receivable from September 30, 2011.

Interest income decreased $511,000, or 2.3%, for the nine months ended September 30, 2012, compared to the same period in the prior year.  This can be attributed to a decrease in interest earned on investment securities of $1.3 million, or 21.0%, partially offset by an increase in interest and fees on loans of $733,000, or 4.5%.  This increase was attributable to a $26.3 million or 6.9% increase in the average balance of loans receivable from September 30, 2011.

Interest earned on securities decreased $446,000, or 22.9%, for the three months ended September 30, 2012, compared to the same period in the prior year. This was primarily the result of a decrease in the average balance of the securities portfolio of $25.0 million, or 12.7%, to $172.6 million at September 30, 2012 from $197.7 million for the same period in the prior year. Interest income on investment securities was also adversely affected by a decrease in the portfolio yield.  The total investment securities portfolio yield of 4.34% for the three months ended September 30, 2012 decreased by 31 basis points from 4.65% for the same period in the prior year.

Interest earned on securities decreased $1.3 million, or 21.0%, for the nine months ended September 30, 2012, compared to the same period in the prior year. This was primarily the result of a decrease in the average balance of the securities portfolio of $13.2 million, or 6.8%, to $181.1 million at September 30, 2012 from $194.3 million for the same period in the prior year. Interest income on investment securities was adversely affected by a decrease in the portfolio yield.  The total investment securities portfolio yield of 4.33% for the nine months ended September 30, 2012 decreased by 52 basis points from 4.85% for the same period in the prior year.

Interest expense. Interest expense decreased $532,000, or 24.9%, for the three months ended September 30, 2012, compared to the same period in the prior year.  This can be attributed to decreases in interest incurred on certificates of deposits and savings of $183,000 and $133,000, respectively.  The reduction was intensified by decreases in the rates paid on money market and savings accounts of 37 and 34 basis points, respectively, when compared to the three months ended September 30, 2011.

Interest expense decreased $1.8 million, or 27.2%, for the nine months ended September 30, 2012, compared to the same period in the prior year. This can be attributed to decreases in interest incurred on certificates of deposits and savings of $655,000 and $500,000, respectively.  The reduction was enhanced by decreases in the rates paid on money market and savings accounts of 52 and 45 basis points, respectively, when compared to the nine months ended September 30, 2011.

Interest incurred on deposits, the largest component of the Company’s interest-bearing liabilities, declined $418,000, or 22.8%, for the three months ended September 30, 2012, compared to the same period in the prior year. This decrease was attributed to a decline in average rate paid on deposits to 1.11% for the three months ended September 30, 2012 from 1.41% for the same period in the prior year.  The improvement in interest cost due to rates was bolstered by a decrease in the average balance of interest-bearing deposits of $9.9 million, or 1.9%, to $508.5 million for the three months ended September 30, 2012, compared to $518.4 million for the same period in the prior year.

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Interest incurred on deposits declined $1.5 million, or 26.0%, for the nine months ended September 30, 2012, compared to the same period in the prior year. This decrease was attributed to a decline in average rate paid on deposits to 1.14% for the nine months ended September 30, 2012 from 1.53% for the same period in the prior year.  The improvement in interest cost due to rates was enhanced by a decrease in the average balance of interest-bearing deposits of $2.7 million, or 0.5%, to $511.8 million for the nine months ended September 30, 2012, compared to $514.4 million for the same period in the prior year.

These fluctuations are reflected in the quarterly rate volume report presented below depicting the cost decrease associated with interest-bearing liabilities.  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 minimize total interest expense.

Interest incurred on borrowed funds, declined by $114,000, for the three months ended September 30, 2012, compared with the same period in the prior year. This decline was primarily attributable to a reduction of $94,000 in interest paid on trust preferred securities when compared to September 30, 2011.

Interest incurred on borrowed funds, declined by $316,000, for the nine months ended September 30, 2012, compared with the same period in the prior year. This decline was primarily attributable to a reduction of $290,000 in interest paid on trust preferred securities when compared to September 30, 2011.

Provision for loan losses. The provision for loan losses represents the charge to income necessary to adjust the allowance for loan losses to an amount that represents management’s assessment of the estimated probable incurred credit losses inherent in the loan portfolio. Each quarter management performs a review of estimated probable incurred credit losses in the loan portfolio. Based on this review, a provision for loan losses of $143,000 was recorded for the quarter ended September 30, 2012 compared to $920,000 for the quarter ended September 30, 2011. The provision for loan losses was lower due in part to decreases in net charge-offs and decreases in nonperforming and delinquent loans.

Nonperforming loans were $15.4 million, or 3.8% of total loans at September 30, 2012 compared with $22.7 million, or 5.9% at September 30, 2011. Net charge-offs were $722,000 for the quarter ended September 30, 2012 compared with $373,000 for the quarter ended September 30, 2011.  Year-to-date net loan charge-offs totaled $839,000 compared to $1.1 million for the same period the year prior.  Total loans were $409.2 million at September 30, 2012 compared with $388.6 million at September 30, 2011.

Non-interest income. Non-interest income increased $182,000 for the three month period of September 30, 2012 over the comparable 2011 period.  This growth was largely the result of increases in investment security gains and service charges on deposit accounts of $146,000 and $26,000, respectively.

Non-interest income increased $700,000 for the nine month period of September 30, 2012 over the comparable 2011 period.  This growth was largely the result of increases in investment security gains, revenue from investment services, and gain on loan sale of $464,000, $91,000, and $84,000, respectively.

Non-interest expense. Non-interest expense of $4.1 million for the third quarter of 2012 was 5.5%, or $216,000 higher than the same period in 2011.  Professional fees and FDIC expense increased $89,000, or 49.2%, and $74,000, or 42.0%, respectively, when compared to the same period in 2011.  These increases were partially offset by a decrease in salaries and benefits of $49,000, or 2.8%.

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Non-interest expense of $11.9 million for the year-to-date September 30, 2012 was 0.4%, or $42,000, higher than the same period in 2011.  Losses on other real estate owned and salaries and employee benefits decreased $260,000, or 52.2%, and $133,000, or 2.5%, as compared to the same period in 2011.  These decreases were partially offset by increases in professional fees, FDIC expense, and equipment expense of $93,000, or 16.1%, $78,000, or 11.6%, and $69,000, or 14.1%.

Provision for income taxes. The Company recognized $1.4 million in income tax expense, which reflected an effective tax rate of 21.7% for the nine months ended September 30, 2012, as compared to $319,000 with an effective tax rate of 10.2% for the respective 2011 period.  The increase in the tax provision can be attributed to an increase in income before taxes of $3.3 million, or 105.3% when compared to the same period in the prior year.

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.

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	For the Three Months Ended September 30,
	2012							2011
(Dollars in thousands)	Average Balance		Interest		Average Yield/Cost			Average Balance		Interest		Average Yield/Cost
Interest-earning assets:
Loans receivable	$	411,053	$	5,810		5.62	%	$	386,788	$	5,555		5.70	%
Investment securities (3)		172,637		1,498		4.34	%		197,654		1,944		4.65	%
Interest-bearing deposits with other banks		23,126		34		0.58	%		25,284		29		0.46	%
Total interest-earning assets		606,816		7,342		5.07	%		609,726		7,528		5.14	%
Noninterest-earning assets		50,256							36,781
Total assets	$	657,072						$	646,507
Interest-bearing liabilities:
Interest - bearing demand deposits	$	64,785		67		0.41	%	$	60,197		90		0.59	%
Money market deposits		68,499		72		0.42	%		75,734		151		0.79	%
Savings deposits		171,746		165		0.38	%		163,178		298		0.72	%
Certificates of deposit		203,482		1,115		2.18	%		219,262		1,298		2.35	%
Borrowings		22,997		183		3.17	%		25,379		297		4.64	%
Total interest-bearing liabilities		531,509		1,602		1.20	%		543,750		2,134		1.56	%
Noninterest-bearing liabilities
Other liabilities		75,147							61,066
Stockholders' equity		50,416							41,691
Total liabilities and stockholders' equity	$	657,072						$	646,507
Net interest income			$	5,740						$	5,394
Interest rate spread (1)						3.87	%						3.58	%
Net yield on interest-earning assets (2)						4.02	%						3.75	%
Ratio of average interest-earning assets to average interest-bearing liabilities						114.17	%						112.13	%

(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 interest margin represents net interest income as a percentage of average interest-earning assets.

(3) Tax equivalent adjustments to interest income for tax-exempt securities were $385 and $373 for 2012 and 2011, respectively.

Analysis of Changes in Net Interest Income. The following table analyzes the changes in interest income and interest expense, between the three month periods ended September 30, 2012 and 2011, 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.

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	2012 versus 2011
	Increase (decrease) due to
(Dollars in thousands)	Volume			Rate			Total
Interest-earning assets:
Loans receivable	$	348		$	(93	)	$	255
Investment securities		(292	)		(154	)		(446	)
Interest-bearing deposits with other banks		(2	)		7			5
Total interest-earning assets		54			(240	)		(186	)
Interest-bearing liabilities:
Interest - bearing demand deposits		7			(30	)		(23	)
Money market deposits		(14	)		(65	)		(79	)
Savings deposits		16			(149	)		(133	)
Certificates of deposit		(93	)		(90	)		(183	)
Borrowings		(28	)		(86	)		(114	)
Total interest-bearing liabilities		(112	)		(420	)		(532	)
Net interest income	$	166		$	180		$	346

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	For the Nine Months Ended September 30,
	2012							2011
(Dollars in thousands)	Average Balance		Interest		Average Yield/Cost			Average Balance		Interest		Average Yield/Cost
Interest-earning assets:
Loans receivable	$	406,919	$	16,988		5.58	%	$	380,668	$	16,255		5.71	%
Investment securities (3)		181,062		4,704		4.33	%		194,250		5,956		4.85	%
Interest-bearing deposits with other banks		22,221		105		0.63	%		27,122		97		0.48	%
Total interest-earning assets		610,202		21,797		5.03	%		602,040		22,308		5.20	%
Noninterest-earning assets		45,323							33,524
Total assets	$	655,525						$	635,564
Interest-bearing liabilities:
Interest - bearing demand deposits	$	61,718		190		0.41	%	$	55,314		265		0.64	%
Money market deposits		70,108		216		0.41	%		73,963		515		0.93	%
Savings deposits		170,423		495		0.39	%		157,538		995		0.84	%
Certificates of deposit		209,504		3,448		2.20	%		227,613		4,103		2.41	%
Borrowings		23,551		585		3.32	%		25,953		901		4.64	%
Total interest-bearing liabilities		535,304		4,934		1.23	%		540,381		6,779		1.68	%
Noninterest-bearing liabilities
Other liabilities		70,846							55,672
Stockholders' equity		49,375							39,511
Total liabilities and stockholders' equity	$	655,525						$	635,564
Net interest income			$	16,863						$	15,529
Interest rate spread (1)						3.79	%						3.52	%
Net interest margin (2)						3.95	%						3.69	%
Ratio of average interest-earning assets to average interest-bearing liabilities						113.99	%						111.41	%

(1) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost ofinterest-bearing liabilities

(2) Net interest margin represents net interest income as a percentage of average interest-earning assets.

(3) Tax equivalent adjustments to interest income for tax-exempt securities was $1,159 and $1,094 for 2012 and 2011, respectively.

Analysis of Changes in Net Interest Income. The following table analyzes the changes in interest income and interest expense, between the nine month periods ended September 30, 2012 and 2011, 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.

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	2012 versus 2011
	Increase (decrease) due to
(Dollars in thousands)	Volume			Rate			Total
Interest-earning assets:
Loans receivable	$	1,122		$	(389	)	$	733
Investment securities		(479	)		(773	)		(1,252	)
Interest-bearing deposits with other banks		(18	)		26			8
Total interest-earning assets		625			(1,136	)		(511	)
Interest-bearing liabilities:
Interest - bearing demand deposits		31			(106	)		(75	)
Money market deposits		(27	)		(272	)		(299	)
Savings deposits		81			(581	)		(500	)
Certificates of deposit		(327	)		(328	)		(655	)
Borrowings		(83	)		(233	)		(316	)
Total interest-bearing liabilities		(325	)		(1,520	)		(1,845	)
Net interest income	$	950		$	384		$	1,334

LIQUIDITY

Management's objective in managing liquidity is maintaining the ability to continue meeting the cash flow needs of bank customers, such as borrowings or deposit withdrawals, as well as the Company’s 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 believes the Company has the capital adequacy, profitability and reputation to meet the current and projected needs of its customers.

For the three and nine months ended September 30, 2012, 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. 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. Generally Accepted Accounting Principles (“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.

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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 affect 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 multi-bank holding company. The affiliate banks are subject to regulations of the Federal Deposit Insurance Corporation (“FDIC”) and the State of Ohio, Division of Financial Institutions.

Effective February 11, 2010, the Board of Directors of the Company’s subsidiary, EB, entered into a Memorandum of Understanding (“MOU”) with the FDIC and the Ohio Division of Financial Institutions as a result of the joint examination by the FDIC and the Ohio Division of Financial Institutions completed in the fourth quarter of 2009.  The MOU sets forth certain actions required to be taken by management of EB to rectify unsatisfactory conditions identified by the federal and state banking regulators that relate to EB’s concentration of credit for non-owner occupied 1 - 4 family residential mortgage loans.  The MOU requires EB to reduce delinquent and classified loans and enhance credit administration for non-owner occupied residential real estate; to develop specific plans for the reduction of borrower indebtedness on classified and delinquent credits; to correct violations of laws and regulations listed in the joint examination report; to implement an earnings improvement plan; to maintain specified capital discussed below; to submit to the FDIC and the Ohio Division of Financial Institutions for review and comment a revised methodology for calculating and determining the adequacy of the allowance for loan losses; and to provide 30 days’ advance notification of proposed dividend payments.

Compliance with the terms of the MOU continues to be a high priority for the Company.   Specific actions taken include the evaluation and reorganization of lending and credit administration personnel, retention of collection and workout personnel, and the sale of $5.6 million of nonperforming assets to a sister, nonbank-asset resolution subsidiary.  This amount is an increase from the original $4.6 million sale in 2009.  In 2010 and 2011, the Company invested $500,000 and $1.5 million in EB in the form of capital infusions to maintain Tier I capital at the level required by the FDIC and the Ohio Division of Financial Institutions.

The MOU requires that EB submit plans and report to the Ohio Division of Financial Institutions and the FDIC regarding EB’s loan portfolio and profit plan, among other matters.  The MOU also requires that the Bank maintain its Tier I Leverage Capital ratio at not less than 9 percent.

The following table sets forth the capital requirements for EB under the FDIC regulations and EB’s capital ratios at September 30, 2012 and December 31, 2011:

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FDIC Regulations

Capital Ratio	Adequately Capitalized			Well Capitalized					September 30, 2012			December 31, 2011
Tier I Leverage Capital		4.00	%		5.00	%	(1	)		10.17	%		9.92	%
Risk-Based Capital:
Tier I		4.00			6.00					13.10			12.57
Total		8.00			10.00					14.35			13.82

(1) 9 percent required by the MOU.

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 company's 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 Company’s board has established a goal of maintaining Tier 1 leverage capital of at least 7.25% and total risk-based capital of at least 12%, both at the level of the holding company and at The Middlefield Banking Company.  These enhanced capital levels have been achieved through a combination of measures, including restraining growth, sale of additional equity, and improved earnings.  The goal of the elevated capital levels is to account for the ongoing economic stress in the markets in which we operate and to account for the levels of substandard and other noperforming assets.

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The following table illustrates the Company's and Banks’ capital ratios at September 30, 2012:

	Middlefield Banc Corp. September 30, 2012					The Middlefield Banking Co. September 30, 2012					Emerald Bank September 30, 2012
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(in thousands)
Total Capital (to Risk-weighted Assets)
Actual	$	56,832		13.40	%	$	47,031		12.85	%	$	8,351		14.35	%
For Capital Adequacy Purposes		33,939		8.00			29,280		8.00			4,656		8.00
To Be Well Capitalized		42,424		10.00			36,601		10.00			5,820		10.00
Tier I Capital (to Risk-weighted Assets)
Actual	$	51,506		12.14	%	$	42,456		11.60	%	$	7,623		13.10	%
For Capital Adequacy Purposes		16,969		4.00			14,640		4.00			2,328		4.00
To Be Well Capitalized		25,454		6.00			21,960		5.00			3,492		6.00
Tier I Capital (to Average Assets)
Actual	$	51,506		7.92	%	$	42,456		7.42	%	$	7,623		10.17	%
For Capital Adequacy Purposes		25,998		4.00			22,882		4.00			2,999		4.00
To Be Well Capitalized		32,497		5.00			28,602		5.00			3,749		5.00

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 September 30, 2012, have remained unchanged from December 31, 2011.

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 losses as a result of 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.  Mortgage-backed securities also offer improved management of interest rate risk because some are adjustable rate securities.  In this low interest rate environment, investment in mortgage-backed securities represents superior asset/liability management compared to investment in fixed-rate residential mortgages.

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MB’s Board of Directors have 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.

MB and EB have 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.

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 September 30, 2012 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 September 30, 2011 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 September 30, 2012 for portfolio equity:

	Increase  200 Basis Points			Decrease  200 Basis Points
Net interest income - increase (decrease)		1.90	%		0.22	%
Portfolio equity - increase (decrease)		(17.73	)  %		(7.80	)  %

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Item 4. Controls and Procedures

Controls and Procedures Disclosure

The Company 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 Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1.    Legal Proceedings

               None

Item 1a.  There are no material changes to the risk factors set forth in Part I, Item 1A, “Risk Factors,” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.  Please refer to that section for disclosures regarding the risks and uncertainties related to the Company’s business.

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

Please refer to Note 7 of the Notes to Unaudited Consolidated Financial Statements

Item 3.    Defaults by the Company on its senior securities

               None

Item 4.    Mine Safety Disclosures

Item 5.    Other information

               None

Item 6.    Exhibits

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Exhibit list for Middlefield Banc Corp.’s Form 10-Q Quarterly Report for the Period Ended September 30, 2012

exhibit number	description	location
3.1	Second Amended and Restated Articles of Incorporation of Middlefield Banc Corp., as amended	Incorporated by reference to Exhibit 3.1 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2005, filed on March 29, 2006
3.2	Regulations of Middlefield Banc Corp.	Incorporated by reference to Exhibit 3.2 of Middlefield Banc Corp.’s registration statement on Form 10 filed on April 17, 2001
4.0	Specimen stock certificate	Incorporated by reference to Exhibit 4 of Middlefield Banc Corp.’s registration statement on Form 10 filed on April 17, 2001
4.1	Amended and Restated Trust Agreement, dated as of December 21, 2006, between Middlefield Banc Corp., as Depositor, Wilmington Trust Company, as Property trustee, Wilmington Trust Company, as Delaware Trustee, and Administrative Trustees	Incorporated by reference to Exhibit 4.1 of Middlefield Banc Corp.’s Form 8-K Current Report filed on December 27, 2006
4.2	Junior Subordinated Indenture, dated as of December 21, 2006, between Middlefield Banc Corp. and Wilmington Trust Company	Incorporated by reference to Exhibit 4.2 of Middlefield Banc Corp.’s Form 8-K Current Report filed on December 27, 2006
4.3	Guarantee Agreement, dated as of December 21, 2006, between Middlefield Banc Corp. and Wilmington Trust Company	Incorporated by reference to Exhibit 4.3 of Middlefield Banc Corp.’s Form 8-K Current Report filed on December 27, 2006

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exhibit number   description   location  

10.1.0*	1999 Stock Option Plan of Middlefield Banc Corp.	Incorporated by reference to Exhibit 10.1 of Middlefield Banc Corp.’s registration statement on Form 10 filed on April 17, 2001
10.1.1*	2007 Omnibus Equity Plan	Incorporated by reference to Middlefield Banc Corp.’s definitive proxy statement for the 2008 Annual Meeting of Shareholders, Appendix A, filed on April 7, 2008
10.2*	Severance Agreement between Middlefield Banc Corp. and Thomas G. Caldwell, dated January 7, 2008	Incorporated by reference to Exhibit 10.2 of Middlefield Banc Corp.’s Form 8-K Current Report filed on January 9, 2008
10.3*	Severance Agreement between Middlefield Banc Corp. and James R. Heslop, II, dated January 7, 2008	Incorporated by reference to Exhibit 10.3 of Middlefield Banc Corp.’s Form 8-K Current Report filed on January 9, 2008
10.4.0*	Severance Agreement between Middlefield Banc Corp. and Jay P. Giles, dated January 7, 2008	Incorporated by reference to Exhibit 10.4 of Middlefield Banc Corp.’s Form 8-K Current Report filed on January 9, 2008
10.4.1*	Severance Agreement between Middlefield Banc Corp. and Teresa M. Hetrick, dated January 7, 2008	Incorporated by reference to Exhibit 10.4.1 of Middlefield Banc Corp.’s Form 8-K Current Report filed on January 9, 2008
10.4.2*	[reserved]

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exhibit number   description   location  

10.4.3*	Severance Agreement between Middlefield Banc Corp. and Donald L. Stacy, dated January 7, 2008	Incorporated by reference to Exhibit 10.4.3 of Middlefield Banc Corp.’s Form 8-K Current Report filed on January 9, 2008
10.4.4*	Severance Agreement between Middlefield Banc Corp. and Alfred F. Thompson Jr., dated January 7, 2008	Incorporated by reference to Exhibit 10.4.4 of Middlefield Banc Corp.’s Form 8-K Current Report filed on January 9, 2008
10.5	Federal Home Loan Bank of Cincinnati Agreement for Advances and Security Agreement dated September 14, 2000	Incorporated by reference to Exhibit 10.4 of Middlefield Banc Corp.’s registration statement on Form 10 filed on April 17, 2001
10.6*	Amended Director Retirement Agreement with Richard T. Coyne	Incorporated by reference to Exhibit 10.6 of Middlefield Banc Corp.’s Form 8-K Current Report filed on January 9, 2008
10.7*	Amended Director Retirement Agreement with Frances H. Frank	Incorporated by reference to Exhibit 10.7 of Middlefield Banc Corp.’s Form 8-K Current Report filed on January 9, 2008
10.8*	Amended Director Retirement Agreement with Thomas C. Halstead	Incorporated by reference to Exhibit 10.8 of Middlefield Banc Corp.’s Form 8-K Current Report filed on January 9, 2008
10.9*	Director Retirement Agreement with George F. Hasman	Incorporated by reference to Exhibit 10.9 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2001, filed on March 28, 2002

50

exhibit number   description   location  

10.10*	Director Retirement Agreement with Donald D. Hunter	Incorporated by reference to Exhibit 10.10 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2001, filed on March 28, 2002
10.11*	Director Retirement Agreement with Martin S. Paul	Incorporated by reference to Exhibit 10.11 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2001, filed on March 28, 2002
10.12*	Amended Director Retirement Agreement with Donald E. Villers	Incorporated by reference to Exhibit 10.12 of Middlefield Banc Corp.’s Form 8-K Current Report filed on January 9, 2008
10.13*	Executive Survivor Income Agreement (aka DBO agreement [death benefit only]) with Donald L. Stacy	Incorporated by reference to Exhibit 10.14 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2003, filed on March 30, 2004
10.14*	DBO Agreement with Jay P. Giles	Incorporated by reference to Exhibit 10.15 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2003, filed on March 30, 2004
10.15*	DBO Agreement with Alfred F. Thompson Jr.	Incorporated by reference to Exhibit 10.16 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2003, filed on March 30, 2004

51

exhibit number   description   location  

10.16*	Reserved
10.17*	DBO Agreement with Theresa M. Hetrick	Incorporated by reference to Exhibit 10.18 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2003, filed on March 30, 2004
10.18*	Executive Deferred Compensation Agreement with Jay P. Giles	Incorporated by reference to Exhibit 10.18 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year ended December 31, 2011, filed on March 20, 2012
10.19*	DBO Agreement with James R. Heslop, II	Incorporated by reference to Exhibit 10.19 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2003, filed on March 30, 2004
10.20*	DBO Agreement with Thomas G. Caldwell	Incorporated by reference to Exhibit 10.20 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2003, filed on March 30, 2004
10.21*	Form of Indemnification Agreement with directors and executive officers	Incorporated by reference to Exhibit 99.1 of Middlefield Banc Corp.’s registration statement on Form 10, Amendment No. 1, filed on September 14, 2001
10.22*	Annual Incentive Plan	Incorporated by reference to Exhibit 10.22 of Middlefield Banc Corp.’s Form 8-K Current Report filed on September 12, 2012

52

exhibit number   description   location  

10.22.1	Annual Incentive Plan 2012 Award Summary for named executive officers	Incorporated by reference to Exhibit 10.22.1 of Middlefield Banc Corp.’s Form 8-K Current Report filed on September 12, 2012
10.23*	Amended Executive Deferred Compensation Agreement with Thomas G. Caldwell	Incorporated by reference to Exhibit 10.23 of Middlefield Banc Corp.’s Form 8-K Current Report filed on May 9, 2008
10.24*	Amended Executive Deferred Compensation Agreement with James R. Heslop, II	Incorporated by reference to Exhibit 10.24 of Middlefield Banc Corp.’s Form 8-K Current Report filed on May 9, 2008
10.25*	Amended Executive Deferred Compensation Agreement with Donald L. Stacy	Incorporated by reference to Exhibit 10.25 of Middlefield Banc Corp.’s Form 8-K Current Report filed on May 9, 2008
10.26	Stock Purchase Agreement dated August 15, 2011 between Bank Opportunity Fund LLC and Middlefield Banc Corp.	Incorporated by reference to Exhibit 10.26 of Middlefield Banc Corp.’s Form 8-K Current Report filed on August 18, 2011
10.26.1	Amendment 1 of the Stock Purchase Agreement with Bank Opportunity Fund LLC (amendment dated September 29, 2011)	Incorporated by reference to Exhibit 10.26.1 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year ended December 31, 2011, filed on March 20, 2012
10.26.2	Amendment 2 of the Stock Purchase Agreement with Bank Opportunity Fund LLC (amendment dated October 20, 2011)	Incorporated by reference to Exhibit 10.26.2 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year ended December 31, 2011, filed on March 20, 2012
10.26.3	Amendment 3 of the Stock Purchase Agreement with Bank Opportunity Fund LLC (amendment dated November 28, 2011)	Incorporated by reference to Exhibit 10.26.3 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year ended December 31, 2011, filed on March 20, 2012

53

exhibit number   description   location  

10.26.4	Amendment 4 of the Stock Purchase Agreement with Bank Opportunity Fund LLC (amendment dated December 21, 2011)	Incorporated by reference to Exhibit 10.26.4 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year ended December 31, 2011, filed on March 20, 2012
10.26.5	March 21, 2012 letter agreement between Bank Opportunity Fund LLC and Middlefield Banc Corp	Incorporated by reference to Exhibit 10.26.5 of Middlefield Banc Corp.’s Form 8-K Current Report filed on March 27, 2012
10.26.6	Amendment 5 of the Stock Purchase Agreement with Bank Opportunity Fund LLC (amendment dated April 17, 2012)	Incorporated by reference to Exhibit 10.26.6 of Middlefield Banc Corp.’s Form 8-K Current Report filed on April 23, 2012
10.26.7	Amendment 6 of the Stock Purchase Agreement with Bank Opportunity Fund LLC (amendment dated August 23, 2012)	Incorporated by reference to Exhibit 10.26.7 of Middlefield Banc Corp.’s Form 8-K Current Report filed on August 24, 2012
10.27	[reserved]
10.28	Amended and Restated Purchaser’s Rights and Voting Agreement, dated April 17, 2012, among Bank Opportunity Fund LLC, Middlefield Banc Corp., and directors and officers of Middlefield Banc Corp.	Incorporated by reference to Exhibit 10.28 of Middlefield Banc Corp.’s Form 8-K Current Report filed on April 23, 2012
10.28.1	Amendment of the Amended and Restated Purchaser’s Rights and Voting Agreement (amendment dated August 23, 2012)	Incorporated by reference to Exhibit 10.28.1 of Middlefield Banc Corp.’s Form 8-K Current Report filed on August 24, 2012
31.1	Rule 13a-14(a) certification of Chief Executive Officer	filed herewith
31.2	Rule 13a-14(a) certification of Chief Financial Officer	filed herewith
32	Rule 13a-14(b) certification	filed herewith
101.INS**	XBRL Instance	furnished herewith
101.SCH**	XBRL Taxonomy Extension Schema	furnished herewith
101.CAL**	XBRL Taxonomy Extension Calculation	furnished herewith
101.DEF**	XBRL Taxonomy Extension Definition	furnished herewith
101.LAB**	XBRL Taxonomy Extension Labels	furnished herewith
101.PRE**	XBRL Taxonomy Extension Presentation	furnished herewith
* management contract or compensatory plan or arrangement
** XBRLinformation is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

54

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:  November 8, 2012	By:	/s/  Thomas G. Caldwell
		Thomas G. Caldwell
		President and Chief Executive Officer

Date:  November 8, 2012	By:	/s/  Donald L. Stacy
		Donald L. Stacy
		Principal Financial and Accounting Officer

 

55

EX-31.1

Exhibit 31.1

CERTIFICATION

Pursuant to Section 302 of the Securities Exchange Act of 1934

I, Thomas G. Caldwell, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Middlefield Banc Corp. (“the Registrant”).

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and we have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally excepted accounting principles;

(c) Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons fulfilling the equivalent function):

(a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.

Date:  November 8, 2012

By:	/s/Thomas G. Caldwell
Thomas G. Caldwell
President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

Pursuant to Section 302 of the Securities Exchange Act of 1934

I, Donald L. Stacy, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Middlefield Banc Corp. (“the Registrant”).

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and we have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

(c) Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons fulfilling the equivalent function):

(a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.

Date: November 8, 2012		By: /s/Donald L. Stacy
	Donald L. Stacy
	Principal Financial and Accounting Officer

EX-32.1

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Middlefield Banc Corp. (the “Company”) on Form 10-Q for the period ending September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Thomas G. Caldwell, President, and Donald L. Stacy, Chief Financial Officer, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)           The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)           The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By: /s/Thomas G. Caldwell	By: /s/Donald L. Stacy
Thomas G. Caldwell	Donald L. Stacy
President and Chief Executive Officer	Principal Financial and Accounting Officer

November 8, 2012

A signed original of this written statement required by Section 906 has been provided to Middlefield Banc Corp. and will be retained by Middlefield Banc Corp. and furnished to the Securities and Exchange Commission or its staff upon request.

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Note 6 - Loans And Related Allowance For Loan Losses (Detail) - Additional Information on Impaired Loans (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Commercial and Industrial [Member]
Total:
Average Recorded Investment	$ 2,535	$ 3,295	$ 2,170	$ 3,266
Interest Income Recognized	139	11	170	93
Real Estate Construction [Member]
Total:
Average Recorded Investment	2,305	630	2,400	624
Interest Income Recognized		15	113	15
Residential Real Estate Mortgage [Member]
Total:
Average Recorded Investment	3,622	997	3,764	793
Interest Income Recognized	85	23	169	68
Commercial Real Estate Mortgage [Member]
Total:
Average Recorded Investment	3,597	4,899	3,985	4,081
Interest Income Recognized	200	86	324	188
Consumer Installment [Member]
Total:
Average Recorded Investment	13	25	27	13
Interest Income Recognized	$ 1		$ 2	$ 4

XML

Note 5 - Investment Securities Available For Sale (Detail) - Sales of Securities Available-for-sale (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Proceeds from sales	$ 5,622	$ 14,233	$ 27,426	$ 24,305
Gross realized gains	154	6	462	21
Gross realized losses	$ (2)		$ (14)	$ (37)

XML

Note 3 - Earnings Per Share (Detail) - Shares Used in Calculation of Earnings Per Share	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Weighted average common shares outstanding	2,167,711	1,894,207	2,077,027	1,847,945
Average treasury stock shares	(189,530)	(189,530)	(189,530)	(189,530)
Weighted average common shares and common stock equivalents used to calculate basic earnings per share	1,978,181	1,704,677	1,887,497	1,658,415
Additional common stock equivalents (stock options) used to calculate diluted earnings per share	5,682		4,236
Weighted average common shares and common stock equivalents used to calculate diluted earnings per share	1,983,863	1,704,677	1,891,733	1,658,415

XML

Note 6 - Loans And Related Allowance For Loan Losses (Detail) - Allowance for Loan Losses (USD $) In Thousands, unless otherwise specified			3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 Commercial and Industrial [Member]	Sep. 30, 2011 Commercial and Industrial [Member]	Sep. 30, 2012 Commercial and Industrial [Member]	Sep. 30, 2011 Commercial and Industrial [Member]	Sep. 30, 2012 Real Estate Construction [Member]	Sep. 30, 2011 Real Estate Construction [Member]	Sep. 30, 2012 Real Estate Construction [Member]	Sep. 30, 2011 Real Estate Construction [Member]	Sep. 30, 2012 Residential Real Estate Mortgage [Member]	Sep. 30, 2011 Residential Real Estate Mortgage [Member]	Sep. 30, 2012 Residential Real Estate Mortgage [Member]	Sep. 30, 2011 Residential Real Estate Mortgage [Member]	Sep. 30, 2012 Commercial Real Estate Mortgage [Member]	Sep. 30, 2011 Commercial Real Estate Mortgage [Member]	Sep. 30, 2012 Commercial Real Estate Mortgage [Member]	Sep. 30, 2011 Commercial Real Estate Mortgage [Member]	Sep. 30, 2012 Consumer Installment [Member]	Sep. 30, 2011 Consumer Installment [Member]	Sep. 30, 2012 Consumer Installment [Member]	Sep. 30, 2011 Consumer Installment [Member]	Sep. 30, 2012 Total [Member]	Sep. 30, 2011 Total [Member]	Sep. 30, 2012 Total [Member]	Sep. 30, 2011 Total [Member]
ALL balance at end of period	$ 7,173	$ 6,819	$ 1,626	$ 957	$ 1,296	$ 962	$ 504	$ 229	$ 438	$ 188	$ 4,109	$ 3,791	$ 3,731	$ 3,434	$ 1,492	$ 1,921	$ 1,306	$ 1,543	$ 21	$ 129	$ 48	$ 94	$ 7,752	$ 7,027	$ 6,819	$ 6,221
ALL balance at end of period	7,173	6,819	1,704	918	1,704	918	445	257	445	257	2,953	4,363	2,953	4,363	2,055	1,893	2,055	1,893	16	143	16	143	7,173	7,574	7,173	7,574
Charge-offs			(60)	(232)	(88)	(503)				(6)	(570)	(121)	(668)	(461)	(70)	(86)	(123)	(266)	(40)		(62)	(11)	(740)	(439)	(941)	(1,247)
Recoveries			1	49	70	75					12	15	15	18					5	2	17	22	18	66	102	115
Provision			$ 137	$ 144	$ 426	$ 384	$ (59)	$ 28	$ 7	$ 75	$ (598)	$ 678	$ (125)	$ 1,372	$ 633	$ 58	$ 872	$ 616	$ 30	$ 12	$ 13	$ 38	$ 143	$ 920	$ 1,193	$ 2,485

XML

Note 6 - Loans And Related Allowance For Loan Losses (Detail) - Primary Segments of the Loan Portfolio (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Jun. 30, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Dec. 31, 2010
Total loans	$ 409,175		$ 401,880
Ending allowance balance attributable to loans:
Total ending allowance balance	7,173		6,819
Commercial and Industrial [Member]
Loans individually evaluated for impairment	4,414		4,492
Loans collectively evaluated for impairment	60,909		54,693
Total loans	65,323		59,185
Ending allowance balance attributable to loans:
Allowance for loan losses individually evaluated for impairment	1,096		595
Allowance for loan losses collectively evaluated for impairment	608		701
Total ending allowance balance	1,704	1,626	1,296	918	957	962
Real Estate Construction [Member]
Loans individually evaluated for impairment	4,383		867
Loans collectively evaluated for impairment	16,939		20,678
Total loans	21,322		21,545
Ending allowance balance attributable to loans:
Allowance for loan losses individually evaluated for impairment	442		237
Allowance for loan losses collectively evaluated for impairment	3		201
Total ending allowance balance	445	504	438	257	229	188
Residential Real Estate Mortgage [Member]
Loans individually evaluated for impairment	3,734		4,882
Loans collectively evaluated for impairment	201,699		203,257
Total loans	205,433		208,139
Ending allowance balance attributable to loans:
Allowance for loan losses individually evaluated for impairment	482		685
Allowance for loan losses collectively evaluated for impairment	2,471		3,046
Total ending allowance balance	2,953	4,109	3,731	4,363	3,791	3,434
Commercial Real Estate Mortgage [Member]
Loans individually evaluated for impairment	7,021		6,491
Loans collectively evaluated for impairment	105,846		102,011
Total loans	112,867		108,502
Ending allowance balance attributable to loans:
Allowance for loan losses individually evaluated for impairment	955		185
Allowance for loan losses collectively evaluated for impairment	1,100		1,121
Total ending allowance balance	2,055	1,492	1,306	1,893	1,921	1,543
Consumer Installment [Member]
Loans collectively evaluated for impairment	4,230		4,509
Total loans	4,230		4,509
Ending allowance balance attributable to loans:
Allowance for loan losses collectively evaluated for impairment	16		48
Total ending allowance balance	16	21	48	143	129	94
Total [Member]
Loans individually evaluated for impairment	19,553		16,732
Loans collectively evaluated for impairment	389,622		385,148
Total loans	409,175		401,880
Ending allowance balance attributable to loans:
Allowance for loan losses individually evaluated for impairment	2,975		1,702
Allowance for loan losses collectively evaluated for impairment	4,198		5,117
Total ending allowance balance	$ 7,173	$ 7,752	$ 6,819	$ 7,574	$ 7,027	$ 6,221

XML

Note 1 - Basis of Presentation

9 Months Ended

Sep. 30, 2012

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

NOTE 1 - BASIS OF PRESENTATION

The consolidated financial statements of Middlefield Banc Corp. ("Company") include its two bank subsidiaries, The Middlefield Banking Company (“MB”) and Emerald Bank (“EB”), and a non-bank asset resolution subsidiary EMORECO, Inc. 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 the Company considers necessary to fairly state the Company’s financial position and the results of operations and cash flows.  The consolidated balance sheet at December 31, 2011, 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 consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included with Middlefield’s Form 10-K for the year ended December 31, 2011 (File No. 000-32561). 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.

Recent Accounting Pronouncements

In September 2011, the FASB issued ASU 2011-08, Intangibles – Goodwill and Other Topics (Topic 350), Testing Goodwill for Impairment.  The objective of this Update is to simplify how entities, both public and nonpublic, test goodwill for impairment.  The amendments in the Update permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350.  The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent.  Under the amendments in this Update, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount.  The amendments in this Update apply to all entities, both public and nonpublic, that have goodwill reported in their financial statements and are effective for interim and annual goodwill impairment tests performed for fiscal years beginning after December 15, 2011.  Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011, if an entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance.  This ASU did not have a significant impact on the Company’s financial statements.

In December 2011, the FASB issued ASU 2011-11, Balance Sheet (Topic 210):  Disclosures about Offsetting Assets and Liabilities.  The amendments in this Update affect all entities that have financial instruments and derivative instruments that are either (1) offset in accordance with either Section 210-20-45 or Section 815-10-45 or (2) subject to an enforceable master netting arrangement or similar agreement.  The requirements amend the disclosure requirements on offsetting in Section 210-20-50.  This information will enable users of an entity's financial statements to evaluate the effect or potential effect of netting arrangements on an entity's financial position, including the effect or potential effect of rights of setoff associated with certain financial instruments and derivative instruments in the scope of this Update.  An entity is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods.  An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented.  This ASU is not expected to have a significant impact on the Company’s financial statements.

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Note 6 - Loans And Related Allowance For Loan Losses (Detail) - Additional Information Regarding Troubled Debt Restructurings (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012
Rate Forgiveness [Member] | Commercial and Industrial [Member] | Nine Months [Member]
Number of Contracts	1
Rate Forgiveness [Member] | Residential Real Estate Mortgage [Member] | Three Months [Member]
Number of Contracts	1
Rate Forgiveness [Member] | Residential Real Estate Mortgage [Member] | Nine Months [Member]
Number of Contracts	2
Other Modifications [Member] | Commercial and Industrial [Member] | Three Months [Member]
Number of Contracts	2
Other Modifications [Member] | Commercial and Industrial [Member] | Nine Months [Member]
Number of Contracts	8
Other Modifications [Member] | Residential Real Estate Mortgage [Member] | Three Months [Member]
Number of Contracts	6
Other Modifications [Member] | Residential Real Estate Mortgage [Member] | Nine Months [Member]
Number of Contracts	8
Other Modifications [Member] | Consumer Installment [Member] | Three Months [Member]
Number of Contracts	1
Other Modifications [Member] | Consumer Installment [Member] | Nine Months [Member]
Number of Contracts	2
Commercial and Industrial [Member] | Three Months [Member]
Number of Contracts	2
Pre-Modification Outstanding Recorded Investment (in Dollars)	13
Commercial and Industrial [Member] | Nine Months [Member]
Number of Contracts	9
Pre-Modification Outstanding Recorded Investment (in Dollars)	243
Residential Real Estate Mortgage [Member] | Three Months [Member]
Number of Contracts	7
Pre-Modification Outstanding Recorded Investment (in Dollars)	619
Residential Real Estate Mortgage [Member] | Nine Months [Member]
Number of Contracts	10
Pre-Modification Outstanding Recorded Investment (in Dollars)	946
Consumer Installment [Member] | Three Months [Member]
Number of Contracts	1
Pre-Modification Outstanding Recorded Investment (in Dollars)	6
Consumer Installment [Member] | Nine Months [Member]
Number of Contracts	2
Pre-Modification Outstanding Recorded Investment (in Dollars)	11

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Note 4 - Fair Value Measurements (Detail) - Estimated Fair Value of Financial Instruments (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Financial assets:
Cash and cash equivalents	$ 52,606	$ 34,390
Investment securities
Available for sale	179,140	193,977
Net loans	402,002	395,061
Bank-owned life insurance	8,465	8,257
Federal Home Loan Bank stock	1,887	1,887
Accrued interest receivable	2,598	2,234
Financial liabilities:
Deposits	584,738	580,962
Short-term borrowings	6,518	7,392
Other borrowings	15,836	16,831
Accrued interest payable	557	645
Fair Value, Inputs, Level 1 [Member]
Financial assets:
Cash and cash equivalents	52,606
Investment securities
Available for sale	5
Bank-owned life insurance	8,465
Federal Home Loan Bank stock	1,887
Accrued interest receivable	2,598
Financial liabilities:
Deposits	382,773
Short-term borrowings	6,518
Accrued interest payable	557
Fair Value, Inputs, Level 2 [Member]
Investment securities
Available for sale	179,135
Fair Value, Inputs, Level 3 [Member]
Investment securities
Net loans	394,070
Financial liabilities:
Deposits	207,336
Other borrowings	16,240
Estimate of Fair Value, Fair Value Disclosure [Member]
Financial assets:
Cash and cash equivalents	52,606	34,390
Investment securities
Available for sale	179,140	193,977
Net loans	394,070	382,542
Bank-owned life insurance	8,465	8,257
Federal Home Loan Bank stock	1,887	1,887
Accrued interest receivable	2,598	2,234
Financial liabilities:
Deposits	590,109	587,178
Short-term borrowings	6,518	7,392
Other borrowings	16,240	17,327
Accrued interest payable	$ 557	$ 645

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Note 4 - Fair Value Measurements (Detail) - Additional Quantitative Information About Assets measured at fair value (USD $) In Thousands, unless otherwise specified			9 Months Ended				9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 Appraisal of Collateral - Appraisal Adjustments [Member] Minimum [Member]	Sep. 30, 2012 Appraisal of Collateral - Appraisal Adjustments [Member] Maximum [Member]	Sep. 30, 2012 Appraisal of Collateral - Appraisal Adjustments [Member]		Sep. 30, 2012 Appraisal of Collateral Liquidation Expenses [Member] Minimum [Member]	Sep. 30, 2012 Appraisal of Collateral Liquidation Expenses [Member] Maximum [Member]	Sep. 30, 2012 Appraisal of Collateral [Member]
Estimate (in Dollars)	$ 17,233	$ 18,237			$ 14,258	[1],[2]
Range			0.00%	(75.00%)			0.00%	(45.80%)
Other real estate owned (in Dollars)									$ 2,332	[1],[3]

[1] Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various level 3 inputs which are not identifiable.

[2] Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

[3] Includes qualitative adjustments by management and estimated liquidation expenses.

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Note 6 - Loans And Related Allowance For Loan Losses (Detail) - Troubled Debt Restructurings (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012
Commercial and Industrial [Member] | Three Months [Member]
Troubled Debt Restructurings subsequently defaulted - number of contracts	1
Troubled Debt Restructurings subsequently defaulted - recorded investment (in Dollars)	$ 30
Commercial and Industrial [Member] | Nine Months [Member]
Troubled Debt Restructurings subsequently defaulted - number of contracts	2
Troubled Debt Restructurings subsequently defaulted - recorded investment (in Dollars)	60
Residential Real Estate Mortgage [Member] | Three Months [Member]
Troubled Debt Restructurings subsequently defaulted - number of contracts	1
Troubled Debt Restructurings subsequently defaulted - recorded investment (in Dollars)	20
Residential Real Estate Mortgage [Member] | Nine Months [Member]
Troubled Debt Restructurings subsequently defaulted - number of contracts	1
Troubled Debt Restructurings subsequently defaulted - recorded investment (in Dollars)	$ 20

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Note 5 - Investment Securities Available For Sale (Detail) (USD $)	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011
Available-for-sale Securities Pledged as Collateral	$ 55,600,000		$ 55,800,000
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	7
Percentage of Portfolio	96.00%
Available-for-sale Securities, Current	179,140,000	193,977,000
Available-for-sale Securities, Gross Unrealized Gains	9,127,000	7,104,000
Available-for-sale Securities, Gross Unrealized Losses	33,000	224,000
Mortgage-backed Securities, Issued by Private Enterprises [Member]
Available-for-sale Securities, Current	5,400,000
Available-for-sale Securities, Gross Unrealized Gains	570,000	411,000
Available-for-sale Securities, Gross Unrealized Losses	$ 2,000	$ 95,000

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Note 5 - Investment Securities Available For Sale (Detail) - Amortized Cost and Fair Values of Securities Available for Sale (USD $)	Sep. 30, 2012	Dec. 31, 2011
Available for Sale Securities Amortized Cost	$ 170,046,000	$ 187,097,000
Available for Sale Securities Gross Unrealized Gains	9,127,000	7,104,000
Available for Sale Securities Gross Unrealized Losses	(33,000)	(224,000)
Available for Sale Securities Fair Value	179,140,000	193,977,000
Taxable [Member] | US States and Political Subdivisions Debt Securities [Member]
Available for Sale Securities Amortized Cost	8,198,000	8,207,000
Available for Sale Securities Gross Unrealized Gains	864,000	766,000
Available for Sale Securities Fair Value	9,062,000	8,973,000
Tax-exempt [Member] | US States and Political Subdivisions Debt Securities [Member]
Available for Sale Securities Amortized Cost	78,808,000	75,807,000
Available for Sale Securities Gross Unrealized Gains	4,827,000	3,681,000
Available for Sale Securities Gross Unrealized Losses	(29,000)	(61,000)
Available for Sale Securities Fair Value	83,606,000	79,427,000
US Government Agencies Debt Securities [Member]
Available for Sale Securities Amortized Cost	16,733,000	31,520,000
Available for Sale Securities Gross Unrealized Gains	537,000	427,000
Available for Sale Securities Gross Unrealized Losses	(2,000)	(14,000)
Available for Sale Securities Fair Value	17,268,000	31,933,000
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Available for Sale Securities Amortized Cost	60,139,000	63,808,000
Available for Sale Securities Gross Unrealized Gains	2,328,000	1,819,000
Available for Sale Securities Gross Unrealized Losses		(54,000)
Available for Sale Securities Fair Value	62,467,000	65,573,000
Mortgage-backed Securities, Issued by Private Enterprises [Member]
Available for Sale Securities Amortized Cost	5,418,000	7,005,000
Available for Sale Securities Gross Unrealized Gains	570,000	411,000
Available for Sale Securities Gross Unrealized Losses	(2,000)	(95,000)
Available for Sale Securities Fair Value	5,986,000	7,321,000
Debt Securities [Member]
Available for Sale Securities Amortized Cost	169,296,000	186,347,000
Available for Sale Securities Gross Unrealized Gains	9,126,000	7,104,000
Available for Sale Securities Gross Unrealized Losses	(33,000)	(224,000)
Available for Sale Securities Fair Value	178,389,000	193,227,000
Equity Securities in Financial Institutions [Member]
Available for Sale Securities Amortized Cost	750,000	750,000
Available for Sale Securities Gross Unrealized Gains	1,000
Available for Sale Securities Fair Value	$ 751,000	$ 750,000

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Consolidated Statement of Cash Flows (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
OPERATING ACTIVITIES
Net income	$ 5,012,000	$ 2,801,000
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	1,193,000	2,485,000
Investment securities (gains) losses, net	(448,000)	16,000
Depreciation and amortization	663,000	639,000
Amortization of premium and discount on investment securities	674,000	247,000
Amortization of deferred loan fees, net	(139,000)	(120,000)
Earnings on bank-owned life insurance	(208,000)	(209,000)
Deferred income taxes	220,000	(173,000)
Stock-based compensation expense	32,000	59,000
Losses on other real estate owned	238,000	498,000
Increase in accrued interest receivable	(364,000)	(384,000)
Decrease in accrued interest payable	(88,000)	(73,000)
Decrease in prepaid federal deposit insurance	633,000	642,000
Other, net	(95,000)	(746,000)
Net cash provided by operating activities	7,323,000	5,682,000
Investment securities available for sale:
Proceeds from repayments and maturities	40,227,000	56,940,000
Proceeds from sale of securities	27,426,000	24,305,000
Purchases	(50,828,000)	(77,429,000)
Increase in loans, net	(8,826,000)	(18,217,000)
Proceeds from the sale of other real estate owned	542,000	777,000
Purchase of premises and equipment	(883,000)	(321,000)
Net cash provided by (used for) investing activities	7,658,000	(13,945,000)
FINANCING ACTIVITIES
Net increase in deposits	3,776,000	21,987,000
Decrease in short-term borrowings, net	(874,000)	(724,000)
Repayment of other borrowings	(995,000)	(1,366,000)
Common stock issuance	2,329,000	2,210,000
Proceeds from dividend reinvestment & purchase plan	481,000	414,000
Cash dividends	(1,482,000)	(1,306,000)
Net cash provided by financing activities	3,235,000	21,215,000
Increase in cash and cash equivalents	18,216,000	12,952,000
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	34,390,000	30,635,000
CASH AND CASH EQUIVALENTS AT END OF PERIOD	52,606,000	43,587,000
Cash paid during the year for:
Interest on deposits and borrowings	5,022,000	6,852,000
Income taxes	1,250,000	515,000
Non-cash investing transactions:
Transfers from loans to other real estate owned	$ 916,000	$ 1,146,000

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Note 5 - Investment Securities Available For Sale (Detail) - Amortized Cost and Fair Value of Debt Securities by Contractual Maturity (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012
Due in one year or less	$ 3,003
Due in one year or less	3,038
Due after one year through five years	4,834
Due after one year through five years	5,093
Due after five years through ten years	14,682
Due after five years through ten years	15,545
Due after ten years	146,777
Due after ten years	154,713
Total	169,296
Total	$ 178,389

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Note 6 - Loans And Related Allowance For Loan Losses (Detail) - Classes of the Loan Portfolio Summarized by Credit Quality (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Financing Receivable	$ 409,175	$ 401,880
Pass [Member] | Commercial and Industrial [Member]
Financing Receivable	60,439	53,645
Pass [Member] | Real Estate Construction [Member]
Financing Receivable	16,913	20,883
Pass [Member] | Residential Real Estate Mortgage [Member]
Financing Receivable	191,710	192,534
Pass [Member] | Commercial Real Estate Mortgage [Member]
Financing Receivable	104,030	100,536
Pass [Member] | Consumer Installment [Member]
Financing Receivable	4,208	4,495
Pass [Member]
Financing Receivable	377,300	372,093
Special Mention [Member] | Commercial and Industrial [Member]
Financing Receivable	407	1,104
Special Mention [Member] | Residential Real Estate Mortgage [Member]
Financing Receivable	868	1,100
Special Mention [Member] | Commercial Real Estate Mortgage [Member]
Financing Receivable	2,176	443
Special Mention [Member] | Consumer Installment [Member]
Financing Receivable	2	6
Special Mention [Member]
Financing Receivable	3,453	2,653
Substandard [Member] | Commercial and Industrial [Member]
Financing Receivable	4,477	4,363
Substandard [Member] | Real Estate Construction [Member]
Financing Receivable	4,409	662
Substandard [Member] | Residential Real Estate Mortgage [Member]
Financing Receivable	12,855	14,505
Substandard [Member] | Commercial Real Estate Mortgage [Member]
Financing Receivable	6,661	7,523
Substandard [Member] | Consumer Installment [Member]
Financing Receivable	20	8
Substandard [Member]
Financing Receivable	28,422	27,061
Doubtful [Member] | Commercial and Industrial [Member]
Financing Receivable		73
Doubtful [Member]
Financing Receivable		73
Commercial and Industrial [Member]
Financing Receivable	65,323	59,185
Real Estate Construction [Member]
Financing Receivable	21,322	21,545
Residential Real Estate Mortgage [Member]
Financing Receivable	205,433	208,139
Commercial Real Estate Mortgage [Member]
Financing Receivable	112,867	108,502
Consumer Installment [Member]
Financing Receivable	$ 4,230	$ 4,509

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Consolidated Balance Sheet (Unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
ASSETS
Cash and due from banks	$ 32,735	$ 15,730
Federal funds sold	19,871	18,660
Cash and cash equivalents	52,606	34,390
Investment securities available for sale	179,140	193,977
Loans	409,175	401,880
Less allowance for loan losses	7,173	6,819
Net loans	402,002	395,061
Premises and equipment	8,701	8,264
Goodwill	4,559	4,559
Bank-owned life insurance	8,465	8,257
Accrued interest and other assets	8,708	10,043
TOTAL ASSETS	664,181	654,551
Deposits:
Noninterest-bearing demand	70,505	63,348
Interest-bearing demand	65,164	55,853
Money market	72,831	75,621
Savings	174,273	167,207
Time	201,965	218,933
Total deposits	584,738	580,962
Short-term borrowings	6,518	7,392
Other borrowings	15,836	16,831
Accrued interest and other liabilities	2,003	2,113
TOTAL LIABILITIES	609,095	607,298
STOCKHOLDERS' EQUITY
Common stock, no par value; 10,000,000 shares authorized, 2,172,934 and 1,951,868 shares issued	34,082	31,240
Retained earnings	21,736	18,206
Accumulated other comprehensive income	6,002	4,541
Treasury stock, at cost; 189,530 shares	(6,734)	(6,734)
TOTAL STOCKHOLDERS' EQUITY	55,086	47,253
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 664,181	$ 654,551

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Note 7 - Common Stock Issuance (Detail) (USD $)	0 Months Ended	1 Months Ended	0 Months Ended	1 Months Ended	3 Months Ended	9 Months Ended
	Apr. 30, 2012	Apr. 17, 2012	Aug. 12, 2011	Apr. 30, 2012	Jul. 31, 2012	Sep. 30, 2012	Sep. 30, 2011
Stock Issued During Period, Shares, New Issues	103,585	93,050	85,200		400,000	196,635
Sale of Stock, Price Per Share (in Dollars per share)	$ 16	$ 16		$ 16		$ 19
Proceeds from Issuance of Common Stock (in Dollars)	$ 1,657,360	$ 1,488,800				$ 2,329,000	$ 2,210,000
Payments of Stock Issuance Costs (in Dollars)				$ 816,000		$ 816,000
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners			4.90%
Additional Shares to be Purchased			33,700
Share Price (in Dollars per share)						$ 16

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Consolidated Statement of Changes in Stockholders' Equity (Unaudited) (USD $) In Thousands	Common Stock [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Treasury Stock [Member]	Total
Balance, December 31, 2011 at Dec. 31, 2011	$ 31,240	$ 18,206	$ 4,541	$ (6,734)	$ 47,253
Net income		5,012			5,012
Comprehensive income			1,461		1,461
Stock-based compensation expense (1,722 shares)	32				32
Common stock issuance (196,635 shares), net of issuance costs of $816	2,329				2,329
Dividend reinvestment and purchase plan (22,708 shares)	481				481
Cash dividends ($0.78 per share)		(1,482)			(1,482)
Balance, September 30, 2012 at Sep. 30, 2012	$ 34,082	$ 21,736	$ 6,002	$ (6,734)	$ 55,086

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Note 6 - Loans And Related Allowance For Loan Losses (Detail) (Threshold for Loans Evaluated for Impairment [Member], USD $)	Sep. 30, 2012
Notes, Loans and Financing Receivable, Gross, Current	$ 150,000
Loans and Leases Receivable, Gross, Commercial	200,000
Outside Consultant [Member]
Loans and Leases Receivable, Gross, Commercial	250,000
Criticized Relationships [Member]
Financing Receivable, Gross	$ 125,000

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Note 1 - Basis of Presentation (Detail)	Sep. 30, 2012
Number of Bank Subsidiaries	2

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Note 6 - Loans And Related Allowance For Loan Losses (Detail) - Major Classifications of Net Loans (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Jun. 30, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Dec. 31, 2010
Financing Receivable Gross	$ 409,175		$ 401,880
Less allowance for loan losses	(7,173)		(6,819)
Net loans	402,002		395,061
Commercial and Industrial [Member]
Financing Receivable Gross	65,323		59,185
Less allowance for loan losses	(1,704)	(1,626)	(1,296)	(918)	(957)	(962)
Real Estate Construction [Member]
Financing Receivable Gross	21,322		21,545
Less allowance for loan losses	(445)	(504)	(438)	(257)	(229)	(188)
Residential Real Estate Mortgage [Member]
Financing Receivable Gross	205,433		208,139
Less allowance for loan losses	(2,953)	(4,109)	(3,731)	(4,363)	(3,791)	(3,434)
Commercial Real Estate Mortgage [Member]
Financing Receivable Gross	112,867		108,502
Less allowance for loan losses	(2,055)	(1,492)	(1,306)	(1,893)	(1,921)	(1,543)
Consumer Installment [Member]
Financing Receivable Gross	4,230		4,509
Less allowance for loan losses	$ (16)	$ (21)	$ (48)	$ (143)	$ (129)	$ (94)

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Note 3 - Earnings Per Share (Detail) (USD $)	1 Months Ended	3 Months Ended	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011	Dec. 31, 2010
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number (in Shares)	90,528	88,354	88,354	90,528	88,774	89,077
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit	$ 17.55		$ 17.55
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit			$ 40.24	$ 40.24
Incremental Common Shares Attributable to Share-based Payment Arrangements (in Shares)		5,682	4,236
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in Shares)			17,536	90,528
Earnings Per Share, Potentially Dilutive Securities			11,332
Share Price (in Dollars per share)		$ 16	$ 16
Dilutive Securities [Member]
Incremental Common Shares Attributable to Share-based Payment Arrangements (in Shares)			9,000
Quarter Ended [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Per Share Weighted Average Price of Shares Purchased	$ 17.23	$ 22.85	$ 22.85	$ 17.23
Year-to-Date [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Per Share Weighted Average Price of Shares Purchased	$ 17.36	$ 21.08	$ 21.08	$ 17.36

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Consolidated Statement of Changes in Stockholders' Equity (Unaudited) (Parentheticals) (USD $)	9 Months Ended
	Sep. 30, 2012
Stock-based compensation expense (shares) (in Shares)	1,722
Common stock, shares issued (in Shares)	196,635
Common stock, issuance costs (in Dollars)	$ 816,000
Dividend reinvestment and purchase plan shares (in Shares)	22,708
Cash dividends per share (in Dollars per share)	$ 0.78
Common Stock [Member]
Stock-based compensation expense (shares) (in Shares)	1,722
Common stock, shares issued (in Shares)	196,635
Common stock, issuance costs (in Dollars)	$ 816,000
Dividend reinvestment and purchase plan shares (in Shares)	22,708
Retained Earnings [Member]
Cash dividends per share (in Dollars per share)	$ 0.78

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Consolidated Balance Sheet (Unaudited) (Parentheticals) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Common stock, shares authorized (in Shares)	10,000,000	10,000,000
Common stock, shares issued (in Shares)	2,172,934	1,951,868
Common stock, no par value (in Dollars per share)	$ 0	$ 0
Treasury stock, shares (in Shares)	189,530	189,530

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Note 2 - Stock-based Compensation (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

	2012			Weighted- average Exercise Price		2011			Weighted- average Exercise Price
Outstanding, January 1		88,774		$	26.81		89,077		$	27.87
Granted		-			-		9,000			17.55
Exercised		-			-		-			-
Forfeited		(420	)		36.86		(7,549	)		29.22
Outstanding, September 30		88,354		$	26.76		90,528		$	26.73
Exercisable, September 30		88,354		$	26.76		81,528		$	27.75

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Document And Entity Information	9 Months Ended
	Sep. 30, 2012	Nov. 05, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	MIDDLEFIELD BANC CORP
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		1,983,491
Amendment Flag	false
Entity Central Index Key	0000836147
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Sep. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3

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Note 3 - Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Weighted Average Number of Shares [Table Text Block]

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2012			2011			2012			2011
Weighted average common shares outstanding		2,167,711			1,894,207			2,077,027			1,847,945
Average treasury stock shares		(189,530	)		(189,530	)		(189,530	)		(189,530	)
Weighted average common shares and common stock equivalents used to calculate basic earnings per share		1,978,181			1,704,677			1,887,497			1,658,415
Additional common stock equivalents (stock options) used to calculate diluted earnings per share		5,682			-			4,236			-
Weighted average common shares and common stock equivalents used to calculate diluted earnings per share		1,983,863			1,704,677			1,891,733			1,658,415

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Consolidated Statement of Income (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
INTEREST INCOME
Interest and fees on loans	$ 5,810	$ 5,555	$ 16,988	$ 16,255
Interest-bearing deposits in other institutions	7	4	19	8
Federal funds sold	6		13	13
Investment securities:
Taxable interest	749	1,220	2,455	3,832
Tax-exempt interest	749	724	2,249	2,124
Dividends on stock	21	25	73	76
Total interest income	7,342	7,528	21,797	22,308
INTEREST EXPENSE
Deposits	1,418	1,836	4,349	5,877
Short term borrowings	61	59	219	177
Other borrowings	78	100	244	313
Trust preferred securities	45	139	122	412
Total interest expense	1,602	2,134	4,934	6,779
NET INTEREST INCOME	5,740	5,394	16,863	15,529
Provision for loan losses	143	920	1,193	2,485
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	5,597	4,474	15,670	13,044
NONINTEREST INCOME
Service charges on deposit accounts	481	455	1,383	1,299
Investment securities gains (losses), net	152	6	448	(16)
Earnings on bank-owned life insurance	71	70	208	209
Other income	164	155	640	487
Total noninterest income	868	686	2,679	1,979
NONINTEREST EXPENSE
Salaries and employee benefits	1,705	1,754	5,255	5,388
Occupancy expense	233	242	703	737
Equipment expense	186	175	557	488
Data processing costs	184	162	574	515
Ohio state franchise tax	160	126	417	351
Federal deposit insurance expense	250	176	751	673
Professional fees	270	181	670	577
Losses on other real estate owned	188	195	238	498
Other expense	946	895	2,780	2,676
Total noninterest expense	4,122	3,906	11,945	11,903
Income before income taxes	2,343	1,254	6,404	3,120
Income taxes	494	175	1,392	319
NET INCOME	$ 1,849	$ 1,079	$ 5,012	$ 2,801
EARNINGS PER SHARE
Basic (in Dollars per share)	$ 0.93	$ 0.63	$ 2.66	$ 1.69
Diluted (in Dollars per share)	$ 0.93	$ 0.63	$ 2.65	$ 1.69
DIVIDENDS DECLARED PER SHARE (in Dollars per share)	$ 0.26	$ 0.26	$ 0.78	$ 0.78

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Note 4 - Fair Value Measurements

9 Months Ended

Sep. 30, 2012

Fair Value Disclosures [Text Block]

NOTE 4 - FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for an asset or liability in an orderly transaction between market participants at the measurement date. The three broad levels within the fair value hierarchy are as follows:

Level I:     Quoted prices are available in active markets for identical assets or liabilities as of the reported date.

Level II:    Pricing inputs are other than the quoted prices in active markets, which are either directly or indirectly observable as of the reported date.  The nature of these assets and liabilities includes items for which quoted prices are available but traded less frequently and items that are fair-valued using other financial instruments, the parameters of which can be directly observed.

Level III:   Assets and liabilities that have little to no pricing observability as of the reported date.  These items do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.

The following tables present the assets measured on a recurring basis on the Consolidated Balance Sheet at their fair value as of September 30, 2012 and December 31, 2011 by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

			September 30, 2012
(Dollar amounts in thousands)	Level I		Level II		Level III		Total
Assets Measured on a Recurring Basis:
U.S. government agency securities	$	-	$	17,268	$	-	$	17,268
Obligations of states and political subdivisions		-		92,668		-		92,668
Mortgage-backed securities in government-sponsored entities				62,467				62,467
Private-label mortgage-backed securities		-		5,986		-		5,986
Total debt securities		-		178,389		-		178,389
Equity securities in financial institutions		5		746		-		751
Total	$	5	$	179,135	$	-	$	179,140

			December 31, 2011
	Level I		Level II		Level III		Total
Assets Measured on a Recurring Basis:
U.S. government agency securities	$	-	$	31,933	$	-	$	31,933
Obligations of states and political subdivisions		-		88,400		-		88,400
Mortgage-backed securities in government-sponsored entities				65,573				65,573
Private-label mortgage-backed securities		-		7,321		-		7,321
Total debt securities		-		193,227		-		193,227
Equity securities in financial institutions		5		745		-		750
Total	$	5	$	193,972	$	-	$	193,977

The Company obtains fair values from an independent pricing service which represent either quoted market prices for the identical securities (Level 1 inputs) or fair values determined by pricing models using a market approach that considers observable market data, such as interest rate volatilities, LIBOR yield curve, credit spreads and prices from market makers and live trading systems (Level 2).

Financial instruments are considered Level III when their values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.  In addition to these unobservable inputs, the valuation models for Level III financial instruments typically also rely on a number of inputs that are readily observable either directly or indirectly.  Level III financial instruments also include those for which the determination of fair value requires significant management judgment or estimation.  The Company has no securities considered to be Level III as of September 30, 2012 and December 31, 2011.

The Company uses prices compiled by third party vendors due to the recent stabilization in the markets along with improvements in third party pricing methodology that have narrowed the variances between third party vendor prices and actual market prices.

The following tables present the assets measured on a nonrecurring basis on the Consolidated Balance Sheet at their fair value as of September 30, 2012 and December 31, 2011, by level within the fair value hierarchy. Impaired loans that are collateral dependent are written down to fair value through the establishment of specific reserves. Techniques used to value the collateral that secure the impaired loan include: quoted market prices for identical assets classified as Level I inputs; observable inputs, employed by certified appraisers, for similar assets classified as Level II inputs. In cases where valuation techniques included inputs that are unobservable and are based on estimates and assumptions developed by management based on the best information available under each circumstance, the asset valuation is classified as Level III inputs.

			September 30, 2012
(Dollar amounts in thousands)	Level I		Level II		Level III		Total
Assets Measured on a non-recurring Basis:
Impaired loans	$	-	$	-	$	14,258	$	14,258
Other real estate owned		-		-		2,332		2,332

			December 31, 2011
	Level I		Level II		Level III		Total
Assets Measured on a non-recurring Basis:
Impaired loans	$	-	$	-	$	16,535	$	16,535
Other real estate owned		-		-		2,196		2,196

The following table presents additional quantitative information about assets measured at fair value on a non-recurring basis and for which the Company uses Level III inputs to determine fair value:

	Quantitative Information about Level III Fair Value Measurements
(unaudited, in thousands)	Estimate		Valuation Techniquest	Unobservable Input	Range (Weighted Average)
September 30, 2012
Impaired loans	$	14,258	Appraisal of collateral (1)	Appraisal adjustments (2)	0%	to	-75.0%	(-31.9%)
				Liquidation expenses (2)	0%	to	-45.8%	(-1.5%)
Other real estate owned	$	2,332	Appraisal of collateral (1), (3)

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various level 3 inputs which are not identifiable.

(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

(3) Includes qualitative adjustments by management and estimated liquidation expenses.

The estimated fair value of the Company’s financial instruments is as follows:

	September 30, 2012
	Carrying Value		Level I		Level II		Level III		Total Fair Value
	(in thousands)
Financial assets:
Cash and cash equivalents	$	52,606	$	52,606	$	-	$	-	$	52,606
Investment securities
Available for sale		179,140		5		179,135		-		179,140
Net loans		402,002		-		-		394,070		394,070
Bank-owned life insurance		8,465		8,465				-		8,465
Federal Home Loan Bank stock		1,887		1,887				-		1,887
Accrued interest receivable		2,598		2,598		-		-		2,598
Financial liabilities:
Deposits	$	584,738	$	382,773	$	-	$	207,336	$	590,109
Short-term borrowings		6,518		6,518		-		-		6,518
Other borrowings		15,836		-		-		16,240		16,240
Accrued interest payable		557		557		-		-		557

	September 30, 2012				December 31, 2011
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(in thousands)
Financial assets:
Cash and cash equivalents	$	52,606	$	52,606	$	34,390	$	34,390
Investment securities
Available for sale		179,140		179,140		193,977		193,977
Net loans		402,002		394,070		395,061		382,542
Bank-owned life insurance		8,465		8,465		8,257		8,257
Federal Home Loan Bank stock		1,887		1,887		1,887		1,887
Accrued interest receivable		2,598		2,598		2,234		2,234
Financial liabilities:
Deposits	$	584,738	$	590,109	$	580,962	$	587,178
Short-term borrowings		6,518		6,518		7,392		7,392
Other borrowings		15,836		16,240		16,831		17,327
Accrued interest payable		557		557		645		645

Financial instruments are defined as cash, evidence of ownership interest in an entity, or a contract which creates an obligation or right to receive or deliver cash or another financial instrument from/to a second entity on potentially favorable or unfavorable terms.

Fair value is defined as the amount at which a financial instrument could be exchanged in a current transaction between willing parties other than in a forced liquidation sale.  If a quoted market price is available for a financial instrument, the estimated fair value would be calculated based upon the market price per trading unit of the instrument.

If no readily available market exists, the fair value estimates for financial instruments should be based upon management’s judgment regarding current economic conditions, interest rate risk, expected cash flows, future estimated losses, and other factors as determined through various option pricing formulas or simulation modeling.  Since many of these assumptions result from judgments made by management based upon estimates which are inherently uncertain, the resulting estimated fair values may not be indicative of the amount realizable in the sale of a particular financial instrument.  In addition, changes in assumptions on which the estimated fair values are based may have a significant impact on the resulting estimated fair values.

As certain assets such as deferred tax assets and premises and equipment are not considered financial instruments, the estimated fair value of financial instruments would not represent the full value of the Company.

The Company employed simulation modeling in determining the estimated fair value of financial instruments for which quoted market prices were not available based upon the following assumptions:

Cash and Cash Equivalents, Federal Home Loan Bank Stock, Accrued Interest Receivable, Accrued Interest Payable, and Short-Term Borrowings

The fair value is equal to the current carrying value.

Bank-Owned Life Insurance

The fair value is equal to the cash surrender value of the life insurance policies.

Investment Securities Available-for-sale

The fair value of investment securities is equal to the available quoted market price.  If no quoted market price is available, fair value is estimated using the quoted market price for similar securities. 

Loans

The fair value is estimated by discounting future cash flows using current market inputs at which loans with similar terms and qualities would be made to borrowers of similar credit quality.  Where quoted market prices were available, primarily for certain residential mortgage loans, such market rates were used as estimates for fair value.

Deposits and Other Borrowings

The fair values of certificates of deposit and other borrowed funds are based on the discounted value of contractual cash flows.  The discount rates are estimated using rates currently offered for similar instruments with similar remaining maturities.  Demand, savings, and money market deposits are valued at the amount payable on demand.

Commitments to Extend Credit

These financial instruments are generally not subject to sale, and estimated fair values are not readily available. The carrying value, represented by the net deferred fee arising from the unrecognized commitment or letter of credit, and the fair value, determined by discounting the remaining contractual fee over the term of the commitment using fees currently charged to enter into similar agreements with similar credit risk, are not considered material for disclosure.

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Note 3 - Earnings Per Share

9 Months Ended

Sep. 30, 2012

Earnings Per Share [Text Block]

NOTE 3 - EARNINGS PER SHARE

The Company provides dual presentation of Basic and Diluted earnings per share.  Basic earnings per share uses 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 denominator in calculating basic and diluted earnings per share. 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 Months Ended September 30,						For the Nine Months Ended September 30,
	2012			2011			2012			2011
Weighted average common shares outstanding		2,167,711			1,894,207			2,077,027			1,847,945
Average treasury stock shares		(189,530	)		(189,530	)		(189,530	)		(189,530	)
Weighted average common shares and common stock equivalents used to calculate basic earnings per share		1,978,181			1,704,677			1,887,497			1,658,415
Additional common stock equivalents (stock options) used to calculate diluted earnings per share		5,682			-			4,236			-
Weighted average common shares and common stock equivalents used to calculate diluted earnings per share		1,983,863			1,704,677			1,891,733			1,658,415

The average share price for the quarter ended September 30, 2012 was $22.85 while the year-to-date average price was $21.08.  Options to purchase 88,354 shares of common stock, at prices ranging from $17.55 to $40.24, were outstanding at September 30, 2012.  Of those options, 9,000 were considered dilutive based on the average market price exceeding the strike price for the nine months ended September 30, 2012.  The three month period ended with 17,536 shares considered dilutive.  In accordance with the subscription agreement entered into by an institutional investor, there was also an additional 11,332 shares, at $16 per share, considered dilutive for the three and nine-months ended September 30, 2012.  The remaining options had no dilutive effect on the earnings per share.

The average share price for the quarter ended September 30, 2011 was $17.23 while the year-to-date average price was $17.36.  The options to purchase 90,528 shares of common stock at prices ranging from $17.55 to $40.24 were outstanding during the three and nine months ended September 30, 2011 but were not included in the computation of diluted earnings per share as they were anti-dilutive due to the strike price being greater than the average market price.

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Note 2 - Stock-based Compensation (Detail) - Stock Option Activity (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Outstanding, January 1	88,774	89,077
Outstanding, January 1 (in Dollars per share)	$ 26.81	$ 27.87
Granted	0	9,000
Granted (in Dollars per share)	$ 0	$ 17.55
Exercised	0	0
Exercised (in Dollars per share)	$ 0	$ 0
Forfeited	(420)	(7,549)
Forfeited (in Dollars per share)	$ 36.86	$ 29.22
Outstanding, September 30	88,354	90,528
Outstanding, September 30 (in Dollars per share)	$ 26.76	$ 26.73
Exercisable, September 30	88,354	81,528
Exercisable, September 30 (in Dollars per share)	$ 26.76	$ 27.75

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Note 4 - Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

			September 30, 2012
(Dollar amounts in thousands)	Level I		Level II		Level III		Total
Assets Measured on a Recurring Basis:
U.S. government agency securities	$	-	$	17,268	$	-	$	17,268
Obligations of states and political subdivisions		-		92,668		-		92,668
Mortgage-backed securities in government-sponsored entities				62,467				62,467
Private-label mortgage-backed securities		-		5,986		-		5,986
Total debt securities		-		178,389		-		178,389
Equity securities in financial institutions		5		746		-		751
Total	$	5	$	179,135	$	-	$	179,140

			December 31, 2011
	Level I		Level II		Level III		Total
Assets Measured on a Recurring Basis:
U.S. government agency securities	$	-	$	31,933	$	-	$	31,933
Obligations of states and political subdivisions		-		88,400		-		88,400
Mortgage-backed securities in government-sponsored entities				65,573				65,573
Private-label mortgage-backed securities		-		7,321		-		7,321
Total debt securities		-		193,227		-		193,227
Equity securities in financial institutions		5		745		-		750
Total	$	5	$	193,972	$	-	$	193,977

Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Valuation Techniques [Table Text Block]

			September 30, 2012
(Dollar amounts in thousands)	Level I		Level II		Level III		Total
Assets Measured on a non-recurring Basis:
Impaired loans	$	-	$	-	$	14,258	$	14,258
Other real estate owned		-		-		2,332		2,332

			December 31, 2011
	Level I		Level II		Level III		Total
Assets Measured on a non-recurring Basis:
Impaired loans	$	-	$	-	$	16,535	$	16,535
Other real estate owned		-		-		2,196		2,196

Fair Value Inputs, Assets, Quantitative Information [Table Text Block]

	Quantitative Information about Level III Fair Value Measurements
(unaudited, in thousands)	Estimate		Valuation Techniquest	Unobservable Input	Range (Weighted Average)
September 30, 2012
Impaired loans	$	14,258	Appraisal of collateral (1)	Appraisal adjustments (2)	0%	to	-75.0%	(-31.9%)
				Liquidation expenses (2)	0%	to	-45.8%	(-1.5%)
Other real estate owned	$	2,332	Appraisal of collateral (1), (3)

Fair Value, by Balance Sheet Grouping [Table Text Block]

	September 30, 2012
	Carrying Value		Level I		Level II		Level III		Total Fair Value
	(in thousands)
Financial assets:
Cash and cash equivalents	$	52,606	$	52,606	$	-	$	-	$	52,606
Investment securities
Available for sale		179,140		5		179,135		-		179,140
Net loans		402,002		-		-		394,070		394,070
Bank-owned life insurance		8,465		8,465				-		8,465
Federal Home Loan Bank stock		1,887		1,887				-		1,887
Accrued interest receivable		2,598		2,598		-		-		2,598
Financial liabilities:
Deposits	$	584,738	$	382,773	$	-	$	207,336	$	590,109
Short-term borrowings		6,518		6,518		-		-		6,518
Other borrowings		15,836		-		-		16,240		16,240
Accrued interest payable		557		557		-		-		557

	September 30, 2012				December 31, 2011
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(in thousands)
Financial assets:
Cash and cash equivalents	$	52,606	$	52,606	$	34,390	$	34,390
Investment securities
Available for sale		179,140		179,140		193,977		193,977
Net loans		402,002		394,070		395,061		382,542
Bank-owned life insurance		8,465		8,465		8,257		8,257
Federal Home Loan Bank stock		1,887		1,887		1,887		1,887
Accrued interest receivable		2,598		2,598		2,234		2,234
Financial liabilities:
Deposits	$	584,738	$	590,109	$	580,962	$	587,178
Short-term borrowings		6,518		6,518		7,392		7,392
Other borrowings		15,836		16,240		16,831		17,327
Accrued interest payable		557		557		645		645

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Note 7 - Common Stock Issuance

9 Months Ended

Sep. 30, 2012

Stockholders' Equity Note Disclosure [Text Block]

NOTE 7 – COMMON STOCK ISSUANCE

Middlefield Banc Corp. entered into an August 15, 2011 Stock Purchase Agreement with Banc Opportunity Fund LLC.  The Stock Purchase Agreement provides for the purchase by Bank Opportunity Fund of up to 24.99% of our common stock.  The Stock Purchase Agreement was amended by the First Amendment, dated September 29, 2011, the Second Amendment, dated October 20, 2011, the Third Amendment, dated November 28, 2011, the Fourth Amendment, dated December 21, 2011, the Fifth Amendment, dated April 17, 2012, and by the Sixth Amendment, dated August 23, 2012.

As amended by the Fifth Amendment on April 17, 2012, the Stock Purchase Agreement provides for Bank Opportunity Fund’s ownership to reach 24.99% in three stages: (1) ownership of 4.9%, which occurred with the purchase by a Bank Opportunity Fund affiliate of 93,050 shares at $16 per share on April 17, 2012, (2) ownership of 9.9%, which occurred on April 30, 2012 with the purchase by the affiliate of 103,585 shares at $16 per share, and (3) ownership of 24.99% by the purchase of additional shares, currently estimated to be approximately 400,000 additional shares, which cannot occur unless Bank Opportunity Fund obtains regulatory approval, unless our stockholders approve the acquisition of shares by Bank Opportunity Fund, and unless the other conditions contained in the amended Stock Purchase Agreement are satisfied.  The first sale of shares to Bank Opportunity Fund, on April 17, 2012, yielded gross proceeds of $1,488,800 and the second sale, on April 30, yielded gross proceeds of $1,657,360.  Associated issuance costs totaled $816,000 as of September 30, 2012.  As amended by the Sixth Amendment, the purchase price for the additional shares in the third and final stage will be the greater of $19 per share or 75% of tangible book value per share.

Completion of the third and final stage is subject to regulatory approval on the part of the Federal Reserve Bank of Cleveland and the Ohio Division of Financial Institutions.  Additionally, Bank Opportunity Fund cannot own 20% or more of our common stock unless stockholders first approve that ownership level, acting at a special meeting in accordance with the Ohio Control Share Acquisition Act.  As amended by the Sixth Amendment, the deadline for completion of the third and final stage is November 30, 2012, with a 45-day extension beyond that date unless the Federal Reserve or the Ohio Division of Financial Institutions advises Bank Opportunity Fund that the necessary regulatory approvals are unlikely to be received.

Bank Opportunity Fund currently is entitled by the terms of the amended Stock Purchase Agreement to designate one director for service on the board of Middlefield Banc Corp. and on the board of each of its subsidiary banks.  By the terms of the April 17, 2012 Amended and Restated Purchaser’s Rights and Voting Agreement with Bank Opportunity Fund, as amended by the amendment dated as of August 23, 2012, our directors and executive officers are required to vote shares they hold for approval of the acquisition of shares by Bank Opportunity Fund and in favor of election of Bank Opportunity Fund’s director nominee.

Bank Opportunity Fund LLC is a Delaware limited liability company, established by its managing member Bank Acquisitions LLC, also a Delaware limited liability company.  Bank Opportunity Fund was formed to invest primarily in U. S. banks, thrifts, and their holding companies.  Bank Opportunity Advisors LLC, another Delaware limited liability company, is the investment adviser for Bank Opportunity Fund.  Bank Acquisitions LLC as managing member and Bank Opportunity Advisors LLC as investment adviser manage the day-to-day operations and investment activities of Bank Opportunity Fund.  Bank Acquisitions LLC controls Bank Opportunity Fund.

The proposed sale of additional shares to Bank Opportunity Fund is the final part of a private offering of our stock that began in 2010 and continued into 2011.  Relying on the SEC’s private offering exemption in Regulation D Rule 506, we conducted the private offering without registration under the Securities Act of 1933, offering and selling our shares solely to those qualifying as accredited investors, as defined in Regulation D.  The subscription agreement entered into by an institutional investor that purchased 85,200 shares on August 12, 2011 in the private offering provides that – when the sale of shares to Bank Opportunity Fund is completed – the institutional investor will buy more shares from us so that the institutional investor maintains its ownership interest at 4.9%.  The investor may, however, purchase the shares on the open market to maintain the 4.9% ownership interest.  Accordingly, completion of the transaction with Bank Opportunity Fund obligates the institutional investor to purchase additional shares, which we currently estimate to be approximately 33,700 shares.  Because the subscription agreement right to purchase shares at $16 is significantly less than the current trading price for Middlefield Banc Corp. stock, we expect the investor will purchase these shares from us.

We give no assurance that the conditions to completion of the sale of stock to Bank Opportunity Fund will be satisfied by January 14, 2013, which is the final day of the 45-day extension of the November 30, 2012 deadline established by the Sixth Amendment of the Stock Purchase Agreement, or that the transaction will be completed at all.  We are optimistic that Bank Opportunity Fund will obtain regulatory approval for its acquisition of additional shares, however.  We have not yet fixed the date for the special meeting at which we will ask stockholders – in accordance with the Ohio Control Share Acquisition Act – to consider and vote upon the sale of shares to Bank Opportunity Fund.  We currently expect to hold the special meeting before the end of the first quarter of 2013, and we expect to complete the sale of shares to Bank Opportunity Fund promptly after that meeting, assuming stockholders approve the sale.

This summary of the Stock Purchase Agreement, as amended, and related transactions is qualified in its entirety by reference to (1) the Form 8-K Current Report that we filed with the SEC on August 18, 2011, (2) the August 15, 2011 Stock Purchase Agreement (exhibit 10.26 to the Form 8-K Current Report filed on August 18, 2011), (3) the First, Second, Third, and Fourth Amendments of the Stock Purchase Agreement (exhibits 10.26.1, 10.26.2, 10.26.3, and 10.26.4 to our Form 10-K Annual Report for the year ended December 31, 2011), (4) the Form 8-K Current Report that we filed with the SEC on March 27, 2012, (5) the Form 8-K Current Report that we filed with the SEC on April 23, 2012, (6) the Fifth Amendment of the Stock Purchase Agreement and the Amended and Restated Purchaser’s Rights and Voting Agreement (exhibits 10.26.6 and 10.28 to the Form 8-K Current Report filed on April 23, 2012), (7) the Form 8-K Current Report that we filed with the SEC on May 4, 2012, (8) the Form 8-K Current Report that we filed with the SEC on August 7, 2012, (9) the Form 8-K Current Report that we filed with the SEC on August 24, 2012, and (10) the Sixth Amendment of the Stock Purchase Agreement and the Amendment of the Amended and Restated Purchaser’s Rights and Voting Agreement (exhibits 10.26.7 and 10.28.1 to the Form 8-K Current Report filed on August 24, 2012).

Forward-looking statements.  This Form 10-Q includes forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995.  Forward-looking statements include but are not limited to statements about anticipated operating and financial performance, such as loan originations, operating efficiencies, loan sales, charge-offs and loan loss provisions, growth opportunities, interest rates, and deposit growth.  Words such as “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “project,” “plan,” and similar expressions are intended to identify forward-looking statements.  These statements involve risks and uncertainties that could cause actual results to differ materially, including without limitation delays in obtaining or failure to receive required regulatory approvals, including approval by the Superintendent of the Ohio Division of Financial Institutions and by the Board of Governors of the Federal Reserve System, the possibility that fewer than the required number of the Middlefield’s stockholders vote in accordance with the Ohio Control Share Acquisition Act to approve the sale of shares to Bank Opportunity Fund, the occurrence of events that would have a material adverse effect on Middlefield as described in the Stock Purchase Agreement, as amended, and other uncertainties associated with the transactions described in this Form 10-Q.  Additional factors that could cause actual results to differ materially are discussed in Middlefield’s filings with the Securities and Exchange Commission, including, without limitation, Middlefield’s Form 10-K Annual Report, its Form 10-Q Quarterly Reports, and its Form 8-K Current Reports.  Forward-looking statements are based on Middlefield’s beliefs, plans, objectives, goals, assumptions, expectations, estimates, and intentions as of the date the statements are made.  You must exercise caution because Middlefield cannot give any assurance that its beliefs, plans, objectives, goals, assumptions, expectations, estimates, and intentions will be realized.  Middlefield does not undertake a duty to update any forward-looking statements in this Form 10-Q.

Additional information and where to find it. This communication may be deemed to be solicitation material.  Middlefield will file with the SEC a proxy statement and other documents regarding the transaction with Bank Opportunity Fund.  MIDDLEFIELD STOCKHOLDERS ARE URGED TO READ ALL RELEVANT DOCUMENTS TO BE FILED WITH THE SEC, INCLUDING MIDDLEFIELD’S PROXY STATEMENT, BECAUSE THE PROXY STATEMENT AND OTHER DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION, INCLUDING INFORMATION ABOUT THE TRANSACTION WITH BANK OPPORTUNITY FUND.  Members of the public will be able to obtain the proxy statement and other relevant documents free of charge at the SEC’s website, http://www.sec.gov, and Middlefield’s stockholders will receive information at an appropriate time about how to obtain the proxy statement and other transaction-related documents for free from Middlefield.  The proxy statement and other documents are not currently available.  Middlefield and its directors, executive officers, certain members of management, and employees may have interests in the transaction or be deemed to be participants in the solicitation of proxies of Middlefield’s stockholders to approve the transaction with Bank Opportunity Fund.  Information regarding the participants and their interest in the solicitation is set forth in the proxy statement filed by Middlefield with the SEC on April 9, 2012, for the 2012 Annual Meeting.  Stockholders may obtain additional information regarding the interests of participants by reading the proxy statement relating to the transaction when the proxy statement becomes available.

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Note 5 - Investment Securities Available For Sale

9 Months Ended

Sep. 30, 2012

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

NOTE 5 - INVESTMENT SECURITIES AVAILABLE-FOR-SALE

The amortized cost and fair values of securities available-for-sale are as follows:

	September 30, 2012
(Dollar amounts in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. government agency securities	$	16,733	$	537	$	(2	)	$	17,268
Obligations of states and political subdivisions:
Taxable		8,198		864		-			9,062
Tax-exempt		78,808		4,827		(29	)		83,606
Mortgage-backed securities in government-sponsored entities		60,139		2,328		-			62,467
Private-label mortgage-backed securities		5,418		570		(2	)		5,986
Total debt securities		169,296		9,126		(33	)		178,389
Equity securities in financial institutions		750		1		-			751
Total	$	170,046	$	9,127	$	(33	)	$	179,140

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. government agency securities	$	31,520	$	427	$	(14	)	$	31,933
Obligations of states and political subdivisions:
Taxable		8,207		766		-			8,973
Tax-exempt		75,807		3,681		(61	)		79,427
Mortgage-backed securities in government-sponsored entities		63,808		1,819		(54	)		65,573
Private-label mortgage-backed securities		7,005		411		(95	)		7,321
Total debt securities		186,347		7,104		(224	)		193,227
Equity securities in financial institutions		750		-		-			750
Total	$	187,097	$	7,104	$	(224	)	$	193,977

The amortized cost and fair value of debt securities at September 30, 2012, by contractual maturity, are shown below.  Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

(Dollar amounts in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	3,003	$	3,038
Due after one year through five years		4,834		5,093
Due after five years through ten years		14,682		15,545
Due after ten years		146,777		154,713
Total	$	169,296	$	178,389

Proceeds from the sales of securities available-for-sale and the gross realized gains and losses are as follows:

	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2012			2011		2012			2011
Proceeds from sales	$	5,622		$	14,233	$	27,426		$	24,305
Gross realized gains		154			6		462			21
Gross realized losses		(2	)		-		(14	)		(37	)

Gross realized losses for the nine months ended September 30, 2011 were the result of other-than-temporary impairment (“OTTI”) taken on equity securities.

Investment securities with an approximate carrying value of $55,600,000 and $55,800,000 at September 30, 2012 and 2011, respectively, were pledged to secure deposits and other purposes as required by law.

The following tables show the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position.

	September 30, 2012
	Less than Twelve Months					Twelve Months or Greater					Total
(Dollar amounts in thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. government agency securities	$	1,998	$	(2	)	$	-	$	-		$	1,998	$	(2	)
Obligations of states and political subdivisions		1,671		(29	)		-		-			1,671		(29	)
Private-label mortgage-backed securities		-		-			370		(2	)		370		(2	)
Total	$	3,669	$	(31	)	$	370	$	(2	)	$	4,039	$	(33	)

	December 31, 2011
	Less than Twelve Months					Twelve Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. government agency securities	$	1,986	$	(14	)	$	-	$	-		$	1,986	$	(14	)
Obligations of states and political subdivisions		2,707		(40	)		919		(21	)		3,626		(61	)
Mortgage-backed securities in government sponsored entities		8,992		(54	)		-		-			8,992		(54	)
Private-label mortgage-backed securities		1,628		(42	)		398		(53	)		2,026		(95	)
Equity securities in financial institutions		-		-
Total	$	15,313	$	(150	)	$	1,317	$	(74	)	$	16,630	$	(224	)

There were 7 securities that were considered temporarily impaired at September 30, 2012.

On a quarterly basis, the Company performs an assessment to determine whether there have been any events or economic circumstances indicating that a security with an unrealized loss has suffered OTTI. A debt security is considered impaired if the fair value is less than its amortized cost basis at the reporting date. OTTI losses are recognized in earnings when the Company has the intent to sell the debt security or it is more likely than not that it will be required to sell the debt security before recovery of its amortized cost basis. However, even if the Company does not expect to sell a debt security, it must evaluate expected cash flows to be received and determine if a credit loss has occurred.

An unrealized loss is generally deemed to be other than temporary and a credit loss is deemed to exist if the present value of the expected future cash flows is less than the amortized cost basis of the debt security. As a result, the credit loss component of an OTTI is recorded as a component of investment securities gains (losses) in the accompanying Consolidated Statement of Income, while the remaining portion of the impairment loss is recognized in other comprehensive income, provided the Company does not intend to sell the underlying debt security and it is “more likely than not” that the Company will not have to sell the debt security prior to recovery.

Debt securities issued by U.S. government agencies, U.S. government-sponsored enterprises, and state and political subdivisions accounted for more than 96% of the total available-for-sale portfolio as of September 30, 2012 and no credit losses are expected, given the explicit and implicit guarantees provided by the U.S. federal government and the lack of significant unrealized loss positions within the obligations of state and political subdivisions’ security portfolio. The Company’s assessment was concentrated mainly on private-label collateralized mortgage obligations of approximately $5.4 million for which the Company evaluates credit losses on a quarterly basis. The gross unrealized gain position related to these private-label collateralized mortgage obligations amounted to $570,000 and the gross unrealized loss position was $2,000 on September 30, 2012. The Company considered the following factors in determining whether a credit loss exists and the period over which the debt security is expected to recover:

• The length of time and the extent to which the fair value has been less than the amortized cost basis.

• Changes in the near term prospects of the underlying collateral of a security such as changes in default rates, loss severity given default and significant changes in prepayment assumptions;

• The level of cash flows generated from the underlying collateral supporting the principal and interest payments of the debt securities; and

• Any adverse change to the credit conditions and liquidity of the issuer, taking into consideration the latest information available about the overall financial condition of the issuer, credit ratings, recent legislation and government actions affecting the issuer’s industry and actions taken by the issuer to deal with the present economic climate.

For the three and nine months ended September 30, 2012, there were no available-for-sale debt securities with an unrealized loss that suffered OTTI.

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Note 6 - Loans And Related Allowance For Loan Losses

9 Months Ended

Sep. 30, 2012

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE 6 - LOANS AND RELATED ALLOWANCE FOR LOAN LOSSES

Major classifications of loans are summarized as follows (in thousands):

	September 30, 2012			December 31, 2011
Commercial and industrial	$	65,323		$	59,185
Real estate - construction		21,322			21,545
Real estate - mortgage:
Residential		205,433			208,139
Commercial		112,867			108,502
Consumer installment		4,230			4,509
		409,175			401,880
Less allowance for loan losses		(7,173	)		(6,819	)
Net loans	$	402,002		$	395,061

The Company’s primary business activity is with customers located within its local trade area, eastern Geauga County, and contiguous counties to the north, east, and south.  The Company also serves the central Ohio market with offices in Dublin and Westerville, Ohio.  Commercial, residential, consumer, and agricultural loans are granted.  Although the Company has a diversified loan portfolio, loans outstanding to individuals and businesses are dependent upon the local economic conditions in the Company’s immediate trade area.

The following tables summarize the primary segments of the loan portfolio and allowance for loan losses (in thousands):

					Real Estate- Mortgage
September 30, 2012	Commercial and industrial		Real estate- construction		Residential		Commercial		Consumer installment		Total
Individually evaluated for impairment	$	4,414	$	4,383	$	3,734	$	7,021	$	-	$	19,553
Collectively evaluated for impairment		60,909		16,939		201,699		105,846		4,230		389,622
Total loans	$	65,323	$	21,322	$	205,433	$	112,867	$	4,230	$	409,175

					Real estate- Mortgage
December 31, 2011	Commercial and industrial		Real estate- construction		Residential		Commercial		Consumer installment		Total
Individually evaluated for impairment	$	4,492	$	867	$	4,882	$	6,491	$	-	$	16,732
Collectively evaluated for impairment		54,693		20,678		203,257		102,011		4,509		385,148
Total loans	$	59,185	$	21,545	$	208,139	$	108,502	$	4,509	$	401,880

					Real Estate- Mortgage
September 30, 2012	Commercial and industrial		Real estate- construction		Residential		Commercial		Consumer installment		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1,096	$	442	$	482	$	955	$	-	$	2,975
Collectively evaluated for impairment		608		3		2,471		1,100		16		4,198
Total ending allowance balance	$	1,704	$	445	$	2,953	$	2,055	$	16	$	7,173

					Real Estate- Mortgage
December 31, 2011	Commercial and industrial		Real estate- construction		Residential		Commercial		Consumer installment		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	595	$	237	$	685	$	185	$	-	$	1,702
Collectively evaluated for impairment		701		201		3,046		1,121		48		5,117
Total ending allowance balance	$	1,296	$	438	$	3,731	$	1,306	$	48	$	6,819

The Company’s loan portfolio is segmented to a level that allows management to monitor risk and performance.  The portfolio is segmented into Commercial and Industrial (“C&I”), Real Estate Construction, Real Estate - Mortgage which is further segmented into Residential and Commercial real estate, and Consumer Installment Loans.  The C&I loan segment consists of loans made for the purpose of financing the activities of commercial customers.  The residential mortgage loan segment consists of loans made for the purpose of financing the purchase or equity line of residences.  The commercial mortgage loan segment consists of loans made for the purposed of financing the activities of commercial real estate owners and operators. The consumer loan segment consists primarily of installment loans and overdraft lines of credit connected with customer deposit accounts.

Management evaluates individual loans in all of the commercial segments for possible impairment if the loan is greater than $150,000 and if the loan either is in nonaccrual status, or is risk rated Special Mention or Substandard.  Loans are considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.  Factors considered by management in evaluating impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.  Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.  The Company does not separately evaluate individual consumer and residential mortgage loans for impairment, unless such loans are part of a larger relationship that is impaired.

Once the determination has been made that a loan is impaired, the determination of whether a specific allocation of the allowance is necessary is measured by comparing the recorded investment in the loan to the fair value of the loan using one of three methods:  (a) the present value of expected future cash flows discounted at the loan’s effective interest rate; (b) the loan’s observable market price; or (c) the fair value of the collateral less selling costs.  The method is selected on a loan-by loan basis, with management primarily utilizing the fair value of collateral method.  The evaluation of the need and amount of a specific allocation of the allowance and whether a loan can be removed from impairment status is made on a quarterly basis.  The Company’s policy for recognizing interest income on impaired loans does not differ from its overall policy for interest recognition.

The following tables present impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary (in thousands):

September 30, 2012
Impaired Loans
	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial and industrial	$	978	$	978	$	-
Real estate - construction		203		203		-
Real estate - mortgage:
Residential		1,859		1,863		-
Commercial		1,306		1,311		-
Consumer installment		30		30		-
Total	$	4,376	$	4,385	$	-
With an allowance recorded:
Commercial and industrial	$	2,896	$	2,899	$	840
Real estate - construction		3,986		3,986		442
Real estate - mortgage:
Residential		2,451		2,458		556
Commercial		3,524		3,533		1,137
Total	$	12,857	$	12,876	$	2,975
Total:
Commercial and industrial	$	3,874	$	3,877	$	840
Real estate - construction		4,189		4,189		442
Real estate - mortgage:
Residential		4,310		4,321		556
Commercial		4,830		4,844		1,137
Consumer installment		30		30		-
Total	$	17,233	$	17,261	$	2,975

December 31, 2011
Impaired Loans
	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial and industrial	$	1,172	$	1,172	$	-
Real estate - construction		4,250		4,250		-
Real estate - mortgage:
Residential		3,188		3,193		-
Commercial		2,528		2,536		-
Consumer installment		24		24		-
Total	$	11,162	$	11,175	$	-
With an allowance recorded:
Commercial and industrial	$	658	$	658	$	203
Real estate - construction		271		271		125
Real estate - mortgage:
Residential		1,813		1,817		547
Commercial		4,332		4,344		827
Total	$	7,074	$	7,090	$	1,702
Total:
Commercial and industrial	$	1,830	$	1,831	$	203
Real estate - construction		4,521		4,521		125
Real estate - mortgage:
Residential		5,001		5,010		547
Commercial		6,861		6,880		827
Consumer installment		24		24		-
Total	$	18,237	$	18,266	$	1,702

The following tables present average recorded investment and related interest income recognized for impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary (in thousands):

	For the Three Months Ended September 30, 2012				For the Three Months Ended September 30, 2011
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Total:
Commercial and industrial	$	2,535	$	139	$	3,295	$	11
Real estate - construction		2,305		-		630		15
Real estate - mortgage:
Residential		3,622		85		997		23
Commercial		3,597		200		4,899		86
Consumer installment		13		1		25		-

	For the Nine Months Ended September 30, 2012				For the Nine Months Ended September 30, 2011
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Total:
Commercial and industrial	$	2,170	$	170	$	3,266	$	93
Real estate - construction		2,400		113		624		15
Real estate - mortgage:
Residential		3,764		169		793		68
Commercial		3,985		324		4,081		188
Consumer installment		27		2		13		4

Management uses a nine point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first five categories are considered not criticized, and are aggregated as “Pass” rated. The criticized rating categories used by management generally follow bank regulatory definitions. The Special Mention category includes assets that are currently protected but are potentially weak, resulting in an undue and unwarranted credit risk, but not to the point of justifying a Substandard classification.  Loans in the Substandard category have well-defined weaknesses that jeopardize the liquidation of the debt, and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected.  All loans greater than 90 days past due are considered Substandard.  Loans in the doubtful category exhibit similar weaknesses found in the substandard loans, though the weaknesses are more pronounced. Such loans are static and collection in full is improbable. However, these loans are not yet rated as loss because certain events may occur which would salvage the debt.  Any portion of a loan that has been charged off is placed in the Loss category.

To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Company has a structured loan rating process with several layers of internal and external oversight.  Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as bankruptcy, repossession, or death occurs to raise awareness of a possible credit event.  The Company’s Commercial Loan Officers are responsible for the timely and accurate risk rating of the loans in their portfolios at origination and on an ongoing basis.  The Credit Department performs an annual review of all commercial relationships $200,000 or greater.  Confirmation of the appropriate risk grade is included in the review on an ongoing basis.  The Company has an experienced Loan Review Department that continually reviews and assesses loans within the portfolio.  The Company engages an external consultant to conduct loan reviews on a semi-annual basis. Generally, the external consultant reviews commercial relationships greater than $250,000 and/or criticized relationships greater than $125,000.  Detailed reviews, including plans for resolution, are performed on loans classified as Substandard on a quarterly basis.  Loans in the Special Mention and Substandard categories that are individually evaluated for impairment are given separate consideration in the determination of the allowance.

The following table presents the classes of the loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system (in thousands):

	Pass		Special Mention		Substandard		Doubtful		Total Loans
September 30, 2012
Commercial and industrial	$	60,439	$	407	$	4,477	$	-	$	65,323
Real estate - construction		16,913		-		4,409		-		21,322
Real estate - mortgage:
Residential		191,710		868		12,855		-		205,433
Commercial		104,030		2,176		6,661		-		112,867
Consumer installment		4,208		2		20		-		4,230
Total	$	377,300	$	3,453	$	28,422	$	-	$	409,175

December 31, 2011	Pass		Special Mention		Substandard		Doubtful		Loans
Commercial and industrial	$	53,645	$	1,104	$	4,363	$	73	$	59,185
Real estate - construction		20,883		-		662		-		21,545
Real estate - mortgage:
Residential		192,534		1,100		14,505		-		208,139
Commercial		100,536		443		7,523		-		108,502
Consumer installment		4,495		6		8		-		4,509
Total	$	372,093	$	2,653	$	27,061	$	73	$	401,880

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due.

Loans are placed on non-accrual status when it is determined that the asset for which payment in full of interest or principal is not expected.  The accrual of interest is resumed when the Company expects to collect all contractual principal and interest due and the borrower has demonstrated a sustained period of repayment performance in accordance with the contractual terms.

The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans (in thousands):

			Still Accruing
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days+ Past Due		Total Past Due		Non- Accrual		Total Loans
September 30, 2012
Commercial and industrial	$	62,529	$	1,221	$	372	$	10	$	1,603	$	1,191	$	65,323
Real estate - construction		20,647		-		-		-		-		675		21,322
Real estate - mortgage:
Residential		195,547		885		363		-		1,248		8,638		205,433
Commercial		109,932		140		97		79		316		2,619		112,867
Consumer installment		4,148		69		1		-		70		12		4,230
Total	$	392,803	$	2,315	$	833	$	89	$	3,237	$	13,135	$	409,175

			Still Accruing
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days+ Past Due		Total Past Due		Non- Accrual		Total Loans
December 31, 2011
Commercial and industrial	$	57,291	$	258	$	16	$	44	$	318	$	1,576	$	59,185
Real estate - construction		20,862		20		-		-		20		663		21,545
Real estate - mortgage:
Residential		193,732		2,624		863		275		3,762		10,645		208,139
Commercial		104,086		83		412		-		495		3,921		108,502
Consumer installment		4,408		60		41		-		101		-		4,509
Total	$	380,379	$	3,045	$	1,332	$	319	$	4,696	$	16,805	$	401,880

An allowance for loan losses (“ALL”) is maintained to absorb losses from the loan portfolio.  The ALL is based on management’s continuing evaluation of the risk characteristics and credit quality of the loan portfolio, assessment of current economic conditions, diversification and size of the portfolio, adequacy of collateral, past and anticipated loss experience, and the amount of nonperforming loans.

The Company’s methodology for determining the ALL is based on the requirements of ASC Section 310-10-35 for loans individually evaluated for impairment (discussed above) and ASC Subtopic 450-20 for loans collectively evaluated for impairment, as well as the Interagency Policy Statements on the Allowance for Loan and Lease Losses and other bank regulatory guidance.   The total of the two components represents the Company’s ALL.

Loans that are collectively evaluated for impairment are analyzed with general allowances being made as appropriate.  For general allowances, historical loss trends are used in the estimation of losses in the current portfolio.  These historical loss amounts are modified by other qualitative factors.

The classes described above, which are based on the purpose code assigned to each loan, provide the starting point for the ALL analysis.  Management tracks the historical net charge-off activity at the purpose code level.  A historical charge-off factor is calculated using a defined number of consecutive historical quarters. All loan pools currently use a rolling 8 quarters period.

Management has identified a number of additional qualitative factors which it uses to supplement the historical charge-off factor because these factors are likely to cause estimated credit losses associated with the existing loan pools to differ from historical loss experience.  The additional factors that are evaluated quarterly and updated using information obtained from internal, regulatory, and governmental sources are: national and local economic trends and conditions; levels of and trends in delinquency rates and non-accrual loans; trends in volumes and terms of loans; effects of changes in lending policies; experience, ability, and depth of lending staff; value of underlying collateral; and concentrations of credit from a loan type, industry and/or geographic standpoint.

Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in order to make appropriate and timely adjustments to the ALL.  When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ALL.

The following tables summarize the primary segments of the loan portfolio as of the three and nine months ended September 30, 2012 and 2011 (in thousands):

	Commercial and industrial			Real estate- construction		Real estate- residential mortgage			Real estate- commercial mortgage			Consumer installment			Total
ALL balance at December 31, 2011	$	1,296		$	438	$	3,731		$	1,306		$	48		$	6,819
Charge-offs		(88	)		-		(668	)		(123	)		(62	)		(941	)
Recoveries		70			-		15			-			17			102
Provision		426			7		(125	)		872			13			1,193
ALL balance at September 30, 2012	$	1,704		$	445	$	2,953		$	2,055		$	16		$	7,173

	Commercial and industrial			Real estate- construction			Real estate- residential mortgage			Real estate- commercial mortgage			Consumer installment			Total
ALL balance at December 31, 2010	$	962		$	188		$	3,434		$	1,543		$	94		$	6,221
Charge-offs		(503	)		(6	)		(461	)		(266	)		(11	)		(1,247	)
Recoveries		75			-			18			-			22			115
Provision		384			75			1,372			616			38			2,485
ALL balance at September 30, 2011	$	918		$	257		$	4,363		$	1,893		$	143		$	7,574

	Commercial and industrial			Real estate- construction			Real estate- residential mortgage			Real estate- commercial mortgage			Consumer installment			Total
ALL balance at June 30, 2012	$	1,626		$	504		$	4,109		$	1,492		$	21		$	7,752
Charge-offs		(60	)		-			(570	)		(70	)		(40	)		(740	)
Recoveries		1			-			12			-			5			18
Provision		137			(59	)		(598	)		633			30			143
ALL balance at September 30, 2012	$	1,704		$	445		$	2,953		$	2,055		$	16		$	7,173

	Commercial and industrial			Real estate- construction		Real estate- residential mortgage			Real estate- commercial mortgage			Consumer installment		Total
ALL balance at June 30, 2011	$	957		$	229	$	3,791		$	1,921		$	129	$	7,027
Charge-offs		(232	)				(121	)		(86	)				(439	)
Recoveries		49					15						2		66
Provision		144			28		678			58			12		920
ALL balance at September 30, 2011	$	918		$	257	$	4,363		$	1,893		$	143	$	7,574

The following tables summarize troubled debt restructurings (in thousands):

Modifications

Three Months Ended September 30, 2012

	Number of Contracts						Pre-Modification Outstanding
Troubled Debt Restructurings	Rate Forgiveness		Other		Total		Recorded Investment
Commercial and industrial		-		2		2	$	13
Real estate- mortgage:
Residential		1		6		7		619
Consumer Installment		-		1		1		6

Troubled Debt Restructurings subsequently defaulted	Number of Contracts		Recorded Investment
Commercial and industrial		1	$	30
Real estate- mortgage:
Residential		1		20

Modifications

Nine Months Ended September 30, 2012

	Number of Contracts
Troubled Debt Restructurings	Rate Forgiveness		Other		Total		Pre-Modification Outstanding Recorded Investment
Commercial and industrial		1		8		9	$	243
Real estate- mortgage:
Residential		2		8		10		946
Consumer Installment		-		2		2		11

Troubled Debt Restructurings subsequently defaulted	Number of Contracts		Recorded Investment
Commercial and industrial		2	$	60
Real estate- mortgage:
Residential		1		20

The Company does not forgive principal upon troubled debt restructuring.  Therefore, the post-modification outstanding recorded investment equals pre-modification outstanding recorded investment for each timeframe and category.

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Accounting Policies, by Policy (Policies)

9 Months Ended

Sep. 30, 2012

Basis of Accounting, Policy [Policy Text Block]

The consolidated financial statements of Middlefield Banc Corp. ("Company") include its two bank subsidiaries, The Middlefield Banking Company (“MB”) and Emerald Bank (“EB”), and a non-bank asset resolution subsidiary EMORECO, Inc. 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 the Company considers necessary to fairly state the Company’s financial position and the results of operations and cash flows.  The consolidated balance sheet at December 31, 2011, 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 consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included with Middlefield’s Form 10-K for the year ended December 31, 2011 (File No. 000-32561). 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.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

In September 2011, the FASB issued ASU 2011-08, Intangibles – Goodwill and Other Topics (Topic 350), Testing Goodwill for Impairment.  The objective of this Update is to simplify how entities, both public and nonpublic, test goodwill for impairment.  The amendments in the Update permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350.  The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent.  Under the amendments in this Update, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount.  The amendments in this Update apply to all entities, both public and nonpublic, that have goodwill reported in their financial statements and are effective for interim and annual goodwill impairment tests performed for fiscal years beginning after December 15, 2011.  Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011, if an entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance.  This ASU did not have a significant impact on the Company’s financial statements.

In December 2011, the FASB issued ASU 2011-11, Balance Sheet (Topic 210):  Disclosures about Offsetting Assets and Liabilities.  The amendments in this Update affect all entities that have financial instruments and derivative instruments that are either (1) offset in accordance with either Section 210-20-45 or Section 815-10-45 or (2) subject to an enforceable master netting arrangement or similar agreement.  The requirements amend the disclosure requirements on offsetting in Section 210-20-50.  This information will enable users of an entity's financial statements to evaluate the effect or potential effect of netting arrangements on an entity's financial position, including the effect or potential effect of rights of setoff associated with certain financial instruments and derivative instruments in the scope of this Update.  An entity is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods.  An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented.  This ASU is not expected to have a significant impact on the Company’s financial statements.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents, Federal Home Loan Bank Stock, Accrued Interest Receivable, Accrued Interest Payable, and Short-Term Borrowings

The fair value is equal to the current carrying value.

Life Insurance, Corporate or Bank Owned [Text Block]

Bank-Owned Life Insurance

The fair value is equal to the cash surrender value of the life insurance policies.

Marketable Securities, Available-for-sale Securities, Policy [Policy Text Block]

Investment Securities Available-for-sale

The fair value of investment securities is equal to the available quoted market price.  If no quoted market price is available, fair value is estimated using the quoted market price for similar securities.

Policy Loans Receivable, Policy [Policy Text Block]

Loans

The fair value is estimated by discounting future cash flows using current market inputs at which loans with similar terms and qualities would be made to borrowers of similar credit quality.  Where quoted market prices were available, primarily for certain residential mortgage loans, such market rates were used as estimates for fair value.

Deposit Liabilities Disclosures [Text Block]

Deposits and Other Borrowings

The fair values of certificates of deposit and other borrowed funds are based on the discounted value of contractual cash flows.  The discount rates are estimated using rates currently offered for similar instruments with similar remaining maturities.  Demand, savings, and money market deposits are valued at the amount payable on demand.

Commitments and Contingencies, Policy [Policy Text Block]

Commitments to Extend Credit

These financial instruments are generally not subject to sale, and estimated fair values are not readily available. The carrying value, represented by the net deferred fee arising from the unrecognized commitment or letter of credit, and the fair value, determined by discounting the remaining contractual fee over the term of the commitment using fees currently charged to enter into similar agreements with similar credit risk, are not considered material for disclosure.

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Note 5 - Investment Securities Available For Sale (Detail) - Gross Unrealized Losses and Fair Value (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Securities in Continuous Unrealized Loss Position Less than Twelve Months Fair Value	$ 3,669	$ 15,313
Securities in Continuous Unrealized Loss Position Less than Twelve Months Gross Unrealized Losses	(31)	(150)
Securities in Continuous Unrealized Loss Position Twelve Months or Greater Fair Value	370	1,317
Securities in Continuous Unrealized Loss Position Twelve Months or Greater Gross Unrealized Losses	(2)	(74)
Securities in Continuous Unrealized Loss Position Fair Value	4,039	16,630
Securities in Continuous Unrealized Loss Position Gross Unrealized Losses	(33)	(224)
US Government Agencies Debt Securities [Member]
Securities in Continuous Unrealized Loss Position Less than Twelve Months Fair Value	1,998	1,986
Securities in Continuous Unrealized Loss Position Less than Twelve Months Gross Unrealized Losses	(2)	(14)
Securities in Continuous Unrealized Loss Position Fair Value	1,998	1,986
Securities in Continuous Unrealized Loss Position Gross Unrealized Losses	(2)	(14)
US States and Political Subdivisions Debt Securities [Member]
Securities in Continuous Unrealized Loss Position Less than Twelve Months Fair Value	1,671	2,707
Securities in Continuous Unrealized Loss Position Less than Twelve Months Gross Unrealized Losses	(29)	(40)
Securities in Continuous Unrealized Loss Position Twelve Months or Greater Fair Value		919
Securities in Continuous Unrealized Loss Position Twelve Months or Greater Gross Unrealized Losses		(21)
Securities in Continuous Unrealized Loss Position Fair Value	1,671	3,626
Securities in Continuous Unrealized Loss Position Gross Unrealized Losses	(29)	(61)
Mortgage-backed Securities, Issued by Private Enterprises [Member]
Securities in Continuous Unrealized Loss Position Less than Twelve Months Fair Value		1,628
Securities in Continuous Unrealized Loss Position Less than Twelve Months Gross Unrealized Losses		(42)
Securities in Continuous Unrealized Loss Position Twelve Months or Greater Fair Value	370	398
Securities in Continuous Unrealized Loss Position Twelve Months or Greater Gross Unrealized Losses	(2)	(53)
Securities in Continuous Unrealized Loss Position Fair Value	370	2,026
Securities in Continuous Unrealized Loss Position Gross Unrealized Losses	(2)	(95)
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Securities in Continuous Unrealized Loss Position Less than Twelve Months Fair Value		8,992
Securities in Continuous Unrealized Loss Position Less than Twelve Months Gross Unrealized Losses		(54)
Securities in Continuous Unrealized Loss Position Fair Value		8,992
Securities in Continuous Unrealized Loss Position Gross Unrealized Losses		$ (54)

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Note 6 - Loans And Related Allowance For Loan Losses (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

	September 30, 2012			December 31, 2011
Commercial and industrial	$	65,323		$	59,185
Real estate - construction		21,322			21,545
Real estate - mortgage:
Residential		205,433			208,139
Commercial		112,867			108,502
Consumer installment		4,230			4,509
		409,175			401,880
Less allowance for loan losses		(7,173	)		(6,819	)
Net loans	$	402,002		$	395,061

Schedule of Financing Receivable by Segment [Table Text Block]

					Real Estate- Mortgage
September 30, 2012	Commercial and industrial		Real estate- construction		Residential		Commercial		Consumer installment		Total
Individually evaluated for impairment	$	4,414	$	4,383	$	3,734	$	7,021	$	-	$	19,553
Collectively evaluated for impairment		60,909		16,939		201,699		105,846		4,230		389,622
Total loans	$	65,323	$	21,322	$	205,433	$	112,867	$	4,230	$	409,175

					Real estate- Mortgage
December 31, 2011	Commercial and industrial		Real estate- construction		Residential		Commercial		Consumer installment		Total
Individually evaluated for impairment	$	4,492	$	867	$	4,882	$	6,491	$	-	$	16,732
Collectively evaluated for impairment		54,693		20,678		203,257		102,011		4,509		385,148
Total loans	$	59,185	$	21,545	$	208,139	$	108,502	$	4,509	$	401,880

					Real Estate- Mortgage
September 30, 2012	Commercial and industrial		Real estate- construction		Residential		Commercial		Consumer installment		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1,096	$	442	$	482	$	955	$	-	$	2,975
Collectively evaluated for impairment		608		3		2,471		1,100		16		4,198
Total ending allowance balance	$	1,704	$	445	$	2,953	$	2,055	$	16	$	7,173

					Real Estate- Mortgage
December 31, 2011	Commercial and industrial		Real estate- construction		Residential		Commercial		Consumer installment		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	595	$	237	$	685	$	185	$	-	$	1,702
Collectively evaluated for impairment		701		201		3,046		1,121		48		5,117
Total ending allowance balance	$	1,296	$	438	$	3,731	$	1,306	$	48	$	6,819

Impaired Financing Receivables [Table Text Block]

September 30, 2012
Impaired Loans
	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial and industrial	$	978	$	978	$	-
Real estate - construction		203		203		-
Real estate - mortgage:
Residential		1,859		1,863		-
Commercial		1,306		1,311		-
Consumer installment		30		30		-
Total	$	4,376	$	4,385	$	-
With an allowance recorded:
Commercial and industrial	$	2,896	$	2,899	$	840
Real estate - construction		3,986		3,986		442
Real estate - mortgage:
Residential		2,451		2,458		556
Commercial		3,524		3,533		1,137
Total	$	12,857	$	12,876	$	2,975
Total:
Commercial and industrial	$	3,874	$	3,877	$	840
Real estate - construction		4,189		4,189		442
Real estate - mortgage:
Residential		4,310		4,321		556
Commercial		4,830		4,844		1,137
Consumer installment		30		30		-
Total	$	17,233	$	17,261	$	2,975

December 31, 2011
Impaired Loans
	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial and industrial	$	1,172	$	1,172	$	-
Real estate - construction		4,250		4,250		-
Real estate - mortgage:
Residential		3,188		3,193		-
Commercial		2,528		2,536		-
Consumer installment		24		24		-
Total	$	11,162	$	11,175	$	-
With an allowance recorded:
Commercial and industrial	$	658	$	658	$	203
Real estate - construction		271		271		125
Real estate - mortgage:
Residential		1,813		1,817		547
Commercial		4,332		4,344		827
Total	$	7,074	$	7,090	$	1,702
Total:
Commercial and industrial	$	1,830	$	1,831	$	203
Real estate - construction		4,521		4,521		125
Real estate - mortgage:
Residential		5,001		5,010		547
Commercial		6,861		6,880		827
Consumer installment		24		24		-
Total	$	18,237	$	18,266	$	1,702

Additional Information on Impaired Financing Receivables [Table Text Block]

	For the Three Months Ended September 30, 2012				For the Three Months Ended September 30, 2011
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Total:
Commercial and industrial	$	2,535	$	139	$	3,295	$	11
Real estate - construction		2,305		-		630		15
Real estate - mortgage:
Residential		3,622		85		997		23
Commercial		3,597		200		4,899		86
Consumer installment		13		1		25		-

	For the Nine Months Ended September 30, 2012				For the Nine Months Ended September 30, 2011
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Total:
Commercial and industrial	$	2,170	$	170	$	3,266	$	93
Real estate - construction		2,400		113		624		15
Real estate - mortgage:
Residential		3,764		169		793		68
Commercial		3,985		324		4,081		188
Consumer installment		27		2		13		4

Financing Receivable Credit Quality Indicators [Table Text Block]

	Pass		Special Mention		Substandard		Doubtful		Total Loans
September 30, 2012
Commercial and industrial	$	60,439	$	407	$	4,477	$	-	$	65,323
Real estate - construction		16,913		-		4,409		-		21,322
Real estate - mortgage:
Residential		191,710		868		12,855		-		205,433
Commercial		104,030		2,176		6,661		-		112,867
Consumer installment		4,208		2		20		-		4,230
Total	$	377,300	$	3,453	$	28,422	$	-	$	409,175

December 31, 2011	Pass		Special Mention		Substandard		Doubtful		Loans
Commercial and industrial	$	53,645	$	1,104	$	4,363	$	73	$	59,185
Real estate - construction		20,883		-		662		-		21,545
Real estate - mortgage:
Residential		192,534		1,100		14,505		-		208,139
Commercial		100,536		443		7,523		-		108,502
Consumer installment		4,495		6		8		-		4,509
Total	$	372,093	$	2,653	$	27,061	$	73	$	401,880

Past Due Financing Receivables [Table Text Block]

			Still Accruing
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days+ Past Due		Total Past Due		Non- Accrual		Total Loans
September 30, 2012
Commercial and industrial	$	62,529	$	1,221	$	372	$	10	$	1,603	$	1,191	$	65,323
Real estate - construction		20,647		-		-		-		-		675		21,322
Real estate - mortgage:
Residential		195,547		885		363		-		1,248		8,638		205,433
Commercial		109,932		140		97		79		316		2,619		112,867
Consumer installment		4,148		69		1		-		70		12		4,230
Total	$	392,803	$	2,315	$	833	$	89	$	3,237	$	13,135	$	409,175

			Still Accruing
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days+ Past Due		Total Past Due		Non- Accrual		Total Loans
December 31, 2011
Commercial and industrial	$	57,291	$	258	$	16	$	44	$	318	$	1,576	$	59,185
Real estate - construction		20,862		20		-		-		20		663		21,545
Real estate - mortgage:
Residential		193,732		2,624		863		275		3,762		10,645		208,139
Commercial		104,086		83		412		-		495		3,921		108,502
Consumer installment		4,408		60		41		-		101		-		4,509
Total	$	380,379	$	3,045	$	1,332	$	319	$	4,696	$	16,805	$	401,880

Schedule of Credit Losses for Financing Receivables, Current [Table Text Block]

	Commercial and industrial			Real estate- construction		Real estate- residential mortgage			Real estate- commercial mortgage			Consumer installment			Total
ALL balance at December 31, 2011	$	1,296		$	438	$	3,731		$	1,306		$	48		$	6,819
Charge-offs		(88	)		-		(668	)		(123	)		(62	)		(941	)
Recoveries		70			-		15			-			17			102
Provision		426			7		(125	)		872			13			1,193
ALL balance at September 30, 2012	$	1,704		$	445	$	2,953		$	2,055		$	16		$	7,173

	Commercial and industrial			Real estate- construction			Real estate- residential mortgage			Real estate- commercial mortgage			Consumer installment			Total
ALL balance at December 31, 2010	$	962		$	188		$	3,434		$	1,543		$	94		$	6,221
Charge-offs		(503	)		(6	)		(461	)		(266	)		(11	)		(1,247	)
Recoveries		75			-			18			-			22			115
Provision		384			75			1,372			616			38			2,485
ALL balance at September 30, 2011	$	918		$	257		$	4,363		$	1,893		$	143		$	7,574

	Commercial and industrial			Real estate- construction			Real estate- residential mortgage			Real estate- commercial mortgage			Consumer installment			Total
ALL balance at June 30, 2012	$	1,626		$	504		$	4,109		$	1,492		$	21		$	7,752
Charge-offs		(60	)		-			(570	)		(70	)		(40	)		(740	)
Recoveries		1			-			12			-			5			18
Provision		137			(59	)		(598	)		633			30			143
ALL balance at September 30, 2012	$	1,704		$	445		$	2,953		$	2,055		$	16		$	7,173

	Commercial and industrial			Real estate- construction		Real estate- residential mortgage			Real estate- commercial mortgage			Consumer installment		Total
ALL balance at June 30, 2011	$	957		$	229	$	3,791		$	1,921		$	129	$	7,027
Charge-offs		(232	)				(121	)		(86	)				(439	)
Recoveries		49					15						2		66
Provision		144			28		678			58			12		920
ALL balance at September 30, 2011	$	918		$	257	$	4,363		$	1,893		$	143	$	7,574

Additional Information Regarding Troubled Debt Restructurings [Table Text Block]

	Number of Contracts						Pre-Modification Outstanding
Troubled Debt Restructurings	Rate Forgiveness		Other		Total		Recorded Investment
Commercial and industrial		-		2		2	$	13
Real estate- mortgage:
Residential		1		6		7		619
Consumer Installment		-		1		1		6

	Number of Contracts
Troubled Debt Restructurings	Rate Forgiveness		Other		Total		Pre-Modification Outstanding Recorded Investment
Commercial and industrial		1		8		9	$	243
Real estate- mortgage:
Residential		2		8		10		946
Consumer Installment		-		2		2		11

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

Troubled Debt Restructurings subsequently defaulted	Number of Contracts		Recorded Investment
Commercial and industrial		1	$	30
Real estate- mortgage:
Residential		1		20

Troubled Debt Restructurings subsequently defaulted	Number of Contracts		Recorded Investment
Commercial and industrial		2	$	60
Real estate- mortgage:
Residential		1		20

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Note 4 - Fair Value Measurements (Detail) - Assets Measured on a Recurring Basis (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Assets Measured on a Recurring Basis:
Assets Measured on a Recurring Basis	$ 179,140	$ 193,977
US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Assets Measured on a Recurring Basis:
Assets Measured on a Recurring Basis	17,268	31,933
US Government Agencies Debt Securities [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Assets Measured on a Recurring Basis:
Assets Measured on a Recurring Basis	17,268	31,933
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Assets Measured on a Recurring Basis:
Assets Measured on a Recurring Basis	92,668	88,400
US States and Political Subdivisions Debt Securities [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Assets Measured on a Recurring Basis:
Assets Measured on a Recurring Basis	92,668	88,400
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member] | Fair Value, Inputs, Level 2 [Member]
Assets Measured on a Recurring Basis:
Assets Measured on a Recurring Basis	62,467	65,573
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Assets Measured on a Recurring Basis:
Assets Measured on a Recurring Basis	62,467	65,573
Mortgage-backed Securities, Issued by Private Enterprises [Member] | Fair Value, Inputs, Level 2 [Member]
Assets Measured on a Recurring Basis:
Assets Measured on a Recurring Basis	5,986	7,321
Mortgage-backed Securities, Issued by Private Enterprises [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Assets Measured on a Recurring Basis:
Assets Measured on a Recurring Basis	5,986	7,321
Mortgage-backed Securities, Issued by Private Enterprises [Member]
Assets Measured on a Recurring Basis:
Assets Measured on a Recurring Basis	5,400
Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Assets Measured on a Recurring Basis:
Assets Measured on a Recurring Basis	178,389	193,227
Debt Securities [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Assets Measured on a Recurring Basis:
Assets Measured on a Recurring Basis	178,389	193,227
Equity Securities in Financial Institutions [Member] | Fair Value, Inputs, Level 1 [Member]
Assets Measured on a Recurring Basis:
Assets Measured on a Recurring Basis	5	5
Equity Securities in Financial Institutions [Member] | Fair Value, Inputs, Level 2 [Member]
Assets Measured on a Recurring Basis:
Assets Measured on a Recurring Basis	746	745
Equity Securities in Financial Institutions [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Assets Measured on a Recurring Basis:
Assets Measured on a Recurring Basis	751	750
Fair Value, Inputs, Level 1 [Member]
Assets Measured on a Recurring Basis:
Assets Measured on a Recurring Basis	5	5
Fair Value, Inputs, Level 2 [Member]
Assets Measured on a Recurring Basis:
Assets Measured on a Recurring Basis	179,135	193,972
Estimate of Fair Value, Fair Value Disclosure [Member]
Assets Measured on a Recurring Basis:
Assets Measured on a Recurring Basis	$ 179,140	$ 193,977

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Note 6 - Loans And Related Allowance For Loan Losses (Detail) - Past Due Financing Receivables (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Financing Receivable Current	$ 392,803	$ 380,379
Financing Receivable 30-59 Days Past Due	2,315	3,045
Financing Receivable 60-89 Days Past Due	833	1,332
Financing Receivable 90 Days + Past Due	89	319
Financing Receivable Total Past Due	3,237	4,696
Financing Receivable Non-Accrual	13,135	16,805
Financing Receivable	409,175	401,880
Commercial and Industrial [Member]
Financing Receivable Current	62,529	57,291
Financing Receivable 30-59 Days Past Due	1,221	258
Financing Receivable 60-89 Days Past Due	372	16
Financing Receivable 90 Days + Past Due	10	44
Financing Receivable Total Past Due	1,603	318
Financing Receivable Non-Accrual	1,191	1,576
Financing Receivable	65,323	59,185
Real Estate Construction [Member]
Financing Receivable Current	20,647	20,862
Financing Receivable 30-59 Days Past Due		20
Financing Receivable Total Past Due		20
Financing Receivable Non-Accrual	675	663
Financing Receivable	21,322	21,545
Residential Real Estate Mortgage [Member]
Financing Receivable Current	195,547	193,732
Financing Receivable 30-59 Days Past Due	885	2,624
Financing Receivable 60-89 Days Past Due	363	863
Financing Receivable 90 Days + Past Due		275
Financing Receivable Total Past Due	1,248	3,762
Financing Receivable Non-Accrual	8,638	10,645
Financing Receivable	205,433	208,139
Commercial Real Estate Mortgage [Member]
Financing Receivable Current	109,932	104,086
Financing Receivable 30-59 Days Past Due	140	83
Financing Receivable 60-89 Days Past Due	97	412
Financing Receivable 90 Days + Past Due	79
Financing Receivable Total Past Due	316	495
Financing Receivable Non-Accrual	2,619	3,921
Financing Receivable	112,867	108,502
Consumer Installment [Member]
Financing Receivable Current	4,148	4,408
Financing Receivable 30-59 Days Past Due	69	60
Financing Receivable 60-89 Days Past Due	1	41
Financing Receivable Total Past Due	70	101
Financing Receivable Non-Accrual	12
Financing Receivable	$ 4,230	$ 4,509

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Consolidated Statement of Comprehensive Income (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Net income	$ 1,849	$ 1,079	$ 5,012	$ 2,801
Net unrealized holding gain on available for sale securities	838	3,238	2,662	6,746
Tax effect	(285)	(1,124)	(905)	(2,294)
Reclassification adjustment for (gains) losses included in net income	(152)	(6)	(448)	16
Tax effect	52	2	152	(5)
Total other comprehensive income	453	2,110	1,461	4,463
Comprehensive income	$ 2,302	$ 3,189	$ 6,473	$ 7,264

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Note 2 - Stock-based Compensation

9 Months Ended

Sep. 30, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE 2 - STOCK-BASED COMPENSATION

The Company has no unvested stock options outstanding and no unrecognized stock-based compensation costs outstanding as of September 30, 2012.

Stock option activity during the nine months ended September 30, 2012 and 2011 is as follows:

	2012			Weighted- average Exercise Price		2011			Weighted- average Exercise Price
Outstanding, January 1		88,774		$	26.81		89,077		$	27.87
Granted		-			-		9,000			17.55
Exercised		-			-		-			-
Forfeited		(420	)		36.86		(7,549	)		29.22
Outstanding, September 30		88,354		$	26.76		90,528		$	26.73
Exercisable, September 30		88,354		$	26.76		81,528		$	27.75

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Note 4 - Fair Value Measurements (Detail) - Assets Measured on a Nonrecurring Basis (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Assets Measured on a non-recurring Basis:
Impaired loans	$ 17,233	$ 18,237
Fair Value, Inputs, Level 3 [Member]
Assets Measured on a non-recurring Basis:
Impaired loans	14,258	16,535
Other real estate owned	2,332	2,196
Estimate of Fair Value, Fair Value Disclosure [Member]
Assets Measured on a non-recurring Basis:
Impaired loans	14,258	16,535
Other real estate owned	$ 2,332	$ 2,196

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Note 6 - Loans And Related Allowance For Loan Losses (Detail) - Impaired Loans by Class (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
With no related allowance recorded:
With no related allowance recorded - recorded investment	$ 4,376	$ 11,162
With no related allowance recorded - unpaid principal balance	4,385	11,175
With an allowance recorded:
With an allowance recorded - recorded Investment	12,857	7,074
With an allowance recorded - unpaid principal balance	12,876	7,090
With an allowance recorded - related allowance	2,975	1,702
Total:
Recorded investment	17,233	18,237
Unpaid principal balance	17,261	18,266
Related Allowance	2,975	1,702
Commercial and Industrial [Member]
With no related allowance recorded:
With no related allowance recorded - recorded investment	978	1,172
With no related allowance recorded - unpaid principal balance	978	1,172
With an allowance recorded:
With an allowance recorded - recorded Investment	2,896	658
With an allowance recorded - unpaid principal balance	2,899	658
With an allowance recorded - related allowance	840	203
Total:
Recorded investment	3,874	1,830
Unpaid principal balance	3,877	1,831
Related Allowance	840	203
Real Estate Construction [Member]
With no related allowance recorded:
With no related allowance recorded - recorded investment	203	4,250
With no related allowance recorded - unpaid principal balance	203	4,250
With an allowance recorded:
With an allowance recorded - recorded Investment	3,986	271
With an allowance recorded - unpaid principal balance	3,986	271
With an allowance recorded - related allowance	442	125
Total:
Recorded investment	4,189	4,521
Unpaid principal balance	4,189	4,521
Related Allowance	442	125
Residential Real Estate Mortgage [Member]
With no related allowance recorded:
With no related allowance recorded - recorded investment	1,859	3,188
With no related allowance recorded - unpaid principal balance	1,863	3,193
With an allowance recorded:
With an allowance recorded - recorded Investment	2,451	1,813
With an allowance recorded - unpaid principal balance	2,458	1,817
With an allowance recorded - related allowance	556	547
Total:
Recorded investment	4,310	5,001
Unpaid principal balance	4,321	5,010
Related Allowance	556	547
Commercial Real Estate Mortgage [Member]
With no related allowance recorded:
With no related allowance recorded - recorded investment	1,306	2,528
With no related allowance recorded - unpaid principal balance	1,311	2,536
With an allowance recorded:
With an allowance recorded - recorded Investment	3,524	4,332
With an allowance recorded - unpaid principal balance	3,533	4,344
With an allowance recorded - related allowance	1,137	827
Total:
Recorded investment	4,830	6,861
Unpaid principal balance	4,844	6,880
Related Allowance	1,137	827
Consumer Installment [Member]
With no related allowance recorded:
With no related allowance recorded - recorded investment	30	24
With no related allowance recorded - unpaid principal balance	30	24
With an allowance recorded:
With an allowance recorded - related allowance	0	0
Total:
Recorded investment	30	24
Unpaid principal balance	30	24
Related Allowance	$ 0	$ 0

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Note 5 - Investment Securities Available For Sale (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Available-for-sale Securities Reconciliation [Table Text Block]

	September 30, 2012
(Dollar amounts in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. government agency securities	$	16,733	$	537	$	(2	)	$	17,268
Obligations of states and political subdivisions:
Taxable		8,198		864		-			9,062
Tax-exempt		78,808		4,827		(29	)		83,606
Mortgage-backed securities in government-sponsored entities		60,139		2,328		-			62,467
Private-label mortgage-backed securities		5,418		570		(2	)		5,986
Total debt securities		169,296		9,126		(33	)		178,389
Equity securities in financial institutions		750		1		-			751
Total	$	170,046	$	9,127	$	(33	)	$	179,140

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. government agency securities	$	31,520	$	427	$	(14	)	$	31,933
Obligations of states and political subdivisions:
Taxable		8,207		766		-			8,973
Tax-exempt		75,807		3,681		(61	)		79,427
Mortgage-backed securities in government-sponsored entities		63,808		1,819		(54	)		65,573
Private-label mortgage-backed securities		7,005		411		(95	)		7,321
Total debt securities		186,347		7,104		(224	)		193,227
Equity securities in financial institutions		750		-		-			750
Total	$	187,097	$	7,104	$	(224	)	$	193,977

Investments Classified by Contractual Maturity Date [Table Text Block]

(Dollar amounts in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	3,003	$	3,038
Due after one year through five years		4,834		5,093
Due after five years through ten years		14,682		15,545
Due after ten years		146,777		154,713
Total	$	169,296	$	178,389

Realized Gain (Loss) on Investments [Table Text Block]

	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2012			2011		2012			2011
Proceeds from sales	$	5,622		$	14,233	$	27,426		$	24,305
Gross realized gains		154			6		462			21
Gross realized losses		(2	)		-		(14	)		(37	)

Schedule of Unrealized Loss on Investments [Table Text Block]

	September 30, 2012
	Less than Twelve Months					Twelve Months or Greater					Total
(Dollar amounts in thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. government agency securities	$	1,998	$	(2	)	$	-	$	-		$	1,998	$	(2	)
Obligations of states and political subdivisions		1,671		(29	)		-		-			1,671		(29	)
Private-label mortgage-backed securities		-		-			370		(2	)		370		(2	)
Total	$	3,669	$	(31	)	$	370	$	(2	)	$	4,039	$	(33	)

	December 31, 2011
	Less than Twelve Months					Twelve Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. government agency securities	$	1,986	$	(14	)	$	-	$	-		$	1,986	$	(14	)
Obligations of states and political subdivisions		2,707		(40	)		919		(21	)		3,626		(61	)
Mortgage-backed securities in government sponsored entities		8,992		(54	)		-		-			8,992		(54	)
Private-label mortgage-backed securities		1,628		(42	)		398		(53	)		2,026		(95	)
Equity securities in financial institutions		-		-
Total	$	15,313	$	(150	)	$	1,317	$	(74	)	$	16,630	$	(224	)