20.	SUBSEQUENT EVENT

January

12,

2017,

we completed our acquisition of Liberty Bank, N.A. ("Liberty"), pursuant to a previously announced definitive merger agreement. Under the terms of the merger agreement, Liberty shareholders received

$37.96

in cash or

1.1934

shares of Middlefield’s common stock in exchange for each share of Liberty common stock they owned immediately prior to the merger. Middlefield issued approximately

557,079

shares its common stock in the merger and the aggregate merger consideration was approximately

$43.1

million. Upon closing, Liberty was merged into MBC, and its

three

full-service bank offices, in Twinsburg, in northern Summit County, and in Beachwood and Solon in eastern Cuyahoga County, became offices of MBC. The systems integration of Liberty into MBC was completed in

February.

Middlefield Banc Corp

Unaudited Pro Forma Combined Consolidated Condensed Balance Sheet

As of

December

31,

2016

(Dollars in Thousands, Except Per Share Amounts)

	December 31, 2016

ASSETS
Cash and due from banks	$	52,718
Fed funds sold		1,100
Cash and cash equivalents		53,818
Investment securities available for sale, at fair value		113,796
Loans held for sale		992
Loans		807,450
Less allowance for loan and lease losses		6,598
Net loans		800,852
Premises and equipment, net		11,535
Goodwill		13,807
Core deposit intangibles		3,123
Bank owned life insurance		15,193
Other real estate owned		934
Accrued interest and other assets		10,310
TOTAL ASSETS	$	1,024,360

LIABILITIES
Noninterest-bearing demand	$	171,711
Interest-bearing demand		83,759
Money market		170,155
Savings		182,364
Time		220,697
Total deposits		828,686
Short-term borrowings		68,359
Other borrowings		21,437
Accrued interest and other liabilities		7,434
TOTAL LIABILITIES	$	925,916

EQUITY
Common stock	$	69,502
Surplus / additional paid in capital		-
Retained earnings		41,259
Accumulated other comprehensive income		1,201
Treasury stock		(13,518	)
TOTAL STOCKHOLDERS' EQUITY	$	98,444
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,024,360

Middlefield Banc Corp

Unaudited Pro Forma Combined Consolidated Condensed Statement of Income

For the Twelve Months Ended

December

31,

2016

and

2015

(Dollars in Thousands, Except Per Share Amounts)

	Year Ended December 31, 2016		Year-Ended December 31, 2015

INTEREST INCOME

Interest and fees on originated loans	$	35,308	$	31,986
Interest bearing deposits in other institutions		210		124
Federal funds sold		20		13
Investment securities		4,019		4,627
Dividends on stock		138		164

Total interest income		39,695		36,914

INTEREST EXPENSE

Deposits		4,315		4,265
Short term borrowings		322		194
Other borrowings		560		575
Trust preferred securities		182		117

Total interest expense		5,379		5,151

Net interest income		34,316		31,763

Provision for loan and lease losses		570		315

Net interest income after provision for loan and lease losses		33,746		31,448

NONINTEREST INCOME

Service charges on deposit accounts		2,266		2,156
Investment securities gains, net		303		323
Earnings on bank-owned life insurance		430		678
Gains on sale of loans		1,257		805
Other income		1,229		1,224

Total noninterest income		5,485		5,186

NONINTEREST EXPENSE

Salaries and employee benefits		14,523		13,454
Occupancy expense		1,762		1,746
Equipment expense		1,206		1,156
Data processing costs		1,931		1,489
Core deposit intangible amortization		382		382
Other expense		8,919		8,453

Total noninterest expense		28,723		26,680

Income before taxes		10,508		9,954
Income taxes		2,473		1,954

NET INCOME	$	8,035	$	8,000

Less: Income attributable to common stock subject to possible conversion		-		-
Pro forma net income attributable to common stock not subject to possible conversion	$	8,035	$	8,000

Pro forma net income per common share - basic	$	3.02	$	3.11
Pro forma net income per common share - diluted		3.00		3.10

Weighted average number of shares outstanding - basic		2,664,936		2,572,045
Weighted average number of shares outstanding - diluted		2,676,293		2,581,199