Note 1 - Basis of Presentation	3 Months Ended
Mar. 31, 2018
Notes to Financial Statements
Significant Accounting Policies [Text Block]	NOTE 1 - BASIS OF PRESENTATION The consolidated financial statements of Middlefield Banc Corp. ("Company") include its bank subsidiary, The Middlefield Banking Company (“MBC” or “Middlefield Bank”), and a nonbank asset resolution subsidiary EMORECO, Inc. All significant inter-company items have been eliminated. The accompanying unaudited 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, 2017, 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 financial statements should be read in conjunction with the financial statements and notes thereto included with the Company’s Form 10 -K for the year ended December 31, 2017. The results of the Company’s operations for any interim period are not necessarily indicative for the results of the Company’s operations for any other interim period or for a full fiscal year. Recent Accounting Pronouncements – In February 2016, the FASB issued ASU 2016 - 02, Leases (Topic 842 ) . The standard requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. A short-term lease is defined as one in which (a) the lease term is 12 months or less and (b) there is not an option to purchase the underlying asset that the lessee is reasonably certain to exercise. For short-term leases, lessees may elect to recognize lease payments over the lease term on a straight-line basis. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2018, and interim periods within those years. For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, and for interim periods within fiscal years beginning after December 15, 2020. The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is currently assessing the practical expedients it may elect at adoption, but does not anticipate the amendments will have a significant impact on the financial statements. Based on the Company’s preliminary analysis of its current portfolio, the impact to the Company’s balance sheet is estimated to result in less than a 1 percent increase in assets and liabilities. The Company also anticipates additional disclosures to be provided at adoption. In June 2016, the FASB issued ASU 2016 - 13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments ( “ CECL ” ) , which changes the impairment model for most financial assets. This Update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of the Update is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be effected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. ASU 2016 - 13 is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted for annual and interim periods beginning after December 15, 2018. With certain exceptions, transition to the new requirements will be through a cumulative effect adjustment to opening retained earnings as of the beginning of the first reporting period in which the guidance is adopted. Management is currently evaluating the impact of the adoption of this guidance on the Company’s consolidated financial statements. Management will oversee the implementation of CECL and is currently in the process of implementing a software solution to assist in the adoption of this ASU. Management plans to run the current incurred loss model and the CECL model concurrently for 12 months prior to the adoption of this guidance on January 1, 2020. In February 2018, the FASB issued ASU 2018 - 03, Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825 - 10 ), to clarify certain aspects of the guidance issued in ASU 2016 - 01. ( 1 ) An entity measuring an equity security using the measurement alternative may change its measurement approach to a fair value method in accordance with Topic 820, Fair Value Measurement, through an irrevocable election that would apply to that security and all identical or similar investments of the same issuer. Once an entity makes this election, the entity should measure all future purchases of identical or similar investments of the same issuer using a fair value method in accordance with Topic 820. ( 2 ) Adjustments made under the measurement alternative are intended to reflect the fair value of the security as of the date that the observable transaction for a similar security took place. ( 3 ) Re-measuring the entire value of forward contracts and purchased options is required when observable transactions occur on the underlying equity securities. ( 4 ) When the fair value option is elected for a financial liability, the guidance in paragraph 825 - 10 - 45 - 5 should be applied, regardless of whether the fair value option was elected under either Subtopic 815 - 15, Derivatives and Hedging—Embedded Derivatives, or 825 - 10, Financial Instruments—Overall. ( 5 ) Financial liabilities for which the fair value option is elected, the amount of change in fair value that relates to the instrument specific credit risk should first be measured in the currency of denomination when presented separately from the total change in fair value of the financial liability. Then, both components of the change in the fair value of the liability should be re-measured into the functional currency of the reporting entity using end-of-period spot rates. ( 6 ) The prospective transition approach for equity securities without a readily determinable fair value in the amendments in Update 2016 - 01 is meant only for instances in which the measurement alternative is applied. An insurance entity subject to the guidance in Topic 944, Financial Services— Insurance, should apply a prospective transition method when applying the amendments related to equity securities without readily determinable fair values. An insurance entity should apply the selected prospective transition method consistently to the entity’s entire population of equity securities for which the measurement alternative is elected. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years beginning after June 15, 2018. Public business entities with fiscal years beginning between December 15, 2017, and June 15, 2018, are not required to adopt these amendments until the interim period beginning after June 15, 2018, and public business entities with fiscal years beginning between June 15, 2018, and December 15, 2018, are not required to adopt these amendments before adopting the amendments in Update 2016 - 01. For all other entities, the effective date is the same as the effective date in Update 2016 - 01. All entities may early adopt these amendments for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, as long as they have adopted Update 2016 - 01. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations. ASU 2018 - 04, Investments – Debt Securities (Topic 320 ) and Regulated Operations (Topic 980 ) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 117 and SEC Release No. 33 - 9273, ASU 2018 - 04 supersedes various SEC paragraphs and adds an SEC paragraph pursuant to the issuance of Staff Accounting Bulletin No. 117.

NOTE

- BASIS OF PRESENTATION

The consolidated financial statements of Middlefield Banc Corp. ("Company") include its bank subsidiary, The Middlefield Banking Company (“MBC” or “Middlefield Bank”), and a nonbank asset resolution subsidiary EMORECO, Inc. All significant inter-company items have been eliminated.

The accompanying unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles and the instructions for Form

-Q and Article

of Regulation S-

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, 2017,

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 financial statements should be read in conjunction with the financial statements and notes thereto included with the Company’s Form

-K for the year ended

December 31, 2017.

The results of the Company’s operations for any interim period are

not

necessarily indicative for the results of the Company’s operations for any other interim period or for a full fiscal year.

Recent Accounting Pronouncements –

February 2016,

the FASB issued ASU

2016

02,

Leases (Topic

842

)

. The standard requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. A short-term lease is defined as

one

in which (a) the lease term is

months or less and (b) there is

not

an option to purchase the underlying asset that the lessee is reasonably certain to exercise. For short-term leases, lessees

may

elect to recognize lease payments over the lease term on a straight-line basis. For public business entities, the amendments in this Update are effective for fiscal years beginning after

December 15, 2018,

and interim periods within those years. For all other entities, the amendments in this Update are effective for fiscal years beginning after

December 15, 2019,

and for interim periods within fiscal years beginning after

December 15, 2020.

The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is currently assessing the practical expedients it

may

elect at adoption, but does

not

anticipate the amendments will have a significant impact on the financial statements. Based on the Company’s preliminary analysis of its current portfolio, the impact to the Company’s balance sheet is estimated to result in less than a

percent increase in assets and liabilities. The Company also anticipates additional disclosures to be provided at adoption.

June 2016,

the FASB issued ASU

2016

13,

Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments

(

“

CECL

”

)

, which changes the impairment model for most financial assets. This Update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of the Update is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be effected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. ASU

2016

is effective for annual and interim periods beginning after

December 15, 2019,

and early adoption is permitted for annual and interim periods beginning after

December 15, 2018.

With certain exceptions, transition to the new requirements will be through a cumulative effect adjustment to opening retained earnings as of the beginning of the

first

reporting period in which the guidance is adopted. Management is currently evaluating the impact of the adoption of this guidance on the Company’s consolidated financial statements. Management will oversee the implementation of CECL and is currently in the process of implementing a software solution to assist in the adoption of this ASU. Management plans to run the current incurred loss model and the CECL model concurrently for

months prior to the adoption of this guidance on

January 1, 2020.

February 2018,

the FASB issued ASU

2018

03,

Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic

825

), to clarify certain aspects of the guidance issued in ASU

2016

01.

(

) An entity measuring an equity security using the measurement alternative

may

change its measurement approach to a fair value method in accordance with Topic

820,

Fair Value Measurement, through an irrevocable election that would apply to that security and all identical or similar investments of the same issuer. Once an entity makes this election, the entity should measure all future purchases of identical or similar investments of the same issuer using a fair value method in accordance with Topic

820.

(

) Adjustments made under the measurement alternative are intended to reflect the fair value of the security as of the date that the observable transaction for a similar security took place. (

) Re-measuring the entire value of forward contracts and purchased options is required when observable transactions occur on the underlying equity securities. (

) When the fair value option is elected for a financial liability, the guidance in paragraph

825

should be applied, regardless of whether the fair value option was elected under either Subtopic

815

15,

Derivatives and Hedging—Embedded Derivatives, or

825

10,

Financial Instruments—Overall. (

) Financial liabilities for which the fair value option is elected, the amount of change in fair value that relates to the instrument specific credit risk should

first

be measured in the currency of denomination when presented separately from the total change in fair value of the financial liability. Then, both components of the change in the fair value of the liability should be re-measured into the functional currency of the reporting entity using end-of-period spot rates. (

) The prospective transition approach for equity securities without a readily determinable fair value in the amendments in Update

2016

is meant only for instances in which the measurement alternative is applied. An insurance entity subject to the guidance in Topic

944,

Financial Services— Insurance, should apply a prospective transition method when applying the amendments related to equity securities without readily determinable fair values. An insurance entity should apply the selected prospective transition method consistently to the entity’s entire population of equity securities for which the measurement alternative is elected. For public business entities, the amendments in this Update are effective for fiscal years beginning after

December 15, 2017,

and interim periods within those fiscal years beginning after

June 15, 2018.

Public business entities with fiscal years beginning between

December 15, 2017,

and

June 15, 2018,

are

not

required to adopt these amendments until the interim period beginning after

June 15, 2018,

and public business entities with fiscal years beginning between

June 15, 2018,

and

December 15, 2018,

are

not

required to adopt these amendments before adopting the amendments in Update

2016

01.

For all other entities, the effective date is the same as the effective date in Update

2016

01.

All entities

may

early adopt these amendments for fiscal years beginning after

December 15, 2017,

including interim periods within those fiscal years, as long as they have adopted Update

2016

01.

The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

ASU

2018

04,

Investments – Debt Securities (Topic

320

) and Regulated Operations (Topic

980

) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin

No.

117

and SEC Release

No.

9273,

ASU

2018

supersedes various SEC paragraphs and adds an SEC paragraph pursuant to the issuance of Staff Accounting Bulletin

No.

117.