April 3, 2006

Dear Shareholders:

     You are cordially invited to attend the 2006 Annual Meeting of Shareholders of Middlefield Banc Corp. The meeting will be held on Wednesday, May 10, 2006, 1:00 p.m. local time at the Grandview Inn, 13404 Old State Road, Middlefield, Ohio. The attached Notice of Annual Meeting of Shareholders and proxy statement discuss the business to be conducted at the meeting.

     Your vote is important, regardless of the number of shares you own. Please read the enclosed proxy statement and then complete, sign, and date the enclosed proxy and return it in the accompanying postage-paid return envelope as promptly as possible. This will not prevent you from voting in person, but it will ensure that your vote is counted.

     Thank you for your attention to this important matter.

		Sincerely,
Donald D. Hunter
		Chairman of the Board

15985 East High Street, P.O. Box 35 • Middlefield, Ohio 44062 • 440/632-1666 • 888/801-1666 • 440/632-1700 (FAX) • www.middlefieldbank.com

Middlefield Banc Corp.
15985 East High Street
P.O. Box 35
Middlefield, Ohio 44062
(440) 632-1666

     Notice is hereby given that the 2006 Annual Meeting of Shareholders of Middlefield Banc Corp. will be held at the Grandview Inn, 13404 Old State Road, Middlefield, Ohio, on Wednesday, May 10, 2006, at 1:00 p.m. local time.

     A proxy and a proxy statement for the 2006 Annual Meeting of Shareholders are enclosed. The purpose of the annual meeting is to consider and act upon —

	1)		election of three directors to serve until the 2009 Annual Meeting of Shareholders or until their successors are elected and qualified,
	2)		ratification of the Board’s appointment of S.R. Snodgrass, A.C. as independent auditor for the fiscal year ending December 31, 2006, and
	3)		such other business as may properly come before the meeting or any adjournment thereof.

     The Board of Directors is not aware of any other business to come before the annual meeting. Any action may be taken on the foregoing proposals at the 2006 annual meeting on the date specified or on any date or dates to which the annual meeting may be adjourned or postponed. The record date for determining shareholders entitled to notice of and to vote at the meeting is March 22, 2006.

     You are requested to complete and sign the enclosed proxy, which is solicited by the Board of Directors, and to return it promptly in the postage-paid return envelope provided. Please sign your name on the proxy exactly as indicated thereon.

		By Order of the Board of Directors,
		Nancy C. Snow Secretary

Middlefield, Ohio
April 3, 2006

Thank you for acting promptly

Middlefield Banc Corp.
15985 East High Street
P.O. Box 35
Middlefield, Ohio 44062
(440) 632-1666

     This proxy statement is furnished in connection with the solicitation by the Board of Directors of Middlefield Banc Corp. (“Middlefield”), an Ohio corporation, of proxies to be voted at the 2006 Annual Meeting of Shareholders and at any adjournment or postponement thereof. The annual meeting will be held on Wednesday, May 10, 2006, at 1:00 p.m. local time, at the Grandview Inn, 13404 Old State Road, Middlefield, Ohio. The accompanying Notice of Meeting and this Proxy Statement are first being mailed to shareholders on or about April 3, 2006.

Purpose of the Meeting

At the annual meeting, we will ask Middlefield shareholders to—

(1) elect three directors to serve until the 2009 Annual Meeting of Shareholders or until their successors are elected and qualified, and

(2) ratify the appointment of Middlefield’s independent auditor.

Voting and Revocation of Proxies

     Proxies solicited hereby may be used at the annual meeting only and will not be used for any other meeting. Proxies solicited by the Board will be voted in accordance with the directions given. If no instructions are given, proxies will be voted in favor of the proposals set forth in this proxy statement.

     Shareholders who execute proxies retain the right to revoke them at any time before completion of the annual meeting, but revocation will not affect a vote previously taken. You may revoke a proxy by —

	•		attending the annual meeting and advising Middlefield’s Secretary that you intend to vote in person (but your attendance at the annual meeting will not constitute revocation of a proxy),
	•		giving a subsequent proxy relating to the same shares, or
	•		filing with the Secretary at or before the annual meeting a written notice of revocation bearing a later date than the proxy.

     A written notice revoking a proxy should be delivered to Ms. Nancy C. Snow, Secretary, Middlefield Banc Corp., 15985 East High Street, P.O. Box 35, Middlefield, Ohio 44062. Unless revoked, the shares represented by proxies will be voted at the annual meeting.

Record Date and Outstanding Shares; Quorum

     If you were a shareholder at the close of business on March 22, 2006, you are entitled to vote at the annual meeting. As of March 22, 2006, there were 1,352,022 shares of Middlefield common stock issued and outstanding. When present in person or by proxy at the annual meeting, the holders of a majority of the shares of Middlefield common stock issued and outstanding and entitled to vote will constitute a quorum for the conduct of business at the meeting.

Vote Required

     Shareholders are entitled to one vote for each share held. Shareholders are not entitled to cumulate their votes in the election or removal of directors or otherwise. Directors are elected by a plurality vote of shareholders present in person or by proxy and constituting a quorum, meaning the nominees receiving the greatest numbers of votes will be elected.

Abstentions and Broker Non-Votes

     Abstention may be specified on all proposals except the election of directors. Although they are counted for purposes of establishing that a quorum is present, abstentions and broker non-votes are not counted as votes cast. Because directors are elected by a plurality of votes cast, abstentions and broker non-votes have no effect on the election of directors.

Voting Securities and Principal Holders

     No person is known by Middlefield to own beneficially more than 5% of the outstanding common stock. The following table shows the beneficial ownership of Middlefield common stock on March 22, 2006, by —

	•		each director and director nominee and each executive officer identified in the Summary Compensation Table, and
	•		all directors, nominees, and executive officers as a group.

     For purposes of the table, a person is considered to beneficially own any shares over which he or she exercises sole or shared voting or investment power or of which he or she has the right to acquire beneficial ownership within 60 days. Unless otherwise indicated, voting power and investment power are exercised solely by the person named or they are shared with members of his or her household. Shares deemed to be outstanding for purposes of computing “Percent of stock” are calculated on the basis of 1,352,022 shares outstanding, plus the number of shares each individual has the right to acquire within 60 days.

		Shares				Shares acquirable within
		beneficially				60 days by exercise of				Percent of
Directors, nominees and named executive officers		owned				options(1)				stock
Thomas G. Caldwell, President and Chief Executive Officer			10,686	(2)			13,058				1.74	%
Richard T. Coyne			4,016	(3)			0				(10	)
Frances H. Frank			8,380	(4)			1,917				(10	)
Jay P. Giles			875				5,628				(10	)
Thomas C. Halstead			10,468	(5)			1,445				(10	)
George F. Hasman			7,335				231				(10	)
James R. Heslop, II, Executive Vice President and Chief Operating Officer			1,994	(6)			12,135				1.04	%
Donald D. Hunter, Chairman of the Board			7,939				1,917				(10	)
James J. McCaskey			689	(7)			1,214				(10	)
Martin S. Paul			1,157	(5)			917				(10	)
Donald L. Stacy, Chief Financial Officer and Treasurer			1,055	(8)			6,653				(10	)
Carolyn J. Turk			1,837				0				(10	)
Donald E. Villers			9,736	(9)			1,114				(10	)
Other executive officers (4 people)			2,174				24,113				1.91	%
All directors, nominees, and executive officers as a group (17 people)			68,340				70,342				9.75	%

Corporate Governance

     Middlefield periodically reviews its corporate governance policies and procedures to ensure that Middlefield meets the highest standards of ethical conduct, reports with accuracy and transparency, and maintains full compliance with laws, rules, and regulations that govern Middlefield’s operations. As part of the corporate governance process, the Board reviews and adopts corporate governance policies and practices for Middlefield.

     Middlefield has adopted a Code of Ethics that is designed to promote the highest standards of ethical conduct by Middlefield’s directors, executive officers, and employees. The Code of Ethics requires that Middlefield’s directors, executive officers, and employees avoid conflicts of interest, comply with all laws and other legal requirements, conduct business in an honest and ethical manner, and otherwise act with integrity and in Middlefield’s best interest. Under the terms of the Code of Ethics, directors, executive officers, and employees are required to report any conduct that they believe in good faith to be an actual or apparent violation of the Code of Ethics. In addition, Middlefield has adopted a Code of Ethics for Financial Professionals, which applies to Middlefield’s principal executive officer, principal financial officer, principal accounting officer or controller, or person performing similar functions for Middlefield. The Code of Ethics is available on Middlefield’s website at www.middlefieldbank.com.

     As a mechanism to encourage compliance with the Code of Ethics and Code of Ethics for Financial Professionals, Middlefield has established procedures to receive, retain, and address complaints received regarding accounting, internal accounting controls, or auditing matters. These procedures ensure that individuals may submit concerns regarding questionable accounting or auditing matters in a confidential and anonymous manner.

First Proposal — Election of Directors

     According to Article III, Section 2, of Middlefield’s regulations, the Board may consist of no fewer than five and no more than 25 directors, the precise number being fixed or changed from time to time within that range by the Board or by majority vote of shareholders acting at an annual meeting. On February 13, 2006, the Board of Directors fixed the size of the Board at 9 effective at the May 10, 2006 Annual Meeting of Shareholders. The Board fixed the number of directors at 9 to increase Middlefield’s ability to govern its affairs and transact the business of banking. As a result, Class I includes Directors Frances H. Frank, Thomas C. Halstead, and James J. McCaskey whose terms expire at the 2008 annual meeting, and Class III includes Directors Thomas G. Caldwell, Donald D. Hunter, and Carolyn J. Turk whose terms expire at the annual meeting in 2007. For purposes of the 2006 annual meeting, Director Donald E. Villers, a member of Class I whose current term expires in 2008, and Director Richard T. Coyne, a member of Class III whose current term expires in 2007, were recommended by the Corporate Governance and Nominating Committee to serve as directors in Class II along with James R. Heslop, II. The Board has nominated Directors Villers, Coyne, and Heslop to serve as directors for three-year terms ending at the 2009 Annual Meeting of Shareholders, or until their successors are elected and qualified.

Three director										Current
nominees and six						Director				term
continuing directors		Age				since				expires				Principal occupation in the last 5 years
Nominees for the Term Ending in 2009
Richard T. Coyne			70				1997				2007			Mr. Coyne is the General Manager of Jaco Products, a production plastics component manufacturer located in Middlefield, Ohio. He is also Vice President of Capital Plastics, a coin and currency manufacturer located in Massillon, Ohio
James R. Heslop, II			52				2001				2006			Executive Vice President and Chief Operating Officer of the bank since 1996, Mr. Heslop became Executive Vice President and Chief Operating Officer of Middlefield on October 30, 2000. He became a director of the bank in July 1999 and a director of Middlefield on November 19, 2001. From July 1993 until joining the bank in April 1996, Mr. Heslop was a director, President, and Chief Executive Officer of First County Bank in Chardon, Ohio, an institution with total assets exceeding $40 million. First County Bank is an affiliate of FNB Corporation of Hermitage, Pennsylvania
Donald E. Villers			72				1987				2008			Mr. Villers is retired, having previously served as a superintendent with Copperweld Steel, from which he retired after 31 years of service
Six Continuing Directors
Thomas G. Caldwell			48				1997				2007			Mr. Caldwell is President and Chief Executive Officer of Middlefield and the bank. Mr. Caldwell served as Vice President of Middlefield until October 2000, when he became its President and CEO
Donald D. Hunter			77				1977				2007			Mr. Hunter serves as Chairman of the Board of each of Middlefield and the bank. He is a retired retail merchant
Carolyn J. Turk			49				2004				2007			Ms. Turk is the Controller of Molded Fiber Glass Company and a licensed CPA
Frances H. Frank			58				1995				2008			Mrs. Frank is the Secretary and Treasurer of The Frank Agency, Inc., a general insurance agency located in Middlefield, Ohio
Thomas C. Halstead			74				1988				2008			Mr. Halstead is co-owner of Settlers Farm, a retail shopping area located in Middlefield, Ohio. He previously was owner of Settlers Collections, a retail gift outlet
James J. McCaskey			42				2004				2008			Mr. McCaskey is the President of McCaskey Landscape & Design, LLC, a design-build landscape development company. Previously, he was the Vice President of Sales for the Pattie Group, also a design-build landscape development company, with which he had been employed for seventeen years

     Directors of Middlefield also serve as directors of The Middlefield Banking Company. However, directors of the bank are elected annually and do not serve staggered terms. The nine directors identified in the table above are expected to be nominated and elected to serve as directors of the bank for the following year.

     There are no family relationships among any of Middlefield’s directors or executive officers. No director or executive officer of Middlefield serves as a director of (1) a company with a class of securities registered under or that is subject to the periodic reporting requirements of the Securities Exchange Act of 1934, or (2) any investment company registered under the Investment Company Act of 1940.

     The Board has determined that all of the current directors and director nominees are independent under the recently amended listing standards of the Nasdaq Stock Market, Inc., except for Messrs. Caldwell and Heslop.

     Board Committees. The standing committees of Middlefield’s Board are the corporate governance and nominating committee, the compensation committee, and the audit committee.

     Corporate Governance and Nominating Committee. In February of 2004, Middlefield approved the charter and guidelines of the corporate governance and nominating committee. The charter was revised in February 2005 to increase the director retirement age to 75 and to make the 1,000 share ownership requirement for directors adjust automatically based on changes in the shares outstanding. A current copy of the charter and guidelines are available on Middlefield’s website at www.middlefieldbank.com. A copy of the charter and guidelines are also available in print to shareholders upon request, addressed to Middlefield’s Secretary, Ms. Nancy C. Snow, at Middlefield Banc Corp., 15985 East High Street, P.O. Box 35, Middlefield, Ohio 44062. Members of the committee are appointed by the Board. The committee was composed in 2005 of Directors Hasman (chairman of the committee), Coyne, and Frank, all of whom are considered by the Board to be independent directors within the meaning of Nasdaq Rule 4200(a)(15). The corporate governance and nominating committee met 4 times in 2005.

     The corporate governance and nominating committee recommends to the Board the slate of director nominees to be proposed by the Board for election by the shareholders, any director nominees to be elected by the Board to fill interim director vacancies, and the directors to be selected for membership on and chairmanship of the committees of the Board. In addition, this committee addresses general corporate governance matters on behalf of the Board and reviews with the Board, on an annual basis, the requisite skills and criteria for new Board members. The committee also reviews the composition and function of the Board as a whole.

     Several factors are considered by the committee when selecting individuals to be nominated for election to the Board. A candidate must meet any qualification requirements set forth in any corporate governance documents such as the committee’s charter and/or guidelines. A candidate must also not have been subject to certain criminal or regulatory actions. The committee considers the following criteria in selecting nominees: personal qualities and characteristics, accomplishments, and reputation in the business community; financial, regulatory, and business experience; current knowledge and contacts in the communities in which Middlefield does business; ability and willingness to commit adequate time to Board and committee matters; fit of the individual’s skills with those of other directors and potential directors in building a Board that is effective and responsive to Middlefield’s needs; independence; and any other factors the Board deems relevant, including diversity of viewpoints, background, experience, and other demographics. In addition, prior to nominating an existing director for re-election to the Board, the committee considers and reviews an existing director’s board and committee attendance and performance; length of board service; experience, skills, and contributions that the existing director brings to the board; and independence.

     Middlefield’s corporate governance guidelines require a director to beneficially own at least 1,000 shares of Middlefield stock within three years of becoming a director. The 1,000 share ownership requirement is adjusted in the event of any change in outstanding shares subsequent to the adoption of the guidelines by reason of any reorganization, recapitalization, stock split, stock dividend, combination or exchange of shares, merger, consolidation, or any change in the corporate structure or shares of Middlefield. Consequently, the share ownership requirement is 1,050 shares as adjusted for the December 15, 2005 5% stock dividend. Middlefield’s corporate governance guidelines also establish a director retirement age. Upon reaching the age of 75, directors may serve on the Board until their term ends. Middlefield directors may not stand for re-election after their 75^th birthday.

     The committee will consider nominees for the Board of Directors recommended by stockholders. A shareholder may submit a nomination for director by following the procedures specified in Article III, section 4, of Middlefield’s regulations. Among other things, these procedures require that the shareholder deliver to Middlefield’s Secretary a written notice stating the name and age of each nominee, the nominee’s principal occupation, and the number of shares of Middlefield common stock he or she beneficially owns. The written consent of the nominee to serve as a director must also be provided by the shareholder making the nomination. The information must be provided to the Secretary at least 60 days before the date corresponding to the date on which Middlefield’s proxy materials were mailed to shareholders for the previous year’s annual meeting, and no more than 120 days before that date. A nomination made by a shareholder who does not comply with these procedures will be disregarded.

     To identify nominees, the committee relies on personal contacts as well as its knowledge of members of the local communities. The committee also considers director candidates recommended by stockholders in accordance with the policies and procedures set forth above. The committee determines whether a candidate is eligible and qualified for service on the Board by evaluating the candidate under the selection criteria set forth above. Middlefield has not previously used an independent search firm to identify nominees. Directors of the bank will be elected and nominated solely by Middlefield’s and the bank’s Board of Directors.

     Compensation Committee. The compensation committee establishes the compensation of the senior executive officers of Middlefield and the bank. Middlefield approved a compensation committee charter in April of 2004 to help establish compensation policies that will enable Middlefield to attract, motivate, and retain high quality leadership. In 2005, the members of Middlefield’s compensation committee and the bank’s compensation committee were Directors Frank (chair of the committee), Hunter, McCaskey, Paul, and Villers. Middlefield’s compensation committee met once in 2005.

     Audit Committee. The audit committee appoints Middlefield’s independent public auditor, reviews and approves the audit plan and fee estimate of the independent public auditor, appraises the effectiveness of the internal and external audit efforts, evaluates the adequacy and effectiveness of Middlefield’s accounting policies and financial and accounting management, supervises Middlefield’s internal auditor, and reviews and approves the annual financial statements. The audit committee has the authority to engage separate legal counsel and other advisors, as necessary, to execute its duties. The members of Middlefield’s audit committee in 2005 were Directors Coyne (chair of the committee), Halstead, Hasman, and Turk. The audit committee met three times in 2005.

     Middlefield’s Board adopted a written charter for the Audit Committee in August 2001. The charter is reviewed on an annual basis, and was modified in December 2004 to reflect recent law changes and regulatory proposals under the Sarbanes-Oxley Act of 2002.

     Audit Committee Independence. Middlefield believes that none of the directors who serve on the audit committee have a relationship with Middlefield or the bank that would interfere with the exercise of independent judgment in carrying out their responsibilities as director. The Board, in its business judgment, has determined that all members of the Audit Committee meet the current independence requirements of the Nasdaq Stock Market and applicable rules and regulations of the Securities and Exchange Commission, and that Mr. Coyne and Ms. Turk satisfy the requirements for an “audit committee financial expert” promulgated by the SEC.

     Audit Committee Report. The audit committee has submitted the following report for inclusion in this proxy statement —

     The Audit Committee has reviewed and discussed the audited financial statements for the year ended December 31, 2005, and has discussed the audited financial statements with management. The Audit Committee has also discussed with S.R. Snodgrass, A.C., Middlefield’s independent auditors, the matters required to be discussed by Statement on Auditing Standards No. 61 (having to do with accounting methods used in the financial statements). The Audit Committee has received the written disclosures and the letter from S.R. Snodgrass, A.C. required by Independence Standards Board Standard No. 1 (having to do with matters that could affect the auditor’s independence), and has discussed with S.R. Snodgrass, A.C. the independent auditors’ independence. Based on this, the Audit Committee recommended to the Board that the audited financial statements be included in Middlefield’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005, for filing with the Securities and Exchange Commission.

Submitted by the Audit Committee
Richard T. Coyne		Thomas C. Halstead
George F. Hasman		Carolyn J. Turk, CPA

     Board and Committee Meetings. Middlefield’s Board held eight meetings in 2005. The individuals who served in 2005 as directors of Middlefield attended at least 75% of (1) the total number of Board meetings and (2) the total number of meetings held by all committees on which he or she served.

     The Board encourages directors to attend the Annual Meeting of Shareholders. All of Middlefield’s directors who served in 2005 attended Middlefield’s 2005 Annual Meeting of Shareholders.

     Director Compensation. In 2005, Middlefield directors received compensation of $200 for each meeting attended. The Chairman of the Board received additional annual compensation of $2,400. Under Middlefield’s 1999 Stock Option Plan, options to acquire 1,214 shares of Middlefield common stock at an exercise price of $26.12 per share were granted effective June 14, 1999, to each Middlefield director who was not also a full-time officer or employee of Middlefield or the bank. The share amount and the exercise price are adjusted for the August 14, 2000 two-for-one stock split and the June 14, 2002, December 12, 2003, December 1, 2004, and December 15, 2005 5% stock dividends. The 1999 Stock Option Plan provides for an automatic grant of options on similar terms to any other nonemployee director elected or appointed after the May 12, 1999 adoption of the 1999 Stock Option Plan but during the term of the plan. In December 2000, each of Middlefield’s seven non-employee directors received an additional grant of options to acquire 472 shares, exercisable at $19.74 per share (adjusted for subsequent stock dividends). In December 2002, each of Middlefield’s nonemployee directors received an option representing the right to acquire 231 shares at $24.62 per share (adjusted for subsequent stock dividends). In May 2004, Directors McCaskey and Turk received options to acquire 1,214 shares of Middlefield common stock at $30.16 (adjusted for subsequent stock dividends) after being elected as directors at the 2004 annual meeting.

     Directors are also entitled to life insurance benefits under the bank’s group term life insurance program, paying benefits ranging from $10,000 to $30,000 to the director’s beneficiaries if the director dies while in service to the bank.

     The Middlefield Banking Company entered into director retirement agreements with each nonemployee director in 2001, other than Directors McCaskey and Turk. The agreements are intended to encourage existing directors to remain directors of the bank, assuring the bank that it will have the benefit of the directors’ experience and guidance in the years ahead. Middlefield and the bank believe it is necessary and appropriate to reward director service with a competitive compensation package, including Board fees and post-retirement benefits. The agreements provide directors with a retirement benefit that Middlefield considers modest.

     For retirement on or after the normal retirement age estimated for each director, ranging from ages 75 to 78, the director retirement agreements provide for an annual benefit for ten years in an amount equal to 25% of the final average annual fees earned by the director in the three years before retirement. However, no benefits are payable unless the director has served as a director for at least five years, including years of service before the director retirement agreements were entered into. If a director terminates service before his or her estimated normal retirement age for reasons other than death or disability, he or she will receive over a period of ten years a payment based upon the retirement-liability balance accrued by The Middlefield Banking Company at the end of the year before the year in which the director’s service terminated. However, no benefits are payable in the case of early termination unless the director is at least 55 years of age and has served as a director for at least five years, including years of service before the director retirement agreements were entered into. If a director becomes disabled before his or her estimated normal retirement age, the director will receive a lump-sum payment in an amount equal to the retirement-liability balance accrued by The Middlefield Banking Company at the end of the year before the year in which disability occurred. If a change in control occurs and a director’s service terminates within 12 months after the change in control, the director will receive a lump-sum payment equal to the retirement-liability balance accrued by the bank at the end of the year before the year in which termination occurred. For this purpose, the term “change in control” means —

•

a merger in which Middlefield’s shareholders end up with less than 50% of the resulting company’s voting stock, or

	•		a beneficial ownership report is required to be filed under sections 13(d) or 14(d) of the Securities Exchange Act of 1934 by a person (or group of persons acting in concert) to report ownership of 15% or more of Middlefield’s voting securities, or
	•		during any period of two consecutive years, individuals who constitute Middlefield’s Board of Directors at the beginning of the two-year period cease for any reason to constitute a majority of the Board. Directors elected during the two-year period are treated as if they were directors at the beginning of the period if they were nominated by at least two-thirds of the directors in office at the beginning of the period, or
	•		Middlefield sells substantially all of its assets to a third party, including sale of The Middlefield Banking Company.

     No benefits are payable under the director retirement agreements to a director’s beneficiaries after the director’s death. The director retirement agreements of Directors Frank, Halstead, Hunter, and Villers provide that The Middlefield Banking Company shall also obtain and maintain health insurance coverage for the lifetime of those directors and their spouses if the coverage can be obtained on commercially reasonable terms. A director forfeits all benefits under the director retirement agreement if he or she is not nominated for reelection because of the director’s neglect of duties, commission of a felony or misdemeanor, or acts of fraud, disloyalty, or willful violation of significant bank policies, or if the director is removed by order of the FDIC.

     Director Indemnification. At the 2001 Annual Meeting of Shareholders, the shareholders approved the form and use of indemnification agreements for directors. Middlefield entered into indemnification agreements with each director that allow directors to select the most favorable indemnification rights provided under — (1) Middlefield’s Second Amended and Restated Articles of Incorporation or Regulations in effect on the date of the indemnification agreement or on the date expenses are incurred; (2) state law in effect on the date of the indemnification agreement or on the date expenses are incurred; (3) any liability insurance policy in effect when a claim is made against the director or on the date expenses are incurred; and (4) any other indemnification arrangement otherwise available. The agreements cover all fees, expenses, judgments, fines, penalties, and settlement amounts paid in any matter relating to the director’s role as Middlefield’s director, officer, employee, agent or when serving as Middlefield’s representative with respect to another entity. Each indemnification agreement provides for the prompt advancement of all expenses incurred in connection with any proceeding subject to the director’s obligation to repay those advances if it is determined later that the director is not entitled to indemnification.

The Board of Directors recommends a vote “FOR” election of Messrs. Coyne, Heslop, and Villers to serve as directors until the 2009 Annual Meeting of Shareholders or until their successors are elected and qualified

     Executive Officers. The executive officers of Middlefield and the bank who do not also serve as Middlefield directors are —

Name		Age				Principal occupation in the last 5 years
Jay P. Giles			56			Mr. Giles is Senior Vice President — Senior Commercial Lender. He joined the bank in September 1998, having previously served as Vice President and Senior Commercial Lender at Huntington National Bank in Burton, Ohio, since 1985
Teresa M. Hetrick			42			Ms. Hetrick is Senior Vice President — Operations/Administration. Ms. Hetrick served as Vice President and Secretary of First County Bank in Chardon, Ohio, before joining the bank in December 1996
Jack L. Lester			60			Mr. Lester is Vice President — Compliance and Security Officer. He joined the bank in August 1990 as a loan officer and has served in his current position since 1991

Name		Age				Principal occupation in the last 5 years
Nancy C. Snow			71			Ms. Snow is Secretary of Middlefield and Vice President, Secretary, and Branch Manager of the bank. She has been with the bank since 1979, and has served in her current capacities since the mid-1980s
Donald L. Stacy			52			Mr. Stacy joined the bank in August 1999 and serves as its Senior Vice President and Chief Financial Officer. On October 30, 2000, he was appointed as the Treasurer and Chief Financial Officer of Middlefield. He previously served for 20 years with Security Dollar Bank and Security Financial Corp. in Niles, Ohio, where he was Senior Vice President and Treasurer
Alfred F. Thompson, Jr.			46			Mr. Thompson is the bank’s Vice President — Senior Retail Lender. Mr. Thompson has been with the bank since March 1996. He was promoted from loan officer to Assistant Vice President in 1997, and promoted again to his current position in 1998. Before joining the bank, Mr. Thompson served as Loan Officer in the Small Business Group of National City Bank, Northeast

     Executive Compensation. The following table shows compensation for services in all capacities for the fiscal years ended December 31, 2005, 2004, and 2003 for the President and Chief Executive Officer and for the other executive officers whose salary and bonus exceeded $100,000 during 2005. None of Middlefield’s executive officers receives any cash remuneration from Middlefield. All of the cash remuneration reflected in the table was paid by the bank. Because Middlefield’s business is expected to consist for the foreseeable future of acting merely as the holding company for The Middlefield Banking Company, Middlefield expects that no separate cash compensation will be paid to officers of Middlefield in addition to compensation paid to them by The Middlefield Banking Company.

SUMMARY COMPENSATION TABLE

																		Long-Term Compensation
										Annual Compensation								Awards								Payouts
														($)				($)				(#)				($)				($)
Name and						($)				($)				Other Annual				Restricted Stock				Securities				LTIP				All Other
Principal Position		Year				Salary (1)				Bonus (2)				Compensation				Awards (5)				Underlying Options				Payouts				Compensation
Thomas G. Caldwell			2005			$	203,010			$	55,500					(4)		$	—				1,500				—			$	5,550	(6)
President and Chief			2004			$	181,920			$	40,506				1,271	(3)		$	3,525				2,100				—			$	4,950
Executive Officer			2003			$	159,508			$	28,712					(4)		$	—				3,472				—			$	4,307
James R. Heslop, II			2005			$	157,800			$	28,100					(4)		$	—				1,500				—			$	3,500	(6)
Executive Vice			2004			$	146,100			$	26,000			$	1,271	(3)		$	3,525				2,100				—			$	3,250
President and Chief			2003			$	131,661			$	17,462					(4)		$	—				3,472				—			$	2,328
Operating Officer
Jay P. Giles Senior Vice			2005			$	104,100			$	10,920					(4)		$	—				500				—			$	3,120	(6)
President – Senior			2004			$	101,000			$	12,121			$	1,168	(3)		$	3,525				1,050				—			$	3,030
Commercial Lender			2003			$	99,500			$	9,950					(4)		$	—				2,315				—			$	2,985
of the bank
Donald L. Stacy			2005			$	102,500			$	10,763					(4)		$	—				1,000				—			$	3,075	(6)
Chief Financial			2004			$	97,500			$	11,579			$	1,271	(3)		$	3,525				1,575				—			$	2,925
Officer and			2003			$	85,000			$	9,562					(4)		$	—				2,315				—			$	2,550
Treasurer

     Stock Option Plan. Middlefield’s 1999 Stock Option Plan provides for the grant of options to acquire a maximum of 139,621 shares of common stock. The 1999 Stock Option Plan also allows for the grant of stock appreciation rights, restricted stock, and performance unit awards. Options granted under the plan can be either incentive stock options or non-qualified stock options. Options to acquire 74,305 shares of Middlefield common stock were issued and outstanding as of March 22, 2006.

     Under the stock option plan, qualified stock options — also commonly known as incentive stock options or ISOs — may be granted to Middlefield or bank officers and employees, and non-qualified stock options may be granted to directors, officers, and employees. No individual may be granted options to acquire more than 20% of the total shares acquirable by exercise of options that may be granted under the plan. Similarly, all non-employee directors as a group may be granted options to acquire no more than 20% of the total shares acquirable by exercise of options that may be granted under the plan. The stock option plan has a ten-year term, and it provides that options to acquire no more than 10% of the total shares acquirable under the plan may be granted in any one year. The plan is administered by a committee of at least 2 nonemployee directors.

     A qualified stock option, or ISO, is an option that satisfies the terms of Section 422 of the Internal Revenue Code of 1986. All other options granted under the stock option plan are non-qualified options, also known as NQSOs. All options granted to officers and employees under the plan to date are ISOs, and all options granted to non-employee directors are NQSOs. The exercise price of ISOs must be no less than the fair market value of the shares on the date of grant (or 110% of fair market value in the case of any ISO grant to a holder of more than 10% of Middlefield’s common stock), and the exercise price of NQSOs must be no less than book value at the end of the most recent fiscal year.

     The committee administering the stock option plan determines the vesting schedule of stock options. Options granted under the plan are not transferable except by will or the laws of descent and distribution, and are exercisable during the option grantee’s lifetime by the option grantee only. Exercisable options not exercised within three months after termination of the option holder’s service expire, except in the case of the option holder’s death, in which case they expire after one year. If the option holder’s service is terminated for cause, all of his options expire immediately. However, unexercisable options become fully exercisable if a tender offer for Middlefield common stock occurs or if Middlefield’s shareholders approve an agreement whereby Middlefield ceases to be an independent, publicly owned company or whereby Middlefield agrees to sale of substantially all of its assets. If a merger occurs and Middlefield is not the surviving entity, option holders have the right to receive in exchange for the value of their options the cash or other consideration paid in the merger.

     Awards of restricted stock may also be granted to Middlefield or bank officers and employees pursuant to the 1999 Stock Option Plan. The restricted stock is subject to such restrictions as the committee may impose including, without limitation, any limitation to the right to vote a restricted a share of restricted stock, or the right to receive any dividend or other right or property associated with the stock. Middlefield granted 80 shares of restricted stock during 2005, none of which was awarded to executive officers.

     The following table shows stock option grants by Middlefield in 2005 to the individuals identified in the Summary Compensation Table above. No stock appreciation rights have been granted under the stock option plan.

OPTIONS/STOCK APPRECIATION RIGHTS GRANTED IN 2005

Individual grants
		Number of				Percent of total										Potential realizable value at
		securities				options granted to				Exercise						assumed annual rates of stock
		underlying options				employees in fiscal				price per						price appreciation for option term
Name		granted				year				share				Expiration date		5%				10%
Thomas G. Caldwell			1,500				17.05	%		$	40.50			December 06, 2015		$	38,205			$	96,820
James R. Heslop, II			1,500				17.05	%		$	40.50			December 06, 2015		$	38,205			$	96,820
Jay P. Giles			500				5.68	%		$	40.50			December 06, 2015		$	12,735			$	32,273
Donald L. Stacy			1,000				11.36	%		$	40.50			December 06, 2015		$	25,470			$	64,547

AGGREGATED OPTIONS/STOCK APPRECIATION RIGHTS EXERCISED IN 2005
AND FISCAL YEAR-END 2005 OPTIONS/STOCK APPRECIATION RIGHT VALUES

     The following table shows the number of shares of Middlefield common stock acquired in 2005 or acquirable by option exercise by the individuals named in the Summary Compensation Table. The table also indicates the extent to which the options were exercisable at December 31, 2005, as well as the approximate value of the options based on the estimated fair market value of Middlefield common stock on December 31, 2005.

										Number of securities
										underlying unexercised								Value of unexercised in-the-money
		Shares acquired								options at fiscal year end								options at fiscal year end (1)
Name		on exercise				Value realized				Exercisable				Unexercisable				Exercisable				Unexercisable
Thomas G. Caldwell			– 0 –				—				13,058				– 0 –			$	177,596			$	– 0 –
James R. Heslop, II			– 315 –				5,934				12,135				– 0 –			$	161,481			$	– 0 –
Jay P. Giles			– 0 –				—				5,628				– 0 –			$	72,848			$	– 0 –
Donald L. Stacy			– 0 –				—				6,653				– 0 –			$	76,998			$	– 0 –

     Retirement Plan. Neither Middlefield nor the bank maintains a defined benefit or actuarial plan providing retirement benefits for officers or employees based on actual or average final compensation. The bank maintains a section 401(k) employee savings and investment plan for substantially all employees and officers of the bank who have more than one year of service. The bank’s contribution to the plan is based on 50% matching of voluntary contributions, up to 6% of compensation. An eligible employee may contribute up to 15% of his or her salary. Employee contributions are vested at all times. Bank contributions are fully vested after 6 years, vesting in 20% annual increments beginning with the second year.

     Annual Incentive Plan. In 2003, the bank adopted an annual incentive plan designed to reward employees with additional cash compensation if certain objectives are achieved. The objectives are tied to the strategic and financial plans of the bank and address the areas of profitability, growth, asset quality, and customer service. Each employee has pre-determined goals and is provided with an update on the achievement of those goals on a quarterly basis. The plan may be terminated by the Board at any time. All employees are eligible to receive a payout under the plan. Distributions under the plan are made in the first quarter of the year if the established goals are achieved in the preceding year.

     Severance Agreements. Neither the bank nor Middlefield has written employment agreements with officers. Middlefield entered into severance agreements with six officers on November 28, 2001, including Messrs. Caldwell, Heslop, and Stacy. Messrs. Caldwell and Heslop’s 2001 severance agreements were amended in August of 2003 to increase the lump sum cash severance payment from two times the executives’ annual compensation to 2.5 times annual compensation, without modifying any other provisions of these agreements. Mr. Giles and another officer also entered into severance agreements in August of 2003. The initial term of the severance agreement is three years, renewing each year for an additional one-year term unless the Board determines that the executive has not met the requirements and standards of the Board and that the term therefore will not be extended.

     The severance agreements provide that the executive will be entitled to severance compensation if two conditions are satisfied —

	1)		a change in control occurs during the agreement’s term, and
	2)		the executive is involuntarily terminated within two years after the change in control or the executive voluntarily terminates employment for “good reason” within two years after the change in control.

     The severance compensation will be paid in a lump sum in cash within five days after termination of the executive’s employment. The amount of the severance compensation is two and a half times Messrs. Caldwell and Heslop’s annual compensation, and two times Mr. Giles’ and Mr. Stacy’s annual compensation. This means the executive’s (1) base salary at the time of the change in control or at the time of termination of employment, whichever amount is higher, and (2) average bonus and incentive compensation in the three years preceding the year in which the change in control occurred. The severance compensation is not discounted to present value. The executive is also entitled to continued life, health, and disability insurance coverage for 24 months, and accelerated vesting of benefits under benefit plans. Middlefield has also agreed to pay up to $500,000 of legal fees incurred by the executives associated with the interpretation, enforcement, or defense of their rights under the severance agreements if Middlefield initiates the legal proceeding but the executive prevails.

     The term “change in control” can be defined in a variety of ways from one corporation to the next and from one benefit plan to the next. A “change in control” is defined under the severance agreement in a manner identical to the way a “change of control” is defined under the director retirement agreements entered into between Middlefield and nonemployee directors. See “Director Compensation” above on pages 7 and 8.

     If the executive terminates employment for “good reason” within two years after a change in control, the executive will be entitled to severance benefits just as if he or she were terminated involuntarily and without cause. Under the severance agreements, “good reason” includes the following without the executive’s written consent– (i) an adverse change in the executive’s status, title, position, or responsibilities, (ii) a reduction in the executive’s annual compensation, ( iii) a material reduction in the executive’s benefits under employee benefit plans, (iv) the merger of Middlefield with another entity, or Middlefield transfers substantially all of its assets, or liquidates, unless the successor entity assumes all obligations under the severance agreements, or (v) a relocation of the executive’s principal place of employment outside of Middlefield, Ohio.

     For a limited time after a change in control, the executive would also be entitled to severance compensation under the agreements if he or she terminates employment voluntarily with or without good reason. The period during which an executive may terminate employment for any reason or for no reason without forfeiting severance benefits begins 12 months after the change in control and continues for a period of 90 days. An executive terminated for cause is entitled to no severance compensation.

     Executive Survivor Income Agreements. In June 2003, The Middlefield Banking Company entered into executive survivor income agreements with various officers, including Messrs. Caldwell, Giles, Heslop, and Stacy. The total death benefit payable to Mr. Caldwell’s beneficiaries if he dies in active service to the bank is $471,741, the benefit payable to Mr. Giles’ beneficiaries is $262,861, the benefit payable to Mr. Heslop’s beneficiaries is $368,970, and the benefit payable to Mr. Stacy’s beneficiaries is $222,619. For their death after terminating active service with the bank, the death benefit for Mr. Caldwell’s beneficiaries is $471,741, $131,430 for Mr. Giles’ beneficiaries, $368,970 for Mr. Heslop’s beneficiaries, and $111,309 for Mr. Stacy’s beneficiaries. The benefit is payable if the officer who entered into the executive survivor income agreement dies in active service to the bank or if the officer previously terminated service with the bank —

	•		as a result of disability,
	•		by voluntary termination after having reached age 55 with 10 years of service to the bank,
	•		by retirement at the normal retirement age of 65,
	•		within 12 months after a change in control, if the officer’s termination of service was involuntary but without cause or voluntary but with good reason. For this purpose, good reason can exist if any of a number of adverse employment actions affecting the officer are taken after a change in control, such as a reduction in the officer’s salary or authority or relocation of the bank’s offices. As defined in the executive survivor income agreements, the term “change in control” is identical to the way a “change of control” is defined under both the director retirement agreements entered into between Middlefield and nonemployee directors and the severance agreements entered into between Middlefield and officers. See “Director Compensation” above on pages 7 and 8 and “Severance Agreements” above on page 12.

     Benefits payable under the executive survivor income agreements are not funded. The executive survivor income agreements represent the mere promise on the bank’s part to pay benefits, which will be paid from the bank’s general assets. To assure itself of funds sufficient to pay the promised death benefits, the bank purchased insurance on the four officers’ lives, through a single premium payment. The bank owns the policies and is the sole beneficiary. Of the total premium paid for insurance on the various officers’ lives, $495,873 is attributable to insurance purchased on the life of Mr. Caldwell, $502,412 is attributable to insurance purchased on the life of Mr. Giles, $447,351 is attributable to insurance on the life of Mr. Heslop, and $333,890 is attributable to insurance purchased on the life of Mr. Stacy. The premium amounts are not reflected in the Summary Compensation Table. The bank expects that the policies’ death benefits will be sufficient to allow the bank to pay all benefits promised under the executive survivor income agreements and to recover in full the entire premium paid.

     Group Term Life Insurance. Bank officers also have life insurance benefits under a group term life insurance program, paying benefits to the officer’s beneficiaries if the officer dies while employed by the bank, up to the lesser of (1) twice the officer’s annual salary at the time of death or (2) $140,000.

     Comparative Performance Graph. The graph below compares the cumulative total shareholder return on Middlefield common stock to the cumulative total return of the Nasdaq Composite Index and the SNL $100M — 500M OTC-BB and Pink Banks index for which bid prices or trades are reported in the “pink sheets” of the National Quotation Bureau, LLC, a static paper-quotation medium printed weekly and distributed to broker/dealers, or on the

OTC Bulletin Board, an electronic, screen-based market maintained by the National Association of Securities Dealers, Inc.’s subsidiary, NASD Regulation, Inc. The following comparison covers the period from June 15, 2001, the day Middlefield’s common stock became registered under section 12 of the Securities Exchange Act of 1934, to December 31, 2005. The graph assumes that $100 was invested on June 15, 2001, and that all dividends were reinvested.

COMPARISON OF THE CUMULATIVE TOTAL RETURN
OF
MIDDLEFIELD BANC CORP.,
THE SNL $100M — $500M OTC-BB AND PINK BANKS INDEX,
AND THE NASDAQ — TOTAL US
FROM JUNE 15, 2001, TO DECEMBER 31, 2005

		Period Ending
Index		06/15/01				12/31/01				12/31/02				12/31/03				12/31/04				12/31/05
Middlefield Banc Corp.			100.00				93.20				117.28				133.40				170.18				203.81
NASDAQ Composite			100.00				79.18				54.44				82.09				89.60				91.54
SNL $100M-$500M OTC-BB & Pink Banks			100.00				107.36				128.79				174.93				211.44				234.81

(1) Middlefield is not among the approximately 3,000 companies included in the Nasdaq Composite Index. The SNL Securities $100M — $500M OTC-BB and Pink Banks Index is a market-weighted index that includes commercial banks and bank holding companies with total assets between $100 million and $500 million, whose stocks trade over-the-counter on the OTC Bulletin Board or in the National Quotation Bureau, LLC’s pink sheets. Middlefield Banc Corp. is included in the SNL $100M — $500M OTC-BB and Pink Banks Index.

     Middlefield common stock is traded very infrequently. Although there is no established market for the common stock, bid prices are quoted from time to time under the symbol “MBCN” on the National Quotation Bureau, LLC’s pink sheets.

     Compensation Committee Report. Middlefield’s executive compensation program is administered by the Compensation Committee of the Board of Directors, which consists entirely of independent members. The members of the compensation committee in 2005 were Directors Frank, Hunter, McCaskey, Paul, and Villers, with Director Frank acting as chair of the committee. The compensation program is designed to enable Middlefield to attract, motivate, and retain quality executive officers by providing a fully competitive and comprehensive compensation package. In its design and administration of the executive compensation program, the Committee’s objectives are as follows:

	•		to link executive compensation rewards to increases in shareholder value, as measured by positive long-term operating results and a continued strengthening of Middlefield’s financial condition;
	•		to provide incentives for executive officers to work towards achieving successful annual results as a step in achieving Middlefield’s long-term operating results and strategic objectives;
	•		to correlate, as closely as possible, executive officers’ receipt of compensation with the attainment of specific performance objectives;
	•		to maintain a competitive mix of total executive compensation benefits, with particular emphasis on awards related to increases in long-term shareholder value; and
	•		to facilitate stock ownership through the granting of stock options.

     Establishment of Executive Compensation Program and Procedures

     Beginning in 2003, the Compensation Committee has utilized the services of Meyer-Chatfield, Inc., a compensation consulting firm, to make recommendations regarding Middlefield’s executive compensation program. The recommendations of Meyer-Chatfield are reviewed by the Committee.

     For each executive officer, the Committee is responsible for the establishment of base salary, as well as the award level for the annual incentive plan, both of which are subject to approval by the independent directors. The Committee is also responsible for the award level and administration of the stock option program for executive officers, as well as recommendations regarding other executive benefits and plans, subject to the same approval process. In reviewing the individual performance of the named executive officers whose compensation is detailed in this Proxy Statement (i.e., those executive officers whose salary and bonus exceeded $100,000 during 2005), the Committee takes into account the views of the Chief Executive Officer of Middlefield. In evaluating the Chief Executive Officer’s performance for 2005, the Committee reviewed reports submitted by each director and reported its determination directly to the independent members of the board.

     As an overall evaluation tool in determining levels of compensation for the Middlefield executive officers, as well as for the Chief Executive Officer, the Committee reviews the compensation policies of other public companies, as well as published financial industry salary surveys, particularly the survey published by the Ohio Bankers’ League. Although the Committee has not established a specific comparison group of bank holding companies for determination of compensation, those listed in the salary surveys that share one or more common traits with Middlefield, such as asset size, geographic location, and financial returns on assets and equity, are given more weight.

     Components of Named Executive Officer Compensation

     For 2005, the executive compensation program for the named executive officers consisted of four primary components– (a) a base salary, (b) incentive compensation under the bank’s Annual Incentive Plan, (c) executive

benefits, such as life insurance and stock options/grants, and (d) benefits that are generally available to all employees. These components are discussed in further detail below.

Base Salary. The performance and base salary of each named executive officer are reviewed annually basis. Base salary is determined primarily by evaluating the individual officer’s level of responsibility for the position, comparing the position to similar positions within Middlefield and by comparing salaries in the salary surveys for executives with similar experience and responsibilities outside of Middlefield.

The Chief Executive Officer provides written evaluations on each of the named executive officers to the Committee. These written assessments include a review of the performance of the named executive officers for both personal and corporate goals. The goals are both qualitative and quantitative in nature and are aligned with each officer’s job responsibilities. The Committee then established the base salary for the named executive officers based upon this performance review as well as upon Middlefield’s overall performance during the preceding year. No specific weight value was placed upon any factors by the Committee.

Incentive Compensation. Incentive compensation includes two programs– the award of cash bonuses through the Annual Incentive Plan and the award of stock options and restricted stock. Awards under Middlefield’s incentive plans are determined by the Committee and approved by the Board.

Cash Incentive Compensation. Beginning in 2003, The Middlefield Banking Company established an Annual Incentive Plan that is open to all employees. Incentives paid under the plan are based on objective criteria tied to the financial performance of the bank established prior to the beginning of the year. The performance targets focus on the Return on Average Equity (“ROAE”) of the bank. Also included as targets are individual performance goals. An incentive bonus for the named executive officers depends upon two basic factors: (a) the position held by the named executive officer, which establishes a maximum cash incentive available based upon a percentage of the officer’s base salary (10 – 30% for Mr. Caldwell, 10 – 20% for Mr. Heslop, and 7.5 – 12.5% for Messrs. Giles and Stacy) and (b) the extent to which the performance targets, including return on equity, have been met or exceeded.

Stock Options. The Committee believes that stock options are an important element of compensation because they encourage key employees to remain with Middlefield by providing them with a long-term interest in Middlefield’s overall performance. As such, stock options provide an incentive to manage with a view toward maximizing long-term shareholder value. Stock option grants provide an incentive for the creation of shareholder value since the full benefit of the grant to each named executive officer can only be realized with an appreciation in the price of Middlefield’s Common Stock.

Option grants provide the right to purchase shares of Middlefield’s Common Stock at the fair market value on the date of grant. Stock options are granted pursuant to the 1999 Stock Option Plan. In determining the level of options awards, the Committee does not use any specific formula, but takes into consideration the criteria used for the Annual Incentive Plan, as well as individual performance.

In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123 (revised), Share Based Payment (Statement 123 (R)). Effective in 2006, Statement 123 (R) requires all entities to recognize compensation expense in an amount equal to the fair value of share-based payments (i.e., stock options).

Restricted Stock. Middlefield may grant restricted stock to the named executive officers and certain other executive officers. Restricted stock is subject to such restrictions as the stock option plan committee may impose including, without limitation, any limitation to the right to vote a restricted a share of restricted stock, or the right to receive any dividend or other right or property associated with the stock. Middlefield

granted no shares of restricted stock during 2005 to executive officers. However, Middlefield may grant restricted stock in the future for these individuals.

     Compensation of the Chief Executive Officer. Thomas G. Caldwell has served as the Chief Executive Officer of the Company since October 30, 2000. Mr. Caldwell’s base salary for 2005 was determined by the Committee through an assessment of the financial performance of Middlefield and his overall performance as a leader of Middlefield. The various management and performance categories are not weighted, but are designed to assess Mr. Caldwell’s leadership abilities. The Committee also reviewed information from Meyer-Chatfield to determine if there were any overall trends in the financial services industry regarding compensation of chief executive officers that would suggest any adjustments to the amounts to be paid to Mr. Caldwell. The Committee believes that base salary is generally competitive and has targeted the 50^th percentile of a peer group level for the base salary. Included within the peer group are other similarly situated financial institutions with assets of $200 — $500 million. Based on these factors, the Committee established Mr. Caldwell’s 2005 annual base salary at $185,000. Mr. Caldwell also received bonus compensation under the Annual Incentive Plan and stock options in 2005.

     The Committee believes that the Company’s executive compensation program serves Middlefield and its shareholders by providing a direct link between the interests of executive officers and those of shareholders generally and by helping to attract and retain qualified executive officers who are dedicated to Middlefield’s long-term success.

     The qualifying compensation regulations issued by the Internal Revenue Service under Internal Revenue Code section 162(m) provide that no deduction is allowed for applicable employee remuneration paid by a publicly held corporation to a covered employee to the extent that the remuneration exceeds $1.0 million for the applicable taxable year, unless certain conditions are satisfied. Salary and bonus amounts deferred by executives are not subject to section 162(m). Currently, remuneration is not expected to exceed $1.0 million for any employee. Therefore, compensation should not be affected by the qualifying compensation regulations. The compensation committee and Middlefield’s Board of Directors intend to maintain executive compensation within the section 162(m) deductibility limits, but could permit compensation exceeding the section 162(m) limits in the future.

     The foregoing report has been respectfully furnished by the members of the Compensation Committee.

Frances H. Frank, Chair
Donald D. Hunter
James J. McCaskey
Martin S. Paul
Donald E. Villers

     Compensation Committee Interlocks and Insider Participation. None of the members of the compensation committee has served as an officer or employee of Middlefield or the bank. Director Frank is Secretary and Treasurer of The Frank Agency, Inc., a general insurance agency located in Middlefield. Mrs. Frank’s spouse is the principal executive officer of The Frank Agency, Inc. The Middlefield Banking Company has from time to time purchased and expects to continue to purchase insurance through The Frank Agency, Inc., including directors and officers liability insurance, blanket bond coverage, and pension and welfare benefits insurance. The Frank Agency, Inc. receives commissions and fees for its service as insurance agent for these purchases. The Middlefield Banking Company also pays fees for miscellaneous benefit plan-related administrative services provided by The Frank Agency, Inc. During 2005, fees and premiums for insurance purchased through The Frank Agency, Inc. did not exceed $60,000. Fees and premiums to be paid by The Middlefield Banking Company for insurance purchased through The Frank Agency, Inc. in 2006 are not expected to exceed $60,000.

     Directors and executive officers of Middlefield and the bank, and their associates, were customers of and had banking transactions with the bank in the ordinary course of business in 2005. Middlefield expects that these

relationships and transactions will continue in the future. The existing transactions do not involve more than the normal risk of collectability or present other unfavorable features. Loans and commitments to lend included in these transactions were made and will be made in the future on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons not employed by Middlefield or the bank.

Second Proposal —Ratification of Appointment of Independent Auditor

     Middlefield’s independent auditor for the year ended December 31, 2005, was S.R. Snodgrass, A.C. The Audit Committee has selected, subject to shareholder ratification, S.R. Snodgrass, A.C. to be Middlefield’s independent auditor for the fiscal year ending December 31, 2006. We expect one or more representatives of S.R. Snodgrass, A.C. to be present at the annual meeting. The representative of S.R. Snodgrass, A.C. will have the opportunity to make a statement if desired, and will be available to respond to appropriate questions.

     The following table sets forth the fees paid to S.R. Snodgrass, A.C. for services provided during fiscal years ended December 31, 2005 and 2004:

		2005				2004
Audit Fees (1)		$	61,725			$	56,273
Audit-Related Fees (2)		$	1,400			$	1,125
Tax Fees (3)		$	9,294			$	9,671
All Other Fees (4)		$	9,484			$	4,123
Total		$	81,903			$	71,192

     The audit committee’s policy is to pre-approve all audit and permissible non-audit services provided by the independent auditors. These services may include audit services, audit-related services, tax services, and other services. Pre-approval is detailed as to the particular service or category of services and is generally subject to a budget. The independent auditors and management are required to periodically report to the audit committee regarding the extent of services provided by the independent auditors in accordance with this pre-approval, and the fees for the services performed to date. The audit committee may also pre-approve particular services on a case-by-case basis.

     Auditor Independence. The audit committee of the Board believes that the non-audit services provided by S.R. Snodgrass, A.C. are compatible with maintaining the auditor’s independence. To the best of Middlefield’s knowledge, none of the time devoted by S.R. Snodgrass, A.C. on its engagement to audit Middlefield’s financial

statements for the year ended December 31, 2005 is attributable to work performed by persons other than full-time, permanent employees of S.R. Snodgrass, A.C.

The Board of Directors recommends a vote “FOR” ratification of the appointment of S.R. Snodgrass, A.C. as Middlefield’s independent auditor for the fiscal year ending December 31, 2006

Shareholder Proposals

     The proxy is solicited by management and confers discretionary authority to vote on any matters that properly come before the annual meeting or any adjournments thereof. If any matter not set forth in the Notice of Annual Meeting of Shareholders is properly presented at the 2006 annual meeting, the persons named as proxies will vote thereon in accordance with their best judgment.

     Shareholders desiring to submit proposals for inclusion in Middlefield’s proxy materials for the 2007 annual meeting must submit the proposals to Middlefield at its executive offices no later than December 4, 2006. We will not include in our proxy statement or form of proxy for the 2007 annual meeting a shareholder proposal that is received after that date or that otherwise fails to meet requirements for shareholder proposals established by Securities and Exchange Commission regulations.

     If a shareholder intends to present a proposal at the 2007 annual meeting without seeking to include the proposal in Middlefield’s proxy materials for that meeting, the shareholder must give advance notice to Middlefield. According to Article I, section 8, of Middlefield’s regulations, the shareholder must give notice at least 60 days but no more than 120 days before the date in 2007 corresponding to the mailing date of this proxy statement for the 2006 annual meeting. This proxy statement is being mailed to shareholders on or about April 3, 2006. Accordingly, a shareholder who desires to present a proposal at the 2007 annual meeting without seeking to include the proposal in Middlefield’s proxy materials for that meeting should provide notice of the proposal to Middlefield no earlier than December 4, 2006, and no later than February 2, 2007. If the shareholder fails to do so, Middlefield’s management will be entitled to use their discretionary voting authority on that proposal, without any discussion of the matter in Middlefield’s proxy materials. Shareholders who desire to submit a proposal for the 2007 annual meeting without seeking to include the proposal in Middlefield’s proxy materials for that meeting should refer to Article I, section 8, of Middlefield’s regulations for information concerning the procedures for submitting proposals, including information required to be provided by shareholders submitting proposals.

Section 16(a) Beneficial Ownership Reporting Compliance

     Section 16(a) of the Securities Exchange Act of 1934 requires Middlefield’s directors and executive officers, as well as any persons who own more than 10% of a registered class of Middlefield’s equity securities, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of Middlefield stock. Based solely on review of the copies of such reports furnished to Middlefield and written representations to Middlefield, to Middlefield’s knowledge all Section 16(a) filing requirements applicable to its executive officers, directors and greater than 10% beneficial owners were complied with during the fiscal year ended December 31, 2005.

General

     The persons named in the proxy will vote all properly executed proxies. If a shareholder specifies a choice for a proposal to be acted upon, the proxy will be voted in accordance with his or her specifications. If no choice is specified, the proxy will be voted FOR election of the nominees identified herein and FOR ratification of Middlefield’s independent auditor.

     The Board is not aware of any business to come before the meeting other than those matters described in this proxy statement. However, if any other matters should properly come before the annual meeting, proxies in the accompanying form will be voted in respect thereof in accordance with the judgment of the person or persons voting the proxies, including matters relating to the conduct of the annual meeting.

     The cost of solicitation of proxies will be borne by Middlefield. We will reimburse brokerage firms and other custodians, nominees, and fiduciaries for reasonable expenses incurred by them in sending proxy material to the beneficial owners of common stock. In addition to solicitations by mail, directors, officers, and regular employees of the bank may solicit proxies personally or by telephone without additional compensation.

Shareholder Communications

     The Board has provided the following process for shareholders to send communications to the Board of Directors and/or individual directors. If the concern relates to Middlefield’s financial statements, accounting practices, or internal controls, the concern should be submitted in writing to the chairman of the audit committee in care of Ms. Nancy C. Snow, Secretary, at Middlefield Banc Corp., 15985 East High Street, P.O. Box 35, Middlefield, Ohio 44062. If the concern relates to Middlefield’s governance practices, business ethics, or corporate conduct, the concern should be submitted in writing to the chairman of the corporate governance and nominating committee in care of Ms. Nancy C. Snow, Secretary, at the same address as above. If the shareholder is unsure as to which category his or her concern relates, he or she may communicate it to any one of the independent directors in care of Ms. Nancy C. Snow, Secretary.

Information Available to Shareholders

     Our 2005 Annual Report has been mailed to persons who were shareholders as of the close of business on March 22, 2006. Additional copies may be obtained without charge by written request. Middlefield files periodic reports and other information with the SEC under the Securities Exchange Act of 1934. Copies of the public portions of reports to the SEC may be inspected and copied at the headquarters of the SEC, 450 Fifth Street, NW, Washington, D.C. 20549. The SEC maintains an Internet web site containing reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is http://www.sec.gov.

     If you and others who share your address own your shares in street name, your broker or other holder of record may be sending one copy only of the annual report and proxy statement to your address. Known as “householding,” this practice reduces Middlefield’s printing and postage costs. However, if you wish to receive a separate annual report or proxy statement in the future, you should contact your broker or other holder of record. If you own your shares in street name and are receiving multiple copies of our annual report and proxy statement, you can request householding by contacting your broker or other holder of record. Shareholders who share an address to which a single annual report or proxy statement is delivered may orally or in writing request a separate copy of the annual report or proxy statement. Middlefield will deliver the separate annual report or proxy statement promptly at your request.

     A copy of Middlefield Banc Corp.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005, as filed with the Securities and Exchange Commission but without exhibits, will be furnished without charge to shareholders upon written request to: Mr. Donald L. Stacy, Chief Financial Officer, Middlefield Banc Corp., 15985 East High Street, P.O. Box 35, Middlefield, Ohio 44062.

Proxy Solicited by the Board of Directors

     The undersigned shareholder of Middlefield Banc Corp. hereby constitutes and appoints George F. Hasman and Donald D. Hunter, and each of them, with full power of substitution, as proxies to represent the undersigned at the Annual Meeting of Shareholders of Middlefield Banc Corp. to be held on May 10, 2006, and any adjournments and postponements thereof, and to vote the shares of common stock the undersigned would be entitled to vote upon all matters referred to herein and in their discretion upon any other matters that properly come before the Annual Meeting:

First Proposal — Election of Directors		For Nominee		Withhold Vote For
				Nominee
To elect the three nominees identified below as directors for a term of three years and until their successors are elected and qualified .........................................................................................................................................		o		o
Instruction: To withhold your vote for any individual nominee, strike a line through the nominee’s name:     Richard T. Coyne     James R. Heslop, II     Donald E. Villers

Second Proposal — Ratification of Independent Auditor		For		Against		Abstain
To ratify the appointment of S.R. Snodgrass, A.C. as independent auditor for the fiscal year ending December 31, 2006 .......................................................................................................................................		o		o		o

         The Board recommends a vote FOR the First Proposal regarding election of the identified nominees and FOR the Second Proposal ratifying the appointment of S.R. Snodgrass, A.C. as the independent auditor.

         The shares represented by this proxy will be voted as specified. Unless specified to the contrary, all shares of the undersigned will be voted “FOR” election of the nominees identified above and “FOR” ratification of the independent auditor. If any other business is properly presented at the meeting, this proxy will be voted by those named herein in accordance with their best judgment. The Board knows of no other business to be presented at the meeting.

         The undersigned acknowledges receipt from Middlefield Banc Corp., before execution of this proxy, of Notice of the Meeting, a Proxy Statement, and Annual Report.

Dated:                     , 2006		Signature
		Signature
		(Please sign exactly as your name appears on this card. If shares are held jointly, each holder should sign. When signing as attorney, executor, administrator, trustee, guardian, or in another representative capacity, please give your full title. If a corporation, please sign in full corporate name by the President or other duly authorized officer. If a partnership, please sign in partnership name by a duly authorized person (general partner).)

Please mark, sign, date and return this proxy promptly using the postage-paid, self-addressed envelope provided.