Edgar Filing: MIDDLEFIELD BANC CORP

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12

Middlefield Banc Corp
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(Name of Registrant as Specified In Its Charter)

Middlefield Banc Corp
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)

April 8, 2002

Dear Shareholders:

You are cordially invited to attend the 2002 Annual Meeting of
Shareholders of Middlefield Banc Corp. The meeting will be held on Wednesday,
May 15, 2002, 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

MIDDLEFIELD BANC CORP.
15985 East High Street

Middlefield, Ohio 44062

(440) 632-1666

______________________________________

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

______________________________________

Notice is hereby given that the Annual Meeting of Shareholders of
Middlefield Banc Corp. will be held at the Grandview Inn, 13404 Old State Road,
Middlefield, Ohio on Wednesday, May 15, 2002 at 1:00 p.m. local time.

A proxy and a proxy statement for the 2002 Annual Meeting are enclosed.
The purpose of the annual meeting is to consider and act upon--

1) election of three directors to serve until the 2005 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, 2002,
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 2002 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 25, 2002.

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
Vice President and Secretary

Middlefield, Ohio
April 8, 2002

================================================================================
IMPORTANT: PLEASE VOTE, SIGN, DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS
POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE TO MIDDLEFIELD BANC CORP. AT
15985 EAST HIGH STREET, P.O. BOX 35, MIDDLEFIELD, OHIO 44062, REGARDLESS OF
WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING.
================================================================================

THANK YOU FOR ACTING PROMPTLY

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

_________________________

Proxy Statement
_________________________

This proxy statement is furnished in connection with the solicitation
by the board of directors of Middlefield Banc Corp., an Ohio corporation, of
proxies to be voted at the 2002 annual meeting of shareholders and at any
adjournment or postponement thereof. The annual meeting will be held on
Wednesday, May 15, 2002 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 8,
2002.

Purpose of the Meeting

At the annual meeting, we will ask Middlefield shareholders to elect
three directors to serve until the 2005 annual meeting or until their successors
are elected and qualified. We will also ask shareholders to 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, Vice President and 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 25, 2002,
you are entitled to vote at the annual meeting. As of March 25, 2002 1,103,544
shares of Middlefield common stock were 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

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. 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.

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.

Definition of "Broker Non-vote." Rules of self-regulatory organizations
of which brokers are members -- such as the New York Stock Exchange and the
other major stock exchanges -- prevent brokers from voting customers' shares
held in street name, unless the customer gives specific voting instructions to
the broker or unless the proposal to be voted on is a routine proposal. The
self-regulatory organizations' rules generally allow brokers the discretion to
vote customers' shares on routine matters only, such as election of directors.
Proposals to amend or adopt bylaws or articles of incorporation, proposals to
adopt stock-compensation plans, and proposals to increase shares available for
issuance under a plan by more than 5% of shares outstanding are examples of
non-routine proposals. Brokers generally are not permitted by rules of their
self-regulatory organizations to vote on those proposals unless the customer
gives specific voting instructions. If a broker signs and submits a proxy
without indicating how the proxy is to be voted on a non-routine proposal, the
proxy is considered a so-called "broker non-vote" insofar as that non-routine
proposal is concerned. Broker non-votes count toward establishment of a quorum,
but they do not count as votes cast on a non-routine proposal.

VOTING SECURITIES AND PRINCIPAL HOLDERS

The following table shows the beneficial ownership of Middlefield
common stock on March 25, 2002 by --

. any person who is known by Middlefield to own beneficially more
than 5% of the outstanding common stock,
. each director and director nominee and each executive officer
identified in the Summary Compensation Table, and
. all directors 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 1,103,544 shares outstanding,
plus the number of shares each individual has the right to acquire within 60
days.

Shares Shares acquirable
beneficially within 60 days by Percent
Directors, nominees and named executive officers owned exercise of options/(1)/ of stock
-------------------------------------------------------------------------- ------------ ------------------------ --------

Thomas G. Caldwell, President and Chief Executive Officer ................ 8,700 (2) 3,500 1.1%
Richard T. Coyne ......................................................... 1,218 (3) 1,390 0.2%
Frances H. Frank ......................................................... 6,564 (4) 1,390 0.7%
Thomas C. Halstead ....................................................... 8,616 (5) 1,000 0.9%
George F. Hasman ......................................................... 5,070 1,390 0.6%
James R. Heslop, II, Executive Vice President and Chief
Operating Officer ........................................................ 520 (6) 3,000 0.3%
Donald D. Hunter, Chairman of the Board .................................. 7,686 (7) 1,390 0.8%
Martin S. Paul ........................................................... 20 1,390 0.1%
Donald E. Villers......................................................... 7,330 (8) 1,190 0.8%
---------- ------------------------ --------
All directors, nominees and executive officers as a group (15 people) .... 47,693 19,640 6.0%
========== ======================== ========

(1) Options granted under Middlefield's 1999 Stock Option Plan. Options
granted under the plan vest and become exercisable one year after the
grant date and have ten-year terms.
(2) Includes 100 shares held by Mr. Caldwell as custodian for his minor
children.
(3) Includes 60 shares held by Mr. Coyne as custodian for his
grandchildren.
(4) Includes 3,786 shares held by Mrs. Frank's spouse. Mrs. Frank disclaims
beneficial ownership of shares held by her spouse.
(5) Includes 2,917 shares held by Mr. Halstead's spouse and her trust. Mr.
Halstead disclaims beneficial ownership of those shares.

(6) Includes 120 shares held by Mr. Heslop as custodian for his minor
children.
(7) Includes 462 shares held by First United Methodist Church, for which
Mr. Hunter acts as trustee.
(8) Includes 414 shares held by Mr. Villers' spouse and 200 shares held
jointly by Mr. Villers' spouse with their children.

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. At the
2002 annual meeting, three individuals identified below will be nominated to
serve as directors for three-year terms ending at the 2005 annual meeting of
shareholders, or until their successors are elected and qualified.

Current
Three director nominees and Director term
six continuing directors Age since expires Principal occupation in the last 5 years
--------------------------- --- -------- ------- ----------------------------------------

Three Nominees for the Term Ending in 2005:

Frances H. Frank 54 1995 2002 Mrs. Frank is the Secretary and Treasurer of The Frank
Agency, Inc., a general insurance agency located in
Middlefield, Ohio

Thomas C. Halstead 70 1988 2002 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

Donald E. Villers 68 1987 2002 Mr. Villers is retired, having previously served as a
superintendent with Copperweld Steel, from which he
retired after 31 years of service. Mr. Villers has
been a Township Trustee of Parkman Township in Geauga
County, Ohio since 1988
Six Continuing Directors:

Thomas G. Caldwell 44 1997 2004 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 as well

Richard T. Coyne 66 1997 2004 Mr. Coyne is the General Manager of Jaco Products, a
production plastics component manufacturer located in
Middlefield, Ohio. He is also a Trustee of the Geauga
Park District Foundation, Geauga County, Ohio

George F. Hasman 76 1989 2003 Mr. Hasman was President of Middlefield until October
2000 , but he did not serve on a full-time basis. He
previously served as Chairman and President of The
Twinsburg Banking Company, which was sold to FirstMerit
Corporation in 1982

James R. Heslop, II 48 2001 2003 Executive Vice President of The Middlefield Banking
Company 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 over $40 million total
assets. First County Bank is an affiliate of FNB
Corporation of Naples, Florida

Donald D. Hunter 73 1977 2004 Mr. Hunter serves as Chairman of the Board of each of
Middlefield and the bank. He is co-owner of H&H
Hardware, Inc. in Middlefield, Ohio

Martin S. Paul 58 1999 2003 Mr. Paul is Vice President of Paul's Lumber in
Garrettsville, Ohio. He is also a Trustee of Ohio
Northern University in Ada, Ohio, a Trustee of Robinson
Memorial Hospital Foundation in Ravenna, Ohio and
President and Trustee of Hiram Community Trust in
Hiram, Ohio

The number of directors was expanded to nine by board action on
November 19, 2001. The board appointed James R. Heslop, II, Executive Vice
President and Chief Operating Officer, to fill the vacancy created by the board
expansion. Because of expansion of the board's size, the board was reclassified
into three classes of three directors serving three-year terms, rather than two
classes of four directors serving two-year terms. Director Hasman was elected at
the 2001 Annual Meeting to a term expiring at the 2002 Annual Meeting, but
because of the board reclassification his term was extended to the 2003 Annual
Meeting. Directors Caldwell, Coyne, and Hunter were elected at the 2001 Annual
Meeting to terms expiring at the 2003 Annual Meeting, but because of the board
reclassification their terms were extended to the 2004 Annual Meeting.

The board of Middlefield and the board of The Middlefield Banking
Company are comprised of the same people. However, directors of The Middlefield
Banking Company are elected annually and do not serve staggered terms. All of
Middlefield's directors are expected to be nominated and elected to serve as
directors of The Middlefield Banking Company 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. None of Middlefield's directors or executive officers has been
involved in any legal proceedings concerning bankruptcy, either individually or
in respect of any businesses with which they have been involved. None of them
have been convicted of any crime, excluding traffic violations and similar minor
offenses.

Director Nominations. Neither Middlefield nor the bank has a nominating
committee. The full board acts as a nominating committee, selecting nominees for
election as director.

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 proxy statement,
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.

Board Committees. The only committees of Middlefield's board are the
compensation committee and the audit committee. The members of Middlefield's
compensation committee and the bank's compensation committee are Directors
Villers (who acts as chairman of the committee), Frank, Halstead, and Paul. The
compensation committee establishes the compensation of the senior executive
officers of Middlefield and the bank. The bank's compensation committee met five
times in 2001. The members of Middlefield's audit committee are Directors
Hasman, Halstead, and Coyne (who acts as chairman of the committee). The audit
committee is charged with examining or superintending the examination or audit
of assets, liabilities, and results of operations on at least an annual basis,
reporting the results to the board. It met three times in 2001.

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. None of them is or has for the
past three years been an employee of Middlefield or the bank, and no immediate
family members of any of them is or has for the past three years been an
executive officer of Middlefield or the bank. Although certain of the directors
and their affiliates are indebted to the bank for credit extended in the
ordinary course of business, payments made by them to Middlefield or the bank in
the past three years have not in any of those years exceeded the greater of 5%
of the affiliates' revenues or $200,000. In the opinion of Middlefield's board
the directors who serve on the audit committee are "independent directors," as
that term is defined in Rule 4200(a)(14) of the rules of the National
Association of Securities Dealers, Inc. A copy of the audit committee charter is
attached as Appendix A to this proxy statement. The charter was adopted by
Middlefield's board in August 2001.

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, 2001 and has
discussed the audited financial statements with management. The Audit
Committee has also discussed with S.R. Snodgrass, A.C., Middlefield's
independent accountants, 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 accountants'
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, 2001 for filing with the Securities and Exchange
Commission.

Submitted by the Audit Committee
George F. Hasman
Thomas C. Halstead
Richard T. Coyne

Meeting Attendance. Middlefield's board met six times in 2001. The
individuals who served in 2001 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.

Director Compensation. In 2001 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 1,000 shares of Middlefield common stock
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 exercise
price of those options is $31.75 per share. 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 390 shares, exercisable at $24 per share. No stock options
were granted in 2001.

Directors are also entitled to life insurance benefits under the bank's
group term life insurance program, paying benefits of $30,000 (or $19,000 in the
case of Directors Hasman and Hunter) to the director's beneficiaries if the
director dies while in service to the bank.

Effective December 1, 2001 The Middlefield Banking Company entered into
Director Retirement Agreements with each nonemployee director (each director
other than Directors Caldwell and Heslop). 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 71 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 will be 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 equal to
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 will be 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 wilful violation of
significant bank policies, or if the director is removed by order of the FDIC.

The board of directors recommends a vote "FOR" election of the
identified nominees to serve as directors until the 2005 annual
meeting 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 ................... 51 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 .............. 38 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 ................. 55 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

Nancy C. Snow .................. 66 Ms. Snow is Vice President, Secretary and Branch Manager. She has been
with the bank since 1979, and has served in her current capacities since
the mid-1980s

Donald L. Stacy ................ 48 Mr. Stacy joined the bank in August 1999 and serves as its Chief
Financial Officer. On October 30, 2000 he was appointed as the
Treasurer and Chief Financial Officer of Middlefield. He previously
served for twenty years with Security Dollar Bank and Security Financial
Corp. in Niles, Ohio, where he was Senior Vice President and Treasurer

Alfred F. Thompson, Jr. ........ 42 Mr. Thompson is 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 July 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, 2001, 2000,
and 1999 for the President and Chief Executive Officer and for the other
executive officers whose salary and bonus exceeded $100,000 during 2001. None of
Middlefield's executive officers receives any cash remuneration from
Middlefield. All of the cash remuneration reflected in the table to follow 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
--------------------------------------- -------------------------- -------
(#)
($) ($) Securities ($) ($)
Name and ($) ($) Other Annual Restricted Underlying LTIP All Other
Principal Position Year Salary/(1)/ Bonus/(2)/ Compensation Stock Awards Options Payouts Compensation/(4)/
-------------------- ---- ----------- ---------- ------------ ------------ ---------- ------- -----------------

Thomas G. Caldwell 2001 $ 123,700 $ 500 (3) -- 0 -- $ 10,003
President and Chief 2000 $ 118,300 $ 7,169 (3) -- 2,500 -- $ 9,823
Executive Officer 1999 $ 110,456 $ 0 (3) -- 1,000 -- $ 9,733

James R. Heslop, II 2001 $ 112,850 $ 500 (3) -- 0 -- $ 1,754
Executive Vice 2000 $ 102,750 $ 7,169 (3) -- 2,500 -- $ 1,354
President 1999 $ 87,784 $ 0 (3) -- 500 -- $ 1,086

(1) Includes amounts deferred at the election of the named executive
officers pursuant to the 401(k) plan. Also includes fees for service as
a director of Middlefield or the bank.
(2) Represents profit-sharing distributions earned. Profit-sharing
distributions are made shortly after the end of the year in which
earned.
(3) Perquisites and other personal benefits did not exceed the lesser of
$50,000 or 10% of total salary and bonus.
(4) Represents matching contributions under the bank's 401(k) plan and, for
Mr. Caldwell alone, the $6,700 dollar value of insurance premiums paid
in each of 1999, 2000, and 2001. Mr. Caldwell's 401(k) plan matching
contribution in 2001 was $ 3,303.

Director George F. Hasman held the title of President until October
2000, but he did not serve as a full-time officer or employee. Mr. Hasman did
not receive compensation in his capacity as President. Instead, his compensation
was limited solely to the compensation he received as a director. In his
capacity as a director, Mr. Hasman was granted in 1999 an option to acquire
1,000 shares of Middlefield common stock. The option is currently exercisable in
full, at the exercise price of $31.75 per share. In December 2000 he received an
option to acquire an additional 390 shares of Middlefield common stock,
exercisable at $24 per share.

Life Insurance. Mr. Caldwell is the owner of a life insurance policy
for which The Middlefield Banking Company pays an annual premium of $6,700.
Issued in October 1995, the policy provides for an initial death benefit of
$250,000, increasing over time. Under a separate collateral assignment
agreement, Mr. Caldwell has assigned his interest in the policy to the bank as
security for the bank's interest in the policy death benefits. At Mr. Caldwell's
death, the bank will be reimbursed for premiums paid. Mr. Caldwell's
beneficiaries will receive the remainder of the policy death benefits.

Bank officers 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) $240,000.

Stock Option Plan. Middlefield's 1999 Stock Option Plan provides for
the grant of options to acquire a maximum of 114,866 shares of common stock.
Options granted under the plan can be either incentive stock options or
non-qualified stock options. Options to acquire 20,390 shares of Middlefield
common stock were issued and outstanding as of March 25, 2002. The 1999 Stock
Option Plan also allows for the grant of stock appreciation rights, restricted
stock and performance unit awards, but the only grants made under the plan so
far are stock option grants.

Under the stock option plan, qualified stock options -- also commonly
known as incentive stock options or ISOs -- may be granted to Middlefield's or
the bank's officers and employees, and non-qualified stock options may be
granted to directors, officers and employees. No one 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
directors.

A qualified stock option, or incentive stock option, 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. All
options granted to officers and employees under the plan to date are incentive
stock options, and all options granted to non-employee directors are
non-qualified options. The exercise price of incentive stock options 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 incentive stock option grant to a holder of
more than 10% of Middlefield's common stock), and the exercise price of
non-qualified stock options 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. All stock options granted to date become
fully exercisable one year after the date of grant. 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.

No stock options were granted in 2001. The following table shows the
number of shares of Middlefield common stock acquired during 2001 or acquirable
upon exercise of options by the individuals named in the Summary Compensation
Table. The table also indicates the extent to which the options were exercisable
at December 31, 2001, as well as the approximate value of the options based on
the estimated fair market value of Middlefield common stock on December 31,
2001.

Securities underlying unexercised Value of in-the-money options at
options at fiscal year end fiscal year end(1)
--------------------------------- --------------------------------
Shares acquired
Name on exercise Value realized Exercisable Unexercisable Exercisable Unexercisable
---------------------- ----------------- ----------------- ------------------ ---------------- --------------- ----------------

Thomas G. Caldwell 0 -- 3,500 0 $ 8,750 N/A

James R. Heslop, II 0 -- 3,000 0 $ 8,750 N/A

(1) Value of unexercised options equals the estimated fair market value of
a share acquirable upon exercise of an option at December 31, 2001,
less the exercise price per share, multiplied by the number of shares
acquirable upon exercise of the options. The stock options granted to
Mr. Caldwell and Mr. Heslop in 1999 are exercisable at the price of $31
per share. The stock options granted to Messrs. Caldwell and Heslop in
2000 have an exercise price of $24 per share. Middlefield common stock
is not actively traded and is not authorized for quotation or trading
on any exchange or on Nasdaq. Solely for purposes of the table and for
no other purpose, Middlefield estimated the per share market value of
Middlefield common stock on December 31, 2001 as $ 27.50. This is an
estimate only and does not necessarily reflect actual transactions in
Middlefield common stock. The estimate does not necessarily reflect the
price shareholders could obtain upon sale of their stock or the price
at which shares of Middlefield common stock may be acquired. The
estimate should not be taken to represent management or the board's
estimate of the intrinsic value or appropriate market value of the
common stock.

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.

Profit-Sharing Plan. In 1999 the bank adopted a profit-sharing plan to
reward employees with additional cash compensation if the bank's
return-on-equity improves from one year to the next. The plan may be terminated
by the board at any time. All employees are eligible to receive a profit-sharing
distribution. Profit-sharing distributions are made in the first quarter of the
year if the bank's return-on-equity in the preceding year satisfied plan
thresholds. That is, a profit-sharing distribution will not be made unless the
bank's return-on-equity for the preceding year exceeded the average
return-on-equity in the three years before the last year. Return-on-equity is
calculated on an adjusted basis. Total equity is first increased or decreased as
necessary to an amount that equals 9% of assets, a normalized or base
equity-to-assets ratio. Net income is then decreased by the average after-tax
yield on the excess capital over 9%, or increased by the after-tax yield on the
difference between 9% capital and actual capital. A similar adjustment is made
to account for "leverage borrowed funds," if any, which are borrowings entered
into as investment arbitrage. The bank's board may also make other adjustments
of the net income figures employed in the return-on-equity calculations,
accounting for such things as gains or losses on sale of securities,
extraordinary acquisition costs, and the like. If the adjusted return-on-equity
figure for the last year exceeds the average return-on-equity, similarly
adjusted, for the three years before the last year, a profit-sharing
distribution will be made.

A portion of net income representing the last year's improvement in
return-on-equity is set aside for profit-sharing distributions. The portion to
be set aside is determined by the board at the beginning of each year. The board
fixed the percentage at 25% in early 2001, and it has fixed the percentage at
25% for purposes of profit-sharing plan calculations based on return-on-equity
in 2002. Distribution of the aggregate profit-sharing benefit is then allocated
among employees based on a combination of objective factors, such as
departmental and functional

objectives, and subjective factors, such as an individual's annual performance
evaluation. The objective factors considered are determined at the beginning of
each year by the senior executive officers, taking into account the bank's
strategic goals and objectives for the year. The distribution of profit-sharing
benefits to employees is determined by the board's compensation committee, with
the recommendation of the senior executive officers. But distribution to the
senior executive officers is determined solely by the compensation committee.

Severance Agreements. Neither the bank nor Middlefield has written
employment agreements with officers. Effective November 28, 2001 Middlefield
entered into severance agreements with six officers, including Messrs. Caldwell
and Heslop, replacing Messrs. Caldwell's and Heslop's October 8, 1996 severance
agreements. The initial term of the new 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 twice the executive's annual compensation, meaning 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. Under the
severance agreements, a change in control means any of the following events
occur --

. Merger: Middlefield merges into or consolidates with another
corporation, or merges another corporation into Middlefield,
with the result in either case that less than a majority of the
total voting power of the resulting corporation immediately
after the merger or consolidation is held by persons who were
Middlefield shareholders immediately before the merger or
consolidation, or

. Acquisition of Significant Share Ownership: a person or group of
persons acting in concert acquires the power to vote 15% or more
of Middlefield's common stock, or

. Change in Board Composition: during any period of two
consecutive years, individuals who constituted Middlefield's
board at the beginning of the two-year period (including
directors later elected by the board, or later nominated by the
board for election by shareholders, by a vote of at least
two-thirds (_) of the directors who were directors at the
beginning of the period) cease for any reason to constitute a
majority, or

. Sale of Assets: Middlefield sells to a third party substantially
all of its assets.

If the executive terminates employment for "good reason" within two
years after a change in control, he will be entitled to severance benefits just
as if he were terminated involuntarily and without cause. Under the

severance agreements, "good reason" includes occurrence of any of the following
events without the executive's written consent --

. Change in Status: an adverse change in the executive's status,
title, position or responsibilities, or

. Salary Reduction: a reduction in the executive's annual
compensation, or

. Reduction of Benefits. the executive's benefits under employee
benefit plans are materially reduced, or

. Liquidation or Merger: Middlefield merges with another entity,
or transfers substantially all of its assets, or liquidates,
unless the successor entity assumes all obligations under the
severance agreements, or

. Relocation of the Executive: the executive's principal place of
employment is relocated 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 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.

Comparative Performance Graph. The graph below compares the cumulative
total shareholder return on Middlefield common stock to the cumulative total
return of the Nasdaq Total US Index and the SNL Financial LC index of 163
commercial banks and bank holding companies 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 16, 2001, the day
Middlefield's common stock became registered under the Securities Exchange Act
of 1934, to December 31, 2001. The graph assumes that $100 was invested on June
16, 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 BANK INDEX,
AND THE NASDAQ - TOTAL US**
FROM JUNE 16, 2001 TO DECEMBER 31, 2001

Period Ending *
----------------------------------------------------
6/16/2001 6/30/2001 9/30/2001 12/31/2001
------------------------------------------------------------ ---------- ---------- ---------- ----------

NASDAQ - Total US**/(1)/ .................................. $ 100.00 $ 106.72 $ 74.04 $ 96.25

SNL $100 - $500M OTC-BB and Pink Bank Index/(1)/ .......... $ 100.00 $ 100.62 $ 103.31 $ 107.36

Middlefield Banc Corp./(1)/ ............................... $ 100.00 $ 100.00 $ 88.16 $ 93.20

* Source: SNL Financial LC, Charlottesville, Virginia
** Source: CRSP, Center for Research in Security Prices,
Graduate School of Business, The University of Chicago 2002.

(1) Middlefield is not among the approximately 4,000 companies
included in the NASDAQ - Total US index. The SNL Securities
$100M - $500M OTC-BB and Pink Bank Index is a market-weighted
index that includes 163 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 Bank 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. The members of the compensation
committee are Directors Frank, Halstead, Paul, and Villers, with Director
Villers acting as committee chairman. The committee recommends the compensation
of executive officers of Middlefield and the bank, subject to approval by the
full board. Messrs. Caldwell and Heslop do not participate in board
deliberations and voting concerning their own compensation.

The committee's executive compensation policies are designed to provide
competitive levels of compensation to executive officers, rewarding them for
individual performance and for Middlefield's performance as a whole. Each
executive officer's performance during the fiscal year is reviewed individually
by the committee, focusing primarily upon --

. the amount and quality of work performed,

. overall skill levels and supervisory skills,

. dependability and attendance,

. demonstrated initiative, and

. overall value to Middlefield.

The committee's review takes into account performance of Middlefield
and the bank. The committee employs no fixed criteria, goals, or standards to
establish compensation of individual officers. The committee's determinations
about executive compensation are subjective, although allocation among all
employees -- including executive officers -- of a profit-sharing distribution
for a given year is influenced not only by subjective performance evaluations
but also by more objective standards having to do with the bank's strategic
goals and objectives for the year, as determined by the senior executive
officers at the beginning of each year. Based on its subjective evaluation of
individual and corporate performance factors, the committee recommends to the
full board executive officer salary levels for the coming year. Although the
bank has paid discretionary bonuses in the past and may do so again, bonuses are
the exception rather than the rule, and the decision whether to pay bonuses is a
subjective one on the part of the board. Executive officers also receive
matching contributions under the 401(k) savings and investment plan, and they
may receive profit-sharing distributions if plan return-on-equity criteria are
satisfied, as discussed under the subheading " -- Profit-Sharing Plan." The
amount of an executive officer's profit-sharing distribution is based on the
compensation committee's analysis of a combination of objective and subjective
factors, without fixed weights given to the various factors considered.

The compensation committee also administers the 1999 Stock Option Plan.
Stock options are an important part of a competitive compensation package,
creating a direct, personal incentive for officers to promote growth in a
company's stock price. The value of stock options to officers increases as the
price of the underlying stock increases beyond the option exercise price,
aligning officers' financial interests more closely with shareholders'
interests. But the market for financial stocks generally, and micro-cap
financial stocks in particular, has been stagnant for some time. Moreover,
having been registered under section 12 of the Securities Exchange Act of 1934
for less than one year, Middlefield's common stock is not widely followed and is
traded very infrequently. No stock options were granted in 2001, but executive
officers hold a substantial number of vested, exercisable stock options granted
in 1999 and 2000. Some of those exercisable options have exercise prices
exceeding recent bid prices for Middlefield common stock. As Middlefield's
public profile increases over time and as the market for financial stocks
recovers, the committee believes that the value of stock options held by
executive officers will increase in the years ahead.

Thomas G. Caldwell's 2001 salary was based on the committee's
subjective determinations concerning his performance and overall corporate
performance. Under Mr. Caldwell's guidance in the past year, Middlefield has
continued to achieve disciplined and conservative growth while economic
conditions at the national level have become increasingly challenging and
turbulent. Return-on-equity in 2001 exceeded the average return on equity for
1998, 1999, and 2000, and as a consequence a profit-sharing distribution was
made in the first quarter of 2002 to bank employees, including executive
officers.

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.

Submitted by the Compensation Committee--

Frances H. Frank
Thomas C. Halstead
Martin S. Paul
Donald E. Villers (committee chairman)

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. During 2001, certain directors and executive
officers of Middlefield and The Middlefield Banking Company, and associates of
such persons, were customers of and had banking transactions with The
Middlefield Banking Company in the ordinary course of business. Middlefield
expects that these relationships and transactions will continue in the future.
All 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 Middlefield
Banking Company. The existing transactions do not involve more than the normal
risk of collectability or present other unfavorable features.

Second Proposal -- Ratification of Appointment of Independent Auditor

Middlefield's independent auditor for the year ended December 31, 2001
was S.R. Snodgrass, A.C. With the recommendation of the audit committee, S.R.
Snodgrass, A.C. has been appointed by the board, subject to shareholder
ratification, to continue as independent auditor for the current fiscal year
ending December 31, 2002.

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.

Audit Fees. The aggregate fees billed for professional services
rendered by S.R. Snodgrass, A.C. for the audit of Middlefield's annual financial
statements for the year ended December 31, 2001 and for S.R. Snodgrass, A.C.'s
reviews of the financial statements included in Middlefield's Forms 10-Q filed
with the Securities and Exchange Commission during 2001 were $41,427.

Financial Information Systems Design and Implementation Fees. In 2001
S.R. Snodgrass, A.C. performed no services and therefore billed no fees relating
to operating or supervising the operation of Middlefield's information systems
or local area network or for designing or implementing Middlefield's financial
information management systems.

All Other Fees. The aggregate fees billed for other services rendered
to Middlefield by S.R. Snodgrass, A.C. in 2001 were $35,533, including tax
preparation services and assistance with registration of Middlefield's equity
securities under the Securities Exchange Act of 1934.

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. 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, 2001 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,
2002

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 2002 annual meeting, the
persons named as proxies will vote thereon in accordance with their best
judgement.

Shareholders desiring to submit proposals for inclusion in
Middlefield's proxy materials for the 2003 annual meeting must submit the
proposals to Middlefield at its executive offices no later than December 8,
2002. We will not include in our proxy statement or form of proxy for the 2003
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 2003 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 before the date in 2003 corresponding to the
mailing date of this proxy statement for the 2002 annual meeting. This proxy
statement is being mailed to shareholders on or about April 8, 2002.
Accordingly, a shareholder who desires to present a proposal at the 2003 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 later
than February 6, 2003. If the shareholder fails to do so, Middlefield's
management proxies for the 2003 annual meeting 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 2003 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, 2001.

General

The persons named in the proxy will vote all properly executed proxies.
If a shareholder specifies on such proxy a choice with respect to a proposal to
be acted upon, the proxy will be voted in accordance with such 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 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 Middlefield Banking Company may
solicit proxies personally or by telephone without additional compensation.

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, it is intended that
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.

Information Available to Shareholders

Our annual report is being mailed to shareholders with this proxy
statement. Additional copies of the Annual Report may be obtained without charge
by writing to Ms. Nancy C. Snow, Vice President and Secretary, Middlefield Banc
Corp., PO Box 35, 15985 East High Street, Middlefield, Ohio 44062. 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.
_________________________

A COPY OF MIDDLEFIELD BANC CORP.'S ANNUAL REPORT ON FORM 10-K FOR THE
FISCAL YEAR ENDED DECEMBER 31, 2001 AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION WILL BE FURNISHED WITHOUT CHARGE TO SHAREHOLDERS UPON WRITTEN REQUEST
TO: MR. DONALD L. STACY, CHIEF FINANCIAL OFFICER AND TREASURER, MIDDLEFIELD BANC
CORP., 15985 EAST HIGH STREET, MIDDLEFIELD, OHIO 44062.
_________________________

Charter of the Audit Committee Appendix A
of the Board of Directors
of Middlefield Banc Corp.

I. Audit Committee Purpose

The Audit Committee is appointed by the Board of Directors to assist
the Board in fulfilling its oversight responsibilities. The Audit Committee's
primary duties and responsibilities are to:

.. Monitor the integrity of the Corporation's financial reporting process
and systems of internal controls regarding finance, accounting and
legal compliance.

.. Monitor the independence and performance of the Corporation's
independent auditors and internal auditing department.

.. Provide an avenue of communication among the independent auditors,
management, the internal auditing department and the Board of
Directors.

.. Report to the Board of Directors.

.. Encourage adherence to, and continuous improvement of, the
Corporation's policies, procedures, and practices at all levels.

.. Review areas of potential significant financial risk to the
Corporation.

.. Monitor compliance with legal and regulatory requirements.

The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct access to the
independent auditors as well as anyone in the organization. The Audit Committee
has the ability to retain, at the Corporation's expense, special legal,
accounting, or other consultants or experts it deems necessary in the
performance of its duties.

The Audit Committee shall provide assistance to the corporate directors
in fulfilling their responsibility to the shareholders, potential shareholders,
and investment community relating to corporate accounting reporting practices of
the corporation, and the quality and integrity of the financial reports of the
corporation. In doing so, it is the responsibility of the Audit Committee to
maintain free and open means of communication between the directors, the
independent auditors, the internal auditors, and the financial management of the
Corporation.

II. Audit Committee Composition and Meetings

The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent nonexecutive
directors, free from any relationship that would interfere with the exercise of
his or her independent judgment. All members of the Committee shall have a basic
understanding of finance and accounting and be able to read and understand
fundamental financial statements, and at least one member of the Committee shall
have accounting or related financial management expertise. Committee members are
encouraged to enhance their familiarity with finance and accounting by
participating in seminars, conferences, round tables, and other educational
programs conducted by the Corporation or an outside company.

Audit Committee members shall be appointed by the Board. If an Audit
Committee Chair is not designated or present, the members of the Committee may
designate a Chair by majority vote of the Committee membership.

The Committee shall meet at least four times annually, or more
frequently as circumstances dictate. The Audit Committee Chair shall prepare
and/or approve an agenda in advance of each meeting. The Committee should meet
privately in executive session at least annually with management, the director
of the internal auditing

Page A-1

department, the independent auditors, and as a committee to discuss any matters
that the Committee or each of these groups believe should be discussed. In
addition, the Committee, or at least its chair, should communicate with
management and the independent auditors quarterly to review the Corporation's
financial statements and significant findings based upon the auditors' limited
review procedures.

III. Audit Committee Responsibilities and Duties

Review Procedures

1. Review and reassess the adequacy of this Charter at least
annually. Submit the Charter to the Board of Directors for
approval and have the document published at least every three
years in accordance with SEC regulations.

2. Review the Corporation's annual audited financial statements
prior to filing or distribution. Review should include
discussion with management and independent auditors of
significant issues regarding accounting principles, practices
and judgments.

3. In consultation with the management, the independent auditors,
and internal auditors consider the integrity of the
Corporation's financial reporting processes and controls.
Discuss significant risk exposures and the steps management has
taken to monitor, control, and report such exposures. Review
significant findings prepared by the independent auditors and
the internal auditing department together with management's
responses including the status of previous recommendations.

4. Review with financial management and the independent auditors
the Corporation's quarterly financial results prior to the
release of earnings and/or the Corporation's quarterly financial
statements prior to filing or distribution. Discuss any
significant changes to the Corporation's accounting principles
and any items required to be communicated by the independent
auditors in accordance with SAS 61. The Chair of the Committee
may represent the entire Audit Committee for purposes of this
review.

Independent Auditors

5. The independent auditors are ultimately accountable to the Audit
Committee and the Board of Directors. The Audit Committee shall
review the independence and performance of the auditors and
annually recommend to the Board of Directors the appointment of
the independent auditors or approve any discharge of auditors
when circumstances warrant.

6. Approve the fees for independent auditors and other significant
compensation to be paid to the independent auditors. Review and
approve requests for significant management consulting
engagements to be performed by the independent auditor firm and
be advised of any other significant study undertaken at the
request of management that is beyond the scope of the audit
engagement letter.

7. On an annual basis, the Committee should review and discuss with
the independent auditors all significant relationships they have
with the Corporation that could impair the auditors'
independence.

8. Review the independent auditor's audit plan - discuss scope,
staffing locations, reliance upon management, and internal audit
and general audit approach.

9. Prior to releasing the year-end earnings, discuss the results of
the audit with the independent auditors. Discuss certain matters
required to be communicated to audit committees in accordance
with AICPA SAS 61.

Page A-2

10. Consider the independent auditors' judgment about the quality
and appropriateness of the Corporation's accounting principles
as applied in its financial reporting.

11. Discuss with management and the independent auditors the quality
of the accounting principles and underlying estimates used in
the preparation of the Corporation's financial statements.

12. Discuss with the independent auditors the clarity of the
financial disclosure practices used or proposed by the
Corporation.

13. Inquire as to the independent auditor's views about whether
management's choices of accounting principles appear reasonable
from the perspective of income, asset and liability recognition,
and whether those principles are common practices or are
minority practices.

Internal Audit Department and Legal Compliance

14. Review the budget, plan, changes in plan, activities,
organizational structure, and qualifications of the internal
audit department as needed.

15. Review the appointment, performance, and replacement of the
senior internal audit executive.

16. Review significant reports prepared by the internal audit
department together with management's response and follow-up to
these reports.

17. On at least an annual basis, review with the Corporation's
counsel, any legal matters that could have a significant impact
on the organization's financial statements, the Corporation's
compliance with applicable laws and regulations, including
corporate securities trading policies, and inquiries received
from regulators or governmental agencies.

18. Review all reports concerning any significant fraud or
regulatory noncompliance that occurs at the Corporation. This
review should include consideration of the internal controls
that should be strengthened to reduce the risk of a similar
event in the future.

Other Audit Committee Responsibilities

19. Annually prepare a report to shareholders as required by the
Securities and Exchange Commission. The report should be
included in the annual proxy statement of the Corporation./1/

20. Perform any other activities consistent with this charter, the
Corporation's by-laws, and governing law, as the Committee or
the Board deems necessary or appropriate.

21. Maintain minutes of meetings and periodically report to the
Board of Directors on significant results of the foregoing
activities.

22. Review management's monitoring of the Corporation's compliance
with the organization's Ethical Code, and, ensure that
management has the proper review system in place to ensure that
the

______________

/1/The SEC requires that the Audit Committee issue a report to
shareholders stating whether they have:
.. Reviewed and discussed the audited financial statements with
management;
.. Discussed with the independent auditors the matters required to be
discussed by SAS 61; and
.. Received certain disclosures from the auditors regarding their
independence as required by the ISB 1 and then include a statement if
based on this review if the audit committee recommended to the board to
include the audited financial statements in the annual report filed
with the SEC.

Page A-3

Corporation's financial statements, reports, and other financial
information disseminated to governmental organizations and the
public satisfy legal requirements.

23. Periodically perform self-assessment of audit committee
performance.

24. Annually review policies and procedures as well as audit results
associated with directors' and officers' expense accounts and
perquisites. Annually review a summary of director and officer
related party transactions and potential conflicts of interest.

Page A-4

Proxy Solicited by the Board of Directors
Annual Meeting of Shareholders
Middlefield Banc Corp.

The undersigned shareholder of Middlefield Banc Corp. hereby constitutes
and appoints Donald D. Hunter and George F. Hasman, 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 15, 2002 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:

Withhold Vote
Proposal -- Election of Directors For All Nominees for All Nominees
------------------------------------------------------------------------------------------------------------------------

1) To elect the three nominees identified below as directors for
terms of three years and until their successors are elected
and qualified ........................................................ [_] [_]

Instruction: To withhold your vote for any individual nominee, strike a
line through the nominee's name: Frances H. Frank
Thomas C. Halstead Donald E. Villers

Other Proposals For Against Abstain
---------------------------------------------------------------------------- --------- ---------- ---------------

2) To ratify the appointment of S.R. Snodgrass, A.C. as independent
auditor for the fiscal year ending December 31, 2002 ..................... [_] [_] [_]

The board recommends a vote FOR election of the identified nominees and FOR
proposal 2

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" proposal 2. 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 an
Annual Report.

_______________________________
Dated: _________________________, 2002 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