MBN announces second quarter results



    
                                                         Second Quarter 2009
                                        For the quarter ended April 30, 2009

    Message to Shareholders
    

    TORONTO, June 12 /CNW/ - During the second quarter of 2009, Middlefield
Bancorp Limited ("MBN" or the "Company") generated net income of $0.2 million,
or $0.02 per share, compared with a net loss of $6.1 million, or $0.67 per
share in the comparable quarter last year. The Company realized gains of
approximately $0.5 million during the quarter, which resulted in gains of $1.6
million for the six months ended April 30, 2009.
    Subsequent to the quarter ended April 30, 2009 MBN's subsidiary, 2M
Energy Corp. ("2M"), accepted a proposal from the operator of its oil and gas
properties located in the Countess area of Alberta, to sell its working
interest and settle its liabilities in respect of these properties. The
transaction, which requires 2M to make a payment of $0.6 million and is
anticipated to close during MBN's 2009 third quarter, is expected to result in
a gain of $0.4 million for the Company.
    As of June 1, 2009, MBN's balance sheet remains strong with no debt and
approximately $2.00 per share of cash, short-term investments, marketable
securities and receivables from brokers. Consolidated financial results are
attached.

    Financial Summary

    
    -------------------------------------------------------------------------
    For the periods ended April 30

    (all amounts in thousands,          Three Months              Six Months
     except per share amounts)      2009        2008        2009        2008
    -------------------------------------------------------------------------
    Revenue (loss)            $      680  $   (5,860) $    2,119  $   (3,538)
    Net income (loss)                189      (6,147)        931      (5,362)
    Diluted earnings (loss)
     per share                      0.02       (0.67)       0.10       (0.58)
    -------------------------------------------------------------------------

    Management's Discussion and Analysis
    April 30, 2009 and 2008 (unaudited)
    

    The following Management's Discussion and Analysis ("MD&A") is dated June
12, 2009 and should be read in conjunction with the attached unaudited interim
consolidated financial statements that have been prepared by management and
approved by the board of directors. These statements have not been reviewed by
MBN's external auditors. Readers should also refer to the MD&A in MBN's 2008
Annual Report. Additional information relating to MBN, including MBN's annual
information form, is available on SEDAR at www.sedar.com.
    The reader should be aware that historical results are not necessarily
indicative of future performance. This MD&A contains forward-looking
statements, including statements regarding expected future events, financial
results, objectives and opportunities of MBN, government actions and industry
performance, which are subject to substantial risks and uncertainties.
Forward-looking statements include statements that are predictive in nature,
that depend upon or refer to future events, results, expectations and
performance, or that include words such as "expects", "anticipates",
"intends", "will" or negative versions thereof and other similar wording. MBN
cautions that actual events, results, expectations or performance will be
affected by a number of factors (many of which are beyond its control) and may
differ materially from those based upon the forward-looking statements in the
MD&A, including as a result of: general economic, political, market and
business factors and conditions; commodity price fluctuations; interest and
foreign exchange rate fluctuations; statutory and regulatory developments;
unexpected judicial or regulatory proceedings; and catastrophic events.
Readers are cautioned that the foregoing list of factors is not exhaustive and
to avoid placing undue reliance on forward-looking statements due to the
inherent uncertainty of such statements. Forward-looking statements are based
on the estimates and opinions of MBN's management at the time the statements
were made. MBN does not undertake, and specifically disclaims, any obligation
to update or revise any forward-looking statements, except as required by law.

    Results of Operations

    MBN generated investment income of $0.7 million during the second quarter
of 2009, representing a significant increase over the investment loss of $5.9
million in the prior year comparable period. The investment income resulted
primarily from gains realized on the Company's investment portfolio and to a
lesser extent from interest earnings. Interest income includes the Company's
share of revenue of the variable interest entities ("VIEs") in which it
invested. MBN invests its excess cash in short-term highly liquid mutual fund
investments, which are VIEs of the Company as a result of the Company's being
the primary beneficiary.
    2M's production expenses in the second quarter of 2009 were minimal and
primarily reflect fixed expenses related to maintaining the Company's
remaining oil and gas properties. General and administrative expenses of $0.2
million in the second quarter of 2009 were virtually unchanged from the second
quarter of 2008, however, they declined by $0.1 million on a year-to-date
basis primarily as a result of the Company's decreased share of expenses of
the VIEs in which it invested. Transaction costs, which include brokerage
commissions and fees, amounted to $80,000 in the second quarter of 2009
compared to $150,000 in the comparable quarter last year. The decrease stemmed
from the reduced trading activity during the second quarter of 2009.
    A foreign exchange loss of $151,000 was recorded in the second quarter of
2009 in respect of the Company's U.S. dollar assets as a result of the
weakening of the U.S. dollar against the Canadian dollar. Depreciation,
depletion and accretion ("DD&A") expenses in the second quarter of 2009 were
nominal and reflect accretion expenses in respect of the Company's asset
retirement obligations. DD&A expenses in the 2008 second quarter amounted to
$43,000 which includes accretion expenses as well as non-recoverable capital
expenditures in respect of the oil and gas properties in which 2M has an
interest.
    There is no current income tax expense in 2009 since the Company can
utilize its loss carryforwards to shelter all current taxable income. As at
April 30, 2009 the Company had non-capital losses of $5.3 million available
for carryforward for tax purposes. A nominal future income tax expense of
$8,000 was recorded in the 2009 second quarter in respect of unrealized
investment gains that will be taxable in the future. The 2009 year-to-date
income tax expense of $158,000 primarily relates to investment gains realized
and represents the reversal of a future income tax asset in respect of
unrealized losses that was previously recorded and not an actual cash outlay.
An income tax recovery was recorded in 2008 in respect of investment losses.
Due to the Company's consolidation of VIEs, revenue and expenses increased by
$60,000 and $49,000 respectively, in the second quarter of 2009 and by $0.9
million and $0.2 million respectively, in the second quarter of last year. The
impact from the VIE consolidation is much lower in 2009 due to reduced VIE
investments, in part as a result of the $9.0 million special dividend paid in
July 2008. These adjustments were offset by the deduction of the
non-controlling interest and thus, there was no impact on the net income of
the Company.
    MBN recorded net income of $0.2 million or $0.02 per diluted share in the
second quarter of 2009 compared to a net loss of $6.1 million or $0.67 per
share on a diluted basis in the prior year comparable quarter.

    
    -------------------------------------------------------------------------
                     2009                    2008                   2007
                  Q2      Q1      Q4      Q3      Q2      Q1      Q4      Q3
    -------------------------------------------------------------------------
    Total
     Revenue
     (Loss)      680   1,439     (15) (1,026) (5,860)  2,322     385     497
    Net Income
     (Loss):
    - Total      189     742  (1,775) (1,727) (6,147)    785    (343)     (6)
    - Per
       Common
       Share
       - Basic
         and
         Dilu-
          ted   0.02    0.08   (0.20)  (0.19)  (0.67)   0.09   (0.04)      -
    -------------------------------------------------------------------------
    

    Capital Resources, Liquidity and Capital Expenditures

    Cash used in operating activities, including changes in non-cash
operating working capital, amounted to $7.5 million in the 2009 second quarter
compared to cash provided of $40.3 million in the comparable 2008 period. The
decrease in cash in the 2009 second quarter related primarily to an increase
in amounts held by brokers for trading activities, including margin deposits
for investments sold short. The increase in cash in the 2008 second quarter
stemmed primarily from collecting amounts previously held by third parties.
    Cash provided by investing activities amounted to $12.4 million in the
second quarter of 2009 compared to cash used of $34.2 million in the
comparable quarter in 2008. The Company reduced its investments in the second
quarter of 2009 thus increasing its cash reserves.

    Financial Position

    Short-term investments decreased $6.9 million to $5.0 million at April
30, 2009 and were comprised of investments in money-market securities.
Marketable securities of $1.5 million at April 30, 2009 were down $2.5 million
from January 31, 2009 as a result of a desire to hold cash in a volatile
equity market. Deposits with brokers in respect of short positions amounted to
$3.3 million at April 30, 2009 and the liability associated with covering the
positions amounted to $2.6 million. These short positions are up from January
31, 2009 where the deposit and liability each amounted to $0.2 million.
Receivables and loans amounted to $4.3 million at the end of the 2009 second
quarter compared to $1.2 million at January 31, 2009. The increase in
receivables reflects amounts related to trading activities and is due from an
entity under common control with the managers of the Company. A portion of the
loan receivable was collected during the quarter. Income taxes recoverable
remained unchanged at $0.6 million at April 30, 2009 and reflects the
carryback of a loss for tax purposes to offset taxes paid in prior years.
    The April 30, 2009 payables amounted to $0.3 million compared to $1.2
million at January 31, 2009. The January payable included an amount owing in
respect of an investment in marketable securities for which settlement
occurred after quarter end. No such amount was included in the April payable.
The January 31, 2009 deferred revenue amount of $20,000 was taken to income in
the second quarter to reflect the earned financing fee in respect of the loan
receivable. The April 30, 2009 current and long-term portions of asset
retirement obligations ("ARO") remain virtually unchanged from January 31,
2009 at $0.4 million and $0.7 million, respectively. ARO reflects the
estimated costs associated with the abandonment and reclamation of the 2M oil
and gas properties. The $1.0 million liability associated with the Countess
oil and gas properties will be extinguished when 2M sells its working
interests in these properties and makes a payment of $0.6 million to settle
its outstanding liabilities. This transaction, which is anticipated to close
during MBN's 2009 third quarter, is expected to generate a gain of $0.4
million for the Company. Changes in respect of all other balance sheet items
during the quarter ended April 30, 2009 were minimal.
    The total number of common shares outstanding at April 30, 2009 and June
12, 2009 was 9.0 million.

    Critical Accounting Estimates and Changes in Accounting Policies

    Critical accounting estimates have been disclosed in the MD&A of the
Company in its October 31, 2008 Annual Report.

    Future Accounting Changes

    International Financial Reporting Standards ("IFRS")

    The Company has developed a conversion plan to meet the timetable
published by the Canadian Institute of Chartered Accountants ("CICA") for the
changeover to IFRS. The Company will begin reporting its financial statements
in accordance with IFRS on November 1, 2011. The key elements of the plan
include the disclosures of the qualitative impact in the 2009 and 2010
financial statements, disclosures of the quantitative impact, if any, in the
2010 financial statements and the preparation of the 2011 financial statements
in accordance with IFRS.

    The impact the conversion from Canadian generally accepted accounting
principles ("GAAP") to IFRS will have on the Company's assets and liabilities,
accounting policies, financial statements and other business arrangements is
being evaluated by the Company in accordance with the IFRS conversion plan.
The key elements of the plan and progress to date are outlined below:

    
    -------------------------------------------------------------------------
    Key Activity            Timing                  Progress To Date
    -------------------------------------------------------------------------
    Financial Statement     Complete by the fourth  Work in progress.
     Preparation            quarter of 2010.

    - Identify relevant
      differences between
      Canadian GAAP and
      IFRS to enable
      selection of IFRS 1
      transition policies
      and continuing IFRS
      accounting policies.
    - Determine financial
      statement format
      including nature
      and extent of note
      disclosure.
    - Quantify effect, if
      any, on net assets.
    -------------------------------------------------------------------------
    Resources               Complete by the fourth  IFRS resources have been
                            quarter of 2010.        identified.
    Identify IFRS
    resources and develop
    accounting staff and
    senior executive
    knowledge of IFRS.
    -------------------------------------------------------------------------
    Business Policy         Complete by the fourth    All contracts have been
     Assessment             quarter of 2010.          assembled.

    Evaluate impact, if
    any, on financial
    contracts.
    -------------------------------------------------------------------------
    Information Technology  Complete by the fourth    To be commenced.
                            quarter of 2010.
    Identify and implement
    IT system changes that
    may be required.
    -------------------------------------------------------------------------
    Control Environment     Complete by the fourth    To be commenced.
                            quarter of 2010.
    Establish control
    processes to prevent
    material errors from
    occurring during the
    implementation of IFRS.
    -------------------------------------------------------------------------
    

    Risk Management

    The risks and risk management procedures of the Company have been
disclosed in its MD&A in the October 31, 2008 Annual Report. These risks and
risk management procedures remain unchanged at present.

    Outlook

    With respect to portfolio investment plans, MBN will focus primarily on
investing in equities in the financial services and Canadian resource sectors
in order to take advantage of our expertise in these areas. We are
particularly positive on the outlook for the oil and gas sector based upon
near-term and long-term fundamentals. In addition, we seek out strategic
opportunities for long-term growth as well as short-term special situation
investment opportunities. We will continue to manage our capital carefully
with due regard to balancing risk and return.
    Middlefield Bancorp trades on the TSX under the symbol "MBN". For further
information, visit our website at www.middlefield.com or contact W. Garth
Jestley at 416-847-5346.

    June 12, 2009


    
    MIDDLEFIELD BANCORP LIMITED

    Consolidated Balance Sheets
    (unaudited)

                                                        April 30, October 31,
    (All amounts in thousands)                               2009        2008
    -------------------------------------------------------------------------

    Assets
    Current assets
      Cash                                            $    5,912  $    1,801
      Short-term investments                               5,000       2,000
      Marketable securities                                1,505      10,358
      Deposits with brokers                                3,310           -
      Receivables and loans                                4,344       2,234
      Prepaid expenses                                        26          40
      Income taxes recoverable                               605         605
      Future income tax assets                                 -         152
    -------------------------------------------------------------------------
                                                          20,702      17,190
    Property, plant and equipment, net                        16          16
    -------------------------------------------------------------------------

                                                      $   20,718  $   17,206
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Liabilities
    Current liabilities
      Payables and accruals                           $      284  $      200
      Deferred revenue                                         -          80
      Asset retirement obligations (note 7)                  420         415
      Investments sold short                               2,584           -
      Future income tax liabilities                            6           -
    -------------------------------------------------------------------------
                                                           3,294         695
    Asset retirement obligations (note 7)                    726         720
    -------------------------------------------------------------------------
                                                           4,020       1,415
    -------------------------------------------------------------------------

    Shareholders' Equity
    Share capital (note 4)                                11,971      11,995
    Retained earnings                                      4,727       3,796
    -------------------------------------------------------------------------
                                                          16,698      15,791
    -------------------------------------------------------------------------

                                                      $   20,718  $   17,206
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The accompanying notes are an integral part of these consolidated
    financial statements. It is recommended that readers refer to the
    accompanying Management's Discussion and Analysis which provides
    additional information regarding these consolidated financial statements.

    Approved on behalf of the Board:

                 (signed)                             (signed)
    Director:    Murray J. Brasseur      Director:    George S. Dembroski



    MIDDLEFIELD BANCORP LIMITED

    Consolidated Statements of Income (loss), Comprehensive Income (loss)
    and Retained Earnings
    (unaudited)


    (All amounts in               Three Months Ended        Six Months Ended
     thousands, except per                  April 30                April 30
     share amounts)                 2009        2008        2009        2008
    -------------------------------------------------------------------------

    Revenue
      Investment income (loss)
       (note 5)               $      680  $   (5,860) $    2,119  $   (3,538)
    -------------------------------------------------------------------------

    Expenses
      Production                       9          11          29          23
      General and
       administrative                226         212         641         727
      Transaction costs               80         150          94         193
      Foreign exchange loss
       (gain)                        151         (30)        146         296
      Depreciation, depletion
       and accretion                   6          43          12         111
    -------------------------------------------------------------------------
                                     472         386         922       1,350
    -------------------------------------------------------------------------
    Income (loss) before
     income taxes and
     non-controlling interest        208      (6,246)      1,197      (4,888)
    Income tax expense
     (recovery)                        8        (809)        158        (659)
    -------------------------------------------------------------------------
    Income (loss) before
     non-controlling interest        200      (5,437)      1,039      (4,229)
    Non-controlling interest          11         710         108       1,133
    -------------------------------------------------------------------------
    Net income (loss) and
     comprehensive income (loss)     189      (6,147)        931      (5,362)
    Retained earnings,
     beginning of period           4,538      22,728       3,796      21,972
    Repurchase of shares               -        (119)          -        (148)
    -------------------------------------------------------------------------

    Retained earnings, end of
     period                   $    4,727  $   16,462  $    4,727  $   16,462
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted
     earnings (loss) per
     share (note 6)           $     0.02  $   (0.67)  $    0.10   $    (0.58)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The accompanying notes are an integral part of these consolidated
    financial statements. It is recommended that readers refer to the
    accompanying Management's Discussion and Analysis which provides
    additional information regarding these consolidated financial statements.



    MIDDLEFIELD BANCORP LIMITED

    Consolidated Statements of Cash Flows
    (unaudited)

                                  Three Months Ended        Six Months Ended
                                            April 30                April 30
    (All amounts in thousands)      2009        2008        2009        2008
    -------------------------------------------------------------------------

    Operating
    Net income (loss)         $      189  $   (6,147) $      931  $   (5,362)
    Items not involving cash:
      Loss (gain) on sale of
       investments                  (482)      6,985      (1,646)      5,331
      Unrealized gain on
       investments                   (51)       (255)        (41)        (31)
      Depreciation, depletion
       and accretion                   6          43          12         111
      Future income tax
       expense                         8         140         158         113
    -------------------------------------------------------------------------
                                    (330)        766        (586)        162
    Net change in non-cash
     operating working capital    (7,137)     39,493      (5,402)     17,415
    -------------------------------------------------------------------------
                                  (7,467)     40,259      (5,988)     17,577
    -------------------------------------------------------------------------

    Investing
    Proceeds from sale of
     investments                  50,926     198,290      74,093     281,129
    Purchase of investments      (38,562)   (232,431)    (63,970)   (295,050)
    Purchase of property, plant
     and equipment                     -         (41)         (1)        (41)
    -------------------------------------------------------------------------
                                  12,364     (34,182)     10,122     (13,962)
    -------------------------------------------------------------------------

    Financing
    Repurchase of shares             (16)       (237)        (23)       (290)
    -------------------------------------------------------------------------

    Net increase in cash           4,881       5,840       4,111       3,325
    Cash, beginning of period      1,031         936       1,801       3,451
    -------------------------------------------------------------------------

    Cash, end of period       $    5,912  $    6,776  $    5,912  $    6,776
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The accompanying notes are an integral part of these consolidated
    financial statements. It is recommended that readers refer to the
    accompanying Management's Discussion and Analysis which provides
    additional information regarding these consolidated financial statements.



    MIDDLEFIELD BANCORP LIMITED

    Notes to the Interim Consolidated Financial Statements
    Unaudited

    1.  BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

        These unaudited interim consolidated financial statements include the
        accounts of Middlefield Bancorp Limited ("MBN"), its wholly owned
        subsidiary, 2M Energy Corp. ("2M") and all variable interest entities
        for which it is the primary beneficiary (collectively, the
        "Company"). The interim consolidated financial statements have been
        prepared in accordance with Canadian generally accepted accounting
        principles ("GAAP"). They follow the same accounting policies and
        methods of application as the Company's consolidated financial
        statements for the year ended October 31, 2008. The Company's interim
        consolidated financial statements do not include all disclosures
        required by GAAP for annual financial statements and accordingly,
        should be read in conjunction with the consolidated financial
        statements for the year ended October 31, 2008 as set out on pages 8
        to 20 of the Company's 2008 Annual Report.

        Future Accounting Changes

        International Financial Reporting Standards ("IFRS")

        The Company has developed a conversion plan to meet the timetable
        published by the Canadian Institute of Chartered Accountants ("CICA")
        for the changeover to IFRS. The key elements of the plan include the
        disclosures of the qualitative impact in the 2009 and 2010 financial
        statements, disclosures of the quantitative impact, if any, in the
        2010 financial statements and the preparation of the 2011 financial
        statements in accordance with IFRS. The impact the conversion from
        GAAP to IFRS will have on the Company's net assets, accounting
        policies, financial statements and other business arrangements is
        being evaluated by the Company.

    2.  CARRYING VALUE AND FAIR VALUE OF FINANCIAL INSTRUMENTS

        The following tables provide a comparison of carrying and fair values
        of the Company's financial instruments as at April 30, 2009 and
        October 31, 2008:

        (all amounts in
         thousands)                    Carrying Value
                             -----------------------------------
                             Financial instruments classified as
                             -----------------------------------
        As at April 30,        Held-for-   Loans and       Other       Total
        2009                     trading receivables liabilities  fair value
        ---------------------------------------------------------------------

        Financial assets

        Cash                  $    5,912  $        -  $        -  $    5,912
        Short-term investments     5,000           -           -       5,000
        Marketable securities      1,505           -           -       1,505
        Deposits with brokers          -       3,310           -       3,310
        Receivables and loans          -       4,344           -       4,344

        Financial liabilities

        Payables and accruals          -           -         284         284
        Investments sold short     2,584           -           -       2,584
        ---------------------------------------------------------------------


                                       Carrying Value
                             -----------------------------------
                             Financial instruments classified as
                             -----------------------------------
        As at October 31,      Held-for-   Loans and       Other       Total
        2008                     trading receivables liabilities  fair value
        ---------------------------------------------------------------------

        Financial assets

        Cash                  $    1,801  $        -  $        -  $    1,801
        Short-term investments     2,000           -           -       2,000
        Marketable securities     10,358           -           -      10,358
        Receivables and loans          -       2,234           -       2,234

        Financial liabilities

        Payables and accruals          -           -         200         200
        Deferred revenue               -           -          80          80
        ---------------------------------------------------------------------


    3.  NATURE AND EXTENT OF RISKS ARISING FROM FINANCIAL INSTRUMENTS

        The Company is exposed to the following risks as a result of holding
        financial instruments: price risk, interest rate risk, credit risk
        and foreign exchange rate risk.

        a. Price risk

        The Company is exposed to price risk through the following financial
        instruments:

                                                        April 30, October 31,
        (all amounts in thousands)                          2009        2008
        ---------------------------------------------------------------------

        Short-term investments                        $    5,000  $        -
        Marketable securities                              1,505      10,358
        Investments sold short                            (2,584)          -
        ---------------------------------------------------------------------

        Net exposure                                  $    3,921  $   10,358
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Based on the above exposures, a 10% change in the prices of the
        Company's investments would result in an annualized change of $392
        (2008 - $1,036) in net income and comprehensive income, with all
        other factors held constant.

        b. Interest rate risk

        The Company is exposed to interest rate risk through the following
        financial instruments:

                                                        April 30, October 31,
        (all amounts in thousands)                          2009        2008
        ---------------------------------------------------------------------

        Cash                                          $    5,912  $    1,801
        Short-term investments                                 -       2,000
        ---------------------------------------------------------------------

        Total exposure                                $    5,912  $    3,801
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Based on the above exposures, a 1% change in interest rates would
        result in an annualized change of $59 (2008 - $38) in net income and
        comprehensive income, with all other factors held constant.

        c. Credit risk

        The Company has credit risk attributable to its deposits with
        brokers, which arises because a lender of securities may go bankrupt
        and the Company may lose the collateral it has deposited with the
        lender. As at April 30, 2009 the Company had made collateral cash
        deposits amounting to $3,310 (2008 - $nil) with one counterparty in
        respect of the short positions that the Company held. The credit risk
        of these deposits is concentrated with this counterparty, which has a
        credit rating of AA per DBRS. The Company's credit risk attributable
        to its loan receivable of $697 is mitigated by a general security
        agreement and third party guarantee. Other receivables consist of
        $3,647 in amounts owing from an entity under common control with the
        managers of the Company. Management has assessed the credit risk
        attributable to these receivables as minimal. There is no significant
        credit risk related to the Company's short-term investments.

        d. Foreign exchange rate risk

        The Company's exposure to foreign exchange rate risk relates
        primarily to outstanding balances in respect of its short positions
        which are denominated in U.S. dollars ("USD"). The Company has not
        hedged its exposure to currency fluctuations, however, both the
        receivable and payable balances in respect of the short positions are
        denominated in USD and therefore any currency fluctuations are
        largely offset. The Company monitors these balances on a regular
        basis. The Company is exposed to foreign exchange rate risk through
        the following financial instruments denominated in USD:


                                                        April 30, October 31,
        (all amounts in USD thousands)                      2009        2008
        ---------------------------------------------------------------------

        Deposits with brokers                         $    2,775  $        -
        Investments sold short                            (2,166)          -
        ---------------------------------------------------------------------
        Net exposure                                  $      609  $        -
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Based on the above exposures, a 10% change in the Canadian dollar
        against the USD would result in an annualized change of $73 (2008 -
        $nil) in net income and comprehensive income, with all other factors
        held constant.

    4.  SHARE CAPITAL

        As at June 12, 2009 the Company had 8,991,048 common shares issued
        and outstanding and stock options outstanding for 165,000 common
        shares.

    5.  REVENUE FROM TRADING AND NON-TRADING FINANCIAL INSTRUMENTS

        Investment income (loss) includes both trading related revenue such
        as interest income, dividends and distributions, net gains (losses)
        on investments and changes in fair values as well as non-trading
        related interest income.

                                  Three Months Ended        Six Months Ended
        (all amounts in                     April 30                April 30
         thousands)                 2009        2008        2009        2008
        ---------------------------------------------------------------------

        Held-for-trading
         financial instruments
        Net gains (losses) on
         investments          $      482  $   (6,985) $    1,646  $   (5,331)
        Unrealized gains on
         investments                  51         255          41          31
        Interest income               69         842         282       1,698
        Dividends and
         distributions                19          10          30          10
        ---------------------------------------------------------------------
                                     621      (5,878)      1,999      (3,592)
        Financial instruments
         measured at amortized
         cost
        Interest income               59          18         120          54
        ---------------------------------------------------------------------
                              $      680  $   (5,860) $    2,119  $   (3,538)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    6.  EARNINGS (LOSS) PER SHARE

        (all amounts in           Three Months Ended        Six Months Ended
         thousands, except                  April 30                April 30
         per share amounts)         2009        2008        2009        2008
        ---------------------------------------------------------------------

        Net income (loss) and
         comprehensive income
         (loss)               $      189  $   (6,147) $      931  $   (5,362)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Weighted average
         common shares
         outstanding for
         basic earnings (loss)
         per share                 8,998       9,176       9,004       9,199
        Add: Dilutive effect
         of stock options
         outstanding                   -           4           -           5
        ---------------------------------------------------------------------
        Weighted average
         common shares
         outstanding for
         diluted earnings (loss)
         per share                 8,998       9,180       9,004       9,204
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Basic and diluted
         earnings (loss)
         per share            $     0.02  $    (0.67) $     0.10  $    (0.58)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    7.  SUBSEQUENT EVENT

        (all amounts in thousands)

        On May 19, 2009 2M accepted a proposal dated May 8, 2009 from the
        operator of its Countess oil and gas properties in Alberta whereby 2M
        agreed to pay a total of $610 representing full and final payment of
        all liabilities associated with the Countess properties. The operator
        also agreed to purchase 2M's entire working interest in the Countess
        area for a nominal amount. As a result, 2M expects to recognize a
        gain of $379 on the closing of this transaction, which is anticipated
        to occur during the Company's 2009 third quarter. The gain represents
        the difference between the settlement amount of $610 and the carrying
        amount of 2M's Countess liabilities of $989.
    

    Corporate Information

    Middlefield Bancorp Limited is a Canadian merchant bank managed by
Middlefield Group. The Company's principal objective is to create long term
shareholder value through a twofold strategy of strategic investing in
businesses with strong management and exceptional prospects for longer term
earnings growth and special situation investing where there is excellent
potential for significant capital appreciation. Our aim is to produce a steady
stream of growing earnings from strategic investments supplemented by earnings
from special situation activities. The Company's board of directors and
management include experienced and successful individuals who have committed
their own capital to the Company.

    
    Directors                               Legal Counsel
                                            Ogilvy Renault
    Thomas I.A. Allen, Q.C.(2)
    Counsel, Ogilvy Renault                 Auditors
                                            Deloitte & Touche LLP
    Murray J. Brasseur
    Chairman and Director                   Banker
    Middlefield Bancorp Limited             Bank of Nova Scotia

    George S. Dembroski(1,2)                Stock Exchange Listing
    Corporate Director                      Toronto Stock Exchange
                                            Symbol: MBN
    H. Roger Garland(1)
    Corporate Director                      Head Office
                                            One First Canadian Place
    W. Garth Jestley                        58th Floor
    President and Director                  P.O. Box 192
    Middlefield Bancorp Limited             Toronto, Ontario
                                            M5X 1A6
    Charles B. Young(1,2)
    Corporate Director                      Web Site: www.middlefield.com
                                            Email: invest@middlefield.com

    (1) Audit Committee Member
    (2) Corporate Governance Committee Member
    





For further information:

For further information: visit our website at www.middlefield.com or
contact: W. Garth Jestley, President, (416) 847-5346

Organization Profile

MIDDLEFIELD BANCORP LIMITED

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