Middlefield Banc Corp. (NasdaqCM:MBCN) entered into a non-binding letter of intent to acquire Liberty Bancshares, Inc. (Ada, OH) (OTCPK:LBSI) from Castle Creek Capital Partners VI LP, managed by Castle Creek Capital LLC and others for $62.3 million on December 27, 2021. Middlefield Banc Corp. (NasdaqCM:MBCN) entered into an agreement and plan of reorganization to acquire Liberty Bancshares, Inc. (Ada, OH) (OTCPK:LBSI) from Castle Creek Capital Partners VI LP, managed by Castle Creek Capital LLC and others for $62.3 million on May 26, 2022. Pursuant to the Agreement, each shareholder of Liberty will receive 2.752 shares of Middlefield Banc Corp. (Middlefield) common stock. If the Merger Agreement is terminated under certain conditions, Liberty has agreed to pay to The Middlefield Banking Company a termination fee of $2.7 million. The merger is expected to qualify as a tax-free reorganization for Liberty's shareholders, and Liberty's shareholders will own approximately 31% of the combined company upon completion of the transaction. Ronald L. Zimmerly, Jr., Liberty's President and Chief Executive Officer will assume the role of President of The Middlefield Banking Company. In addition, Zimmerly will become President of Middlefield Banc Corp. assuming Middlefield shareholders approve amendments to the Company's Regulations that separate the positions of President and Chief Executive Officer. Pursuant to the Agreement, Middlefield will add three new members to its Board of Directors including Zimmerly, Mark R. Watkins, Liberty's Chairman of the Board, and Spencer T. Cohn, a representative of Castle Creek Capital, Liberty's largest shareholder.

Completion of the transaction is subject to customary closing conditions, including the receipt of required regulatory approvals and the approval of both Middlefield's shareholders and Liberty's shareholders. The transaction is subject to the effectiveness of the Registration Statement on Form S-4. The transaction has been approved unanimously by the Boards of Directors of both Middlefield and Liberty. Simultaneously upon entering into the Agreement, Middlefield also entered into voting agreements with Liberty's directors and Castle Creek Capital, in which they agree to vote the Liberty common stock they own in favor of the Agreement. Collectively these parties represent approximately 15.9% of Liberty's voting common shares. Liberty also entered into voting agreements with Middlefield's directors in which they agree to vote the Middlefield common stock they own in favor of the Agreement. On October 21, 2022, Middlefield received confirmation from the Federal Reserve Bank of Cleveland of a waiver of the obligation to file a bank holding company act application for approval of the acquisition of Liberty. The Ohio Division of Financial Institutions has issued approval for the merger of Liberty National Bank into The Middlefield Banking Company. All regulatory approvals required for completion of the merger have been received. As of November 3, 2022, Middlefield Banc Corp.'s shareholders approved a proposal to adjourn the special meeting to another date and time to give Middlefield Banc Corp.'s shareholders additional time to consider and vote on the proposals relating to the transactions contemplated by the Agreement and the adjourned special meeting of Middlefield Banc Corp. shareholders scheduled for November 3, 2022 to November 8, 2022. As of November 8, 2022, the transaction has been approved by the shareholders of Middlefield. The transaction is expected to be completed during the fourth quarter of 2022. Middlefield expects the transaction to be accretive to earnings in year one and to earn back the tangible book value dilution created from the transaction in approximately three years. After completion of the transaction, Middlefield anticipates it will remain well-capitalized. Liberty anticipates that its shareholders will benefit from double-digit earnings and dividend accretion as a result of the transaction.

Joseph Berry and Ashwan Bimbhet of Keefe, Bruyette & Woods, Inc. acted as financial advisors and fairness opinion providers and Grady & Associates acted as legal advisor to Middlefield Banc Corp. Robert Toma of Raymond James & Associates, Inc. acted as financial advisor and fairness opinion provider and Jeffery E. Smith and J. Bret Treier of Vorys Sater Seymour & Pease acted as legal advisor to Liberty Bancshares, Inc. Sidley Austin acted as legal advisor to Castle Creek. Laurel Hill Advisory Group, LLC acted as proxy solicitor for Liberty Bancshares. Computershare Trust Company, National Association acted as exchange agent for Liberty and Middlefield. O'Neill & O'Neill, Attorneys at Law acted as legal advisor to Middlefield. Liberty has engaged Laurel Hill in the solicitation of proxies for a fee of $5,500. Liberty has agreed to pay Raymond James a total fee of approximately $800,000, $25,000 of which was paid in connection with its engagement as Liberty's financial advisor and $150,000 of which was paid in connection with the delivery of its opinion, and the remaining is contingent on the closing of the merger. Middlefield has agreed to pay KBW a cash fee equal to 1.075% of the aggregate merger consideration, $250,000 of which became payable with the rendering of KBW's opinion, and the balance of which is contingent upon the consummation of the merger. Georgeson LLC acted as proxy solicitor to Middlefield. Middlefield will pay a service fee of $15,000 to Georgeson. Independent leading proxy advisory firms Institutional Shareholder Services Inc. and Glass Lewis & Co. acted as information agents to Middlefield.