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Note 13 - Employee Benefits

12 Months Ended

Dec. 31, 2013

Disclosure Text Block Supplement [Abstract]

Compensation and Employee Benefit Plans [Text Block]

13.

EMPLOYEE BENEFITS

Retirement Plan

The Bank maintains section 401(k) employee savings and investment plans for all full-time employees and officers of the Bank with more than one year of service. The Bank's contributions to the plans are based on 50 percent matching of voluntary contributions up to 6 percent of compensation. An eligible employee can contribute up to 100 percent of salary. Employee contributions are vested at all times, and MBC contributions are fully vested after six years beginning at the second year in 20 percent increments. EB contributions are vested at 25 percent for less than a year of employment, 50 percent after one year, 75 percent after two years, and fully vested after three years. Contributions for 2013, 2012, and 2011 to these plans amounted to $155,000, $125,000, and $104,000, respectively.

Supplemental Retirement Plan

MBC maintains a Directors’ Retirement Plan to provide postretirement payments over a ten-year period to members of the Board of Directors who have completed five or more years of service. The plan requires payment of 25 percent of the final average annual board fees paid to a director in the three years preceding the director’s retirement.

The following table illustrates the components of the projected payments for the Directors’ Retirement Plan for the years ended:

	Projected Payments
2014	$	34,000
2015		34,000
2016		29,000
2017		23,000
2018		18,000
Thereafter		23,000
Total	$	161,000

The retirement plan is available solely for nonemployee directors of The Middlefield Banking Company, but the Bank has not entered into any additional retirement arrangements for nonemployee directors since 2001. All director participants have retired.

Executive Deferred Compensation Plan

The Company maintains an Executive Deferred Compensation Plan (the “Plan”) to provide post-retirement payments to members of senior management. The Plan agreements are noncontributory, defined contribution arrangements that provide supplemental retirement income benefits to five officers, with contributions made solely by the Banks. During 2013, 2012, and 2011, the Company contributed $120,000, $139,000, and $91,000, respectively, to the Plan.

Stock Option and Restricted Stock Plan

The Company maintains a stock option and restricted stock plan (“the Plan”) for granting incentive stock options, nonqualified stock options, and restricted stock to key officers and employees and nonemployee directors of the Company. A total of 160,000 shares of authorized and unissued or issued common stock are reserved for issuance under the Plan, which expires ten years from the date of stockholder ratification. The per share exercise price of an option granted will not be less than the fair value of a share of common stock on the date the option is granted.

The following table presents share data related to the outstanding options:

				Weighted-					Weighted-
				average					average
				Exercise					Exercise
	2013			Price		2012			Price

Outstanding, January 1	$	79,693		$	27.25	$	88,774		$	26.81
Granted		-			-		-			-
Exercised		(21,112	)	$	24.11		-			-
Forfeited		-			-		(9,081	)		22.94

Outstanding, December 31	$	58,581		$	28.38	$	79,693		$	27.25

Exercisable, December 31	$	58,581		$	28.38	$	79,693		$	27.25

The following table summarizes the characteristics of stock options at December 31, 2013:

			Outstanding						Exercisable
					Contractual		Average				Average
	Exercise				Average		Exercise				Exercise
Grant Date	Price		Shares		Life		Price		Shares		Price


May 12, 2004		27.35		907		0.36		27.35		907		27.35
December 13, 2004		30.45		11,223		0.95		30.45		11,223		30.45
December 14, 2005		36.73		7,163		1.95		36.73		7,163		36.73
December 10, 2006		40.24		3,150		2.94		40.24		3,150		40.24
April 19, 2007		37.33		3,639		3.29		37.33		3,639		37.73
May 16, 2007		37.48		1,337		3.37		37.48		1,337		37.48
December 10, 2007		37.00		2,450		3.94		37.00		2,450		37.00
January 2, 2008		36.25		1,337		4.00		36.25		1,337		36.25
November 10, 2008		23.00		18,500		4.86		23.00		18,500		23.00
May 9, 2011		17.55		8,875		7.35		17.55		8,875		17.55

				58,581						58,581

For the years ended December 31, 2013, 2012, and 2011, the Company granted 0, 1,722, and 2,400 shares, respectively, of common stock under the Omnibus Equity Plan. The Company recognizes compensation expense in the amount of fair value of the common stock at the grant date and as an addition to stockholders’ equity.