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Note 14 - Employee Benefits | 12 Months Ended
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Dec. 31, 2024
Notes to Financial Statements |
Compensation and Employee Benefit Plans [Text Block] | 14. EMPLOYEE BENEFITS Employee Retirement Plan The Bank maintains section 401(k) employee savings and investment plan for all full-time employees and officers of the Bank who are at least 21 years of age. The Bank’s contributions to the plan are based on 66% matching of voluntary contributions up to 6% of compensation for the years ended December 31, 2024, and 2023. The plan also permits the Bank to make a discretionary annual profit-sharing contribution to eligible employees. Employee contributions are vested at all times, and MBC contributions are fully vested after six years beginning at the second year in 20% increments. Matching contributions for 2024 and 2023 amounted to $520,000 and $641,000, respectively. The Bank did not make any profit-sharing contributions during 2024 or 2023. Effective January 1, 2025, the plan was revised to adjust the vesting schedule whereby MBC contributions will be fully vested after five years beginning at the first year in 20% increments. Executive Deferred Compensation Plans The Company maintains executive deferred compensation plans 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 several officers, with contributions made solely by the Bank. Accrued executive deferred compensation amounted to $3.5 million and $3.8 million as of December 31, 2024, and 2023, respectively. During 2024, the Company recognized a net reduction in nonqualified deferred compensation expense resulting in a benefit of $91,000. The decrease in expense reflects the number of participants in the payout phase exceeding currently eligible participants. During 2023, the Company recognized nonqualified deferred compensation expense of $437,000 to the plans. Stock Option and Restricted Stock Plan In 2017, the Company adopted the 2017 Omnibus Equity Plan (the “2017 Plan”) for granting incentive stock options, nonqualified stock options, restricted stock, and other equity awards to key officers and employees and nonemployee directors of the Company. A total of 448,000 shares of common stock were reserved for issuance under the 2017 Plan, which expires ten years from the date of board approval of the plan. 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 remaining available shares that can be issued under the 2017 Plan were 352,063 as of December 31, 2024. There was no stock option activity during the years ended December 31, 2024, or 2023 During 2024 and 2023, the Compensation Committee of the Company's Board of Directors granted awards of restricted stock for an aggregate amount of 70,538 and 36,173 shares, respectively, to certain employees of the Bank. The number of restricted stock shares earned or settled will depend on specific conditions and are also subject to service period-based vesting. The award recipient must maintain service with Middlefield Banc Corp. and its affiliates during the service period defined in the award to satisfy the service condition. Awards of restricted stock are granted annually in a variety of forms:
| ● | Time-lapsed restricted stock units payable in stock or cash at the option of the employee, which generally vest at the end of the three-year vesting period
| ● | Time-lapsed restricted stock units payable in stock, which vest at the end of the three-year performance cycle
| ● | Performance units payable in stock, which vest at the end of the three-year performance cycle and will not vest unless the Company attains defined performance levels (external market and internal performance conditions) and the service condition is met
The following table presents the activity during 2024 related to awards of restricted stock:
|  | Vesting contingent on service conditions - payable in stock or cash |  |  | Vesting contingent on service conditions - payable in stock |  |  | Vesting contingent on performance and service conditions - payable in stock |
|  | Number of nonvested shares |  |  | Weighted-average grant-date fair value |  |  | Number of nonvested shares |  |  | Weighted-average grant-date fair value |  |  | Number of nonvested shares |  |  | Weighted-average grant-date fair value |
Nonvested at January 1, 2024 |  |  | 78,573 |  |  | $ | 25.95 |  |  |  | - |  |  | $ | - |  |  |  | - |  |  | $ | - |
Granted |  |  | - |  |  |  | - |  |  |  | 26,417 |  |  |  | 24.02 |  |  |  | 44,121 |  |  |  | 22.35 |
Vested |  |  | (19,745 | ) |  |  | 23.62 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Forfeited |  |  | (24,829 | ) |  |  | 20.07 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Nonvested at December 31, 2024 |  |  | 33,999 |  |  | $ | 26.93 |  |  |  | 26,417 |  |  | $ | 24.02 |  |  |  | 44,121 |  |  | $ | 22.35 |
The gross compensation expense recognized for all outstanding awards was $714,000 and $391,000 for the years ended 2024 and 2023, respectively. The income tax benefit recognized in the income statement for these plans was $150,000 and $82,000 for the years ended 2024 and 2023, respectively. The liability for the restricted stock units payable in stock or cash was $462,000 and $758,000 for the years ended December 31, 2024, and December 31, 2023, respectively, and included in "accrued interest payable and other liabilities" on the Consolidated Balance Sheet. During 2024, 19,745 time-lapsed restricted stock units payable in stock or cash vested. The total fair value of these units that vested in stock and cash during 2024 totaled $311,000 and $213,000, respectively. During 2023, 10,713 time-lapsed restricted stock units payable in stock or cash vested. The total fair value of these units that vested in stock and cash during 2024 totaled $195,000 and $114,000, respectively. The compensation cost of time-lapsed restricted stock awards is calculated using the closing trading price of our common stock on the grant date. The compensation cost of performance units is calculated using a Monte Carlo simulation to reflect the market condition in the fair value of the award. The assumptions used are noted in the following table. Expected volatilities are based on historical volatilities for the Company and members of a defined peer group. The expected term is derived from the time remaining in the respective awards’ performance period. The risk-free rate for periods within the remaining performance period is based on the semi-annual zero-coupon US Treasury rates as of the grant date.
|  | 2024 |
Expected volatility |  |  | 21.31% - 60.78 | %
Average volatility |  |  | 32.73 | %
Expected dividends |  |  | 0 | %
Expected term (in years) |  |  | 2.40 |
Risk-free rate |  |  | 3.86 | %
The weighted-average grant-date fair value of awards granted was $22.98 during 2024 and $27.57 during 2023. As of December 31, 2024, unrecognized compensation cost related to nonvested shares totaled $1.8 million. This cost is expected to be recognized over a weighted-average period of 2.1 years. The Company compensates the Board of Directors through a combination of stock and cash. During 2024, the Company paid out 6,768 of shares totaling $187,000. The Company paid out 7,475 shares totaling $203,000 during 2023. The expense associated with the stock payments to the Board of Directors is included in "other expense" in the Consolidated Income Statement.

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- Definition The entire disclosure for an entity's employee compensation and benefit plans, including, but not limited to, postemployment and postretirement benefit plans, defined benefit pension plans, defined contribution plans, non-qualified and supplemental benefit plans, deferred compensation, share-based compensation, life insurance, severance, health care, unemployment and other benefit plans. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 710 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/710/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 712 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/712/tableOfContent Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 715 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/715/tableOfContent Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 718 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/718/tableOfContent + Details
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