10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20552

FORM 10 - Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

   OF 1934

For the quarterly period ended June 30, 2014

Commission File Number 000-32561

Middlefield Banc Corp.

(Exact name of registrant as specified in its charter)

Ohio	34 - 1585111
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

15985 East High Street, Middlefield, Ohio 44062-9263

(Address of principal executive offices)

(440) 632-1666

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES [√] NO [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES   [√]  NO [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definition of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [√]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES [ ]   NO [√]

State the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date:

Class: Common Stock, without par value

Outstanding at August 12, 2014: 2,042,873

1

MIDDLEFIELD BANC CORP.

INDEX

Part I – Financial Information
Item 1.	Financial Statements (unaudited)
	Consolidated Balance Sheet as of June 30, 2014 and December 31, 2013	3
	Consolidated Statement of Income for the Three and Six Months ended June 30, 2014 and 2013	4
	Consolidated Statement of Comprehensive Income (Loss) for the Three and Six Months ended June 30, 2014 and 2013	5
	Consolidated Statement of Changes in Stockholders' Equity for the Six Months ended June 31, 2014	6
	Consolidated Statement of Cash Flows for the Six Months ended June 30, 2014 and 2013	7
	Notes to Unaudited Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	38
Item 4.	Controls and Procedures	39
Part II – Other Information
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3.	Defaults by the Company on its Senior Securities	39
Item 4.	Mine Safety Disclosures	39
Item 5.	Other Information	39
Item 6.	Exhibits and Reports on Form 8 – K	39
Signatures		44
Exhibit 31.1		45
Exhibit 31.2		46
Exhibit 32		47

2

MIDDLEFIELD BANC CORP.

CONSOLIDATED BALANCE SHEET

(Dollar amounts in thousands, except share data)

(Unaudited)

	June 30,			December 31,
	2014			2013
ASSETS
Cash and due from banks	$	19,821		$	20,926
Federal funds sold		5,756			5,267
Cash and cash equivalents		25,577			26,193
Investment securities available for sale		165,506			157,143
Loans		450,119			435,725
Less allowance for loan and lease losses		7,129			7,046
Net loans		442,990			428,679
Premises and equipment, net		9,927			9,828
Goodwill		4,559			4,559
Core deposit intangible		136			156
Bank-owned life insurance		8,951			8,816
Accrued interest and other assets		10,623			11,716
TOTAL ASSETS	$	668,269		$	647,090
LIABILITIES
Deposits:
Noninterest-bearing demand	$	96,209		$	85,905
Interest-bearing demand		58,366			53,741
Money market		73,619			77,473
Savings		178,602			177,303
Time		181,997			174,414
Total deposits		588,793			568,836
Short-term borrowings		6,939			10,809
Other borrowings		11,362			11,609
Accrued interest and other liabilities		2,004			2,363
TOTAL LIABILITIES		609,098			593,617
STOCKHOLDERS' EQUITY
Common stock, no par value; 10,000,000 shares authorized, 2,232,283 and 2,221,834 shares issued; 2,042,753 and 2,032,304 shares outstanding		35,266			34,979
Retained earnings		29,780			27,465
Accumulated other comprehensive income (loss)		859			(2,237	)
Treasury stock, at cost; 189,530 shares		(6,734	)		(6,734	)
TOTAL STOCKHOLDERS' EQUITY		59,171			53,473
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	668,269		$	647,090

See accompanying notes to unaudited consolidated financial statements.

3

MIDDLEFIELD BANC CORP.

CONSOLIDATED STATEMENT OF INCOME  

(Dollar amounts in thousands, except per share data)

(Unaudited)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2014		2013			2014		2013
INTEREST INCOME
Interest and fees on loans	$	5,575	$	5,550		$	11,269	$	11,122
Interest-bearing deposits in other institutions		9		9			14		17
Federal funds sold		6		4			9		8
Investment securities:
Taxable interest		526		625			1,035		1,299
Tax-exempt interest		783		744			1,538		1,477
Dividends on stock		20		15			43		38
Total interest income		6,919		6,947			13,908		13,961
INTEREST EXPENSE
Deposits		929		1,219			1,869		2,516
Short-term borrowings		38		47			73		99
Other borrowings		32		44			64		90
Trust preferred securities		34		47			60		81
Total interest expense		1,033		1,357			2,066		2,786
NET INTEREST INCOME		5,886		5,590			11,842		11,175
Provision for loan losses		120		300			300		613
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		5,766		5,290			11,542		10,562
NONINTEREST INCOME
Service charges on deposit accounts		469		511			910		958
Investment securities (losses) gains, net		64		(10	)		58		175
Earnings on bank-owned life insurance		68		75			135		143
Other income		256		243			469		411
Total noninterest income		857		819			1,572		1,687
NONINTEREST EXPENSE
Salaries and employee benefits		2,268		1,906			4,284		3,777
Occupancy expense		275		248			596		522
Equipment expense		194		186			414		375
Data processing costs		224		187			438		400
Ohio state franchise tax		93		149			176		303
Federal deposit insurance expense		97		64			229		218
Professional fees		338		291			625		567
(Gain) loss on sale of other real estate owned		75		(13	)		70		(5	)
Advertising expense		124		111			247		223
Other real estate expense		102		90			165		196
Directors fees		118		133			204		238
Other expense		690		596			1,379		1,135
Total noninterest expense		4,598		3,948			8,827		7,949
Income before income taxes		2,025		2,161			4,287		4,300
Income taxes		414		476			913		958
NET INCOME	$	1,611	$	1,685		$	3,374	$	3,342
EARNINGS PER SHARE
Basic	$	0.79	$	0.84		$	1.66	$	1.66
Diluted	$	0.79		0.83			1.65		1.66
DIVIDENDS DECLARED PER SHARE	$	0.26	$	0.26		$	0.52	$	0.52

See accompanying notes to unaudited consolidated financial statements.

4

MIDDLEFIELD BANC CORP.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(Dollar amounts in thousands)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Net income	$	1,611		$	1,685		$	3,374		$	3,342
Other comprehensive income (loss):
Net unrealized holding gain (loss) on available-for-sale securities		1,950			(6,760	)		4,749			(8,281	)
Tax effect		(663	)		2,298			(1,615	)		2,815
Reclassification adjustment for investment securities losses (gains) included in net income		(64	)		10			(58	)		(175	)
Tax effect		22			(3	)		20			60
Total other comprehensive income (loss)		1,245			(4,455	)		3,096			(5,581	)
Comprehensive income (loss)	$	2,856		$	(2,770	)	$	6,470		$	(2,239	)

See accompanying notes to unaudited consolidated financial statements.

5

MIDDLEFIELD BANC CORP.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY

(Dollar amounts in thousands, except share data)

(Unaudited)

						Accumulated
						Other						Total
	Common		Retained			Comprehensive			Treasury			Stockholders'
	Stock		Earnings			Income (Loss)			Stock			Equity
Balance, December 31, 2013	$	34,979	$	27,465		$	(2,237	)	$	(6,734	)	$	53,473
Net income				3,374									3,374
Other comprehensive income							3,096						3,096
Dividend reinvestment and purchase plan (10,049 shares)		277											277
Employee Stock Grants (400 shares)		10											10
Cash dividends ($0.52 per share)				(1,059	)								(1,059	)
Balance, June 30, 2014	$	35,266	$	29,780		$	859		$	(6,734	)	$	59,171

See accompanying notes to unaudited consolidated financial statements.

6

MIDDLEFIELD BANC CORP.

CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollar amounts in thousands)

(Unaudited)

	Six Months Ended
	June 30,
	2014			2013
OPERATING ACTIVITIES
Net income	$	3,374		$	3,342
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		300			613
Investment securities losses (gains), net		(58	)		(175	)
Depreciation and amortization		373			449
Amortization of premium and discount on investment securities, net		370			457
Accretion of deferred loan fees, net		(141	)		(119	)
Earnings on bank-owned life insurance		(135	)		(143	)
Deferred income taxes		(262	)		103
(Gain) loss on sale of other real estate owned		70			(5	)
Increase in accrued interest receivable		(94	)		(88	)
Decrease in accrued interest payable		(22	)		(32	)
Other, net		(797	)		(16	)
Net cash provided by operating activities		2,978			4,386
INVESTING ACTIVITIES
Investment securities available for sale:
Proceeds from repayments and maturities		6,809			12,992
Proceeds from sale of securities		1,494			8,135
Purchases		(12,287	)		(15,150	)
Increase in loans, net		(14,490	)		(5,465	)
Proceeds from the sale of other real estate owned		256			465
Purchases of premises and equipment		(444	)		(250	)
Net cash (used for) provided by investing activities		(18,662	)		727
FINANCING ACTIVITIES
Net (decrease) increase in deposits		19,957			(7,916	)
Decrease in short-term borrowings, net		(3,870	)		(1,131	)
Repayment of other borrowings		(247	)		(335	)
Common stock issuance		-			74
Stock options exercised		-			(115	)
Proceeds from dividend reinvestment and purchase plan		287			440
Cash dividends paid		(1,059	)		(1,047	)
Net cash provided by (used for) financing activities		15,068			(10,030	)
Decrease in cash and cash equivalents		(616	)		(4,917	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		26,193			45,346
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	25,577		$	40,429
SUPPLEMENTAL INFORMATION
Cash paid during the year for:
Interest on deposits and borrowings	$	2,088		$	2,818
Income taxes		1,395			900
Noncash investing transactions:
Transfers from loans to other real estate owned	$	20		$	975

See accompanying notes to unaudited consolidated financial statements.

7

MIDDLEFIELD BANC CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

The consolidated financial statements of Middlefield Banc Corp. ("Company") include its bank subsidiary, The Middlefield Banking Company (“MB”), and a nonbank asset resolution subsidiary EMORECO, Inc. All significant inter-company items have been eliminated.

The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles and the instructions for Form 10-Q and Article 10 of Regulation S-X. In management’s opinion, the financial statements include all adjustments, consisting of normal recurring adjustments, that the Company considers necessary to fairly state the Company’s financial position and the results of operations and cash flows. The consolidated balance sheet at December 31, 2013, has been derived from the audited financial statements at that date but does not include all of the necessary informational disclosures and footnotes as required by U.S. generally accepted accounting principles. The accompanying financial statements should be read in conjunction with the financial statements and notes thereto included with the Company’s Form 10-K for the year ended December 31, 2013 (File No. 000-32561). The results of the Company’s operations for any interim period are not necessarily indicative of the results of the Company’s operations for any other interim period or for a full fiscal year.

Recent Accounting Pronouncements

In June 2013, the FASB issued ASU 2013-08, Financial Services – Investment Companies (Topic 946): Amendments to the Scope, Measurement, and Disclosure Requirements. The amendments in this Update affect the scope, measurement, and disclosure requirements for investment companies under U.S. GAAP. The amendments do all of the following: 1. Change the approach to the investment company assessment in Topic 946, clarify the characteristics of an investment company, and provide comprehensive guidance for assessing whether an entity is an investment Company. 2. Require an investment company to measure noncontrolling ownership interests in other investment companies at fair value rather than using the equity method of accounting. 3. Require the following additional disclosures: (a) the fact that the entity is an investment company and is applying the guidance in Topic 946, (b) information about changes, if any, in an entity’s status as an investment company, and (c) information about financial support provided or contractually required to be provided by an investment company to any of its investees.The amendments in this Update are effective for an entity’s interim and annual reporting periods in fiscal years that begin after December 15, 2013. This ASU became effective for the Company on January 1, 2014 and did not have a significant impact on the Company’s financial statements.

In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This Update applies to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. An unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. The amendments in this Update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. For nonpublic entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. Early adoption is permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. This ASU became effective for the Company on January 1, 2014 and did not have a significant impact on the Company’s financial statements.

In January 2014, FASB issued ASU 2014-01, Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects. The amendments in this Update permit reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). The amendments in this Update should be applied retrospectively to all periods presented. A reporting entity that uses the effective yield method to account for its investments in qualified affordable housing projects before the date of adoption may continue to apply the effective yield method for those preexisting investments. The amendments in this Update are effective for public business entities for annual periods and interim reporting periods within those annual periods, beginning after December 15, 2014. Early adoption is permitted. This ASU is not expected to have a significant impact on the Company’s financial.

8

In January 2014, the FASB issued ASU 2014-04, Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. The amendments in this Update clarify that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. The amendments in this Update are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. An entity can elect to adopt the amendments in this Update using either a modified retrospective transition method or a prospective transition method. This ASU is not expected to have a significant impact on the Company’s financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (a new revenue recognition standard). The Update’s core principle is that a company will recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, this update specifies the accounting for certain costs to obtain or fulfill a contract with a customer and expands disclosure requirements for revenue recognition. This Update is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is evaluating the effect of adopting this new accounting Update.

In June 2014, the FASB issued ASU 2014-11, Transfers and Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The amendments in this Update change the accounting for repurchase-to-maturity transactions to secured borrowing accounting. For repurchase financing arrangements, the amendments require separate accounting for a transfer of a financial asset executed contemporaneously with a repurchase agreement with the same counterparty, which will result in secured borrowing accounting for the repurchase agreement. The amendments also require enhanced disclosures. The accounting changes in this Update are effective for the first interim or annual period beginning after December 15, 2014. An entity is required to present changes in accounting for transactions outstanding on the effective date as a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. Earlier application is prohibited. The disclosure for certain transactions accounted for as a sale is required to be presented for interim and annual periods beginning after December 15, 2014, and the disclosure for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions accounted for as secured borrowings is required to be presented for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. The disclosures are not required to be presented for comparative periods before the effective date. This Update is not expected to have a significant impact on the Company’s financial statements.

In June 2014, the FASB issued ASU 2014-12, Compensation-Stock Compensation (Topic 718): Accounting for Share-Based Payments when the Terms of an Award Provide that a Performance Target Could Be Achieved After the Requisite Service Period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. Entities may apply the amendments in this Update either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect of applying this Update as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date. Additionally, if retrospective transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. This Update is not expected to have a significant impact on the Company’s financial statements.

9

NOTE 2 - STOCK-BASED COMPENSATION

The Company had no unvested stock options outstanding or unrecognized stock-based compensation costs outstanding as of June 30, 2014 and 2013.

Stock option activity during the six months ended June 30 is as follows:

				Weighted-average					Weighted-average
	2014			Exercise Price		2013			Exercise Price
Outstanding, January 1		58,581		$	28.38		79,693		$	26.81
Exercised		-			-		(19,761	)		24.09
Forfeited		(907	)		27.35		-			-
Outstanding, June 30		57,674			28.40		59,932			28.29
Exercisable, June 30		57,674			28.40		59,932			28.29

NOTE 3 - EARNINGS PER SHARE

The Company provides dual presentation of basic and diluted earnings per share. Basic earnings per share is calculated by dividing net income by the average shares outstanding. Diluted earnings per share adds the dilutive effects of stock options to average shares outstanding.

The following table sets forth the composition of the weighted-average common shares (denominator) used in the basic and diluted earnings per share computation.

	For the Three						For the Six
	Months Ended						Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Weighted-average common shares issued		2,227,556			2,206,794			2,225,555			2,198,033
Average treasury stock shares		(189,530	)		(189,530	)		(189,530	)		(189,530	)
Weighted-average common shares and common stock equivalents used to calculate basic earnings per share		2,038,026			2,017,264			2,036,025			2,008,503
Additional common stock equivalents (stock options) used to calculate diluted earnings per share		6,538			6,697			6,156			8,557
Weighted-average common shares and common stock equivalents used to calculate diluted earnings per share		2,044,564			2,023,961			2,042,181			2,017,060

10

Options to purchase 57,674 shares of common stock, at prices ranging from $17.55 to $40.24, were outstanding during the three and six months ended June 30, 2014. Of those options, 28,282 were considered dilutive based on the market price exceeding the strike price.

Options to purchase 59,932 shares of common stock, at prices ranging from $17.55 to $40.24, were outstanding during the three and six months ended June 30, 2013. Of those options, 31,833 were considered dilutive for the three month period based on the market price exceeding the strike price. For the six months ended June 30, 2013, 49,394 options were considered dilutive.

NOTE 4 - FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for an asset or liability in an orderly transaction between market participants at the measurement date. GAAP established a fair value hierarchy that prioritizes the use of inputs used in valuation methodologies into the following six levels:

Level I: Quoted prices are available in active markets for identical assets or liabilities as of the reported date.

Level II: Pricing inputs are other than the quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and liabilities includes items for which quoted prices are available but traded less frequently and items that are fair valued using other financial instruments, the parameters of which can be directly observed.

Level III: Assets and liabilities that have little to no pricing observability as of the reported date. These items do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.

The following tables present the assets measured on a recurring basis on the Consolidated Balance Sheet at their fair value by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

			June 30, 2014
(Dollar amounts in thousands)	Level I		Level II		Level III		Total
Assets measured on a recurring basis:
U.S. government agency securities	$	-	$	25,061	$	-	$	25,061
Obligations of states and political subdivisions		-		98,772		-		98,772
Mortgage-backed securities in government- sponsored entities				37,599				37,599
Private-label mortgage-backed securities		-		3,318		-		3,318
Total debt securities		-		164,750		-		164,750
Equity securities in financial institutions		5		751		-		756
Total	$	5	$	165,501	$	-	$	165,506

11

			December 31, 2013
(Dollar amounts in thousands)	Level I		Level II		Level III		Total
Assets measured on a recurring basis:
U.S. government agency securities	$	-	$	25,763	$	-	$	25,763
Obligations of states and political subdivisions		-		88,614		-		88,614
Mortgage-backed securities in government- sponsored entities		-		38,323		-		38,323
Private-label mortgage-backed securities		-		3,693		-		3,693
Total debt securities		-		156,393		-		156,393
Equity securities in financial institutions		5		745		-		750
Total	$	5	$	157,138	$	-	$	157,143

The Company obtains fair values from an independent pricing service which represent either quoted market prices for the identical securities (Level I inputs) or fair values determined by pricing models using a market approach that considers observable market data, such as interest rate volatilities, LIBOR yield curve, credit spreads and prices from market makers and live trading systems (Level II).

Financial instruments are considered Level III when their values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. In addition to these unobservable inputs, the valuation models for Level III financial instruments typically also rely on a number of inputs that are readily observable either directly or indirectly. Level III financial instruments also include those for which the determination of fair value requires significant management judgment or estimation. The Company has no securities considered to be Level III as of June 30, 2014 or December 31, 2013.

The Company uses prices compiled by third party vendors due to improvements in third party pricing methodology that have narrowed the variances between third party vendor prices and actual market prices.

The following tables present the assets measured on a nonrecurring basis on the Consolidated Balance Sheet at their fair value by level within the fair value hierarchy. Impaired loans that are collateral dependent are written down to fair value through the establishment of specific reserves. Techniques used to value the collateral that secure the impaired loan include: quoted market prices for identical assets classified as Level I inputs; observable inputs, employed by certified appraisers, for similar assets classified as Level II inputs. In cases where valuation techniques included inputs that are unobservable and are based on estimates and assumptions developed by management based on the best information available under each circumstance, the asset valuation is classified as Level III inputs.

			June 30, 2014
(Dollar amounts in thousands)	Level I		Level II		Level III		Total
Assets measured on a nonrecurring basis:
Impaired loans	$	-	$	-	$	14,029	$	14,029
Other real estate owned		-		-		2,392		2,392

			December 31, 2013
(Dollar amounts in thousands)	Level I		Level II		Level III		Total
Assets measured on a nonrecurring basis:
Impaired loans	$	-	$	-	$	17,158	$	17,158
Other real estate owned		-		-		2,698		2,698

The Company values other real estate owned at the estimated fair value of the underlying collateral less expected selling costs. Such values are estimated primarily using appraisals and reflect a market value approach. Due to the significance of the Level III inputs, other real estate owned has been classified as Level III.

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The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Company uses Level III inputs to determine fair value:

	Quantitative Information about Level III Fair Value Measurements
(Dollar amounts in thousands)					Valuation	Unobservable	Range (Weighted
	Fair Value Estimate				Techniques	Input	Average)
	June 30, 2014		December 31, 2013
Impaired loans	$	14,029	$	17,158	Appraisal of collateral (1)	Appraisal adjustments (2)	-20%	to	-55.0%	(-28.1%)
Other real estate owned	$	2,392	$	2,698	Appraisal of collateral (1)	Appraisal adjustments (2)	0%	to	-10.0%	(-7.5%)

(1)	Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various level 3 inputs which are not identifiable.
(2)	Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted-average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

The estimated fair value of the Company’s financial instruments is as follows:

	June 30, 2014
	Carrying								Total
	Value		Level I		Level II		Level III		Fair Value
	(Dollar amounts in thousands)
Financial assets:
Cash and cash equivalents	$	25,577	$	25,577	$	-	$	-	$	25,577
Investment securities available for sale		165,506		5		165,501		-		165,506
Net loans		442,990		-		-		454,824		454,824
Bank-owned life insurance		8,951		8,951				-		8,951
Federal Home Loan Bank stock		1,887		1,887				-		1,887
Accrued interest receivable		2,229		2,229		-		-		2,229
Financial liabilities:
Deposits	$	588,793	$	406,796	$	-	$	173,490	$	580,286
Short-term borrowings		6,939		6,939		-		-		6,939
Other borrowings		11,362		-		-		11,679		11,679
Accrued interest payable		342		342		-		-		342

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	December 31, 2013
	Carrying								Total
	Value		Level I		Level II		Level III		Fair Value
	(Dollar amounts in thousands)
Financial assets:
Cash and cash equivalents	$	26,193	$	26,193	$	-	$	-	$	26,193
Investment securities available for sale		157,143		5		157,138		-		157,143
Net loans		428,679		-		-		430,502		430,502
Bank-owned life insurance		8,816		8,816		-		-		8,816
Federal Home Loan Bank stock		1,887		1,887		-		-		1,887
Accrued interest receivable		2,135		2,135		-		-		2,135
Financial liabilities:
Deposits	$	568,836	$	394,422	$	-	$	175,854	$	570,276
Short-term borrowings		10,809		10,809		-		-		10,809
Other borrowings		11,609		-				11,787		11,787
Accrued interest payable		364		364		-		-		364

Financial instruments are defined as cash, evidence of ownership interest in an entity, or a contract which creates an obligation or right to receive or deliver cash or another financial instrument from/to a second entity on potentially favorable or unfavorable terms.

Fair value is defined as the amount at which a financial instrument could be exchanged in a current transaction between willing parties other than in a forced liquidation sale. If a quoted market price is available for a financial instrument, the estimated fair value would be calculated based upon the market price per trading unit of the instrument.

If no readily available market exists, the fair value estimates for financial instruments should be based upon management’s judgment regarding current economic conditions, interest rate risk, expected cash flows, future estimated losses, and other factors as determined through various option pricing formulas or simulation modeling. Since many of these assumptions result from judgments made by management based upon estimates which are inherently uncertain, the resulting estimated fair values may not be indicative of the amount realizable in the sale of a particular financial instrument. In addition, changes in assumptions on which the estimated fair values are based may have a significant impact on the resulting estimated fair values.

As certain assets such as deferred tax assets and premises and equipment are not considered financial instruments, the estimated fair value of financial instruments would not represent the full value of the Company.

The Company employed simulation modeling in determining the estimated fair value of financial instruments for which quoted market prices were not available based upon the following assumptions:

Cash and Cash Equivalents, Federal Home Loan Bank Stock, Accrued Interest Receivable, Accrued Interest Payable, and Short-Term Borrowings

The fair value is equal to the current carrying value.

Bank-Owned Life Insurance

The fair value is equal to the cash surrender value of the life insurance policies.

Investment Securities Available for Sale

The fair value of investment securities is equal to the available quoted market price.  If no quoted market price is available, fair value is estimated using the quoted market price for similar securities. 

Net Loans

The fair value is estimated by discounting future cash flows using current market inputs at which loans with similar terms and qualities would be made to borrowers of similar credit quality. Where quoted market prices were available, primarily for certain residential mortgage loans, such market rates were used as estimates for fair value.

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Deposits and Other Borrowings

The fair values of certificates of deposit and other borrowings are based on the discounted value of contractual cash flows. The discount rates are estimated using rates currently offered for similar instruments with similar remaining maturities. Demand, savings, and money market deposits are valued at the amount payable on demand as of period end.

Commitments to Extend Credit

These financial instruments are generally not subject to sale, and estimated fair values are not readily available. The carrying value, represented by the net deferred fee arising from the unrecognized commitment or letter of credit, and the fair value, determined by discounting the remaining contractual fee over the term of the commitment using fees currently charged to enter into similar agreements with similar credit risk, are not considered material for disclosure.

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NOTE 5 – ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table presents the changes in accumulated other comprehensive income by component net of tax for the three and six months ended June 30, 2014 and 2013, respectively:

	Unrealized gains on
	available-for-sale
	securities (a)
Balance as of December 31, 2013	$	(2,237	)
Other comprehensive income before reclassification		1,847
Amount reclassified from accumulated other comprehensive loss		4
Period change		1,851
Balance at March 31, 2014	$	(386	)
Other comprehensive income before reclassification		1,287
Amount reclassified from accumulated other comprehensive income		(42	)
Period change		1,245
Balance at June 30, 2014	$	859
Balance as of December 31, 2012	$	5,391
Other comprehensive loss before reclassification		(1,004	)
Amount reclassified from accumulated other comprehensive loss		(122	)
Period change		(1,126	)
Balance at March 31, 2013		4,265
Other comprehensive loss before reclassification		(4,462	)
Amount reclassified from accumulated other comprehensive loss		7
Period change		(4,455	)
Balance at June 30, 2013	$	(190	)

(a) All amounts are net of tax. Amounts in parentheses indicate debits.

The following tables present significant amounts reclassified out of each component of accumulated other comprehensive income for the three and six months ended June 30, 2014 and 2013, respectively:

	Amount Reclassified from Accumulated Other Comprehensive Income						Affected Line Item in
	For the Three Months Ended						the Statement Where
	June 30,						Net Income is
Details about other comprehensive income	2014			2013			Presented
Unrealized gains on available-for-sale securities
	$	64		$	(10	)	Investment securities gains, net
		(22	)		3		Income taxes
	$	42		$	(7	)	Net of tax

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	Amount Reclassified from Accumulated Other Comprehensive Income						Affected Line Item in
	For the Six Months Ended						the Statement Where
	June 30,						Net Income is
Details about other comprehensive income	2014			2013			Presented
Unrealized gains on available-for-sale securities
	$	58		$	175		Investment securities gains, net
		(20	)		(60	)	Income taxes
	$	38		$	115		Net of tax

NOTE 6 - INVESTMENT SECURITIES AVAILABLE FOR SALE

The amortized cost and fair values of securities available for sale are as follows:

	June 30, 2014
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
(Dollar amounts in thousands)	Cost		Gains		Losses			Value
U.S. government agency securities	$	25,665	$	245	$	(849	)	$	25,061
Obligations of states and political subdivisions:
Taxable		2,957		122		-			3,079
Tax-exempt		94,530		2,852		(1,689	)		95,693
Mortgage-backed securities in government-sponsored entities		37,279		813		(493	)		37,599
Private-label mortgage-backed securities		3,026		292		-			3,318
Total debt securities		163,457		4,324		(3,031	)		164,750
Equity securities in financial institutions		750		6		-			756
Total	$	164,207	$	4,330	$	(3,031	)	$	165,506

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	December 31, 2013
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
(Dollar amounts in thousands)	Cost		Gains		Losses			Value
U.S. government agency securities	$	27,289	$	135	$	(1,661	)	$	25,763
Obligations of states and political subdivisions:
Taxable		3,787		46		(38	)		3,795
Tax-exempt		86,524		1,562		(3,267	)		84,819
Mortgage-backed securities in government-sponsored entities		38,816		535		(1,028	)		38,323
Private-label mortgage-backed securities		3,366		327		-			3,693
Total debt securities		159,782		2,605		(5,994	)		156,393
Equity securities in financial institutions		750		-		-			750
Total	$	160,532	$	2,605	$	(5,994	)	$	157,143

The amortized cost and fair value of debt securities at June 30, 2014, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized		Fair
(Dollar amounts in thousands)	Cost		Value
Due in one year or less	$	684	$	694
Due after one year through five years		4,774		4,996
Due after five years through ten years		23,549		23,871
Due after ten years		134,450		135,189
Total	$	163,457	$	164,750

Proceeds from the sales of securities available for sale and the gross realized gains and losses for the three and six months ended June 30 are as follows:

(Dollar amounts in thousands)	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2014		2013			2014			2013
Proceeds from sales	$	980	$	533		$	1,494		$	8,135
Gross realized gains		64		-			64			204
Gross realized losses		-		(10	)		(6	)		(29	)

Investment securities with an approximate carrying value of $65.8 millionand $66.3 millionat June 30, 2014 and December 31, 2013, respectively, were pledged to secure deposits and other purposes as required by law.

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The following tables show the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position.

	June 30, 2014
	Less than Twelve Months					Twelve Months or Greater					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Dollar amounts in thousands)	Value		Losses			Value		Losses			Value		Losses
U.S. government agency securities	$	-	$	-		$	16,599	$	(849	)	$	16,599	$	(849	)
Obligations of states and political subdivisions		9,511		(104	)		19,616		(1,585	)		29,127		(1,689	)
Mortgage-backed securities in government-sponsored entities		1,075		(3	)		20,334		(490	)		21,409		(493	)
Total	$	10,586	$	(107	)	$	56,549	$	(2,924	)	$	67,135	$	(3,031	)

	December 31, 2013
	Less than Twelve Months					Twelve Months or Greater					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Dollar amounts in thousands)	Value		Losses			Value		Losses			Value		Losses
U.S. government agency securities	$	13,130	$	(929	)	$	7,166	$	(732	)	$	20,295	$	(1,661	)
Obligations of states and political subdivisions
Taxable		1,301		(38	)		-		-			1,301		(38	)
Tax-exempt		26,743		(2,883	)		2,678		(383	)		29,421		(3,267	)
Mortgage-backed securities in government-sponsored entities		18,082		(757	)		5,248		(271	)		23,330		(1,028	)
Total	$	59,255	$	(4,608	)	$	15,092	$	(1,386	)	$	74,347	$	(5,994	)

There were 86 securities considered temporarily impaired at June 30, 2014.

On a quarterly basis, the Company performs an assessment to determine whether there have been any events or economic circumstances indicating that a security with an unrealized loss has suffered other-than-temporary impairment (“OTTI”). A debt security is considered impaired if the fair value is less than its amortized cost basis at the reporting date. The Company assesses whether the unrealized loss is other than temporary.

OTTI losses are recognized in earnings when the Company has the intent to sell the debt security or it is more likely than not that it will be required to sell the debt security before recovery of its amortized cost basis. However, even if the Company does not expect to sell a debt security, it must evaluate expected cash flows to be received and determine if a credit loss has occurred.

An unrealized loss is generally deemed to be other than temporary and a credit loss is deemed to exist if the present value of the expected future cash flows is less than the amortized cost basis of the debt security. As a result the credit loss component of an OTTI is recorded as a component of investment securities gains (losses) in the accompanying Consolidated Statement of Income, while the remaining portion of the impairment loss is recognized in other comprehensive income, provided the Company does not intend to sell the underlying debt security and it is “more likely than not” that the Company will not have to sell the debt security prior to recovery.

Debt securities issued by U.S. government agencies, U.S. government-sponsored enterprises, and state and political subdivisions accounted for more than 98% of the total available-for-sale portfolio as of June 30, 2014 and no credit losses are expected, given the explicit and implicit guarantees provided by the U.S. federal government and the lack of prolonged unrealized loss positions within the obligations of state and political subdivisions security portfolio. The Company’s assessment was concentrated mainly on private-label collateralized mortgage obligations of approximately $3.0 million for which the Company evaluates credit losses on a quarterly basis. The gross unrealized gain position related to these private-label collateralized mortgage obligations amounted to $292,000 on June 30, 2014. The Company considered the following factors in determining whether a credit loss exists and the period over which the debt security is expected to recover:

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• The length of time and the extent to which the fair value has been less than the amortized cost basis.

• Changes in the near term prospects of the underlying collateral of a security such as changes in default rates, loss severity given default and significant changes in prepayment assumptions;

• The level of cash flows generated from the underlying collateral supporting the principal and interest payments of the debt securities; and

• Any adverse change to the credit conditions and liquidity of the issuer, taking into consideration the latest information available about the overall financial condition of the issuer, credit ratings, recent legislation and government actions affecting the issuer’s industry and actions taken by the issuer to deal with the present economic climate.

For the three and six months ended June 30, 2014 and 2013, there were no available-for-sale debt securities with an unrealized loss that suffered OTTI. Management does not believe any individual unrealized loss as of June 30, 2014 or December 31, 2013 represented an other-than-temporary impairment. The unrealized losses on debt securities are primarily the result of interest rate changes. These conditions will not prohibit the Company from receiving its contractual principal and interest payments on these debt securities. The fair value of these debt securities is expected to recover as payments are received on these securities and they approach maturity. Should the impairment of any of these securities become other than temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified.

NOTE 7 - LOANS AND RELATED ALLOWANCE FOR LOAN AND LEASE LOSSES

Major classifications of loans are summarized as follows (in thousands):

	June 30,		December 31,
	2014		2013
Commercial and industrial	$	55,577	$	54,498
Real estate - construction		26,615		25,601
Real estate - mortgage:
Residential		219,229		210,310
Commercial		142,505		141,171
Consumer installment		6,193		4,145
		450,119		435,725
Less allowance for loan and lease losses		7,129		7,046
Net loans	$	442,990	$	428,679

The Company’s primary business activity is with customers located within its local trade area, eastern Geauga County, and contiguous counties to the north, east, and south. The Company also serves the central Ohio market with offices in Dublin and Westerville, Ohio. Commercial, residential, consumer, and agricultural loans are granted. Although the Company has a diversified loan portfolio, loans outstanding to individuals and businesses are dependent upon the local economic conditions in the Company’s immediate trade area.

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff generally are reported at their outstanding unpaid principal balances net of the allowance for loan and lease losses.  Interest income is recognized as income when earned on the accrual method.  The accrual of interest is discontinued on a loan when management believes, after considering economic and business conditions, the borrower’s financial condition is such that collection of interest is doubtful.  Interest received on nonaccrual loans is recorded as income or applied against principal according to management’s judgment as to the collectability of such principal.

Loan origination fees and certain direct loan origination costs are being deferred and the net amount amortized as an adjustment of the related loan’s yield.  Management is amortizing these amounts over the contractual life of the related loans.

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The following tables summarize the primary segments of the loan portfolio and allowance for loan and lease losses (in thousands):

					Real Estate- Mortgage
June 30, 2014	Commercial and industrial		Real estate- construction		Residential		Commercial		Consumer installment		Total
Loans:
Individually evaluated for impairment	$	1,675	$	3,587	$	5,067	$	4,946	$	12	$	15,287
Collectively evaluated for impairment		53,902		23,028		214,162		137,559		6,181		434,832
Total loans	$	55,577	$	26,615	$	219,229	$	142,505	$	6,193	$	450,119

					Real Estate- Mortgage
December 31, 2013	Commercial and industrial		Real estate- construction		Residential		Commercial		Consumer installment		Total
Loans:
Individually evaluated for impairment	$	1,891	$	4,011	$	5,882	$	7,175	$	6	$	18,965
Collectively evaluated for impairment		52,607		21,590		204,428		133,996		4,139		416,760
Total loans	$	54,498	$	25,601	$	210,310	$	141,171	$	4,145	$	435,725

					Real Estate- Mortgage
June 30, 2014	Commercial and industrial		Real estate- construction		Residential		Commercial		Consumer installment		Total
Allowance for loan and lease losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	87	$	141	$	858	$	169	$	3	$	1,258
Collectively evaluated for impairment		509		282		3,272		1,756		52		5,871
Total ending allowance balance	$	596	$	423	$	4,130	$	1,925	$	55	$	7,129

					Real Estate- Mortgage
December 31, 2013	Commercial and industrial		Real estate- construction		Residential		Commercial		Consumer installment		Total
Allowance for loan and lease losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	179	$	210	$	855	$	563	$	-	$	1,807
Collectively evaluated for impairment		435		366		2,809		1,607		22		5,239
Total ending allowance balance	$	614	$	576	$	3,664	$	2,170	$	22	$	7,046

The commercial real estate loans individually evaluated for impairment declined during the period ended June 30, 2014 mostly due to the payoff of a $2.1 million relationship.

The Company’s loan portfolio is segmented to a level that allows management to monitor risk and performance.  The portfolio is segmented into Commercial and Industrial (“C&I”), Real Estate Construction, Real Estate - Mortgage which is further segmented into Residential and Commercial real estate, and Consumer Installment Loans.  The C&I loan segment consists of loans made for the purpose of financing the activities of commercial customers.  The residential mortgage loan segment consists of loans made for the purpose of financing the activities of residential homeowners. The commercial mortgage loan segment consists of loans made for the purpose of financing the activities of commercial real estate owners and operators. The consumer loan segment consists primarily of installment loans and overdraft lines of credit connected with customer deposit accounts.

Management evaluates individual loans in all of the commercial segments for possible impairment if the loan is greater than $200,000 and if the loan either is in nonaccrual status, or is risk rated Substandard and is greater than 90 days past due.  Loans are considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.  Factors considered by management in evaluating impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.  Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.  The Company does not separately evaluate individual consumer and residential mortgage loans for impairment, unless such loans are part of a larger relationship that is impaired.

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Once the determination has been made that a loan is impaired, the determination of whether a specific allocation of the allowance is necessary is measured by comparing the recorded investment in the loan to the fair value of the loan using one of the following methods:  (a) the present value of expected future cash flows discounted at the loan’s effective interest rate; (b) the loan’s observable market price; or (c) the fair value of the collateral less selling costs.  The method is selected on a loan-by-loan basis, with management primarily utilizing the fair value of collateral method.  The evaluation of the need and amount of a specific allocation of the allowance and whether a loan can be removed from impairment status is made on a quarterly basis.  The Company’s policy for recognizing interest income on impaired loans does not differ from its overall policy for interest recognition.

The following tables present impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary (in thousands):

June 30, 2014
Impaired Loans
	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial and industrial	$	1,375	$	1,375	$	-
Real estate - construction		2,965		2,965		-
Real estate - mortgage:
Residential		1,821		1,966		-
Commercial		4,092		4,092		-
Consumer installment		5		5		-
Total	$	10,258	$	10,403	$	-
With an allowance recorded:
Commercial and industrial	$	300	$	300	$	87
Real estate - construction		622		622		141
Real estate - mortgage:
Residential		3,246		3,312		858
Commercial		854		854		169
Consumer installment		7		7		3
Total	$	5,029	$	5,095	$	1,258
Total:
Commercial and industrial	$	1,675	$	1,675	$	87
Real estate - construction		3,587		3,587		141
Real estate - mortgage:
Residential		5,067		5,278		858
Commercial		4,946		4,946		169
Consumer installment		12		12		3
Total	$	15,287	$	15,498	$	1,258

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December 31, 2013
Impaired Loans
	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial and industrial	$	1,357	$	1,357	$	-
Real estate - construction		124		124		-
Real estate - mortgage:
Residential		2,704		2,892		-
Commercial		5,093		5,093		-
Consumer installment		6		6		-
Total	$	9,284	$	9,472	$	-
With an allowance recorded:
Commercial and industrial	$	534	$	534	$	179
Real estate - construction		3,887		3,887		210
Real estate - mortgage:
Residential		3,178		3,217		855
Commercial		2,082		2,082		563
Consumer installment		-		-		-
Total	$	9,681	$	9,720	$	1,807
Total:
Commercial and industrial	$	1,891	$	1,891	$	179
Real estate - construction		4,011		4,011		210
Real estate - mortgage:
Residential		5,882		6,109		855
Commercial		7,175		7,175		563
Consumer installment		6		6		-
Total	$	18,965	$	19,192	$	1,807

The following tables present interest income by class, recognized on impaired loans (in thousands):

	For the Three Months Ended June 30, 2014				For the Six Months Ended June 30, 2014
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial and industrial	$	2,117	$	12	$	2,140	$	49
Real estate - construction		3,653		40		3,683		81
Real estate - mortgage:
Residential		5,153		45		5,229		102
Commercial		5,387		83		5,758		158
Consumer installment		14		-		13		-

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	For the Three Months Ended June 30, 2013				For the Six Months Ended June 30, 2013
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial and industrial	$	2,643	$	15	$	2,687	$	70
Real estate - construction		3,850		58		3,499		95
Real estate - mortgage:
Residential		5,274		69		4,937		143
Commercial		6,669		106		6,018		216
Consumer installment		14		1		18		1

Management uses a nine point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first five categories are considered not criticized, and are aggregated as “Pass” rated. The criticized rating categories used by management generally follow bank regulatory definitions. The Special Mention category includes assets that are currently protected but are potentially weak, resulting in an undue and unwarranted credit risk, but not to the point of justifying a Substandard classification.  Loans in the Substandard category have well-defined weaknesses that jeopardize the liquidation of the debt, and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected.  All loans greater than 90 days past due are considered Substandard.   Assets classified as “doubtful” have all the weaknesses inherent in those classified substandard, with the added characteristic that the weaknesses make collection of principal in full — on the basis of currently existing facts, conditions, and values — highly questionable and improbable. Any portion of a loan that has been charged off is placed in the Loss category.

To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Company has a structured loan rating process with several layers of internal and external oversight.  Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as bankruptcy, repossession, or death occurs to raise awareness of a possible credit loss.  The Company’s Commercial Loan Officers are responsible for the timely and accurate risk rating of the loans in their portfolios at origination and on an ongoing basis.  The Credit Department performs an annual review of all commercial relationships $200,000 or greater.  Confirmation of the appropriate risk grade is included in the review on an ongoing basis.  The Company has an experienced Loan Review Department that continually reviews and assesses loans within the portfolio.  The Company engages an external consultant to conduct loan reviews on a semi-annual basis. Generally, the external consultant reviews commercial relationships greater than $250,000 and/or criticized relationships greater than $125,000.  Detailed reviews, including plans for resolution, are performed on loans classified as Substandard on a quarterly basis.  Loans in the Special Mention and Substandard categories that are collectively evaluated for impairment are given separate consideration in the determination of the allowance.

The primary risk of commercial and industrial loans is the current economic uncertainties. C&I loans are, by nature, secured by less substantial collateral than real estate-secured loans. The primary risk of real estate construction loans is potential delays and /or disputes during the completion process. The primary risk of residential real estate loans is current economic uncertainties along with the slow recovery in the housing market. The primary risk of commercial real estate loans is loss of income of the owner or occupier of the property and the inability of the market to sustain rent levels. Consumer installment loans historically have experienced higher delinquency rates. Consumer installments are typically secured by less substantial collateral than other types of credits.

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The following tables present the classes of the loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system (in thousands):

			Special						Total
	Pass		Mention		Substandard		Doubtful		Loans
June 30, 2014
Commercial and industrial	$	53,337	$	737	$	1,460	$	43	$	55,577
Real estate - construction		25,993		-		622		-		26,615
Real estate - mortgage:
Residential		207,164		912		11,153		-		219,229
Commercial		136,490		2,032		3,983		-		142,505
Consumer installment		6,179		-		14		-		6,193
Total	$	429,163	$	3,681	$	17,232	$	43	$	450,119

			Special						Total
	Pass		Mention		Substandard		Doubtful		Loans
December 31, 2013
Commercial and industrial	$	52,078	$	772	$	1,605	$	43	$	54,498
Real estate - construction		24,052		907		642		-		25,601
Real estate - mortgage:
Residential		198,479		774		11,057		-		210,310
Commercial		132,931		2,232		6,008		-		141,171
Consumer installment		4,129		-		16		-		4,145
Total	$	411,669	$	4,685	$	19,328	$	43	$	435,725

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due.

Nonperforming assets include nonaccrual loans, troubled debt restructurings (TDRs), loans 90 days or more past due, EMORECO assets, other real estate owned, and repossessed assets. A loan is classified as nonaccrual when, in the opinion of management, there are serious doubts about collectability of interest and principal. Accrual of interest is discontinued on a loan when management believes, after considering economic and business conditions, the borrower’s financial condition is such that collection of principal and interest is doubtful.  Payments received on nonaccrual loans are applied against principal according to management’s shadow accounting system.

The following tables present the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans (in thousands):

			Still Accruing
			30-59 Days		60-89 Days		90 Days+		Total		Non-		Total
	Current		Past Due		Past Due		Past Due		Past Due		Accrual		Loans
June 30, 2014
Commercial and industrial	$	53,809	$	703	$	575	$	20	$	1,298	$	469	$	55,577
Real estate - construction		25,995		620		-		-		620		-		26,615
Real estate - mortgage:
Residential		210,073		1,283		415		97		1,796		7,360		219,229
Commercial		141,466		130		-		-		130		909		142,505
Consumer installment		6,153		25		2		-		27		13		6,193
Total	$	437,497	$	2,762	$	992	$	117	$	3,871	$	8,751	$	450,119

25

			Still Accruing
			30-59 Days		60-89 Days		90 Days+		Total		Non-		Total
	Current		Past Due		Past Due		Past Due		Past Due		Accrual		Loans
December 31, 2013
Commercial and industrial	$	53,366	$	521	$	359	$	38	$	918	$	214	$	54,498
Real estate - construction		24,945		17		639		-		656		-		25,601
Real estate - mortgage:
Residential		200,041		2,079		481		143		2,703		7,566		210,310
Commercial		139,730		598		100		-		698		743		141,171
Consumer installment		4,083		38		16		-		54		8		4,145
Total	$	422,165	$	3,253	$	1,595	$	181	$	5,029	$	8,531	$	435,725

An allowance for loan and lease losses (“ALLL”) is maintained to absorb losses from the loan portfolio.  The ALLL is based on management’s continuing evaluation of the risk characteristics and credit quality of the loan portfolio, assessment of current economic conditions, diversification and size of the portfolio, adequacy of collateral, past and anticipated loss experience, and the amount of nonperforming loans.

The Company’s methodology for determining the ALLL is based on the requirements of ASC Section 310-10-35 for loans individually evaluated for impairment (discussed above) and ASC Subtopic 450-20 for loans collectively evaluated for impairment, as well as the Interagency Policy Statements on the Allowance for Loan and Lease Losses and other bank regulatory guidance.   The total of the two components represents the Company’s ALLL. Management also performs impairment analyses on TDRs, which may result in specific reserves.

Loans that are collectively evaluated for impairment are analyzed with general allowances being made as appropriate.  For general allowances, historical loss trends are used in the estimation of losses in the current portfolio.  These historical loss amounts are modified by other qualitative factors.

The classes described above, which are based on the purpose code assigned to each loan, provide the starting point for the ALLL analysis.  Management tracks the historical net charge-off activity at the purpose code level.  A historical charge-off factor is calculated using the last four consecutive historical quarters.

Management has identified a number of additional qualitative factors which it uses to supplement the historical charge-off factor because these factors are likely to cause estimated credit losses associated with the existing loan pools to differ from historical loss experience.  The additional factors that are evaluated quarterly and updated using information obtained from internal, regulatory, and governmental sources are: national and local economic trends and conditions; levels of and trends in delinquency rates and nonaccrual loans; trends in volumes and terms of loans; effects of changes in lending policies; experience, ability, and depth of lending staff; value of underlying collateral; and concentrations of credit from a loan type, industry and/or geographic standpoint.

Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in order to make appropriate and timely adjustments to the ALLL.  When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ALLL.

The following tables summarize the primary segments of the loan portfolio (in thousands):

	Commercial and industrial			Real estate- construction			Real estate- residential mortgage			Real estate- commercial mortgage			Consumer installment			Total
ALLL balance at December 31, 2013	$	614		$	576		$	3,664		$	2,170		$	22		$	7,046
Charge-offs		(92	)		-			(457	)		-			(35	)		(584	)
Recoveries		65			60			195			40			7			367
Provision		9			(213	)		728			(285	)		61			300
ALLL balance at June 30, 2014	$	596		$	423		$	4,130		$	1,925		$	55		$	7,129

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	Commercial and industrial			Real estate- construction			Real estate- residential mortgage			Real estate- commercial mortgage			Consumer installment			Total
ALLL balance at December 31, 2012	$	1,732		$	1,123		$	2,872		$	1,991		$	61		$	7,779
Charge-offs		(325	)		(190	)		(345	)		-			(36	)		(896	)
Recoveries		92			33			71			46			11			253
Provision		(624	)		226			1,028			(32	)		15			613
ALLL balance at June 30, 2013	$	875		$	1,192		$	3,626		$	2,005		$	51		$	7,749

	Commercial and industrial			Real estate- construction			Real estate- residential mortgage			Real estate- commercial mortgage		Consumer installment			Total
ALLL balance at March 31, 2014	$	867		$	488		$	3,726		$	1,862	$	72		$	7,015
Charge-offs		(80	)		-			(141	)		-		(12	)		(233	)
Recoveries		64			60			58			40		5			227
Provision		(255	)		(125	)		487			23		(10	)		120
ALLL balance at June 30, 2014	$	596		$	423		$	4,130		$	1,925	$	55		$	7,129

	Commercial and industrial			Real estate- construction			Real estate- residential mortgage			Real estate- commercial mortgage			Consumer installment			Total
ALLL balance at March 31, 2013	$	1,229		$	1,047		$	3,207		$	2,201		$	47		$	7,731
Charge-offs		-			(128	)		(279	)		-			(19	)		(426	)
Recoveries		92			-			47			-			5			144
Provision		(446	)		273			651			(196	)		18			300
ALLL balance at June 30, 2013	$	875		$	1,192		$	3,626		$	2,005		$	51		$	7,749

The real estate construction provision, for the period ended June 30, 2014, was mostly impacted by an improvement in risk rating to a relationship with a specific reserve of $113,000. The increased residential portfolio provision was mostly related to an increase in the loss ratio of 24 basis points. The negative commercial real estate provision was largely driven by the payoff of a relationship with a specific reserve of $352,000.  

The following tables summarize troubled debt restructurings and subsequent defaults (in thousands):

	For the three months ended
	June 30, 2014								June 30, 2013
	Number of Contracts						Pre-Modification		Number of Contracts				Pre-Modification
Troubled Debt Restructurings	Term Modification		Other		Total		Outstanding Recorded Investment		Term Modification		Total		Outstanding Recorded Investment
Commercial and industrial		1		-		1	$	7		-		-	$	-
Real estate- mortgage:
Commercial		1		-		1		73		-		-		-
Consumer		-		-		-		-		1		1		7

	For the six months ended
	June 30, 2014								June 30, 2013
	Number of Contracts						Pre-Modification		Number of Contracts				Pre-Modification
Troubled Debt Restructurings	Term Modification		Other		Total		Outstanding Recorded Investment		Term Modification		Total		Outstanding Recorded Investment
Commercial and industrial		1		-		1	$	7		5		5	$	742
Real estate- mortgage:
Residential		1		-		1		49		2		2		383
Commercial		1		-		1		73		-		-		-
Consumer		-		1		1		7		1		1		644

There were no changes to the recorded investment post modification. No TDRs, modified in the past twelve months, subsequently defaulted in the three and six months ended June 30, 2014.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis provides further detail to the financial condition and results of operations of the Company. The MD&A should be read in conjunction with the notes and financial statements presented in this report.

CHANGES IN FINANCIAL CONDITION

General. The Company’s total assets ended the June 30, 2014 quarter at $668.3 million, an increase of $21.2 million or 3.3% from December 31, 2013. For the same time period, cash and cash equivalents decreased $0.6 million, or 2.4% while loans increased $14.3 million, or 3.3%. Total liabilities increased $15.5 million, or 2.6% while stockholders’ equity grew $5.7 million, or 10.7%.

Cash on hand and due from banks. Cash and due from banks and Federal funds sold represent cash and cash equivalents. Cash and cash equivalents decreased $0.6 million at June 30, 2014 from $26.2 million at December 31, 2013. Deposits from customers into savings and checking accounts, loan and securities repayments and proceeds from borrowed funds typically increase these accounts. Decreases result from customer withdrawals, new loan originations, purchases of investment securities and repayments of borrowed funds.

Investment securities. Investment securities available for sale on June 30, 2014 totaled $165.5 million, an increase of $8.4 million or 5.3% from $157.1 million at December 31, 2013. During this period the Company recorded repayments, calls, and maturities of $6.8 million. Sales of securities were $1.5 million with a net realized gain of $58,000. Purchases for the period were $12.3 million.

Loans receivable. The loans receivable category consists primarily of single-family mortgage loans used to purchase or refinance personal residences located within the Company’s market area and commercial real estate loans used to finance properties that are used in the borrowers’ businesses or to finance investor-owned rental properties, and to a lesser extent, construction and consumer loans. Net loans receivable increased $14.3 million or 3.3% to $443.0 million as of June 30, 2014 from $428.7 million at December 31, 2013. Included in this amount were increases in the residential real estate and consumer installment portfolios of $8.9 million, or 4.2%, and $2.0 million, or 49.4%, respectively. The commercial real estate, commercial and industrial, and real estate construction portfolios also increased by $1.3 million, $1.1 million, and $1.0 million, respectively.

Allowance for loan and lease losses and Asset Quality. The Company increased the allowance for loan and lease losses to $7.1 million, or 1.6% of total loans, at June 30, 2014. For the three months ended June 30, 2014, net loan charge-offs totaled $6,000, or 0.01% of average loans, compared to $283,000, or 0.3%, for the second quarter of 2013. To maintain the adequacy of the allowance for loan and lease losses, the Company recorded a provision for loan losses of $120,000, versus $300,000 for the first half of 2014. For the six months ended June 30, 2014, net loan charge-offs totaled $217,000, or 0.1% of average loans, compared to $643,000, or 0.3%, for the second quarter of 2013. To maintain the adequacy of the allowance for loan and lease losses, the Company recorded a provision for loan losses of $300,000, versus $613,000 for the first half of 2013.

Management analyzes the adequacy of the allowance for loan and lease losses regularly through reviews of the performance of the loan portfolio considering economic conditions, changes in interest rates and the effect of such changes on real estate values and changes in the amount and composition of the loan portfolio. The allowance for loan and lease losses is a significant estimate that is particularly susceptible to significant changes in the near term. Such evaluation, which includes a review of all loans for which full collectability may not be reasonably assured, considers among other matters, historical loan loss experience, the estimated fair value of the underlying collateral, economic conditions, current interest rates, trends in the borrower’s industry and other factors that management believes warrant recognition in providing for an appropriate allowance for loan and lease losses. Future additions to the allowance for loan and lease losses will be dependent on these factors. Additionally, the Company uses an outside party to conduct an independent review of commercial and commercial real estate loans. The Company uses the results of this review to help determine the effectiveness of the existing policies and procedures, and to provide an independent assessment of the allowance for loan and lease losses allocated to these types of loans. Management believes the allowance for loan and lease losses is appropriately stated at June 30, 2014. Based on the variables involved and management’s judgments about uncertain outcomes, the determination of the allowance for loan and lease losses is considered a critical accounting policy.

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Nonperforming assets. Nonperforming assets includes nonaccrual loans, troubled debt restructurings (TDRs), loans 90 days or more past due, EMORECO assets, other real estate, and repossessed assets. Real estate owned is written down to fair value at its initial recording and continually monitored for changes in fair value. A loan is classified as nonaccrual when, in the opinion of management, there are serious doubts about collectability of interest and principal. Accrual of interest is discontinued on a loan when management believes, after considering economic and business conditions, the borrower’s financial condition is such that collection of principal and interest is doubtful. Payments received on nonaccrual loans are applied against principal until doubt about collectability ceases. TDRs are those loans which the Company, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to the borrower that the Company would not otherwise consider. The Company has 29 TDRs with a total balance of $3.3 million as of June 30, 2014. Nonperforming loans amounted to $10.5 million, or 2.3% of total loans, and $12.3 million, or 2.8% of total loans, at June 30, 2014 and December 31, 2013, respectively. A TDR that yields market interest rate at the time of restructuring and is in compliance with its modified terms is no longer reported as TDR in calendar years after the year in which the restructuring took place. To be in compliance with its modified terms, a loan that is a TDR must not be in nonaccrual status and must be current or less than 30 days past due on its contractual principal and interest payments under the modified repayment terms. Nonperforming loans secured by real estate totaled $9.7 million as of June 30, 2014, down $1.7 million from $11.4 million at December 31, 2013.

	Asset Quality History
(Dollar amounts in thousands)	6/30/2014			3/31/2014			12/31/2013			9/30/2013			6/30/2013
Nonperforming loans	$	10,506		$	10,741		$	12,290		$	13,607		$	12,869
Real estate owned		2,392			2,656			2,698			2,719			2,361
Nonperforming assets		12,898			13,397			14,988			16,326			15,230
Allowance for loan and lease losses		7,129			7,015			7,046			7,821			7,749
Ratios
Nonperforming loans to total loans		2.33	%		2.42	%		2.82	%		3.25	%		3.12	%
Nonperforming assets to total assets		1.93	%		2.00	%		2.32	%		2.48	%		2.32	%
Allowance for loan and lease losses to total loans		1.58	%		1.58	%		1.62	%		1.87	%		1.88	%
Allowance for loan and lease losses to nonperforming loans		67.85	%		65.31	%		57.33	%		57.48	%		60.21	%

A major factor in determining the appropriateness of the allowance for loan and lease losses is the type of collateral which secures the loans. Of the total nonperforming loans at June 30, 2014, 92.6% were secured by real estate. Although this does not insure against all losses, the real estate typically provides for at least partial recovery, even in a distressed-sale and declining-value environment. In response to the performance of the Company’s loan portfolio after the Great Recession, additional resources have been allocated to the loan workout process. The Company’s objective is to minimize the future loss exposure to the Company.

Deposits. The Company considers various sources when evaluating funding needs, including but not limited to deposits, which are a significant source of funds totaling $588.8 million or 97.0% of the Company’s total funding sources at June 30, 2014. Total deposits increased $20.0 million or 3.5% at June 30, 2014 from $568.8 million at December 31, 2013. The increase in deposits is primarily related to the increase in noninterest-bearing demand, time, and interest-bearing demand deposit accounts of $10.3 million or 12.0%, $7.6 million or 4.3%, and $4.6 million or 8.6%, respectively, at June 30, 2014. These increases were partially offset by a decrease in money market accounts of $3.9 million, or 5.0%, respectively, during the six months ended June 30, 2014.

Borrowed funds. The Company uses short and long-term borrowings as another source of funding used for asset growth and liquidity needs. These borrowings primarily include FHLB advances, junior subordinated debt, short-term borrowings from other banks, federal funds purchased, and repurchase agreements. Short-term borrowings decreased $3.9 million, or 35.8%, to $6.9 million as of June 30, 2014. Other borrowings, representing advances from the Federal Home Loan Bank of Cincinnati, declined $247,000, or 2.1%, for the six months ended June 30, 2014 as a result of scheduled principal payments.

Stockholders’ equity. Stockholders’ equity increased $5.7 million, or 10.7%, to $59.2 million at June 30, 2014 from $53.5 million at December 31, 2013. This growth was the result of increases in accumulated other comprehensive income (“AOCI”) and retained earnings of $3.1 million, or 138.4%, $2.3 million, or 8.4%, respectively. The change to AOCI is due to available-for-sale securities fair value adjustments.

29

RESULTS OF OPERATIONS

General. Net income for the three months ended June 30, 2014, was $1.6 million, a $74,000, or 4.4% decrease from the amount earned during the same period in 2013. Diluted earnings per share for the quarter was $0.79 compared to $0.83 for the same period in 2013. Net income for the six months ended June 30, 2014, was $3.4 million, a $32,000, or 1.0% increase from the amount earned during the same period in 2013. Diluted earnings per share for the quarter was $1.65 compared to $1.66 for the same period in 2013.

The Company’s annualized return on average assets (ROA) and return on average equity (ROE) for the quarter were 0.96% and 11.58%, respectively, compared with 1.02% and 12.47% for the same period in 2013. The Company’s annualized return on average assets (ROA) and return on average equity (ROE) for the six month period were 1.02% and 12.33%, respectively, compared with 1.02% and 12.32% for the same period in 2013.

Net interest income. Net interest income, the primary source of revenue for the Company, is determined by the Company’s interest rate spread, which is defined as the difference between income on earning assets and the cost of funds supporting those assets, and the relative amounts of interest-earning assets and interest-bearing liabilities. Management periodically adjusts the mix of assets and liabilities, as well as the rates earned or paid on those assets and liabilities in order to manage and improve net interest income. The level of interest rates and changes in the amount and composition of interest-earning assets and liabilities affect the Company’s net interest income. Historically from an interest rate risk perspective, it has been management’s goal to maintain a balance between steady net interest income growth and the risks associated with interest rate fluctuations.

Net interest income for the three months ended June 30, 2014 totaled $5.8 million, an increase of 5.3% from that reported in the comparable period of 2013. The net interest margin was 4.04% for the quarter of 2014, up from the 3.88% reported for the same quarter of 2013. The increase is attributable to lower interest-bearing liability costs, which decreased 24 basis points to 0.80%. Net interest income for the six months ended June 30, 2014 totaled $11.8 million, an increase of 6.0% from that reported in the comparable period of 2013. The net interest margin was 4.12% for the first half of 2014, up from the 3.90% reported for the same period of 2013. The increase is attributable to lower interest-bearing liability costs, which decreased 25 basis points to 0.81%.

Interest income. Interest income decreased $28,000, or 0.4%, for the three months ended June 30, 2014, compared to the same period in the prior year. This is attributable to decreases in interest earned on taxable investment securities, partially offset by tax-exempt interest and interest and fees on loans. Interest income decreased $53,000, or 0.4%, for the six months ended June 30, 2014, compared to the same period in the prior year. This is attributable to decreases in interest earned on taxable investment securities, partially offset by interest and fees on loans.

Interest earned on loans receivable increased $25,000, or 0.5%, for the three months ended June 30, 2014, compared to the same period in the prior year. This increase is attributable to an increase in the average balance of $37.2 million, or 9.1% from June 30, 2013, partially offset by a 43 basis point decline in the average yield. Interest earned on loans receivable increased $147,000, or 1.3%, for the six months ended June 30, 2014, compared to the same period in the prior year. This increase is attributable to an increase in the average balance of $37.2 million, or 9.1% from June 30, 2013, partially offset by a 39 basis point decline in the average yield.

Interest earned on securities decreased $60,000, or 4.4%, for the three months ended June 30, 2014, compared to the same period in the prior year. The average balance decreased $26.7 million, or 14.2% while the 4.24% yield on the investment portfolio was an increase of 51 basis points, from 3.73%, for the same period in the prior year. Interest earned on securities decreased $203,000, or 7.3%, for the six months ended June 30, 2014, compared to the same period in the prior year. The average balance decreased $30.2 million, or 15.9% while the 4.26% yield on the investment portfolio was an increase of 50 basis points, from 3.76%, for the same period in the prior year.

Interest expense. Interest expense decreased $324,000, or 23.9%, for the three months ended June 30, 2014, compared to the same period in the prior year. The decline was mostly attributed to a 24 basis point decline in total interest-bearing liabilities when compared to the same period in the prior year. It was further impacted by a decrease in the average balance of money market deposits of $4.6 million, or 5.8%, compared to the same period in the prior year. Interest expense decreased $720,000, or 25.8%, for the six months ended June 30, 2014, compared to the same period in the prior year. The decline was mostly attributed to a 25 basis point decline in total interest-bearing liabilities when compared to the same period in the prior year. It was further impacted by a decrease in the average balance of interest-bearing liabilities of $10.4 million, or 2.0%, compared to the same period in the prior year.

Interest incurred on deposits, the largest component of the Company’s interest-bearing liabilities, declined $290,000, or 23.8%, for the three months ended June 30, 2014, compared to the same period in the prior year. This decrease was attributed to a decline in the average rate paid on deposits to 0.74% from 0.97% for the same period in the prior year. This improvement was exacerbated by a decrease in the average balance of interest-bearing deposits of $3.6 million, or 0.7%, to $501.6 million when compared to $505.2 million for the same period in the prior year. Interest incurred on deposits declined $647,000, or 25.7%, for the six months ended June 30, 2014, compared to the same period in the prior year. This decrease was attributed to a decline in the average rate paid on deposits to 0.76% from 1.00% for the same period in the prior year. This improvement was exacerbated by a decrease in the average balance of interest-bearing deposits of $13.5 million, or 2.7%, to $495.9 million when compared to $509.3 million for the same period in the prior year.

30

Interest incurred on borrowings decreased $34,000, or 24.6%, for the three months ended June 30, 2014, compared to the same period in the prior year. Interest incurred on borrowings decreased $73,000, or 27.0%, for the six months ended June 30, 2014, compared to the same period in the prior year.

Provision for loan losses. The provision for loan losses represents the charge to income necessary to adjust the allowance for loan and lease losses to an amount that represents management’s assessment of the estimated probable incurred credit losses inherent in the loan portfolio. Each quarter management performs a review of estimated probable incurred credit losses in the loan portfolio. Based on this review, a provision for loan losses of $120,000 was recorded for the quarter ended June 30, 2014 compared to $300,000 for the quarter ended June 30, 2013. The provision for loan losses was lower due to decreases in nonperforming loans. Nonperforming loans were $10.5 million, or 2.3% of total loans at June 30, 2014 compared with $12.9 million, or 3.1% at June 30, 2013. Net charge-offs were $6,000 for the quarter ended June 30, 2014 compared with $283,000 for the quarter ended June 30, 2013. A provision for loan losses of $300,000 was recorded for the six months ended June 30, 2014 compared to $613,000 for the same period in June 30, 2013. Net charge-offs were $217,000 for the six months ended June 30, 2014 compared with $643,000 for the same period ended June 30, 2013.

Noninterest income. Noninterest income increased $38,000 for the three months ended June 30, 2014 over the comparable 2013 period. This increase was largely the result of an increase in net investment security gains of $74,000, partially offset by a decrease in service charges on deposit account of $42,000, or 8.2%. Noninterest income decreased $115,000 for the six months ended June 30, 2014 over the comparable 2013 period. This decrease was largely the result of a decline in net investment security gains of $117,000, or 66.9%, partially offset by an increase in other income of $58,000, or 14.1%. This change in other income was the result of increases in miscellaneous fees and charges of $25,000, or 54.5%, and check order fees of $18,000, or 155.6%.

Noninterest expense. Noninterest expense of $4.6 million for the second quarter of 2014 was 16.5% or $650,000 more than the second quarter of 2013. Salaries and benefits and other expense increased $362,000, or 19.0%, and $94,000, or 15.8% respectively. These were partially offset by a decrease in Ohio state franchise tax of $56,000, or 37.6%. Noninterest expense of $8.8 million for the six months ended June 30, 2014 was 11.0% or $878,000 more than the same period in 2013. Salaries and benefits and other expense increased $507,000, or 13.4%, and $244,000, or 21.5% respectively. These were partially offset by decreases in Ohio state franchise tax of $127,000, or 41.9%.

Provision for income taxes. The Company recognized $414,000 in income tax expense, which reflected an effective tax rate of 20.4% for the three months ended June 30, 2014, as compared to $476,000 with an effective tax rate of 22.0% for the comparable 2013 period. The Company recognized $913,000 in income tax expense, which reflected an effective tax rate of 21.3% for the six months ended June 30, 2014, as compared to $958,000 with an effective tax rate of 22.3% for the comparable 2013 period.

CRITICAL ACCOUNTING ESTIMATES

The Company’s critical accounting estimates involving the more significant judgments and assumptions used in the preparation of the consolidated financial statements as of June 30, 2014, have remained unchanged from December 31, 2013.

31

Average Balance Sheet and Yield/Rate Analysis. The following table sets forth, for the periods indicated, information concerning the total dollar amounts of interest income from interest-earning assets and the resultant average yields, the total dollar amounts of interest expense on interest-bearing liabilities and the resultant average costs, net interest income, interest rate spread and the net interest margin earned on average interest-earning assets. For purposes of this table, average balances are calculated using monthly averages and the average loan balances include nonaccrual loans and exclude the allowance for loan and lease losses, and interest income includes accretion of net deferred loan fees. Interest and yields on tax-exempt securities (tax-exempt for federal income tax purposes) are shown on a fully tax-equivalent basis utilizing a federal tax rate of 34%. Yields and rates have been calculated on an annualized basis utilizing monthly interest amounts.

	For the Three Months Ended June 30,
	2014							2013
	Average				Average			Average				Average
(Dollar amounts in thousands)	Balance		Interest		Yield/Cost			Balance		Interest		Yield/Cost
Interest-earning assets:
Loans receivable	$	446,478		5,575		5.01	%	$	409,229	$	5,550		5.44	%
Investment securities (3)		161,802		1,309		4.24	%		188,541		1,369		3.73	%
Interest-bearing deposits with other banks		15,727		35		0.89	%		19,120		28		0.59	%
Total interest-earning assets		624,007		6,919		4.45	%		616,890		6,947		4.77	%
Noninterest-earning assets		47,032							44,911
Total assets	$	671,039						$	661,801
Interest-bearing liabilities:
Interest-bearing demand deposits	$	61,224		50		0.33	%	$	61,612		53		0.35	%
Money market deposits		74,675		74		0.40	%		79,253		75		0.38	%
Savings deposits		178,832		141		0.32	%		178,901		151		0.34	%
Certificates of deposit		186,915		664		1.42	%		185,468		940		2.03	%
Borrowings		16,253		104		2.57	%		17,931		138		3.09	%
Total interest-bearing liabilities		517,899		1,033		0.80	%		523,165		1,357		1.04	%
Noninterest-bearing liabilities
Other liabilities		97,335							84,437
Stockholders' equity		55,805							54,199
Total liabilities and stockholders' equity	$	671,039						$	661,801
Net interest income			$	5,886						$	5,590
Interest rate spread (1)						3.65	%						3.73	%
Net interest margin (2)						4.04	%						3.88	%
Ratio of average interest-earning assets to average interest-bearing liabilities						120.49	%						117.91	%

(1) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities

(2) Net interest margin represents net interest income as a percentage of average interest-earning assets.

(3) Tax-equivalent adjustments to interest income for tax-exempt securities were $389 and $378 for the three months ended June 30 2014 and 2013, respectively.

32

Analysis of Changes in Net Interest Income. The following table analyzes the changes in interest income and interest expense, between the three month periods ended June 30, 2014 and 2013, in terms of: (1) changes in volume of interest-earning assets and interest-bearing liabilities and (2) changes in yields and rates. The table reflects the extent to which changes in the Company’s interest income and interest expense are attributable to changes in rate (change in rate multiplied by prior period volume), changes in volume (changes in volume multiplied by prior period rate) and changes attributable to the combined impact of volume/rate (change in rate multiplied by change in volume). The changes attributable to the combined impact of volume/rate are allocated on a consistent basis between the volume and rate variances. Changes in interest income on securities reflects the changes in interest income on a fully tax-equivalent basis.

	2014 versus 2013
	Increase (decrease) due to
(Dollar amounts in thousands)	Volume			Rate			Total
Interest-earning assets:
Loans receivable	$	505		$	(480	)	$	25
Investment securities		(249	)		189			(60	)
Interest-bearing deposits with other banks		(5	)		12			7
Total interest-earning assets		251			(279	)		(28	)
Interest-bearing liabilities:
Interest-bearing demand deposits		-			(3	)		(3	)
Money market deposits		(4	)		3			(1	)
Savings deposits		-			(10	)		(10	)
Certificates of deposit		7			(283	)		(276	)
Borrowings		(13	)		(21	)		(34	)
Total interest-bearing liabilities		(10	)		(314	)		(324	)
Net interest income	$	261		$	35		$	296

33

Average Balance Sheet and Yield/Rate Analysis. The following table sets forth, for the periods indicated, information concerning the total dollar amounts of interest income from interest-earning assets and the resultant average yields, the total dollar amounts of interest expense on interest-bearing liabilities and the resultant average costs, net interest income, interest rate spread and the net interest margin earned on average interest-earning assets. For purposes of this table, average balances are calculated using monthly averages and the average loan balances include nonaccrual loans and exclude the allowance for loan and lease losses, and interest income includes accretion of net deferred loan fees. Interest and yields on tax-exempt securities (tax-exempt for federal income tax purposes) are shown on a fully tax-equivalent basis utilizing a federal tax rate of 34%. Yields and rates have been calculated on an annualized basis utilizing monthly interest amounts.

	For the Six Months Ended June 30,
	2014							2013
	Average				Average			Average				Average
(Dollars in thousands)	Balance		Interest		Yield/Cost			Balance		Interest		Yield/Cost
Interest-earning assets:
Loans receivable	$	445,404	$	11,269		5.10	%	$	408,232	$	11,122		5.49	%
Investment securities (3)		159,288		2,573		4.26	%		189,499		2,776		3.76	%
Interest-bearing deposits with other banks		13,727		66		0.97	%		18,881		63		0.67	%
Total interest-earning assets		618,419		13,908		4.79	%		616,612		13,961		4.81	%
Noninterest-earning assets		46,849							46,393
Total assets	$	665,268						$	663,005
Interest-bearing liabilities:
Interest-bearing demand deposits	$	57,719		92		0.32	%	$	62,630		111		0.36	%
Money market deposits		75,301		150		0.40	%		78,956		156		0.40	%
Savings deposits		177,938		279		0.32	%		178,275		309		0.35	%
Certificates of deposit		184,897		1,348		1.47	%		189,472		1,940		2.06	%
Borrowings		21,443		197		1.85	%		18,385		270		2.96	%
Total interest-bearing liabilities		517,298		2,066		0.81	%		527,718		2,786		1.06	%
Noninterest-bearing liabilities
Other liabilities		92,779							80,600
Stockholders' equity		55,191							54,687
Total liabilities and stockholders' equity	$	665,268						$	663,005
Net interest income			$	11,842						$	11,175
Interest rate spread (1)						3.99	%						3.75	%
Net interest margin (2)						4.12	%						3.90	%
Ratio of average interest-earning assets to average interest-bearing liabilities						119.55	%						116.84	%

(1) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities

(2) Net interest margin represents net interest income as a percentage of average interest-earning assets.

(3) Tax-equivalent adjustments to interest income for tax-exempt securities were $792 and $761 for the six months ended June 30 2014 and 2013, respectively.

34

Analysis of Changes in Net Interest Income. The following table analyzes the changes in interest income and interest expense, between the six month periods ended June 30, 2014 and 2013, in terms of: (1) changes in volume of interest-earning assets and interest-bearing liabilities and (2) changes in yields and rates. The table reflects the extent to which changes in the Company’s interest income and interest expense are attributable to changes in rate (change in rate multiplied by prior period volume), changes in volume (changes in volume multiplied by prior period rate) and changes attributable to the combined impact of volume/rate (change in rate multiplied by change in volume). The changes attributable to the combined impact of volume/rate are allocated on a consistent basis between the volume and rate variances. Changes in interest income on securities reflects the changes in interest income on a fully tax-equivalent basis.

	2014 versus 2013
	Increase (decrease) due to
(Dollars in thousands)	Volume			Rate			Total
Interest-earning assets:
Loans receivable	$	1,013		$	(866	)	$	147
Investment securities		(564	)		361			(203	)
Interest-bearing deposits with other banks		(17	)		20			3
Total interest-earning assets		432			(485	)		(53	)
Interest-bearing liabilities:
Interest-bearing demand deposits		(9	)		(10	)		(19	)
Money market deposits		(7	)		1			(6	)
Savings deposits		(1	)		(29	)		(30	)
Certificates of deposit		(47	)		(545	)		(592	)
Borrowings		45			(118	)		(73	)
Total interest-bearing liabilities		(19	)		(701	)		(720	)
Net interest income	$	451		$	216		$	667

LIQUIDITY

Management's objective in managing liquidity is maintaining the ability to continue meeting the cash flow needs of banking customers, such as borrowings or deposit withdrawals, as well as the Company’s own financial commitments. The principal sources of liquidity are net income, loan payments, maturing and principal reductions on securities and sales of securities available for sale, federal funds sold and cash and deposits with banks. Along with its liquid assets, the Company has additional sources of liquidity available to ensure that adequate funds are available as needed. These include, but are not limited to, the purchase of federal funds, and the ability to borrow funds under line of credit agreements with correspondent banks and a borrowing agreement with the Federal Home Loan Bank of Cincinnati, Ohio and the adjustment of interest rates to obtain depositors. Management believes the Company has the capital adequacy, profitability and reputation to meet the current and projected needs of its customers.

For the six months ended June 30, 2014, the adjustments to reconcile net income to net cash from operating activities consisted mainly of depreciation and amortization of premises and equipment, the provision for loan losses, net amortization of securities and net changes in other assets and liabilities. For a more detailed illustration of sources and uses of cash, refer to the Condensed Consolidated Statements of Cash Flows.

INFLATION

Substantially all of the Company's assets and liabilities relate to banking activities and are monetary in nature. The consolidated financial statements and related financial data are presented in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). GAAP currently requires the Company to measure the financial position and results of operations in terms of historical dollars, with the exception of securities available for sale, impaired loans and other real estate loans that are measured at fair value. Changes in the value of money due to rising inflation can cause purchasing power loss.

Management's opinion is that movements in interest rates affect the financial condition and results of operations to a greater degree than changes in the rate of inflation. It should be noted that interest rates and inflation do affect each other, but do not always move in correlation with each other. The Company's ability to match the interest sensitivity of its financial assets to the interest sensitivity of its liabilities in its asset/liability management may tend to minimize the effect of changes in interest rates on the Company's performance.

35

REGULATORY MATTERS

The Company is subject to the regulatory requirements of the Federal Reserve System as a bank holding company. The affiliate bank is subject to regulations of the Federal Deposit Insurance Corporation (“FDIC”) and the State of Ohio, Division of Financial Institutions.

The Federal Reserve Board and the FDIC have extensive authority to prevent and to remedy unsafe and unsound practices and violations of applicable laws and regulations by institutions and holding companies. The agencies may assess civil money penalties, issue cease-and-desist or removal orders, seek injunctions, and publicly disclose those actions. In addition, the Ohio Division of Financial Institutions possesses enforcement powers to address violations of Ohio banking law by Ohio-chartered banks.

REGULATORY CAPITAL REQUIREMENTS

The Company is subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and prompt corrective action regulations involve quantitative measures of assets, liabilities and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings and other factors and the regulators can lower classifications in certain cases. Failure to meet various capital requirements can initiate regulatory action that could have a direct material effect on the company's operations.

The prompt corrective action regulations provide five classifications, including well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion and plans for capital restoration are required.

36

The following tables illustrate the Company's and Bank’s capital ratios:

	Middlefield Banc Corp.					The Middlefield Banking Co.
	June 30,					June 30,
	2014					2014
	Amount		Ratio			Amount		Ratio
	(Dollar amounts in thousands)
Total Capital
(to Risk-weighted Assets)
Actual	$	67,469		14.45	%	$	65,748		14.09	%
For Capital Adequacy Purposes		37,344		8.00			37,326		8.00
To Be Well Capitalized		46,680		10.00			46,658		10.00
Tier I Capital
(to Risk-weighted Assets)
Actual	$	61,618		13.20	%	$	59,919		12.84	%
For Capital Adequacy Purposes		18,672		4.00			18,663		4.00
To Be Well Capitalized		28,008		6.00			27,995		5.00
Tier I Capital
(to Average Assets)
Actual	$	61,618		9.31	%	$	59,919		9.05	%
For Capital Adequacy Purposes		26,482		4.00			26,482		4.00
To Be Well Capitalized		33,102		5.00			33,102		5.00

	Middlefield Banc Corp.					The Middlefield Banking Co.					Emerald Bank
	December 31,					December 31,					December 31,
	2014					2014					2014
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollar amounts in thousands)
Total Capital
(to Risk-weighted Assets)
Actual	$	64,220		14.06	%	$	53,194		13.77	%	$	9,482		13.76	%
For Capital Adequacy Purposes		36,541		8.00			30,906		8.00			5,514		8.00
To Be Well Capitalized		45,676		10.00			38,632		10.00			6,893		10.00
Tier I Capital
(to Risk-weighted Assets)
Actual	$	58,494		12.81	%	$	48,364		12.52	%	$	8,605		12.48	%
For Capital Adequacy Purposes		18,270		4.00			15,453		4.00			2,757		4.00
To Be Well Capitalized		27,406		6.00			23,179		6.00			4,136		6.00
Tier I Capital
(to Average Assets)
Actual	$	58,494		8.97	%	$	48,364		8.51	%	$	8,605		10.92	%
For Capital Adequacy Purposes		26,093		4.00			22,735		4.00			3,152		4.00
To Be Well Capitalized		32,617		5.00			28,419		5.00			3,940		5.00

37

Item 3. Quantitative and Qualitative Disclosures about Market Risk

ASSET AND LIABILITY MANAGEMENT

The primary objective of the Company’s asset and liability management function is to maximize the Company’s net interest income while simultaneously maintaining an acceptable level of interest rate risk given the Company’s operating environment, capital and liquidity requirements, performance objectives and overall business focus. The principal determinant of the exposure of the Company’s earnings to interest rate risk is the timing difference between the re-pricing or maturity of interest-earning assets and the re-pricing or maturity of its interest-bearing liabilities. The Company’s asset and liability management policies are designed to decrease interest rate sensitivity primarily by shortening the maturities of interest-earning assets while at the same time extending the maturities of interest-bearing liabilities. The Board of Directors of the Company continues to believe in a strong asset/liability management process in order to insulate the Company from material and prolonged increases in interest rates. Mortgage-backed securities generally increase the quality of the Company’s assets by virtue of the insurance or guarantees that back them, are more liquid than individual mortgage loans and may be used to collateralize borrowings or other obligations of the Company.

The Company’s Board of Directors has established an Asset and Liability Management Committee consisting of outside directors and senior management. This committee, which meets quarterly, generally monitors various asset and liability management policies and strategies.

Interest Rate Sensitivity Simulation Analysis

The Company utilizes income simulation modeling in measuring its interest rate risk and managing its interest rate sensitivity. The Asset and Liability Management Committee of the Company believes the various rate scenarios of the simulation modeling enables the Company to more accurately evaluate and manage the exposure of interest rate fluctuations on net interest income, the yield curve, various loan and mortgage-backed security prepayments, and deposit decay assumptions.

Earnings simulation modeling and assumptions about the timing and volatility of cash flows are critical in net portfolio equity valuation analysis. Particularly important are the assumptions driving mortgage prepayments and expected attrition of the core deposit portfolios. These assumptions are based on the Company’s historical experience and industry standards and are applied consistently across all rate risk measures.

The Company has established the following guidelines for assessing interest rate risk:

Net interest income simulation- Given a 200 basis point parallel gradual increase or decrease in market interest rates, net interest income may not change by more than 10% for a one-year period. Given a 100 basis point parallel gradual decrease in market interest rates, net interest income may not change by more than 8% for a one-year period.

Portfolio equity simulation- Portfolio equity is the net present value of the Company’s existing assets and liabilities. Given a 200 basis point immediate and permanent increase in market interest rates, portfolio equity may not correspondingly decrease or increase by more than 20% of stockholders’ equity. Given a 100 basis point immediate and permanent decrease in market interest rates, portfolio equity may not correspondingly decrease or increase by more than 10% of stockholders’ equity.

The following table presents the simulated impact of a 200 basis point upward or 100 basis point downward shift of market interest rates on net interest income, and the change in portfolio equity. This analysis was done assuming the interest-earning asset and interest-bearing liability levels at June 30, 2014 remained constant. The impact of the market rate movements was developed by simulating the effects of rates changing gradually over a one-year period from the June 30, 2014 levels for net interest income, and portfolio equity. The impact of market rate movements was developed by simulating the effects of an immediate and permanent change in rates at June 30, 2014 for portfolio equity:  

	Increase			Decrease
	200 Basis Points			100 Basis Points
Net interest income - decrease		(0.11	)%		(1.19	)%
Portfolio equity - decrease		(6.99	)%		(7.52	)%

38

Item 4. Controls and Procedures

Controls and Procedures Disclosure

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Corporation’s reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

As of the end of the period covered by this quarterly report, an evaluation was carried out under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are, to the best of their knowledge, effective to ensure that information required to be disclosed by the Corporation in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. Subsequent to the date of their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that there were no significant changes in internal control or in other factors that could significantly affect the Company’s internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

A material weakness is a significant deficiency (as defined in Public Company Accounting Oversight Board Auditing Standard No. 2), or a combination of significant deficiencies, that results in there being more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by management or employees in the normal course of performing their assigned functions.

Changes in Internal Control over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings
	None
Item 1a.	There are no material changes to the risk factors set forth in Part I, Item 1A, “Risk Factors,” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. Please refer to that section for disclosures regarding the risks and uncertainties related to the Company’s business.
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
	None
Item 3.	Defaults by the Company on its Senior Securities
	None
Item 4.	Mine Safety Disclosures
	N/A
Item 5.	Other information
	None
Item 6.	Exhibits and Reports on Form 8-K

39

Exhibit list for Middlefield Banc Corp.’s Form 10-Q Quarterly Report for the Period Ended June 30, 2014

3.1	Second Amended and Restated Articles of Incorporation of Middlefield Banc Corp., as amended	Incorporated by reference to Exhibit 3.1 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2005, filed on March 29, 2006
3.2	Regulations of Middlefield Banc Corp.	Incorporated by reference to Exhibit 3.2 of Middlefield Banc Corp.’s registration statement on Form 10 filed on April 17, 2001
4.0	Specimen stock certificate	Incorporated by reference to Exhibit 4 of Middlefield Banc Corp.’s registration statement on Form 10 filed on April 17, 2001
4.1	Amended and Restated Trust Agreement, dated as of December 21, 2006, between Middlefield Banc Corp., as Depositor, Wilmington Trust Company, as Property trustee, Wilmington Trust Company, as Delaware Trustee, and Administrative Trustees	Incorporated by reference to Exhibit 4.1 of Middlefield Banc Corp.’s Form 8-K Current Report filed on December 27, 2006
4.2	Junior Subordinated Indenture, dated as of December 21, 2006, between Middlefield Banc Corp. and Wilmington Trust Company	Incorporated by reference to Exhibit 4.2 of Middlefield Banc Corp.’s Form 8-K Current Report filed on December 27, 2006
4.3	Guarantee Agreement, dated as of December 21, 2006, between Middlefield Banc Corp. and Wilmington Trust Company	Incorporated by reference to Exhibit 4.3 of Middlefield Banc Corp.’s Form 8-K Current Report filed on December 27, 2006
10.1.0*	1999 Stock Option Plan of Middlefield Banc Corp.	Incorporated by reference to Exhibit 10.1 of Middlefield Banc Corp.’s registration statement on Form 10 filed on April 17, 2001
10.1.1*	2007 Omnibus Equity Plan	Incorporated by reference to Middlefield Banc Corp.’s definitive proxy statement for the 2008 Annual Meeting of Shareholders, Appendix A, filed on April 7, 2008
10.2*	Severance Agreement between Middlefield Banc Corp. and Thomas G. Caldwell, dated January 7, 2008	Incorporated by reference to Exhibit 10.2 of Middlefield Banc Corp.’s Form 8-K Current Report filed on January 9, 2008
10.3*	Severance Agreement between Middlefield Banc Corp. and James R. Heslop, II, dated January 7, 2008	Incorporated by reference to Exhibit 10.3 of Middlefield Banc Corp.’s Form 8-K Current Report filed on January 9, 2008
10.4.0*	Severance Agreement between Middlefield Banc Corp. and Jay P. Giles, dated January 7, 2008	Incorporated by reference to Exhibit 10.4 of Middlefield Banc Corp.’s Form 8-K Current Report filed on January 9, 2008
10.4.1*	Severance Agreement between Middlefield Banc Corp. and Teresa M. Hetrick, dated January 7, 2008	Incorporated by reference to Exhibit 10.4.1 of Middlefield Banc Corp.’s Form 8-K Current Report filed on January 9, 2008
10.4.2	[reserved]
10.4.3*	Severance Agreement between Middlefield Banc Corp. and Donald L. Stacy, dated January 7, 2008	Incorporated by reference to Exhibit 10.4.3 of Middlefield Banc Corp.’s Form 8-K Current Report filed on January 9, 2008
10.4.4*	Severance Agreement between Middlefield Banc Corp. and Alfred F. Thompson Jr., dated January 7, 2008	Incorporated by reference to Exhibit 10.4.4 of Middlefield Banc Corp.’s Form 8-K Current Report filed on January 9, 2008

40

10.5	Federal Home Loan Bank of Cincinnati Agreement for Advances and Security Agreement dated September 14, 2000	Incorporated by reference to Exhibit 10.4 of Middlefield Banc Corp.’s registration statement on Form 10 filed on April 17, 2001
10.6*	Amended Director Retirement Agreement with Richard T. Coyne	Incorporated by reference to Exhibit 10.6 of Middlefield Banc Corp.’s Form 8-K Current Report filed on January 9, 2008
10.7*	Amended Director Retirement Agreement with Frances H. Frank	Incorporated by reference to Exhibit 10.7 of Middlefield Banc Corp.’s Form 8-K Current Report filed on January 9, 2008
10.8*	Amended Director Retirement Agreement with Thomas C. Halstead	Incorporated by reference to Exhibit 10.8 of Middlefield Banc Corp.’s Form 8-K Current Report filed on January 9, 2008
10.9*	Director Retirement Agreement with George F. Hasman	Incorporated by reference to Exhibit 10.9 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2001, filed on March 28, 2002
10.10*	Director Retirement Agreement with Donald D. Hunter	Incorporated by reference to Exhibit 10.10 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2001, filed on March 28, 2002
10.11*	Director Retirement Agreement with Martin S. Paul	Incorporated by reference to Exhibit 10.11 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2001, filed on March 28, 2002
10.12*	Amended Director Retirement Agreement with Donald E. Villers	Incorporated by reference to Exhibit 10.12 of Middlefield Banc Corp.’s Form 8-K Current Report filed on January 9, 2008
10.13*	Executive Survivor Income Agreement (aka DBO agreement [death benefit only]) with Donald L. Stacy	Incorporated by reference to Exhibit 10.14 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2003, filed on March 30, 2004
10.14*	DBO Agreement with Jay P. Giles	Incorporated by reference to Exhibit 10.15 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2003, filed on March 30, 2004
10.15*	DBO Agreement with Alfred F. Thompson Jr.	Incorporated by reference to Exhibit 10.16 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2003, filed on March 30, 2004
10.16	[reserved]
10.17*	DBO Agreement with Theresa M. Hetrick	Incorporated by reference to Exhibit 10.18 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2003, filed on March 30, 2004
10.18 *	Executive Deferred Compensation Agreement with Jay P. Giles	Incorporated by reference to Exhibit 10.18 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2011, filed on March 20, 2012
10.19*	DBO Agreement with James R. Heslop, II	Incorporated by reference to Exhibit 10.20 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2003, filed on March 30, 2004

41

10.20*	DBO Agreement with Thomas G. Caldwell	Incorporated by reference to Exhibit 10.21 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2003, filed on March 30, 2004
10.21*	Form of Indemnification Agreement with directors of Middlefield Banc Corp. and with executive officers of Middlefield Banc Corp. and The Middlefield Banking Company	Incorporated by reference to Exhibit 99.1 of Middlefield Banc Corp.’s registration statement on Form 10, Amendment No. 1, filed on June 14, 2001
10.22*	Annual Incentive Plan	Incorporated by reference to Exhibit 10.22 of Middlefield Banc Corp.’s Form 8-K Current Report filed on June 12, 2012
10.22.1	Annual Incentive Plan 2014 Award Summary	Incorporated by reference to Exhibit 10.22.1 of Middlefield Banc Corp.’s Form 8-K Current Report filed on April 17, 2014
10.23*	Amended Executive Deferred Compensation Agreement with Thomas G. Caldwell	Incorporated by reference to Exhibit 10.23 of Middlefield Banc Corp.’s Form 8-K Current Report filed on May 9, 2008
10.24*	Amended Executive Deferred Compensation Agreement with James R. Heslop, II	Incorporated by reference to Exhibit 10.24 of Middlefield Banc Corp.’s Form 8-K Current Report filed on May 9, 2008
10.25*	Amended Executive Deferred Compensation Agreement with Donald L. Stacy	Incorporated by reference to Exhibit 10.25 of Middlefield Banc Corp.’s Form 8-K Current Report filed on May 9, 2008
10.26*	Stock Purchase Agreement dated August 15, 2011 between Bank Opportunity Fund LLC and Middlefield Banc Corp.	Incorporated by reference to Exhibit 10.26 of Middlefield Banc Corp.’s Form 8-K Current Report filed on August 18, 2011
10.26.1	Amendment 1 of the Stock Purchase Agreement with Bank Opportunity Fund LLC (amendment dated September 29, 2011)	Incorporated by reference to Exhibit 10.26.1 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2011, filed on March 20, 2012
10.26.2	Amendment 2 of the Stock Purchase Agreement with Bank Opportunity Fund LLC (amendment dated October 20, 2011)	Incorporated by reference to Exhibit 10.26.2 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2011, filed on March 20, 2012
10.26.3	Amendment 3 of the Stock Purchase Agreement with Bank Opportunity Fund LLC (amendment dated November 28, 2011)	Incorporated by reference to Exhibit 10.26.3 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2011, filed on March 20, 2012
10.26.4	Amendment 4 of the Stock Purchase Agreement with Bank Opportunity Fund LLC (amendment dated December 21, 2011)	Incorporated by reference to Exhibit 10.26.4 of Middlefield Banc Corp.’s Annual Report on Form 10-K for the Year Ended December 31, 2011, filed on March 20, 2012
10.26.5	March 21, 2012 letter agreement between Bank Opportunity Fund LLC and Middlefield Banc Corp.	Incorporated by reference to Exhibit 10.26.5 of Middlefield Banc Corp.’s Form 8-K Current Report filed on March 27, 2012
10.26.6	Amendment 5 of the Stock Purchase Agreement with Bank Opportunity Fund LLC (amendment dated April 17, 2012)	Incorporated by reference to Exhibit 10.26.6 of Middlefield Banc Corp.’s Form 8-K Current Report filed on April 23, 2012
10.26.7	Amendment 6 of the Stock Purchase Agreement with Bank Opportunity Fund LLC (amendment dated August 23, 2012)	Incorporated by reference to Exhibit 10.26.7 of Middlefield Banc Corp.’s Form 8-K Current Report filed on August 24, 2012
10.27	[reserved]

42

10.28	Amended and Restated Purchaser’s Rights and Voting Agreement, dated April 17, 2012, among Bank Opportunity Fund LLC, Middlefield Banc Corp., and directors and officers of Middlefield Banc Corp.	Incorporated by reference to Exhibit 10.28 of Middlefield Banc Corp.’s Form 8-K Current Report filed on April 23, 2012
10.28.1	Amendment of the Amended and Restated Purchaser’s Rights and Voting Agreement (amendment dated August 23, 2012)	Incorporated by reference to Exhibit 10.28.1 of Middlefield Banc Corp.’s Form 8-K Current Report filed on August 24, 2012
31.1	Rule 13a-14(a) certification of Chief Executive Officer	filed herewith
31.2	Rule 13a-14(a) certification of Chief Financial Officer	filed herewith
32	Rule 13a-14(b) certification	filed herewith
101.INS**	XBRL Instance	furnished herewith
101.SCH**	XBRL Taxonomy Extension Schema	furnished herewith
101.CAL**	XBRL Taxonomy Extension Calculation	furnished herewith
101.DEF**	XBRL Taxonomy Extension Definition	furnished herewith
101.LAB**	XBRL Taxonomy Extension Labels	furnished herewith
101.PRE**	XBRL Taxonomy Extension Presentation	furnished herewith

* management contract or compensatory plan or arrangement

** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

43

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned and hereunto duly authorized.

		MIDDLEFIELD BANC CORP.
Date: August 12, 2014	By:	/s/Thomas G. Caldwell
		Thomas G. Caldwell
		President and Chief Executive Officer
Date: August 12, 2014	By:	/s/Donald L. Stacy
		Donald L. Stacy
		Principal Financial and Accounting Officer

44 

EX-31

Exhibit 31.1

Certification of Principal Executive Officer

Pursuant to Section 302 of the Securities Exchange Act of 1934

I, Thomas G. Caldwell, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Middlefield Banc Corp.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 12, 2014	/s/ Thomas G. Caldwell
	Thomas G. Caldwell
	President and Chief Executive Officer

EX-31

Exhibit 31.2

Certification of Principal Executive Officer

Pursuant to Section 302 of the Securities Exchange Act of 1934

I, Donald L. Stacy, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Middlefield Banc Corp.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 12, 2014	/s/ Donald L. Stacy
	Donald L. Stacy
	Principal Financial and Accounting Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Middlefield Banc Corp. (the “Company”) on Form 10-Q for the period ending June 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Thomas G. Caldwell, President, and Donald L. Stacy, Chief Financial Officer, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)     The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By: /s/Thomas G. Caldwell	By: /s/Donald L. Stacy
Thomas G. Caldwell	Donald L. Stacy
President and Chief Executive Officer	Principal Financial and Accounting Officer

August 12, 2014

A signed original of this written statement required by Section 906 has been provided to Middlefield Banc Corp. and will be retained by Middlefield Banc Corp. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Note 7 - Loans and Related Allowance for Loan and Lease Losses (Details) (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012
Note 7 - Loans and Related Allowance for Loan and Lease Losses (Details) [Line Items]
Loans and Leases Receivable, Allowance	$ 7,129,000	$ 7,129,000	$ 7,015,000	$ 7,046,000	$ 7,749,000	$ 7,731,000	$ 7,779,000
Increase (Decrease) In Loss Ratio		0.24%
Financing Receivable, Modifications, Subsequent Default, Recorded Investment		0
Financing Receivable, Modifications, Subsequent Default, Number of Contracts	0	0
Commercial Real Estate Mortgage [Member] | Commercial Real Estate Provision [Member]
Note 7 - Loans and Related Allowance for Loan and Lease Losses (Details) [Line Items]
Loans and Leases Receivable, Allowance	352,000	352,000
Commercial Real Estate Mortgage [Member]
Note 7 - Loans and Related Allowance for Loan and Lease Losses (Details) [Line Items]
Payoff of Loans Receivable		2,100,000
Loans and Leases Receivable, Allowance	1,925,000	1,925,000	1,862,000	2,170,000	2,005,000	2,201,000	1,991,000
Real Estate Construction [Member] | Real Estate Construction Provision [Member]
Note 7 - Loans and Related Allowance for Loan and Lease Losses (Details) [Line Items]
Loans and Leases Receivable, Allowance	113,000	113,000
Real Estate Construction [Member]
Note 7 - Loans and Related Allowance for Loan and Lease Losses (Details) [Line Items]
Loans and Leases Receivable, Allowance	423,000	423,000	488,000	576,000	1,192,000	1,047,000	1,123,000
Threshold for Loans Evaluated for Impairment [Member] | Outside Consultant [Member]
Note 7 - Loans and Related Allowance for Loan and Lease Losses (Details) [Line Items]
Loans and Leases Receivable, Gross, Commercial	250,000	250,000
Threshold for Loans Evaluated for Impairment [Member] | Criticized Relationships [Member]
Note 7 - Loans and Related Allowance for Loan and Lease Losses (Details) [Line Items]
Financing Receivable, Gross	125,000	125,000
Threshold for Loans Evaluated for Impairment [Member]
Note 7 - Loans and Related Allowance for Loan and Lease Losses (Details) [Line Items]
Notes, Loans and Financing Receivable, Gross, Current	200,000	200,000
Loans and Leases Receivable, Gross, Commercial	$ 200,000	$ 200,000

XML

Note 7 - Loans and Related Allowance for Loan and Lease Losses (Details) - Past Due Financing Receivables (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable Current	$ 437,497	$ 422,165
Financing Receivable 30-59 Days Past Due	2,762	3,253
Financing Receivable 60-89 Days Past Due	992	1,595
Financing Receivable 90 Days + Past Due	117	181
Financing Receivable Total Past Due	3,871	5,029
Financing Receivable Non-Accrual	8,751	8,531
Financing Receivable	450,119	435,725
Commercial and Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable Current	53,809	53,366
Financing Receivable 30-59 Days Past Due	703	521
Financing Receivable 60-89 Days Past Due	575	359
Financing Receivable 90 Days + Past Due	20	38
Financing Receivable Total Past Due	1,298	918
Financing Receivable Non-Accrual	469	214
Financing Receivable	55,577	54,498
Real Estate Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable Current	25,995	24,945
Financing Receivable 30-59 Days Past Due	620	17
Financing Receivable 60-89 Days Past Due		639
Financing Receivable 90 Days + Past Due	0	0
Financing Receivable Total Past Due	620	656
Financing Receivable	26,615	25,601
Residential Real Estate Mortgage [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable Current	210,073	200,041
Financing Receivable 30-59 Days Past Due	1,283	2,079
Financing Receivable 60-89 Days Past Due	415	481
Financing Receivable 90 Days + Past Due	97	143
Financing Receivable Total Past Due	1,796	2,703
Financing Receivable Non-Accrual	7,360	7,566
Financing Receivable	219,229	210,310
Commercial Real Estate Mortgage [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable Current	141,466	139,730
Financing Receivable 30-59 Days Past Due	130	598
Financing Receivable 60-89 Days Past Due		100
Financing Receivable 90 Days + Past Due	0	0
Financing Receivable Total Past Due	130	698
Financing Receivable Non-Accrual	909	743
Financing Receivable	142,505	141,171
Consumer Installment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable Current	6,153	4,083
Financing Receivable 30-59 Days Past Due	25	38
Financing Receivable 60-89 Days Past Due	2	16
Financing Receivable 90 Days + Past Due	0	0
Financing Receivable Total Past Due	27	54
Financing Receivable Non-Accrual	13	8
Financing Receivable	$ 6,193	$ 4,145

XML

Note 5 - Accumulated Other Comprehensive Income (Details) - Significant Amounts Reclassified Out of Each Component of Accumulated Other Comprehensive Income (Loss) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Unrealized gains on available-for-sale securities
$	$ 64	$ (10)	$ 58	$ 175
	(22)	3	(20)	(60)
$	$ 42	$ (7)	$ 38	$ 115

XML

Note 3 - Earnings Per Share (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Dec. 31, 2012
Note 3 - Earnings Per Share (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	57,674	59,932	57,674	59,932	58,581	79,693
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit	$ 17.55	$ 17.55	$ 17.55	$ 17.55
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit	$ 40.24	$ 40.24	$ 40.24	$ 40.24
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements	6,538	6,697	6,156	8,557
Equity Option [Member]
Note 3 - Earnings Per Share (Details) [Line Items]
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements	28,282	31,833	28,282	49,394
Three Months Ending [Member]
Note 3 - Earnings Per Share (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	57,674	59,932	57,674	59,932
Six Months Ended [Member]
Note 3 - Earnings Per Share (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	57,674	59,932	57,674	59,932

XML

Note 7 - Loans and Related Allowance for Loan and Lease Losses (Details) - Allowance for Loan Losses (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013	Dec. 31, 2012
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$ 1,258,000		$ 1,258,000			$ 1,807,000
Collectively evaluated for impairment	5,871,000		5,871,000			5,239,000
Balance	7,129,000	7,749,000	7,129,000	7,749,000	7,015,000	7,046,000	7,731,000	7,779,000
Charge-offs	(233,000)	(426,000)	(584,000)	(896,000)
Recoveries	227,000	144,000	367,000	253,000
Provision	120,000	300,000	300,000	613,000
Commercial and Industrial [Member]
Ending allowance balance attributable to loans:
Individually evaluated for impairment	87,000		87,000			179,000
Collectively evaluated for impairment	509,000		509,000			435,000
Balance	596,000	875,000	596,000	875,000	867,000	614,000	1,229,000	1,732,000
Charge-offs	(80,000)		(92,000)	(325,000)
Recoveries	64,000	92,000	65,000	92,000
Provision	(255,000)	(446,000)	9,000	(624,000)
Real Estate Construction [Member]
Ending allowance balance attributable to loans:
Individually evaluated for impairment	141,000		141,000			210,000
Collectively evaluated for impairment	282,000		282,000			366,000
Balance	423,000	1,192,000	423,000	1,192,000	488,000	576,000	1,047,000	1,123,000
Charge-offs		(128,000)		(190,000)
Recoveries	60,000		60,000	33,000
Provision	(125,000)	273,000	(213,000)	226,000
Residential Real Estate Mortgage [Member]
Ending allowance balance attributable to loans:
Individually evaluated for impairment	858,000		858,000			855,000
Collectively evaluated for impairment	3,272,000		3,272,000			2,809,000
Balance	4,130,000	3,626,000	4,130,000	3,626,000	3,726,000	3,664,000	3,207,000	2,872,000
Charge-offs	(141,000)	(279,000)	(457,000)	(345,000)
Recoveries	58,000	47,000	195,000	71,000
Provision	487,000	651,000	728,000	1,028,000
Commercial Real Estate Mortgage [Member]
Ending allowance balance attributable to loans:
Individually evaluated for impairment	169,000		169,000			563,000
Collectively evaluated for impairment	1,756,000		1,756,000			1,607,000
Balance	1,925,000	2,005,000	1,925,000	2,005,000	1,862,000	2,170,000	2,201,000	1,991,000
Recoveries	40,000		40,000	46,000
Provision	23,000	(196,000)	(285,000)	(32,000)
Consumer Installment [Member]
Ending allowance balance attributable to loans:
Individually evaluated for impairment	3,000		3,000
Collectively evaluated for impairment	52,000		52,000			22,000
Balance	55,000	51,000	55,000	51,000	72,000	22,000	47,000	61,000
Charge-offs	(12,000)	(19,000)	(35,000)	(36,000)
Recoveries	5,000	5,000	7,000	11,000
Provision	$ (10,000)	$ 18,000	$ 61,000	$ 15,000

XML

Note 6 - Investment Securities Available For Sale (Details) - Sales of Available for Sale Securities (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Sales of Available for Sale Securities [Abstract]
Proceeds from sales	$ 980	$ 533	$ 1,494	$ 8,135
Gross realized gains	64		64	204
Gross realized losses		$ (10)	$ (6)	$ (29)

XML

Note 7 - Loans and Related Allowance for Loan and Lease Losses (Details) - Troubled Debt Restructurings (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended				3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended
	Jun. 30, 2014 Commercial and Industrial [Member]	Jun. 30, 2014 Commercial and Industrial [Member]	Jun. 30, 2013 Commercial and Industrial [Member]	Jun. 30, 2014 Residential Real Estate Mortgage [Member]	Jun. 30, 2013 Residential Real Estate Mortgage [Member]	Jun. 30, 2014 Commercial Real Estate Mortgage [Member]	Jun. 30, 2014 Commercial Real Estate Mortgage [Member]	Jun. 30, 2013 Consumer Installment [Member]	Jun. 30, 2014 Consumer Installment [Member]	Jun. 30, 2013 Consumer Installment [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts	1	1	5	1	2	1	1	1	1	1
Pre-Modification - Outstanding Recorded Investment (in Dollars)	$ 7	$ 7	$ 742	$ 49	$ 383	$ 73	$ 73	$ 7	$ 7	$ 644

XML

Note 1 - Basis of Presentation

6 Months Ended

Jun. 30, 2014

Disclosure Text Block [Abstract]

Basis of Presentation and Significant Accounting Policies [Text Block]

NOTE 1 - BASIS OF PRESENTATION

The consolidated financial statements of Middlefield Banc Corp. ("Company") include its bank subsidiary, The Middlefield Banking Company (“MB”), and a nonbank asset resolution subsidiary EMORECO, Inc. All significant inter-company items have been eliminated.

The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles and the instructions for Form 10-Q and Article 10 of Regulation S-X. In management’s opinion, the financial statements include all adjustments, consisting of normal recurring adjustments, that the Company considers necessary to fairly state the Company’s financial position and the results of operations and cash flows. The consolidated balance sheet at December 31, 2013, has been derived from the audited financial statements at that date but does not include all of the necessary informational disclosures and footnotes as required by U.S. generally accepted accounting principles. The accompanying financial statements should be read in conjunction with the financial statements and notes thereto included with the Company’s Form 10-K for the year ended December 31, 2013 (File No. 000-32561). The results of the Company’s operations for any interim period are not necessarily indicative of the results of the Company’s operations for any other interim period or for a full fiscal year.

Recent Accounting Pronouncements

In June 2013, the FASB issued ASU 2013-08, Financial Services – Investment Companies (Topic 946): Amendments to the Scope, Measurement, and Disclosure Requirements. The amendments in this Update affect the scope, measurement, and disclosure requirements for investment companies under U.S. GAAP. The amendments do all of the following: 1. Change the approach to the investment company assessment in Topic 946, clarify the characteristics of an investment company, and provide comprehensive guidance for assessing whether an entity is an investment Company. 2. Require an investment company to measure noncontrolling ownership interests in other investment companies at fair value rather than using the equity method of accounting. 3. Require the following additional disclosures: (a) the fact that the entity is an investment company and is applying the guidance in Topic 946, (b) information about changes, if any, in an entity’s status as an investment company, and (c) information about financial support provided or contractually required to be provided by an investment company to any of its investees. The amendments in this Update are effective for an entity’s interim and annual reporting periods in fiscal years that begin after December 15, 2013. This ASU became effective for the Company on January 1, 2014 and did not have a significant impact on the Company’s financial statements.

In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This Update applies to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. An unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. The amendments in this Update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. For nonpublic entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. Early adoption is permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. This ASU became effective for the Company on January 1, 2014 and did not have a significant impact on the Company’s financial statements.

In January 2014, FASB issued ASU 2014-01, Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects. The amendments in this Update permit reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). The amendments in this Update should be applied retrospectively to all periods presented. A reporting entity that uses the effective yield method to account for its investments in qualified affordable housing projects before the date of adoption may continue to apply the effective yield method for those preexisting investments. The amendments in this Update are effective for public business entities for annual periods and interim reporting periods within those annual periods, beginning after December 15, 2014. Early adoption is permitted. This ASU is not expected to have a significant impact on the Company’s financial.

In January 2014, the FASB issued ASU 2014-04, Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. The amendments in this Update clarify that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. The amendments in this Update are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. An entity can elect to adopt the amendments in this Update using either a modified retrospective transition method or a prospective transition method. This ASU is not expected to have a significant impact on the Company’s financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (a new revenue recognition standard). The Update’s core principle is that a company will recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, this update specifies the accounting for certain costs to obtain or fulfill a contract with a customer and expands disclosure requirements for revenue recognition. This Update is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is evaluating the effect of adopting this new accounting Update.

In June 2014, the FASB issued ASU 2014-11, Transfers and Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The amendments in this Update change the accounting for repurchase-to-maturity transactions to secured borrowing accounting. For repurchase financing arrangements, the amendments require separate accounting for a transfer of a financial asset executed contemporaneously with a repurchase agreement with the same counterparty, which will result in secured borrowing accounting for the repurchase agreement. The amendments also require enhanced disclosures. The accounting changes in this Update are effective for the first interim or annual period beginning after December 15, 2014. An entity is required to present changes in accounting for transactions outstanding on the effective date as a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. Earlier application is prohibited. The disclosure for certain transactions accounted for as a sale is required to be presented for interim and annual periods beginning after December 15, 2014, and the disclosure for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions accounted for as secured borrowings is required to be presented for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. The disclosures are not required to be presented for comparative periods before the effective date. This Update is not expected to have a significant impact on the Company’s financial statements.

In June 2014, the FASB issued ASU 2014-12, Compensation-Stock Compensation (Topic 718): Accounting for Share-Based Payments when the Terms of an Award Provide that a Performance Target Could Be Achieved After the Requisite Service Period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. Entities may apply the amendments in this Update either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect of applying this Update as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date. Additionally, if retrospective transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. This Update is not expected to have a significant impact on the Company’s financial statements.

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Note 7 - Loans and Related Allowance for Loan and Lease Losses (Details) - Impaired Loans by Class (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
With no related allowance recorded:
Impaired loans with no related allowance recorded investment	$ 10,258	$ 9,284
Impaired loans with no related allowance unpaid principal balance	10,403	9,472
With an allowance recorded:
Impaired loans with related allowance recorded investment	5,029	9,681
Impaired loans with related allowance unpaid principal balance	5,095	9,720
Impaired loans, related allowance	1,258	1,807
Total:
Impaired loans recorded investment	15,287	18,965
Impaired loans unpaid principal balance	15,498	19,192
Impaired loans, related allowance	1,258	1,807
Commercial and Industrial [Member]
With no related allowance recorded:
Impaired loans with no related allowance recorded investment	1,375	1,357
Impaired loans with no related allowance unpaid principal balance	1,375	1,357
With an allowance recorded:
Impaired loans with related allowance recorded investment	300	534
Impaired loans with related allowance unpaid principal balance	300	534
Impaired loans, related allowance	87	179
Total:
Impaired loans recorded investment	1,675	1,891
Impaired loans unpaid principal balance	1,675	1,891
Impaired loans, related allowance	87	179
Real Estate Construction [Member]
With no related allowance recorded:
Impaired loans with no related allowance recorded investment	2,965	124
Impaired loans with no related allowance unpaid principal balance	2,965	124
With an allowance recorded:
Impaired loans with related allowance recorded investment	622	3,887
Impaired loans with related allowance unpaid principal balance	622	3,887
Impaired loans, related allowance	141	210
Total:
Impaired loans recorded investment	3,587	4,011
Impaired loans unpaid principal balance	3,587	4,011
Impaired loans, related allowance	141	210
Residential Real Estate Mortgage [Member]
With no related allowance recorded:
Impaired loans with no related allowance recorded investment	1,821	2,704
Impaired loans with no related allowance unpaid principal balance	1,966	2,892
With an allowance recorded:
Impaired loans with related allowance recorded investment	3,246	3,178
Impaired loans with related allowance unpaid principal balance	3,312	3,217
Impaired loans, related allowance	858	855
Total:
Impaired loans recorded investment	5,067	5,882
Impaired loans unpaid principal balance	5,278	6,109
Impaired loans, related allowance	858	855
Commercial Real Estate Mortgage [Member]
With no related allowance recorded:
Impaired loans with no related allowance recorded investment	4,092	5,093
Impaired loans with no related allowance unpaid principal balance	4,092	5,093
With an allowance recorded:
Impaired loans with related allowance recorded investment	854	2,082
Impaired loans with related allowance unpaid principal balance	854	2,082
Impaired loans, related allowance	169	563
Total:
Impaired loans recorded investment	4,946	7,175
Impaired loans unpaid principal balance	4,946	7,175
Impaired loans, related allowance	169	563
Consumer Installment [Member]
With no related allowance recorded:
Impaired loans with no related allowance recorded investment	5	6
Impaired loans with no related allowance unpaid principal balance	5	6
With an allowance recorded:
Impaired loans with related allowance recorded investment	7
Impaired loans with related allowance unpaid principal balance	7
Impaired loans, related allowance	3
Total:
Impaired loans recorded investment	12	6
Impaired loans unpaid principal balance	12	6
Impaired loans, related allowance	$ 3

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Note 4 - Fair Value Measurements (Details) - Assets Measured on a Nonrecurring Basis (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Assets measured on a nonrecurring basis:
Impaired loans	$ 15,287	$ 18,965
Fair Value, Inputs, Level 3 [Member]
Assets measured on a nonrecurring basis:
Impaired loans	14,029	17,158
Other real estate owned	2,392	2,698
Estimate of Fair Value Measurement [Member]
Assets measured on a nonrecurring basis:
Impaired loans	14,029	17,158
Other real estate owned	$ 2,392	$ 2,698

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Note 4 - Fair Value Measurements (Details) - Assets Measured on a Recurring Basis (USD $)	Jun. 30, 2014	Dec. 31, 2013
Assets measured on a recurring basis:
Assets Measured on a Recurring Basis	$ 165,506,000	$ 157,143,000
US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Assets measured on a recurring basis:
Assets Measured on a Recurring Basis	25,061,000	25,763,000
US Government Agencies Debt Securities [Member]
Assets measured on a recurring basis:
Assets Measured on a Recurring Basis	25,061,000	25,763,000
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Assets measured on a recurring basis:
Assets Measured on a Recurring Basis	98,772,000	88,614,000
US States and Political Subdivisions Debt Securities [Member]
Assets measured on a recurring basis:
Assets Measured on a Recurring Basis	98,772,000	88,614,000
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member] | Fair Value, Inputs, Level 2 [Member]
Assets measured on a recurring basis:
Assets Measured on a Recurring Basis	37,599,000	38,323,000
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Assets measured on a recurring basis:
Assets Measured on a Recurring Basis	37,599,000	38,323,000
Mortgage-backed Securities, Issued by Private Enterprises [Member] | Fair Value, Inputs, Level 2 [Member]
Assets measured on a recurring basis:
Assets Measured on a Recurring Basis	3,318,000	3,693,000
Mortgage-backed Securities, Issued by Private Enterprises [Member]
Assets measured on a recurring basis:
Assets Measured on a Recurring Basis	3,318,000	3,693,000
Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Assets measured on a recurring basis:
Assets Measured on a Recurring Basis	164,750,000	156,393,000
Debt Securities [Member]
Assets measured on a recurring basis:
Assets Measured on a Recurring Basis	164,750,000	156,393,000
Equity Securities in Financial Institutions [Member] | Fair Value, Inputs, Level 1 [Member]
Assets measured on a recurring basis:
Assets Measured on a Recurring Basis	5,000	5,000
Equity Securities in Financial Institutions [Member] | Fair Value, Inputs, Level 2 [Member]
Assets measured on a recurring basis:
Assets Measured on a Recurring Basis	751,000	745,000
Equity Securities in Financial Institutions [Member]
Assets measured on a recurring basis:
Assets Measured on a Recurring Basis	756,000	750,000
Fair Value, Inputs, Level 1 [Member]
Assets measured on a recurring basis:
Assets Measured on a Recurring Basis	5,000	5,000
Fair Value, Inputs, Level 2 [Member]
Assets measured on a recurring basis:
Assets Measured on a Recurring Basis	165,501,000	157,138,000
Fair Value, Inputs, Level 3 [Member]
Assets measured on a recurring basis:
Assets Measured on a Recurring Basis	$ 0	$ 0

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Note 7 - Loans and Related Allowance for Loan and Lease Losses (Details) - Additional Information on Impaired Loans (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Commercial and Industrial [Member]
Note 7 - Loans and Related Allowance for Loan and Lease Losses (Details) - Additional Information on Impaired Loans [Line Items]
Impaired Financing Receivable - Average Recorded Investment	$ 2,117	$ 2,643	$ 2,140	$ 2,687
Impaired Financing Receivable - Interest Income Recognized	12	15	49	70
Real Estate Construction [Member]
Note 7 - Loans and Related Allowance for Loan and Lease Losses (Details) - Additional Information on Impaired Loans [Line Items]
Impaired Financing Receivable - Average Recorded Investment	3,653	3,850	3,683	3,499
Impaired Financing Receivable - Interest Income Recognized	40	58	81	95
Residential Real Estate Mortgage [Member]
Note 7 - Loans and Related Allowance for Loan and Lease Losses (Details) - Additional Information on Impaired Loans [Line Items]
Impaired Financing Receivable - Average Recorded Investment	5,153	5,274	5,229	4,937
Impaired Financing Receivable - Interest Income Recognized	45	69	102	143
Commercial Real Estate Mortgage [Member]
Note 7 - Loans and Related Allowance for Loan and Lease Losses (Details) - Additional Information on Impaired Loans [Line Items]
Impaired Financing Receivable - Average Recorded Investment	5,387	6,669	5,758	6,018
Impaired Financing Receivable - Interest Income Recognized	83	106	158	216
Consumer Installment [Member]
Note 7 - Loans and Related Allowance for Loan and Lease Losses (Details) - Additional Information on Impaired Loans [Line Items]
Impaired Financing Receivable - Average Recorded Investment	14	14	13	18
Impaired Financing Receivable - Interest Income Recognized		$ 1		$ 1

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Note 4 - Fair Value Measurements (Details) - Additional Quantitative Information About Assets Measured at Fair Value on Non-Recurring Basis (Appraisal Adjustments [Member], USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014		Dec. 31, 2013
Impaired Loans [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value Estimate	$ 14,029		$ 17,158
Valuation Techniques/Unobservable Input	Appraisal of collateral (1)	[1]
Impaired Loans [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range (Weighted Average)	(20.00%)
Impaired Loans [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range (Weighted Average)	(55.00%)
Other Real Estate Owned [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value Estimate	$ 2,392		$ 2,698
Valuation Techniques/Unobservable Input	Appraisal of collateral (1)	[1]
Other Real Estate Owned [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range (Weighted Average)	0.00%
Other Real Estate Owned [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range (Weighted Average)	(10.00%)

[1] Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various level 3 inputs which are not identifiable.

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Note 4 - Fair Value Measurements (Details) - Estimated Fair Value of the Company’s Financial Instruments (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2013	Dec. 31, 2012
Financial assets:
Cash and cash equivalents	$ 25,577	$ 26,193	$ 40,429	$ 45,346
Cash and cash equivalents	25,577	26,193
Available for sale	165,506	157,143
Available for sale	165,506	157,143
Net loans	442,990	428,679
Net loans	454,824	430,502
Bank-owned life insurance	8,951	8,816
Federal Home Loan Bank stock	1,887	1,887
Accrued interest receivable	2,229	2,135
Financial liabilities:
Deposits	588,793	568,836
Deposits	580,286	570,276
Short-term borrowings	6,939	10,809
Short-term borrowings	6,939	10,809
Other borrowings	11,362	11,609
Other borrowings	11,679	11,787
Accrued interest payable	342	364
Fair Value, Inputs, Level 1 [Member]
Financial assets:
Cash and cash equivalents	25,577	26,193
Available for sale	5	5
Available for sale	5	5
Bank-owned life insurance	8,951	8,816
Federal Home Loan Bank stock	1,887	1,887
Accrued interest receivable	2,229	2,135
Financial liabilities:
Deposits	406,796	394,422
Short-term borrowings	6,939	10,809
Accrued interest payable	342	364
Fair Value, Inputs, Level 2 [Member]
Financial assets:
Available for sale	165,501	157,138
Available for sale	165,501	157,138
Fair Value, Inputs, Level 3 [Member]
Financial assets:
Net loans	454,824	430,502
Financial liabilities:
Deposits	173,490	175,854
Other borrowings	$ 11,679	$ 11,787

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Consolidated Statement of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
OPERATING ACTIVITIES
Net income	$ 3,374	$ 3,342
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	300	613
Investment securities losses (gains), net	(58)	(175)
Depreciation and amortization	373	449
Amortization of premium and discount on investment securities, net	370	457
Accretion of deferred loan fees, net	(141)	(119)
Earnings on bank-owned life insurance	(135)	(143)
Deferred income taxes	(262)	103
(Gain) loss on sale of other real estate owned	70	(5)
Increase in accrued interest receivable	(94)	(88)
Decrease in accrued interest payable	(22)	(32)
Other, net	(797)	(16)
Net cash provided by operating activities	2,978	4,386
Investment securities available for sale:
Proceeds from repayments and maturities	6,809	12,992
Proceeds from sale of securities	1,494	8,135
Purchases	(12,287)	(15,150)
Increase in loans, net	(14,490)	(5,465)
Proceeds from the sale of other real estate owned	256	465
Purchases of premises and equipment	(444)	(250)
Net cash (used for) provided by investing activities	(18,662)	727
FINANCING ACTIVITIES
Net (decrease) increase in deposits	19,957	(7,916)
Decrease in short-term borrowings, net	(3,870)	(1,131)
Repayment of other borrowings	(247)	(335)
Common stock issuance		74
Stock options exercised		(115)
Proceeds from dividend reinvestment and purchase plan	287	440
Cash dividends paid	(1,059)	(1,047)
Net cash provided by (used for) financing activities	15,068	(10,030)
Decrease in cash and cash equivalents	(616)	(4,917)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	26,193	45,346
CASH AND CASH EQUIVALENTS AT END OF PERIOD	25,577	40,429
Cash paid during the year for:
Interest on deposits and borrowings	2,088	2,818
Income taxes	1,395	900
Noncash investing transactions:
Transfers from loans to other real estate owned	$ 20	$ 975

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Note 5 - Accumulated Other Comprehensive Income (Details) - Changes in Accumulated Other Comprehensive Income (Loss) by Component Net of Tax (USD $) In Thousands, unless otherwise specified	3 Months Ended								6 Months Ended
	Jun. 30, 2014		Mar. 31, 2014		Jun. 30, 2013		Mar. 31, 2013		Jun. 30, 2014		Jun. 30, 2013		Dec. 30, 2013
Changes in Accumulated Other Comprehensive Income (Loss) by Component Net of Tax [Abstract]
Balance	$ (386)	[1]	$ (2,237)		$ 4,265	[1]	$ 5,391	[1]	$ (2,237)		$ 5,391	[1]	$ (2,237)	[1]
Period change	1,245	[1]	1,851	[1]	(4,455)	[1]	(1,126)	[1]	3,096		(5,581)
Balance	859	[1]	(386)	[1]	(190)	[1]	4,265	[1]	859	[1]	(190)	[1]	(2,237)	[1]
Other comprehensive Income (loss) before reclassification	1,287	[1]	1,847	[1]	(4,462)	[1]	(1,004)	[1]
Amount reclassified from accumulated other comprehensive income (loss)	$ (42)	[1]	$ 4	[1]	$ 7	[1]	$ (122)	[1]

[1] All amounts are net of tax. Amounts in parentheses indicate debits.

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Note 7 - Loans and Related Allowance for Loan and Lease Losses (Details) - Major Classifications of Net Loans (USD $)	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable Gross	$ 450,119,000		$ 435,725,000
Less allowance for loan and lease losses	7,129,000	7,015,000	7,046,000	7,749,000	7,731,000	7,779,000
Net loans	442,990,000		428,679,000
Commercial and Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable Gross	55,577,000		54,498,000
Less allowance for loan and lease losses	596,000	867,000	614,000	875,000	1,229,000	1,732,000
Real Estate Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable Gross	26,615,000		25,601,000
Less allowance for loan and lease losses	423,000	488,000	576,000	1,192,000	1,047,000	1,123,000
Residential Real Estate Mortgage [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable Gross	219,229,000		210,310,000
Less allowance for loan and lease losses	4,130,000	3,726,000	3,664,000	3,626,000	3,207,000	2,872,000
Commercial Real Estate Mortgage [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable Gross	142,505,000		141,171,000
Less allowance for loan and lease losses	1,925,000	1,862,000	2,170,000	2,005,000	2,201,000	1,991,000
Consumer Installment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable Gross	6,193,000		4,145,000
Less allowance for loan and lease losses	$ 55,000	$ 72,000	$ 22,000	$ 51,000	$ 47,000	$ 61,000

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Consolidated Balance Sheet (Unaudited) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013
ASSETS
Cash and due from banks	$ 19,821		$ 20,926
Federal funds sold	5,756		5,267
Cash and cash equivalents	25,577		26,193
Investment securities available for sale	165,506		157,143
Loans	450,119		435,725
Less allowance for loan and lease losses	7,129		7,046
Net loans	442,990		428,679
Premises and equipment, net	9,927		9,828
Goodwill	4,559		4,559
Core deposit intangible	136		156
Bank-owned life insurance	8,951		8,816
Accrued interest and other assets	10,623		11,716
TOTAL ASSETS	668,269		647,090
Deposits:
Noninterest-bearing demand	96,209		85,905
Interest-bearing demand	58,366		53,741
Money market	73,619		77,473
Savings	178,602		177,303
Time	181,997		174,414
Total deposits	588,793		568,836
Short-term borrowings	6,939		10,809
Other borrowings	11,362		11,609
Accrued interest and other liabilities	2,004		2,363
TOTAL LIABILITIES	609,098		593,617
STOCKHOLDERS' EQUITY
Common stock, no par value; 10,000,000 shares authorized, 2,232,283 and 2,221,834 shares issued; 2,042,753 and 2,032,304 shares outstanding	35,266		34,979
Retained earnings	29,780		27,465
Accumulated other comprehensive income (loss)	859	[1]	(2,237)
Treasury stock, at cost; 189,530 shares	(6,734)		(6,734)
TOTAL STOCKHOLDERS' EQUITY	59,171		53,473
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 668,269		$ 647,090

[1] All amounts are net of tax. Amounts in parentheses indicate debits.

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Note 7 - Loans and Related Allowance for Loan and Lease Losses (Details) - Classes of the Loan Portfolio Summarized by Credit Quality (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	$ 450,119	$ 435,725
Commercial and Industrial [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	53,337	52,078
Commercial and Industrial [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	737	772
Commercial and Industrial [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	1,460	1,605
Commercial and Industrial [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	43	43
Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	55,577	54,498
Real Estate Construction [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	25,993	24,052
Real Estate Construction [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	0	907
Real Estate Construction [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	622	642
Real Estate Construction [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	0	0
Real Estate Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	26,615	25,601
Residential Real Estate Mortgage [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	207,164	198,479
Residential Real Estate Mortgage [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	912	774
Residential Real Estate Mortgage [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	11,153	11,057
Residential Real Estate Mortgage [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	0	0
Residential Real Estate Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	219,229	210,310
Commercial Real Estate Mortgage [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	136,490	132,931
Commercial Real Estate Mortgage [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	2,032	2,232
Commercial Real Estate Mortgage [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	3,983	6,008
Commercial Real Estate Mortgage [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	0	0
Commercial Real Estate Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	142,505	141,171
Consumer Installment [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	6,179	4,129
Consumer Installment [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	0	0
Consumer Installment [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	14	16
Consumer Installment [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	0	0
Consumer Installment [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	6,193	4,145
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	429,163	411,669
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	3,681	4,685
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	17,232	19,328
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable	$ 43	$ 43

XML

Consolidated Statement of Changes in Stockholders' Equity (Unaudited) (USD $) In Thousands	Common Stock [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Treasury Stock [Member]	Total
Balance, December 31, 2013 at Dec. 31, 2013	$ 34,979	$ 27,465	$ (2,237)	$ (6,734)	$ 53,473
Net income		3,374			3,374
Other comprehensive income			3,096		3,096
Dividend reinvestment and purchase plan (10,049 shares)	277				277
Employee Stock Grants (400 shares)	10				10
Cash dividends ($0.52 per share)		(1,059)			(1,059)
Balance, June 30, 2014 at Jun. 30, 2014	$ 35,266	$ 29,780	$ 859	$ (6,734)	$ 59,171

XML

Note 6 - Investment Securities Available For Sale (Details) - Amortized Cost and Fair Values of Securities Available for Sale (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Note 6 - Investment Securities Available For Sale (Details) - Amortized Cost and Fair Values of Securities Available for Sale [Line Items]
Amortized Cost	$ 164,207	$ 160,532
Gross Unrealized Gains	4,330	2,605
Gross Unrealized Losses	(3,031)	(5,994)
Fair Value	165,506	157,143
US Government Agencies Debt Securities [Member]
Note 6 - Investment Securities Available For Sale (Details) - Amortized Cost and Fair Values of Securities Available for Sale [Line Items]
Amortized Cost	25,665	27,289
Gross Unrealized Gains	245	135
Gross Unrealized Losses	(849)	(1,661)
Fair Value	25,061	25,763
US States and Political Subdivisions Debt Securities [Member] | Taxable [Member]
Note 6 - Investment Securities Available For Sale (Details) - Amortized Cost and Fair Values of Securities Available for Sale [Line Items]
Amortized Cost	2,957	3,787
Gross Unrealized Gains	122	46
Gross Unrealized Losses		(38)
Fair Value	3,079	3,795
US States and Political Subdivisions Debt Securities [Member] | Tax-exempt [Member]
Note 6 - Investment Securities Available For Sale (Details) - Amortized Cost and Fair Values of Securities Available for Sale [Line Items]
Amortized Cost	94,530	86,524
Gross Unrealized Gains	2,852	1,562
Gross Unrealized Losses	(1,689)	(3,267)
Fair Value	95,693	84,819
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Note 6 - Investment Securities Available For Sale (Details) - Amortized Cost and Fair Values of Securities Available for Sale [Line Items]
Amortized Cost	37,279	38,816
Gross Unrealized Gains	813	535
Gross Unrealized Losses	(493)	(1,028)
Fair Value	37,599	38,323
Mortgage-backed Securities, Issued by Private Enterprises [Member]
Note 6 - Investment Securities Available For Sale (Details) - Amortized Cost and Fair Values of Securities Available for Sale [Line Items]
Amortized Cost	3,026	3,366
Gross Unrealized Gains	292	327
Fair Value	3,318	3,693
Debt Securities [Member]
Note 6 - Investment Securities Available For Sale (Details) - Amortized Cost and Fair Values of Securities Available for Sale [Line Items]
Amortized Cost	163,457	159,782
Gross Unrealized Gains	4,324	2,605
Gross Unrealized Losses	(3,031)	(5,994)
Fair Value	164,750	156,393
Equity Securities in Financial Institutions [Member]
Note 6 - Investment Securities Available For Sale (Details) - Amortized Cost and Fair Values of Securities Available for Sale [Line Items]
Amortized Cost	750	750
Gross Unrealized Gains	6
Fair Value	$ 756	$ 750

XML

Note 7 - Loans and Related Allowance for Loan and Lease Losses (Tables)

6 Months Ended

Jun. 30, 2014

Receivables [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

	June 30,		December 31,
	2014		2013
Commercial and industrial	$	55,577	$	54,498
Real estate - construction		26,615		25,601
Real estate - mortgage:
Residential		219,229		210,310
Commercial		142,505		141,171
Consumer installment		6,193		4,145
		450,119		435,725
Less allowance for loan and lease losses		7,129		7,046
Net loans	$	442,990	$	428,679

Schedule of Financing Receivable by Segment [Table Text Block]

					Real Estate- Mortgage
June 30, 2014	Commercial and industrial		Real estate- construction		Residential		Commercial		Consumer installment		Total
Loans:
Individually evaluated for impairment	$	1,675	$	3,587	$	5,067	$	4,946	$	12	$	15,287
Collectively evaluated for impairment		53,902		23,028		214,162		137,559		6,181		434,832
Total loans	$	55,577	$	26,615	$	219,229	$	142,505	$	6,193	$	450,119

					Real Estate- Mortgage
December 31, 2013	Commercial and industrial		Real estate- construction		Residential		Commercial		Consumer installment		Total
Loans:
Individually evaluated for impairment	$	1,891	$	4,011	$	5,882	$	7,175	$	6	$	18,965
Collectively evaluated for impairment		52,607		21,590		204,428		133,996		4,139		416,760
Total loans	$	54,498	$	25,601	$	210,310	$	141,171	$	4,145	$	435,725

Schedule of Credit Losses for Financing Receivables, Current [Table Text Block]

					Real Estate- Mortgage
June 30, 2014	Commercial and industrial		Real estate- construction		Residential		Commercial		Consumer installment		Total
Allowance for loan and lease losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	87	$	141	$	858	$	169	$	3	$	1,258
Collectively evaluated for impairment		509		282		3,272		1,756		52		5,871
Total ending allowance balance	$	596	$	423	$	4,130	$	1,925	$	55	$	7,129

					Real Estate- Mortgage
December 31, 2013	Commercial and industrial		Real estate- construction		Residential		Commercial		Consumer installment		Total
Allowance for loan and lease losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	179	$	210	$	855	$	563	$	-	$	1,807
Collectively evaluated for impairment		435		366		2,809		1,607		22		5,239
Total ending allowance balance	$	614	$	576	$	3,664	$	2,170	$	22	$	7,046

	Commercial and industrial			Real estate- construction			Real estate- residential mortgage			Real estate- commercial mortgage			Consumer installment			Total
ALLL balance at December 31, 2013	$	614		$	576		$	3,664		$	2,170		$	22		$	7,046
Charge-offs		(92	)		-			(457	)		-			(35	)		(584	)
Recoveries		65			60			195			40			7			367
Provision		9			(213	)		728			(285	)		61			300
ALLL balance at June 30, 2014	$	596		$	423		$	4,130		$	1,925		$	55		$	7,129

	Commercial and industrial			Real estate- construction			Real estate- residential mortgage			Real estate- commercial mortgage			Consumer installment			Total
ALLL balance at December 31, 2012	$	1,732		$	1,123		$	2,872		$	1,991		$	61		$	7,779
Charge-offs		(325	)		(190	)		(345	)		-			(36	)		(896	)
Recoveries		92			33			71			46			11			253
Provision		(624	)		226			1,028			(32	)		15			613
ALLL balance at June 30, 2013	$	875		$	1,192		$	3,626		$	2,005		$	51		$	7,749

	Commercial and industrial			Real estate- construction			Real estate- residential mortgage			Real estate- commercial mortgage		Consumer installment			Total
ALLL balance at March 31, 2014	$	867		$	488		$	3,726		$	1,862	$	72		$	7,015
Charge-offs		(80	)		-			(141	)		-		(12	)		(233	)
Recoveries		64			60			58			40		5			227
Provision		(255	)		(125	)		487			23		(10	)		120
ALLL balance at June 30, 2014	$	596		$	423		$	4,130		$	1,925	$	55		$	7,129

	Commercial and industrial			Real estate- construction			Real estate- residential mortgage			Real estate- commercial mortgage			Consumer installment			Total
ALLL balance at March 31, 2013	$	1,229		$	1,047		$	3,207		$	2,201		$	47		$	7,731
Charge-offs		-			(128	)		(279	)		-			(19	)		(426	)
Recoveries		92			-			47			-			5			144
Provision		(446	)		273			651			(196	)		18			300
ALLL balance at June 30, 2013	$	875		$	1,192		$	3,626		$	2,005		$	51		$	7,749

Impaired Financing Receivables [Table Text Block]

June 30, 2014
Impaired Loans
	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial and industrial	$	1,375	$	1,375	$	-
Real estate - construction		2,965		2,965		-
Real estate - mortgage:
Residential		1,821		1,966		-
Commercial		4,092		4,092		-
Consumer installment		5		5		-
Total	$	10,258	$	10,403	$	-
With an allowance recorded:
Commercial and industrial	$	300	$	300	$	87
Real estate - construction		622		622		141
Real estate - mortgage:
Residential		3,246		3,312		858
Commercial		854		854		169
Consumer installment		7		7		3
Total	$	5,029	$	5,095	$	1,258
Total:
Commercial and industrial	$	1,675	$	1,675	$	87
Real estate - construction		3,587		3,587		141
Real estate - mortgage:
Residential		5,067		5,278		858
Commercial		4,946		4,946		169
Consumer installment		12		12		3
Total	$	15,287	$	15,498	$	1,258

December 31, 2013
Impaired Loans
	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial and industrial	$	1,357	$	1,357	$	-
Real estate - construction		124		124		-
Real estate - mortgage:
Residential		2,704		2,892		-
Commercial		5,093		5,093		-
Consumer installment		6		6		-
Total	$	9,284	$	9,472	$	-
With an allowance recorded:
Commercial and industrial	$	534	$	534	$	179
Real estate - construction		3,887		3,887		210
Real estate - mortgage:
Residential		3,178		3,217		855
Commercial		2,082		2,082		563
Consumer installment		-		-		-
Total	$	9,681	$	9,720	$	1,807
Total:
Commercial and industrial	$	1,891	$	1,891	$	179
Real estate - construction		4,011		4,011		210
Real estate - mortgage:
Residential		5,882		6,109		855
Commercial		7,175		7,175		563
Consumer installment		6		6		-
Total	$	18,965	$	19,192	$	1,807

Schedule of Additional Information Related to Impaired Loans [Table Text Block]

	For the Three Months Ended June 30, 2014				For the Six Months Ended June 30, 2014
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial and industrial	$	2,117	$	12	$	2,140	$	49
Real estate - construction		3,653		40		3,683		81
Real estate - mortgage:
Residential		5,153		45		5,229		102
Commercial		5,387		83		5,758		158
Consumer installment		14		-		13		-

	For the Three Months Ended June 30, 2013				For the Six Months Ended June 30, 2013
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial and industrial	$	2,643	$	15	$	2,687	$	70
Real estate - construction		3,850		58		3,499		95
Real estate - mortgage:
Residential		5,274		69		4,937		143
Commercial		6,669		106		6,018		216
Consumer installment		14		1		18		1

Financing Receivable Credit Quality Indicators [Table Text Block]

			Special						Total
	Pass		Mention		Substandard		Doubtful		Loans
June 30, 2014
Commercial and industrial	$	53,337	$	737	$	1,460	$	43	$	55,577
Real estate - construction		25,993		-		622		-		26,615
Real estate - mortgage:
Residential		207,164		912		11,153		-		219,229
Commercial		136,490		2,032		3,983		-		142,505
Consumer installment		6,179		-		14		-		6,193
Total	$	429,163	$	3,681	$	17,232	$	43	$	450,119

			Special						Total
	Pass		Mention		Substandard		Doubtful		Loans
December 31, 2013
Commercial and industrial	$	52,078	$	772	$	1,605	$	43	$	54,498
Real estate - construction		24,052		907		642		-		25,601
Real estate - mortgage:
Residential		198,479		774		11,057		-		210,310
Commercial		132,931		2,232		6,008		-		141,171
Consumer installment		4,129		-		16		-		4,145
Total	$	411,669	$	4,685	$	19,328	$	43	$	435,725

Past Due Financing Receivables [Table Text Block]

			Still Accruing
			30-59 Days		60-89 Days		90 Days+		Total		Non-		Total
	Current		Past Due		Past Due		Past Due		Past Due		Accrual		Loans
June 30, 2014
Commercial and industrial	$	53,809	$	703	$	575	$	20	$	1,298	$	469	$	55,577
Real estate - construction		25,995		620		-		-		620		-		26,615
Real estate - mortgage:
Residential		210,073		1,283		415		97		1,796		7,360		219,229
Commercial		141,466		130		-		-		130		909		142,505
Consumer installment		6,153		25		2		-		27		13		6,193
Total	$	437,497	$	2,762	$	992	$	117	$	3,871	$	8,751	$	450,119

			Still Accruing
			30-59 Days		60-89 Days		90 Days+		Total		Non-		Total
	Current		Past Due		Past Due		Past Due		Past Due		Accrual		Loans
December 31, 2013
Commercial and industrial	$	53,366	$	521	$	359	$	38	$	918	$	214	$	54,498
Real estate - construction		24,945		17		639		-		656		-		25,601
Real estate - mortgage:
Residential		200,041		2,079		481		143		2,703		7,566		210,310
Commercial		139,730		598		100		-		698		743		141,171
Consumer installment		4,083		38		16		-		54		8		4,145
Total	$	422,165	$	3,253	$	1,595	$	181	$	5,029	$	8,531	$	435,725

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

	For the three months ended
	June 30, 2014								June 30, 2013
	Number of Contracts						Pre-Modification		Number of Contracts				Pre-Modification
Troubled Debt Restructurings	Term Modification		Other		Total		Outstanding Recorded Investment		Term Modification		Total		Outstanding Recorded Investment
Commercial and industrial		1		-		1	$	7		-		-	$	-
Real estate- mortgage:
Residential		-		-		-		-		-		-		-
Commercial		1		-		1		73		-		-		-
Consumer		-		-		-		-		1		1		7

	For the six months ended
	June 30, 2014								June 30, 2013
	Number of Contracts						Pre-Modification		Number of Contracts				Pre-Modification
Troubled Debt Restructurings	Term Modification		Other		Total		Outstanding Recorded Investment		Term Modification		Total		Outstanding Recorded Investment
Commercial and industrial		1		-		1	$	7		5		5	$	742
Real estate- mortgage:
Residential		1		-		1		49		2		2		383
Commercial		1		-		1		73		-		-		-
Consumer		-		1		1		7		1		1		644

XML

Note 6 - Investment Securities Available For Sale (Details) - Amortized Cost and Fair Value of Debt Securities by Contractual Maturity (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014
Amortized Cost and Fair Value of Debt Securities by Contractual Maturity [Abstract]
Due in one year or less	$ 684
Due in one year or less	694
Due after one year through five years	4,774
Due after one year through five years	4,996
Due after five years through ten years	23,549
Due after five years through ten years	23,871
Due after ten years	134,450
Due after ten years	135,189
Total	163,457
Total	$ 164,750

XML

Note 2 - Stock-Based Compensation (Details) - Stock Option Activity (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Stock Option Activity [Abstract]
Outstanding, January 1	58,581	79,693
Outstanding, January 1	$ 28.38	$ 26.81
Exercised		(19,761)
Exercised		$ 24.09
Forfeited	(907)
Forfeited	$ 27.35
Outstanding, June 30	57,674	59,932
Outstanding, June 30	$ 28.40	$ 28.29
Exercisable, June 30	57,674	59,932
Exercisable, June 30	$ 28.40	$ 28.29

XML

Consolidated Statement of Changes in Stockholders' Equity (Unaudited) (Parentheticals) (USD $)	6 Months Ended
	Jun. 30, 2014
Cash dividends per share (in Dollars per share)	$ 0.52
Common Stock [Member]
Dividend reinvestment and purchase plan, Shares	10,049
Employee Stock Grants	400
Retained Earnings [Member]
Cash dividends per share (in Dollars per share)	$ 0.52

XML

Consolidated Balance Sheet (Unaudited) (Parentheticals) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Common stock, shares authorized	10,000,000	10,000,000
Common stock, shares issued	2,232,283	2,221,834
Common stock, no par value (in Dollars per share)	$ 0	$ 0
Common stock, shares outstanding	2,042,753	2,032,304
Treasury stock, shares	189,530	189,530

XML

Note 2 - Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2014

Disclosure Text Block Supplement [Abstract]

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

				Weighted-average					Weighted-average
	2014			Exercise Price		2013			Exercise Price
Outstanding, January 1		58,581		$	28.38		79,693		$	26.81
Exercised		-			-		(19,761	)		24.09
Forfeited		(907	)		27.35		-			-
Outstanding, June 30		57,674			28.40		59,932			28.29
Exercisable, June 30		57,674			28.40		59,932			28.29

XML

Document And Entity Information	6 Months Ended
	Jun. 30, 2014	Aug. 12, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	MIDDLEFIELD BANC CORP
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		2,042,873
Amendment Flag	false
Entity Central Index Key	0000836147
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Jun. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2

XML

Note 3 - Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2014

EARNINGS PER SHARE [Abstract]

Schedule of Weighted Average Number of Shares [Table Text Block]

	For the Three						For the Six
	Months Ended						Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Weighted-average common shares issued		2,227,556			2,206,794			2,225,555			2,198,033
Average treasury stock shares		(189,530	)		(189,530	)		(189,530	)		(189,530	)
Weighted-average common shares and common stock equivalents used to calculate basic earnings per share		2,038,026			2,017,264			2,036,025			2,008,503
Additional common stock equivalents (stock options) used to calculate diluted earnings per share		6,538			6,697			6,156			8,557
Weighted-average common shares and common stock equivalents used to calculate diluted earnings per share		2,044,564			2,023,961			2,042,181			2,017,060

XML

Consolidated Statement of Income (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
INTEREST INCOME
Interest and fees on loans	$ 5,575	$ 5,550	$ 11,269	$ 11,122
Interest-bearing deposits in other institutions	9	9	14	17
Federal funds sold	6	4	9	8
Investment securities:
Taxable interest	526	625	1,035	1,299
Tax-exempt interest	783	744	1,538	1,477
Dividends on stock	20	15	43	38
Total interest income	6,919	6,947	13,908	13,961
INTEREST EXPENSE
Deposits	929	1,219	1,869	2,516
Short-term borrowings	38	47	73	99
Other borrowings	32	44	64	90
Trust preferred securities	34	47	60	81
Total interest expense	1,033	1,357	2,066	2,786
NET INTEREST INCOME	5,886	5,590	11,842	11,175
Provision for loan losses	120	300	300	613
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	5,766	5,290	11,542	10,562
NONINTEREST INCOME
Service charges on deposit accounts	469	511	910	958
Investment securities (losses) gains, net	64	(10)	58	175
Earnings on bank-owned life insurance	68	75	135	143
Other income	256	243	469	411
Total noninterest income	857	819	1,572	1,687
NONINTEREST EXPENSE
Salaries and employee benefits	2,268	1,906	4,284	3,777
Occupancy expense	275	248	596	522
Equipment expense	194	186	414	375
Data processing costs	224	187	438	400
Ohio state franchise tax	93	149	176	303
Federal deposit insurance expense	97	64	229	218
Professional fees	338	291	625	567
(Gain) loss on sale of other real estate owned	75	(13)	70	(5)
Advertising expense	124	111	247	223
Other real estate expense	102	90	165	196
Directors fees	118	133	204	238
Other expense	690	596	1,379	1,135
Total noninterest expense	4,598	3,948	8,827	7,949
Income before income taxes	2,025	2,161	4,287	4,300
Income taxes	414	476	913	958
NET INCOME	$ 1,611	$ 1,685	$ 3,374	$ 3,342
EARNINGS PER SHARE
Basic (in Dollars per share)	$ 0.79	$ 0.84	$ 1.66	$ 1.66
Diluted (in Dollars per share)	$ 0.79	$ 0.83	$ 1.65	$ 1.66
DIVIDENDS DECLARED PER SHARE (in Dollars per share)	$ 0.26	$ 0.26	$ 0.52	$ 0.52

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Note 4 - Fair Value Measurements

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

NOTE 4 - FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for an asset or liability in an orderly transaction between market participants at the measurement date. GAAP established a fair value hierarchy that prioritizes the use of inputs used in valuation methodologies into the following six levels:

Level I: Quoted prices are available in active markets for identical assets or liabilities as of the reported date.

Level II: Pricing inputs are other than the quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and liabilities includes items for which quoted prices are available but traded less frequently and items that are fair valued using other financial instruments, the parameters of which can be directly observed.

Level III: Assets and liabilities that have little to no pricing observability as of the reported date. These items do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.

The following tables present the assets measured on a recurring basis on the Consolidated Balance Sheet at their fair value by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

			June 30, 2014
(Dollar amounts in thousands)	Level I		Level II		Level III		Total
Assets measured on a recurring basis:
U.S. government agency securities	$	-	$	25,061	$	-	$	25,061
Obligations of states and political subdivisions		-		98,772		-		98,772
Mortgage-backed securities in government- sponsored entities				37,599				37,599
Private-label mortgage-backed securities		-		3,318		-		3,318
Total debt securities		-		164,750		-		164,750
Equity securities in financial institutions		5		751		-		756
Total	$	5	$	165,501	$	-	$	165,506

			December 31, 2013
(Dollar amounts in thousands)	Level I		Level II		Level III		Total
Assets measured on a recurring basis:
U.S. government agency securities	$	-	$	25,763	$	-	$	25,763
Obligations of states and political subdivisions		-		88,614		-		88,614
Mortgage-backed securities in government- sponsored entities		-		38,323		-		38,323
Private-label mortgage-backed securities		-		3,693		-		3,693
Total debt securities		-		156,393		-		156,393
Equity securities in financial institutions		5		745		-		750
Total	$	5	$	157,138	$	-	$	157,143

The Company obtains fair values from an independent pricing service which represent either quoted market prices for the identical securities (Level I inputs) or fair values determined by pricing models using a market approach that considers observable market data, such as interest rate volatilities, LIBOR yield curve, credit spreads and prices from market makers and live trading systems (Level II).

Financial instruments are considered Level III when their values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. In addition to these unobservable inputs, the valuation models for Level III financial instruments typically also rely on a number of inputs that are readily observable either directly or indirectly. Level III financial instruments also include those for which the determination of fair value requires significant management judgment or estimation. The Company has no securities considered to be Level III as of June 30, 2014 or December 31, 2013.

The Company uses prices compiled by third party vendors due to improvements in third party pricing methodology that have narrowed the variances between third party vendor prices and actual market prices.

The following tables present the assets measured on a nonrecurring basis on the Consolidated Balance Sheet at their fair value by level within the fair value hierarchy. Impaired loans that are collateral dependent are written down to fair value through the establishment of specific reserves. Techniques used to value the collateral that secure the impaired loan include: quoted market prices for identical assets classified as Level I inputs; observable inputs, employed by certified appraisers, for similar assets classified as Level II inputs. In cases where valuation techniques included inputs that are unobservable and are based on estimates and assumptions developed by management based on the best information available under each circumstance, the asset valuation is classified as Level III inputs.

			June 30, 2014
(Dollar amounts in thousands)	Level I		Level II		Level III		Total
Assets measured on a nonrecurring basis:
Impaired loans	$	-	$	-	$	14,029	$	14,029
Other real estate owned		-		-		2,392		2,392

			December 31, 2013
(Dollar amounts in thousands)	Level I		Level II		Level III		Total
Assets measured on a nonrecurring basis:
Impaired loans	$	-	$	-	$	17,158	$	17,158
Other real estate owned		-		-		2,698		2,698

The Company values other real estate owned at the estimated fair value of the underlying collateral less expected selling costs. Such values are estimated primarily using appraisals and reflect a market value approach. Due to the significance of the Level III inputs, other real estate owned has been classified as Level III.

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Company uses Level III inputs to determine fair value:

	Quantitative Information about Level III Fair Value Measurements
(Dollar amounts in thousands)					Valuation	Unobservable	Range (Weighted
	Fair Value Estimate				Techniques	Input	Average)
	June 30, 2014		December 31, 2013
Impaired loans	$	14,029	$	17,158	Appraisal of collateral (1)	Appraisal adjustments (2)	-20%	to	-55.0%	(-28.1%)
Other real estate owned	$	2,392	$	2,698	Appraisal of collateral (1)	Appraisal adjustments (2)	0%	to	-10.0%	(-7.5%)

(1)	Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various level 3 inputs which are not identifiable.
(2)	Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted-average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

The estimated fair value of the Company’s financial instruments is as follows:

	June 30, 2014
	Carrying								Total
	Value		Level I		Level II		Level III		Fair Value
	(Dollar amounts in thousands)
Financial assets:
Cash and cash equivalents	$	25,577	$	25,577	$	-	$	-	$	25,577
Investment securities available for sale		165,506		5		165,501		-		165,506
Net loans		442,990		-		-		454,824		454,824
Bank-owned life insurance		8,951		8,951				-		8,951
Federal Home Loan Bank stock		1,887		1,887				-		1,887
Accrued interest receivable		2,229		2,229		-		-		2,229
Financial liabilities:
Deposits	$	588,793	$	406,796	$	-	$	173,490	$	580,286
Short-term borrowings		6,939		6,939		-		-		6,939
Other borrowings		11,362		-		-		11,679		11,679
Accrued interest payable		342		342		-		-		342

	December 31, 2013
	Carrying								Total
	Value		Level I		Level II		Level III		Fair Value
	(Dollar amounts in thousands)
Financial assets:
Cash and cash equivalents	$	26,193	$	26,193	$	-	$	-	$	26,193
Investment securities available for sale		157,143		5		157,138		-		157,143
Net loans		428,679		-		-		430,502		430,502
Bank-owned life insurance		8,816		8,816		-		-		8,816
Federal Home Loan Bank stock		1,887		1,887		-		-		1,887
Accrued interest receivable		2,135		2,135		-		-		2,135
Financial liabilities:
Deposits	$	568,836	$	394,422	$	-	$	175,854	$	570,276
Short-term borrowings		10,809		10,809		-		-		10,809
Other borrowings		11,609		-				11,787		11,787
Accrued interest payable		364		364		-		-		364

Financial instruments are defined as cash, evidence of ownership interest in an entity, or a contract which creates an obligation or right to receive or deliver cash or another financial instrument from/to a second entity on potentially favorable or unfavorable terms.

Fair value is defined as the amount at which a financial instrument could be exchanged in a current transaction between willing parties other than in a forced liquidation sale. If a quoted market price is available for a financial instrument, the estimated fair value would be calculated based upon the market price per trading unit of the instrument.

If no readily available market exists, the fair value estimates for financial instruments should be based upon management’s judgment regarding current economic conditions, interest rate risk, expected cash flows, future estimated losses, and other factors as determined through various option pricing formulas or simulation modeling. Since many of these assumptions result from judgments made by management based upon estimates which are inherently uncertain, the resulting estimated fair values may not be indicative of the amount realizable in the sale of a particular financial instrument. In addition, changes in assumptions on which the estimated fair values are based may have a significant impact on the resulting estimated fair values.

As certain assets such as deferred tax assets and premises and equipment are not considered financial instruments, the estimated fair value of financial instruments would not represent the full value of the Company.

The Company employed simulation modeling in determining the estimated fair value of financial instruments for which quoted market prices were not available based upon the following assumptions:

Cash and Cash Equivalents, Federal Home Loan Bank Stock, Accrued Interest Receivable, Accrued Interest Payable, and Short-Term Borrowings

The fair value is equal to the current carrying value.

Bank-Owned Life Insurance

The fair value is equal to the cash surrender value of the life insurance policies.

Investment Securities Available for Sale

The fair value of investment securities is equal to the available quoted market price.  If no quoted market price is available, fair value is estimated using the quoted market price for similar securities. 

Net Loans

The fair value is estimated by discounting future cash flows using current market inputs at which loans with similar terms and qualities would be made to borrowers of similar credit quality. Where quoted market prices were available, primarily for certain residential mortgage loans, such market rates were used as estimates for fair value.

Deposits and Other Borrowings

The fair values of certificates of deposit and other borrowings are based on the discounted value of contractual cash flows. The discount rates are estimated using rates currently offered for similar instruments with similar remaining maturities. Demand, savings, and money market deposits are valued at the amount payable on demand as of period end.

Commitments to Extend Credit

These financial instruments are generally not subject to sale, and estimated fair values are not readily available. The carrying value, represented by the net deferred fee arising from the unrecognized commitment or letter of credit, and the fair value, determined by discounting the remaining contractual fee over the term of the commitment using fees currently charged to enter into similar agreements with similar credit risk, are not considered material for disclosure.

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Note 3 - Earnings Per Share

6 Months Ended

Jun. 30, 2014

EARNINGS PER SHARE [Abstract]

Earnings Per Share [Text Block]

NOTE 3 - EARNINGS PER SHARE

The Company provides dual presentation of basic and diluted earnings per share. Basic earnings per share is calculated by dividing net income by the average shares outstanding. Diluted earnings per share adds the dilutive effects of stock options to average shares outstanding.

The following table sets forth the composition of the weighted-average common shares (denominator) used in the basic and diluted earnings per share computation.

	For the Three						For the Six
	Months Ended						Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Weighted-average common shares issued		2,227,556			2,206,794			2,225,555			2,198,033
Average treasury stock shares		(189,530	)		(189,530	)		(189,530	)		(189,530	)
Weighted-average common shares and common stock equivalents used to calculate basic earnings per share		2,038,026			2,017,264			2,036,025			2,008,503
Additional common stock equivalents (stock options) used to calculate diluted earnings per share		6,538			6,697			6,156			8,557
Weighted-average common shares and common stock equivalents used to calculate diluted earnings per share		2,044,564			2,023,961			2,042,181			2,017,060

Options to purchase 57,674 shares of common stock, at prices ranging from $17.55 to $40.24, were outstanding during the three and six months ended June 30, 2014. Of those options, 28,282 were considered dilutive based on the market price exceeding the strike price.

Options to purchase 59,932 shares of common stock, at prices ranging from $17.55 to $40.24, were outstanding during the three and six months ended June 30, 2013. Of those options, 31,833 were considered dilutive for the three month period based on the market price exceeding the strike price. For the six months ended June 30, 2013, 49,394 options were considered dilutive.

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Note 2 - Stock-Based Compensation (Details) (USD $)	Jun. 30, 2014	Jun. 30, 2013
Disclosure Text Block Supplement [Abstract]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares	0	0
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized	$ 0	$ 0

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Note 4 - Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

			June 30, 2014
(Dollar amounts in thousands)	Level I		Level II		Level III		Total
Assets measured on a recurring basis:
U.S. government agency securities	$	-	$	25,061	$	-	$	25,061
Obligations of states and political subdivisions		-		98,772		-		98,772
Mortgage-backed securities in government- sponsored entities				37,599				37,599
Private-label mortgage-backed securities		-		3,318		-		3,318
Total debt securities		-		164,750		-		164,750
Equity securities in financial institutions		5		751		-		756
Total	$	5	$	165,501	$	-	$	165,506

			December 31, 2013
(Dollar amounts in thousands)	Level I		Level II		Level III		Total
Assets measured on a recurring basis:
U.S. government agency securities	$	-	$	25,763	$	-	$	25,763
Obligations of states and political subdivisions		-		88,614		-		88,614
Mortgage-backed securities in government- sponsored entities		-		38,323		-		38,323
Private-label mortgage-backed securities		-		3,693		-		3,693
Total debt securities		-		156,393		-		156,393
Equity securities in financial institutions		5		745		-		750
Total	$	5	$	157,138	$	-	$	157,143

Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Valuation Techniques [Table Text Block]

			June 30, 2014
(Dollar amounts in thousands)	Level I		Level II		Level III		Total
Assets measured on a nonrecurring basis:
Impaired loans	$	-	$	-	$	14,029	$	14,029
Other real estate owned		-		-		2,392		2,392

			December 31, 2013
(Dollar amounts in thousands)	Level I		Level II		Level III		Total
Assets measured on a nonrecurring basis:
Impaired loans	$	-	$	-	$	17,158	$	17,158
Other real estate owned		-		-		2,698		2,698

Fair Value Inputs, Assets, Quantitative Information [Table Text Block]

	Quantitative Information about Level III Fair Value Measurements
(Dollar amounts in thousands)					Valuation	Unobservable	Range (Weighted
	Fair Value Estimate				Techniques	Input	Average)
	June 30, 2014		December 31, 2013
Impaired loans	$	14,029	$	17,158	Appraisal of collateral (1)	Appraisal adjustments (2)	-20%	to	-55.0%	(-28.1%)
Other real estate owned	$	2,392	$	2,698	Appraisal of collateral (1)	Appraisal adjustments (2)	0%	to	-10.0%	(-7.5%)

Fair Value, by Balance Sheet Grouping [Table Text Block]

	June 30, 2014
	Carrying								Total
	Value		Level I		Level II		Level III		Fair Value
	(Dollar amounts in thousands)
Financial assets:
Cash and cash equivalents	$	25,577	$	25,577	$	-	$	-	$	25,577
Investment securities available for sale		165,506		5		165,501		-		165,506
Net loans		442,990		-		-		454,824		454,824
Bank-owned life insurance		8,951		8,951				-		8,951
Federal Home Loan Bank stock		1,887		1,887				-		1,887
Accrued interest receivable		2,229		2,229		-		-		2,229
Financial liabilities:
Deposits	$	588,793	$	406,796	$	-	$	173,490	$	580,286
Short-term borrowings		6,939		6,939		-		-		6,939
Other borrowings		11,362		-		-		11,679		11,679
Accrued interest payable		342		342		-		-		342

	December 31, 2013
	Carrying								Total
	Value		Level I		Level II		Level III		Fair Value
	(Dollar amounts in thousands)
Financial assets:
Cash and cash equivalents	$	26,193	$	26,193	$	-	$	-	$	26,193
Investment securities available for sale		157,143		5		157,138		-		157,143
Net loans		428,679		-		-		430,502		430,502
Bank-owned life insurance		8,816		8,816		-		-		8,816
Federal Home Loan Bank stock		1,887		1,887		-		-		1,887
Accrued interest receivable		2,135		2,135		-		-		2,135
Financial liabilities:
Deposits	$	568,836	$	394,422	$	-	$	175,854	$	570,276
Short-term borrowings		10,809		10,809		-		-		10,809
Other borrowings		11,609		-				11,787		11,787
Accrued interest payable		364		364		-		-		364

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Note 7 - Loans and Related Allowance for Loan and Lease Losses

6 Months Ended

Jun. 30, 2014

Receivables [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE 7 - LOANS AND RELATED ALLOWANCE FOR LOAN AND LEASE LOSSES

Major classifications of loans are summarized as follows (in thousands):

	June 30,		December 31,
	2014		2013
Commercial and industrial	$	55,577	$	54,498
Real estate - construction		26,615		25,601
Real estate - mortgage:
Residential		219,229		210,310
Commercial		142,505		141,171
Consumer installment		6,193		4,145
		450,119		435,725
Less allowance for loan and lease losses		7,129		7,046
Net loans	$	442,990	$	428,679

The Company’s primary business activity is with customers located within its local trade area, eastern Geauga County, and contiguous counties to the north, east, and south. The Company also serves the central Ohio market with offices in Dublin and Westerville, Ohio. Commercial, residential, consumer, and agricultural loans are granted. Although the Company has a diversified loan portfolio, loans outstanding to individuals and businesses are dependent upon the local economic conditions in the Company’s immediate trade area.

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff generally are reported at their outstanding unpaid principal balances net of the allowance for loan and lease losses.  Interest income is recognized as income when earned on the accrual method.  The accrual of interest is discontinued on a loan when management believes, after considering economic and business conditions, the borrower’s financial condition is such that collection of interest is doubtful.  Interest received on nonaccrual loans is recorded as income or applied against principal according to management’s judgment as to the collectability of such principal.

Loan origination fees and certain direct loan origination costs are being deferred and the net amount amortized as an adjustment of the related loan’s yield.  Management is amortizing these amounts over the contractual life of the related loans.

The following tables summarize the primary segments of the loan portfolio and allowance for loan and lease losses (in thousands):

					Real Estate- Mortgage
June 30, 2014	Commercial and industrial		Real estate- construction		Residential		Commercial		Consumer installment		Total
Loans:
Individually evaluated for impairment	$	1,675	$	3,587	$	5,067	$	4,946	$	12	$	15,287
Collectively evaluated for impairment		53,902		23,028		214,162		137,559		6,181		434,832
Total loans	$	55,577	$	26,615	$	219,229	$	142,505	$	6,193	$	450,119

					Real Estate- Mortgage
December 31, 2013	Commercial and industrial		Real estate- construction		Residential		Commercial		Consumer installment		Total
Loans:
Individually evaluated for impairment	$	1,891	$	4,011	$	5,882	$	7,175	$	6	$	18,965
Collectively evaluated for impairment		52,607		21,590		204,428		133,996		4,139		416,760
Total loans	$	54,498	$	25,601	$	210,310	$	141,171	$	4,145	$	435,725

					Real Estate- Mortgage
June 30, 2014	Commercial and industrial		Real estate- construction		Residential		Commercial		Consumer installment		Total
Allowance for loan and lease losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	87	$	141	$	858	$	169	$	3	$	1,258
Collectively evaluated for impairment		509		282		3,272		1,756		52		5,871
Total ending allowance balance	$	596	$	423	$	4,130	$	1,925	$	55	$	7,129

					Real Estate- Mortgage
December 31, 2013	Commercial and industrial		Real estate- construction		Residential		Commercial		Consumer installment		Total
Allowance for loan and lease losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	179	$	210	$	855	$	563	$	-	$	1,807
Collectively evaluated for impairment		435		366		2,809		1,607		22		5,239
Total ending allowance balance	$	614	$	576	$	3,664	$	2,170	$	22	$	7,046

The commercial real estate loans individually evaluated for impairment declined during the period ended June 30, 2014 mostly due to the payoff of a $2.1 million relationship.

The Company’s loan portfolio is segmented to a level that allows management to monitor risk and performance.  The portfolio is segmented into Commercial and Industrial (“C&I”), Real Estate Construction, Real Estate - Mortgage which is further segmented into Residential and Commercial real estate, and Consumer Installment Loans.  The C&I loan segment consists of loans made for the purpose of financing the activities of commercial customers.  The residential mortgage loan segment consists of loans made for the purpose of financing the activities of residential homeowners. The commercial mortgage loan segment consists of loans made for the purpose of financing the activities of commercial real estate owners and operators. The consumer loan segment consists primarily of installment loans and overdraft lines of credit connected with customer deposit accounts.

Management evaluates individual loans in all of the commercial segments for possible impairment if the loan is greater than $200,000 and if the loan either is in nonaccrual status, or is risk rated Substandard and is greater than 90 days past due.  Loans are considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.  Factors considered by management in evaluating impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.  Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.  The Company does not separately evaluate individual consumer and residential mortgage loans for impairment, unless such loans are part of a larger relationship that is impaired.

Once the determination has been made that a loan is impaired, the determination of whether a specific allocation of the allowance is necessary is measured by comparing the recorded investment in the loan to the fair value of the loan using one of the following methods:  (a) the present value of expected future cash flows discounted at the loan’s effective interest rate; (b) the loan’s observable market price; or (c) the fair value of the collateral less selling costs.  The method is selected on a loan-by-loan basis, with management primarily utilizing the fair value of collateral method.  The evaluation of the need and amount of a specific allocation of the allowance and whether a loan can be removed from impairment status is made on a quarterly basis.  The Company’s policy for recognizing interest income on impaired loans does not differ from its overall policy for interest recognition.

The following tables present impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary (in thousands):

June 30, 2014
Impaired Loans
	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial and industrial	$	1,375	$	1,375	$	-
Real estate - construction		2,965		2,965		-
Real estate - mortgage:
Residential		1,821		1,966		-
Commercial		4,092		4,092		-
Consumer installment		5		5		-
Total	$	10,258	$	10,403	$	-
With an allowance recorded:
Commercial and industrial	$	300	$	300	$	87
Real estate - construction		622		622		141
Real estate - mortgage:
Residential		3,246		3,312		858
Commercial		854		854		169
Consumer installment		7		7		3
Total	$	5,029	$	5,095	$	1,258
Total:
Commercial and industrial	$	1,675	$	1,675	$	87
Real estate - construction		3,587		3,587		141
Real estate - mortgage:
Residential		5,067		5,278		858
Commercial		4,946		4,946		169
Consumer installment		12		12		3
Total	$	15,287	$	15,498	$	1,258

December 31, 2013
Impaired Loans
	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial and industrial	$	1,357	$	1,357	$	-
Real estate - construction		124		124		-
Real estate - mortgage:
Residential		2,704		2,892		-
Commercial		5,093		5,093		-
Consumer installment		6		6		-
Total	$	9,284	$	9,472	$	-
With an allowance recorded:
Commercial and industrial	$	534	$	534	$	179
Real estate - construction		3,887		3,887		210
Real estate - mortgage:
Residential		3,178		3,217		855
Commercial		2,082		2,082		563
Consumer installment		-		-		-
Total	$	9,681	$	9,720	$	1,807
Total:
Commercial and industrial	$	1,891	$	1,891	$	179
Real estate - construction		4,011		4,011		210
Real estate - mortgage:
Residential		5,882		6,109		855
Commercial		7,175		7,175		563
Consumer installment		6		6		-
Total	$	18,965	$	19,192	$	1,807

The following tables present interest income by class, recognized on impaired loans (in thousands):

	For the Three Months Ended June 30, 2014				For the Six Months Ended June 30, 2014
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial and industrial	$	2,117	$	12	$	2,140	$	49
Real estate - construction		3,653		40		3,683		81
Real estate - mortgage:
Residential		5,153		45		5,229		102
Commercial		5,387		83		5,758		158
Consumer installment		14		-		13		-

	For the Three Months Ended June 30, 2013				For the Six Months Ended June 30, 2013
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial and industrial	$	2,643	$	15	$	2,687	$	70
Real estate - construction		3,850		58		3,499		95
Real estate - mortgage:
Residential		5,274		69		4,937		143
Commercial		6,669		106		6,018		216
Consumer installment		14		1		18		1

Management uses a nine point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first five categories are considered not criticized, and are aggregated as “Pass” rated. The criticized rating categories used by management generally follow bank regulatory definitions. The Special Mention category includes assets that are currently protected but are potentially weak, resulting in an undue and unwarranted credit risk, but not to the point of justifying a Substandard classification.  Loans in the Substandard category have well-defined weaknesses that jeopardize the liquidation of the debt, and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected.  All loans greater than 90 days past due are considered Substandard.   Assets classified as “doubtful” have all the weaknesses inherent in those classified substandard, with the added characteristic that the weaknesses make collection of principal in full — on the basis of currently existing facts, conditions, and values — highly questionable and improbable. Any portion of a loan that has been charged off is placed in the Loss category.

To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Company has a structured loan rating process with several layers of internal and external oversight.  Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as bankruptcy, repossession, or death occurs to raise awareness of a possible credit loss.  The Company’s Commercial Loan Officers are responsible for the timely and accurate risk rating of the loans in their portfolios at origination and on an ongoing basis.  The Credit Department performs an annual review of all commercial relationships $200,000 or greater.  Confirmation of the appropriate risk grade is included in the review on an ongoing basis.  The Company has an experienced Loan Review Department that continually reviews and assesses loans within the portfolio.  The Company engages an external consultant to conduct loan reviews on a semi-annual basis. Generally, the external consultant reviews commercial relationships greater than $250,000 and/or criticized relationships greater than $125,000.  Detailed reviews, including plans for resolution, are performed on loans classified as Substandard on a quarterly basis.  Loans in the Special Mention and Substandard categories that are collectively evaluated for impairment are given separate consideration in the determination of the allowance.

The primary risk of commercial and industrial loans is the current economic uncertainties. C&I loans are, by nature, secured by less substantial collateral than real estate-secured loans. The primary risk of real estate construction loans is potential delays and /or disputes during the completion process. The primary risk of residential real estate loans is current economic uncertainties along with the slow recovery in the housing market. The primary risk of commercial real estate loans is loss of income of the owner or occupier of the property and the inability of the market to sustain rent levels. Consumer installment loans historically have experienced higher delinquency rates. Consumer installments are typically secured by less substantial collateral than other types of credits.

The following tables present the classes of the loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system (in thousands):

			Special						Total
	Pass		Mention		Substandard		Doubtful		Loans
June 30, 2014
Commercial and industrial	$	53,337	$	737	$	1,460	$	43	$	55,577
Real estate - construction		25,993		-		622		-		26,615
Real estate - mortgage:
Residential		207,164		912		11,153		-		219,229
Commercial		136,490		2,032		3,983		-		142,505
Consumer installment		6,179		-		14		-		6,193
Total	$	429,163	$	3,681	$	17,232	$	43	$	450,119

			Special						Total
	Pass		Mention		Substandard		Doubtful		Loans
December 31, 2013
Commercial and industrial	$	52,078	$	772	$	1,605	$	43	$	54,498
Real estate - construction		24,052		907		642		-		25,601
Real estate - mortgage:
Residential		198,479		774		11,057		-		210,310
Commercial		132,931		2,232		6,008		-		141,171
Consumer installment		4,129		-		16		-		4,145
Total	$	411,669	$	4,685	$	19,328	$	43	$	435,725

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due.

Nonperforming assets include nonaccrual loans, troubled debt restructurings (TDRs), loans 90 days or more past due, EMORECO assets, other real estate owned, and repossessed assets. A loan is classified as nonaccrual when, in the opinion of management, there are serious doubts about collectability of interest and principal. Accrual of interest is discontinued on a loan when management believes, after considering economic and business conditions, the borrower’s financial condition is such that collection of principal and interest is doubtful.  Payments received on nonaccrual loans are applied against principal according to management’s shadow accounting system.

The following tables present the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans (in thousands):

			Still Accruing
			30-59 Days		60-89 Days		90 Days+		Total		Non-		Total
	Current		Past Due		Past Due		Past Due		Past Due		Accrual		Loans
June 30, 2014
Commercial and industrial	$	53,809	$	703	$	575	$	20	$	1,298	$	469	$	55,577
Real estate - construction		25,995		620		-		-		620		-		26,615
Real estate - mortgage:
Residential		210,073		1,283		415		97		1,796		7,360		219,229
Commercial		141,466		130		-		-		130		909		142,505
Consumer installment		6,153		25		2		-		27		13		6,193
Total	$	437,497	$	2,762	$	992	$	117	$	3,871	$	8,751	$	450,119

			Still Accruing
			30-59 Days		60-89 Days		90 Days+		Total		Non-		Total
	Current		Past Due		Past Due		Past Due		Past Due		Accrual		Loans
December 31, 2013
Commercial and industrial	$	53,366	$	521	$	359	$	38	$	918	$	214	$	54,498
Real estate - construction		24,945		17		639		-		656		-		25,601
Real estate - mortgage:
Residential		200,041		2,079		481		143		2,703		7,566		210,310
Commercial		139,730		598		100		-		698		743		141,171
Consumer installment		4,083		38		16		-		54		8		4,145
Total	$	422,165	$	3,253	$	1,595	$	181	$	5,029	$	8,531	$	435,725

An allowance for loan and lease losses (“ALLL”) is maintained to absorb losses from the loan portfolio.  The ALLL is based on management’s continuing evaluation of the risk characteristics and credit quality of the loan portfolio, assessment of current economic conditions, diversification and size of the portfolio, adequacy of collateral, past and anticipated loss experience, and the amount of nonperforming loans.

The Company’s methodology for determining the ALLL is based on the requirements of ASC Section 310-10-35 for loans individually evaluated for impairment (discussed above) and ASC Subtopic 450-20 for loans collectively evaluated for impairment, as well as the Interagency Policy Statements on the Allowance for Loan and Lease Losses and other bank regulatory guidance.   The total of the two components represents the Company’s ALLL. Management also performs impairment analyses on TDRs, which may result in specific reserves.

Loans that are collectively evaluated for impairment are analyzed with general allowances being made as appropriate.  For general allowances, historical loss trends are used in the estimation of losses in the current portfolio.  These historical loss amounts are modified by other qualitative factors.

The classes described above, which are based on the purpose code assigned to each loan, provide the starting point for the ALLL analysis.  Management tracks the historical net charge-off activity at the purpose code level.  A historical charge-off factor is calculated using the last four consecutive historical quarters.

Management has identified a number of additional qualitative factors which it uses to supplement the historical charge-off factor because these factors are likely to cause estimated credit losses associated with the existing loan pools to differ from historical loss experience.  The additional factors that are evaluated quarterly and updated using information obtained from internal, regulatory, and governmental sources are: national and local economic trends and conditions; levels of and trends in delinquency rates and nonaccrual loans; trends in volumes and terms of loans; effects of changes in lending policies; experience, ability, and depth of lending staff; value of underlying collateral; and concentrations of credit from a loan type, industry and/or geographic standpoint.

Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in order to make appropriate and timely adjustments to the ALLL.  When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ALLL.

The following tables summarize the primary segments of the loan portfolio (in thousands):

	Commercial and industrial			Real estate- construction			Real estate- residential mortgage			Real estate- commercial mortgage			Consumer installment			Total
ALLL balance at December 31, 2013	$	614		$	576		$	3,664		$	2,170		$	22		$	7,046
Charge-offs		(92	)		-			(457	)		-			(35	)		(584	)
Recoveries		65			60			195			40			7			367
Provision		9			(213	)		728			(285	)		61			300
ALLL balance at June 30, 2014	$	596		$	423		$	4,130		$	1,925		$	55		$	7,129

	Commercial and industrial			Real estate- construction			Real estate- residential mortgage			Real estate- commercial mortgage			Consumer installment			Total
ALLL balance at December 31, 2012	$	1,732		$	1,123		$	2,872		$	1,991		$	61		$	7,779
Charge-offs		(325	)		(190	)		(345	)		-			(36	)		(896	)
Recoveries		92			33			71			46			11			253
Provision		(624	)		226			1,028			(32	)		15			613
ALLL balance at June 30, 2013	$	875		$	1,192		$	3,626		$	2,005		$	51		$	7,749

	Commercial and industrial			Real estate- construction			Real estate- residential mortgage			Real estate- commercial mortgage		Consumer installment			Total
ALLL balance at March 31, 2014	$	867		$	488		$	3,726		$	1,862	$	72		$	7,015
Charge-offs		(80	)		-			(141	)		-		(12	)		(233	)
Recoveries		64			60			58			40		5			227
Provision		(255	)		(125	)		487			23		(10	)		120
ALLL balance at June 30, 2014	$	596		$	423		$	4,130		$	1,925	$	55		$	7,129

	Commercial and industrial			Real estate- construction			Real estate- residential mortgage			Real estate- commercial mortgage			Consumer installment			Total
ALLL balance at March 31, 2013	$	1,229		$	1,047		$	3,207		$	2,201		$	47		$	7,731
Charge-offs		-			(128	)		(279	)		-			(19	)		(426	)
Recoveries		92			-			47			-			5			144
Provision		(446	)		273			651			(196	)		18			300
ALLL balance at June 30, 2013	$	875		$	1,192		$	3,626		$	2,005		$	51		$	7,749

The real estate construction provision, for the period ended June 30, 2014, was mostly impacted by an improvement in risk rating to a relationship with a specific reserve of $113,000. The increased residential portfolio provision was mostly related to an increase in the loss ratio of 24 basis points. The negative commercial real estate provision was largely driven by the payoff of a relationship with a specific reserve of $352,000.  

The following tables summarize troubled debt restructurings and subsequent defaults (in thousands):

	For the three months ended
	June 30, 2014								June 30, 2013
	Number of Contracts						Pre-Modification		Number of Contracts				Pre-Modification
Troubled Debt Restructurings	Term Modification		Other		Total		Outstanding Recorded Investment		Term Modification		Total		Outstanding Recorded Investment
Commercial and industrial		1		-		1	$	7		-		-	$	-
Real estate- mortgage:
Residential		-		-		-		-		-		-		-
Commercial		1		-		1		73		-		-		-
Consumer		-		-		-		-		1		1		7

	For the six months ended
	June 30, 2014								June 30, 2013
	Number of Contracts						Pre-Modification		Number of Contracts				Pre-Modification
Troubled Debt Restructurings	Term Modification		Other		Total		Outstanding Recorded Investment		Term Modification		Total		Outstanding Recorded Investment
Commercial and industrial		1		-		1	$	7		5		5	$	742
Real estate- mortgage:
Residential		1		-		1		49		2		2		383
Commercial		1		-		1		73		-		-		-
Consumer		-		1		1		7		1		1		644

There were no changes to the recorded investment post modification. No TDRs, modified in the past twelve months, subsequently defaulted in the three and six months ended June 30, 2014.

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Note 5 - Accumulated Other Comprehensive Income

6 Months Ended

Jun. 30, 2014

Disclosure Text Block [Abstract]

Comprehensive Income (Loss) Note [Text Block]

NOTE 5 – ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table presents the changes in accumulated other comprehensive income by component net of tax for the three and six months ended June 30, 2014 and 2013, respectively:

	Unrealized gains on
	available-for-sale
	securities (a)
Balance as of December 31, 2013	$	(2,237	)
Other comprehensive income before reclassification		1,847
Amount reclassified from accumulated other comprehensive loss		4
Period change		1,851
Balance at March 31, 2014	$	(386	)
Other comprehensive income before reclassification		1,287
Amount reclassified from accumulated other comprehensive income		(42	)
Period change		1,245
Balance at June 30, 2014	$	859
Balance as of December 31, 2012	$	5,391
Other comprehensive loss before reclassification		(1,004	)
Amount reclassified from accumulated other comprehensive loss		(122	)
Period change		(1,126	)
Balance at March 31, 2013		4,265
Other comprehensive loss before reclassification		(4,462	)
Amount reclassified from accumulated other comprehensive loss		7
Period change		(4,455	)
Balance at June 30, 2013	$	(190	)

(a) All amounts are net of tax. Amounts in parentheses indicate debits.

The following tables present significant amounts reclassified out of each component of accumulated other comprehensive income for the three and six months ended June 30, 2014 and 2013, respectively:

	Amount Reclassified from Accumulated Other Comprehensive Income						Affected Line Item in
	For the Three Months Ended						the Statement Where
	June 30,						Net Income is
Details about other comprehensive income	2014			2013			Presented
Unrealized gains on available-for-sale securities
	$	64		$	(10	)	Investment securities gains, net
		(22	)		3		Income taxes
	$	42		$	(7	)	Net of tax

	Amount Reclassified from Accumulated Other Comprehensive Income						Affected Line Item in
	For the Six Months Ended						the Statement Where
	June 30,						Net Income is
Details about other comprehensive income	2014			2013			Presented
Unrealized gains on available-for-sale securities
	$	58		$	175		Investment securities gains, net
		(20	)		(60	)	Income taxes
	$	38		$	115		Net of tax

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Note 6 - Investment Securities Available For Sale

6 Months Ended

Jun. 30, 2014

Investments, Debt and Equity Securities [Abstract]

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

NOTE 6 - INVESTMENT SECURITIES AVAILABLE FOR SALE

The amortized cost and fair values of securities available for sale are as follows:

	June 30, 2014
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
(Dollar amounts in thousands)	Cost		Gains		Losses			Value
U.S. government agency securities	$	25,665	$	245	$	(849	)	$	25,061
Obligations of states and political subdivisions:
Taxable		2,957		122		-			3,079
Tax-exempt		94,530		2,852		(1,689	)		95,693
Mortgage-backed securities in government-sponsored entities		37,279		813		(493	)		37,599
Private-label mortgage-backed securities		3,026		292		-			3,318
Total debt securities		163,457		4,324		(3,031	)		164,750
Equity securities in financial institutions		750		6		-			756
Total	$	164,207	$	4,330	$	(3,031	)	$	165,506

	December 31, 2013
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
(Dollar amounts in thousands)	Cost		Gains		Losses			Value
U.S. government agency securities	$	27,289	$	135	$	(1,661	)	$	25,763
Obligations of states and political subdivisions:
Taxable		3,787		46		(38	)		3,795
Tax-exempt		86,524		1,562		(3,267	)		84,819
Mortgage-backed securities in government-sponsored entities		38,816		535		(1,028	)		38,323
Private-label mortgage-backed securities		3,366		327		-			3,693
Total debt securities		159,782		2,605		(5,994	)		156,393
Equity securities in financial institutions		750		-		-			750
Total	$	160,532	$	2,605	$	(5,994	)	$	157,143

The amortized cost and fair value of debt securities at June 30, 2014, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized		Fair
(Dollar amounts in thousands)	Cost		Value
Due in one year or less	$	684	$	694
Due after one year through five years		4,774		4,996
Due after five years through ten years		23,549		23,871
Due after ten years		134,450		135,189
Total	$	163,457	$	164,750

Proceeds from the sales of securities available for sale and the gross realized gains and losses for the three and six months ended June 30 are as follows:

(Dollar amounts in thousands)	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2014		2013			2014			2013
Proceeds from sales	$	980	$	533		$	1,494		$	8,135
Gross realized gains		64		-			64			204
Gross realized losses		-		(10	)		(6	)		(29	)

Investment securities with an approximate carrying value of $65.8 million and $66.3 million at June 30, 2014 and December 31, 2013, respectively, were pledged to secure deposits and other purposes as required by law.

The following tables show the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position.

	June 30, 2014
	Less than Twelve Months					Twelve Months or Greater					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Dollar amounts in thousands)	Value		Losses			Value		Losses			Value		Losses
U.S. government agency securities	$	-	$	-		$	16,599	$	(849	)	$	16,599	$	(849	)
Obligations of states and political subdivisions		9,511		(104	)		19,616		(1,585	)		29,127		(1,689	)
Mortgage-backed securities in government-sponsored entities		1,075		(3	)		20,334		(490	)		21,409		(493	)
Total	$	10,586	$	(107	)	$	56,549	$	(2,924	)	$	67,135	$	(3,031	)

	December 31, 2013
	Less than Twelve Months					Twelve Months or Greater					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Dollar amounts in thousands)	Value		Losses			Value		Losses			Value		Losses
U.S. government agency securities	$	13,130	$	(929	)	$	7,166	$	(732	)	$	20,295	$	(1,661	)
Obligations of states and political subdivisions
Taxable		1,301		(38	)		-		-			1,301		(38	)
Tax-exempt		26,743		(2,883	)		2,678		(383	)		29,421		(3,267	)
Mortgage-backed securities in government-sponsored entities		18,082		(757	)		5,248		(271	)		23,330		(1,028	)
Total	$	59,255	$	(4,608	)	$	15,092	$	(1,386	)	$	74,347	$	(5,994	)

There were 86 securities considered temporarily impaired at June 30, 2014.

On a quarterly basis, the Company performs an assessment to determine whether there have been any events or economic circumstances indicating that a security with an unrealized loss has suffered other-than-temporary impairment (“OTTI”). A debt security is considered impaired if the fair value is less than its amortized cost basis at the reporting date. The Company assesses whether the unrealized loss is other than temporary.

OTTI losses are recognized in earnings when the Company has the intent to sell the debt security or it is more likely than not that it will be required to sell the debt security before recovery of its amortized cost basis. However, even if the Company does not expect to sell a debt security, it must evaluate expected cash flows to be received and determine if a credit loss has occurred.

An unrealized loss is generally deemed to be other than temporary and a credit loss is deemed to exist if the present value of the expected future cash flows is less than the amortized cost basis of the debt security. As a result the credit loss component of an OTTI is recorded as a component of investment securities gains (losses) in the accompanying Consolidated Statement of Income, while the remaining portion of the impairment loss is recognized in other comprehensive income, provided the Company does not intend to sell the underlying debt security and it is “more likely than not” that the Company will not have to sell the debt security prior to recovery.

Debt securities issued by U.S. government agencies, U.S. government-sponsored enterprises, and state and political subdivisions accounted for more than 98% of the total available-for-sale portfolio as of June 30, 2014 and no credit losses are expected, given the explicit and implicit guarantees provided by the U.S. federal government and the lack of prolonged unrealized loss positions within the obligations of state and political subdivisions security portfolio. The Company’s assessment was concentrated mainly on private-label collateralized mortgage obligations of approximately $3.0 million for which the Company evaluates credit losses on a quarterly basis. The gross unrealized gain position related to these private-label collateralized mortgage obligations amounted to $292,000 on June 30, 2014. The Company considered the following factors in determining whether a credit loss exists and the period over which the debt security is expected to recover:

• The length of time and the extent to which the fair value has been less than the amortized cost basis.

• Changes in the near term prospects of the underlying collateral of a security such as changes in default rates, loss severity given default and significant changes in prepayment assumptions;

• The level of cash flows generated from the underlying collateral supporting the principal and interest payments of the debt securities; and

• Any adverse change to the credit conditions and liquidity of the issuer, taking into consideration the latest information available about the overall financial condition of the issuer, credit ratings, recent legislation and government actions affecting the issuer’s industry and actions taken by the issuer to deal with the present economic climate.

For the three and six months ended June 30, 2014 and 2013, there were no available-for-sale debt securities with an unrealized loss that suffered OTTI. Management does not believe any individual unrealized loss as of June 30, 2014 or December 31, 2013 represented an other-than-temporary impairment. The unrealized losses on debt securities are primarily the result of interest rate changes. These conditions will not prohibit the Company from receiving its contractual principal and interest payments on these debt securities. The fair value of these debt securities is expected to recover as payments are received on these securities and they approach maturity. Should the impairment of any of these securities become other than temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified.

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Accounting Policies, by Policy (Policies)

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

In June 2013, the FASB issued ASU 2013-08, Financial Services – Investment Companies (Topic 946): Amendments to the Scope, Measurement, and Disclosure Requirements. The amendments in this Update affect the scope, measurement, and disclosure requirements for investment companies under U.S. GAAP. The amendments do all of the following: 1. Change the approach to the investment company assessment in Topic 946, clarify the characteristics of an investment company, and provide comprehensive guidance for assessing whether an entity is an investment Company. 2. Require an investment company to measure noncontrolling ownership interests in other investment companies at fair value rather than using the equity method of accounting. 3. Require the following additional disclosures: (a) the fact that the entity is an investment company and is applying the guidance in Topic 946, (b) information about changes, if any, in an entity’s status as an investment company, and (c) information about financial support provided or contractually required to be provided by an investment company to any of its investees. The amendments in this Update are effective for an entity’s interim and annual reporting periods in fiscal years that begin after December 15, 2013. This ASU became effective for the Company on January 1, 2014 and did not have a significant impact on the Company’s financial statements.

In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This Update applies to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. An unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. The amendments in this Update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. For nonpublic entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. Early adoption is permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. This ASU became effective for the Company on January 1, 2014 and did not have a significant impact on the Company’s financial statements.

In January 2014, FASB issued ASU 2014-01, Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects. The amendments in this Update permit reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). The amendments in this Update should be applied retrospectively to all periods presented. A reporting entity that uses the effective yield method to account for its investments in qualified affordable housing projects before the date of adoption may continue to apply the effective yield method for those preexisting investments. The amendments in this Update are effective for public business entities for annual periods and interim reporting periods within those annual periods, beginning after December 15, 2014. Early adoption is permitted. This ASU is not expected to have a significant impact on the Company’s financial.

In January 2014, the FASB issued ASU 2014-04, Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. The amendments in this Update clarify that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. The amendments in this Update are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. An entity can elect to adopt the amendments in this Update using either a modified retrospective transition method or a prospective transition method. This ASU is not expected to have a significant impact on the Company’s financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (a new revenue recognition standard). The Update’s core principle is that a company will recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, this update specifies the accounting for certain costs to obtain or fulfill a contract with a customer and expands disclosure requirements for revenue recognition. This Update is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is evaluating the effect of adopting this new accounting Update.

In June 2014, the FASB issued ASU 2014-11, Transfers and Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The amendments in this Update change the accounting for repurchase-to-maturity transactions to secured borrowing accounting. For repurchase financing arrangements, the amendments require separate accounting for a transfer of a financial asset executed contemporaneously with a repurchase agreement with the same counterparty, which will result in secured borrowing accounting for the repurchase agreement. The amendments also require enhanced disclosures. The accounting changes in this Update are effective for the first interim or annual period beginning after December 15, 2014. An entity is required to present changes in accounting for transactions outstanding on the effective date as a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. Earlier application is prohibited. The disclosure for certain transactions accounted for as a sale is required to be presented for interim and annual periods beginning after December 15, 2014, and the disclosure for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions accounted for as secured borrowings is required to be presented for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. The disclosures are not required to be presented for comparative periods before the effective date. This Update is not expected to have a significant impact on the Company’s financial statements.

In June 2014, the FASB issued ASU 2014-12, Compensation-Stock Compensation (Topic 718): Accounting for Share-Based Payments when the Terms of an Award Provide that a Performance Target Could Be Achieved After the Requisite Service Period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. Entities may apply the amendments in this Update either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect of applying this Update as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date. Additionally, if retrospective transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. This Update is not expected to have a significant impact on the Company’s financial statements.

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Note 6 - Investment Securities Available For Sale (Details) (USD $)				6 Months Ended
	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2014 Private Label Collateralized Mortgage Obligations [Member]	Jun. 30, 2014 Mortgage-backed Securities, Issued by Private Enterprises [Member]	Dec. 31, 2013 Mortgage-backed Securities, Issued by Private Enterprises [Member]	Jun. 30, 2014 Three Months Ending [Member] Available-for-sale Securities [Member]	Jun. 30, 2013 Available-for-sale Securities [Member]
Note 6 - Investment Securities Available For Sale (Details) [Line Items]
Available-for-sale Securities Pledged as Collateral (in Dollars)	$ 65,800,000	$ 66,300,000
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	86					0	0
Percentage of Portfolio	98.00%
Available-for-sale Securities, Current (in Dollars)	165,506,000	157,143,000	3,000,000	3,318,000	3,693,000
Available-for-sale Securities, Gross Unrealized Gain (in Dollars)				$ 292,000

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Note 6 - Investment Securities Available For Sale (Tables)

6 Months Ended

Jun. 30, 2014

Investments, Debt and Equity Securities [Abstract]

Schedule of Available-for-sale Securities Reconciliation [Table Text Block]

	June 30, 2014
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
(Dollar amounts in thousands)	Cost		Gains		Losses			Value
U.S. government agency securities	$	25,665	$	245	$	(849	)	$	25,061
Obligations of states and political subdivisions:
Taxable		2,957		122		-			3,079
Tax-exempt		94,530		2,852		(1,689	)		95,693
Mortgage-backed securities in government-sponsored entities		37,279		813		(493	)		37,599
Private-label mortgage-backed securities		3,026		292		-			3,318
Total debt securities		163,457		4,324		(3,031	)		164,750
Equity securities in financial institutions		750		6		-			756
Total	$	164,207	$	4,330	$	(3,031	)	$	165,506

	December 31, 2013
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
(Dollar amounts in thousands)	Cost		Gains		Losses			Value
U.S. government agency securities	$	27,289	$	135	$	(1,661	)	$	25,763
Obligations of states and political subdivisions:
Taxable		3,787		46		(38	)		3,795
Tax-exempt		86,524		1,562		(3,267	)		84,819
Mortgage-backed securities in government-sponsored entities		38,816		535		(1,028	)		38,323
Private-label mortgage-backed securities		3,366		327		-			3,693
Total debt securities		159,782		2,605		(5,994	)		156,393
Equity securities in financial institutions		750		-		-			750
Total	$	160,532	$	2,605	$	(5,994	)	$	157,143

Investments Classified by Contractual Maturity Date [Table Text Block]

	Amortized		Fair
(Dollar amounts in thousands)	Cost		Value
Due in one year or less	$	684	$	694
Due after one year through five years		4,774		4,996
Due after five years through ten years		23,549		23,871
Due after ten years		134,450		135,189
Total	$	163,457	$	164,750

Realized Gain (Loss) on Investments [Table Text Block]

(Dollar amounts in thousands)	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2014		2013			2014			2013
Proceeds from sales	$	980	$	533		$	1,494		$	8,135
Gross realized gains		64		-			64			204
Gross realized losses		-		(10	)		(6	)		(29	)

Schedule of Unrealized Loss on Investments [Table Text Block]

	June 30, 2014
	Less than Twelve Months					Twelve Months or Greater					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Dollar amounts in thousands)	Value		Losses			Value		Losses			Value		Losses
U.S. government agency securities	$	-	$	-		$	16,599	$	(849	)	$	16,599	$	(849	)
Obligations of states and political subdivisions		9,511		(104	)		19,616		(1,585	)		29,127		(1,689	)
Mortgage-backed securities in government-sponsored entities		1,075		(3	)		20,334		(490	)		21,409		(493	)
Total	$	10,586	$	(107	)	$	56,549	$	(2,924	)	$	67,135	$	(3,031	)

	December 31, 2013
	Less than Twelve Months					Twelve Months or Greater					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Dollar amounts in thousands)	Value		Losses			Value		Losses			Value		Losses
U.S. government agency securities	$	13,130	$	(929	)	$	7,166	$	(732	)	$	20,295	$	(1,661	)
Obligations of states and political subdivisions
Taxable		1,301		(38	)		-		-			1,301		(38	)
Tax-exempt		26,743		(2,883	)		2,678		(383	)		29,421		(3,267	)
Mortgage-backed securities in government-sponsored entities		18,082		(757	)		5,248		(271	)		23,330		(1,028	)
Total	$	59,255	$	(4,608	)	$	15,092	$	(1,386	)	$	74,347	$	(5,994	)

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Note 3 - Earnings Per Share (Details) - Shares Used in Calculation of Earnings Per Share	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Shares Used in Calculation of Earnings Per Share [Abstract]
Weighted-average common shares issued	2,227,556	2,206,794	2,225,555	2,198,033
Average treasury stock shares	(189,530)	(189,530)	(189,530)	(189,530)
Weighted-average common shares and common stock equivalents used to calculate basic earnings per share	2,038,026	2,017,264	2,036,025	2,008,503
Additional common stock equivalents (stock options) used to calculate diluted earnings per share	6,538	6,697	6,156	8,557
Weighted-average common shares and common stock equivalents used to calculate diluted earnings per share	2,044,564	2,023,961	2,042,181	2,017,060

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Note 7 - Loans and Related Allowance for Loan and Lease Losses (Details) - Primary Segments of the Loan Portfolio (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Loans:
Individually evaluated for impairment	$ 15,287	$ 18,965
Collectively evaluated for impairment	434,832	416,760
Total loans	450,119	435,725
Commercial and Industrial [Member]
Loans:
Individually evaluated for impairment	1,675	1,891
Collectively evaluated for impairment	53,902	52,607
Total loans	55,577	54,498
Real Estate Construction [Member]
Loans:
Individually evaluated for impairment	3,587	4,011
Collectively evaluated for impairment	23,028	21,590
Total loans	26,615	25,601
Residential Real Estate Mortgage [Member]
Loans:
Individually evaluated for impairment	5,067	5,882
Collectively evaluated for impairment	214,162	204,428
Total loans	219,229	210,310
Commercial Real Estate Mortgage [Member]
Loans:
Individually evaluated for impairment	4,946	7,175
Collectively evaluated for impairment	137,559	133,996
Total loans	142,505	141,171
Consumer Installment [Member]
Loans:
Individually evaluated for impairment	12	6
Collectively evaluated for impairment	6,181	4,139
Total loans	$ 6,193	$ 4,145

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Consolidated Statements of Comprehensive Income (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014	Jun. 30, 2013
Net income	$ 1,611		$ 1,685		$ 3,374	$ 3,342
Other comprehensive income (loss):
Net unrealized holding gain (loss) on available-for-sale securities	1,950		(6,760)		4,749	(8,281)
Tax effect	(663)		2,298		(1,615)	2,815
Reclassification adjustment for investment securities losses (gains) included in net income	(64)		10		(58)	(175)
Tax effect	22		(3)		20	60
Total other comprehensive income (loss)	1,245	[1]	(4,455)	[1]	3,096	(5,581)
Comprehensive income (loss)	$ 2,856		$ (2,770)		$ 6,470	$ (2,239)

[1] All amounts are net of tax. Amounts in parentheses indicate debits.

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Note 2 - Stock-Based Compensation

6 Months Ended

Jun. 30, 2014

Disclosure Text Block Supplement [Abstract]

Compensation and Employee Benefit Plans [Text Block]

NOTE 2 - STOCK-BASED COMPENSATION

The Company had no unvested stock options outstanding or unrecognized stock-based compensation costs outstanding as of June 30, 2014 and 2013.

Stock option activity during the six months ended June 30 is as follows:

				Weighted-average					Weighted-average
	2014			Exercise Price		2013			Exercise Price
Outstanding, January 1		58,581		$	28.38		79,693		$	26.81
Exercised		-			-		(19,761	)		24.09
Forfeited		(907	)		27.35		-			-
Outstanding, June 30		57,674			28.40		59,932			28.29
Exercisable, June 30		57,674			28.40		59,932			28.29

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Note 4 - Fair Value Measurements (Details) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Note 4 - Fair Value Measurements (Details) [Line Items]
Available-for-sale Securities, Current	$ 165,506,000	$ 157,143,000
Fair Value, Inputs, Level 3 [Member]
Note 4 - Fair Value Measurements (Details) [Line Items]
Available-for-sale Securities, Current	$ 0	$ 0

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Note 6 - Investment Securities Available For Sale (Details) - Gross Unrealized Losses and Fair Value (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Note 6 - Investment Securities Available For Sale (Details) - Gross Unrealized Losses and Fair Value [Line Items]
Less than Twelve Months, Fair Value	$ 10,586	$ 59,255
Less than Twelve Months, Gross Unrealized Losses	(107)	(4,608)
Twelve Months or Greater, Fair Value	56,549	15,092
Twelve Months or Greater, Gross Unrealized Losses	(2,924)	(1,386)
Total, Fair Value	67,135	74,347
Total, Gross Unrealized Losses	(3,031)	(5,994)
US Government Agencies Debt Securities [Member]
Note 6 - Investment Securities Available For Sale (Details) - Gross Unrealized Losses and Fair Value [Line Items]
Less than Twelve Months, Fair Value		13,130
Less than Twelve Months, Gross Unrealized Losses		(929)
Twelve Months or Greater, Fair Value	16,599	7,166
Twelve Months or Greater, Gross Unrealized Losses	(849)	(732)
Total, Fair Value	16,599	20,295
Total, Gross Unrealized Losses	(849)	(1,661)
US States and Political Subdivisions Debt Securities [Member] | Taxable [Member]
Note 6 - Investment Securities Available For Sale (Details) - Gross Unrealized Losses and Fair Value [Line Items]
Less than Twelve Months, Fair Value		1,301
Less than Twelve Months, Gross Unrealized Losses		(38)
Total, Fair Value		1,301
Total, Gross Unrealized Losses		(38)
US States and Political Subdivisions Debt Securities [Member] | Tax-exempt [Member]
Note 6 - Investment Securities Available For Sale (Details) - Gross Unrealized Losses and Fair Value [Line Items]
Less than Twelve Months, Fair Value		26,743
Less than Twelve Months, Gross Unrealized Losses		(2,883)
Twelve Months or Greater, Fair Value		2,678
Twelve Months or Greater, Gross Unrealized Losses		(383)
Total, Fair Value		29,421
Total, Gross Unrealized Losses		(3,267)
US States and Political Subdivisions Debt Securities [Member]
Note 6 - Investment Securities Available For Sale (Details) - Gross Unrealized Losses and Fair Value [Line Items]
Less than Twelve Months, Fair Value	9,511
Less than Twelve Months, Gross Unrealized Losses	(104)
Twelve Months or Greater, Fair Value	19,616
Twelve Months or Greater, Gross Unrealized Losses	(1,585)
Total, Fair Value	29,127
Total, Gross Unrealized Losses	(1,689)
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Note 6 - Investment Securities Available For Sale (Details) - Gross Unrealized Losses and Fair Value [Line Items]
Less than Twelve Months, Fair Value	1,075	18,082
Less than Twelve Months, Gross Unrealized Losses	(3)	(757)
Twelve Months or Greater, Fair Value	20,334	5,248
Twelve Months or Greater, Gross Unrealized Losses	(490)	(271)
Total, Fair Value	21,409	23,330
Total, Gross Unrealized Losses	$ (493)	$ (1,028)

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Note 5 - Accumulated Other Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2014

Disclosure Text Block [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

	Unrealized gains on
	available-for-sale
	securities (a)
Balance as of December 31, 2013	$	(2,237	)
Other comprehensive income before reclassification		1,847
Amount reclassified from accumulated other comprehensive loss		4
Period change		1,851
Balance at March 31, 2014	$	(386	)
Other comprehensive income before reclassification		1,287
Amount reclassified from accumulated other comprehensive income		(42	)
Period change		1,245
Balance at June 30, 2014	$	859
Balance as of December 31, 2012	$	5,391
Other comprehensive loss before reclassification		(1,004	)
Amount reclassified from accumulated other comprehensive loss		(122	)
Period change		(1,126	)
Balance at March 31, 2013		4,265
Other comprehensive loss before reclassification		(4,462	)
Amount reclassified from accumulated other comprehensive loss		7
Period change		(4,455	)
Balance at June 30, 2013	$	(190	)

Schedule of Amounts Recognized in Other Comprehensive Income (Loss) [Table Text Block]

	Amount Reclassified from Accumulated Other Comprehensive Income						Affected Line Item in
	For the Three Months Ended						the Statement Where
	June 30,						Net Income is
Details about other comprehensive income	2014			2013			Presented
Unrealized gains on available-for-sale securities
	$	64		$	(10	)	Investment securities gains, net
		(22	)		3		Income taxes
	$	42		$	(7	)	Net of tax

	Amount Reclassified from Accumulated Other Comprehensive Income						Affected Line Item in
	For the Six Months Ended						the Statement Where
	June 30,						Net Income is
Details about other comprehensive income	2014			2013			Presented
Unrealized gains on available-for-sale securities
	$	58		$	175		Investment securities gains, net
		(20	)		(60	)	Income taxes
	$	38		$	115		Net of tax