Note 2 - Investment Securities

3 Months Ended

Mar. 31, 2013

Investment Holdings [Text Block]

NOTE 2 – INVESTMENT SECURITIES

The amortized cost and fair value of investment securities as of March 31, 2013 and December 31, 2012 are summarized as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
March 31, 2013:
Securities held to maturity:
Municipal securities	$	86,356,209	$	746,173	$	(407,348	)	$	86,695,034
Other securities		650,000		-		-			650,000
	$	87,006,209	$	746,173	$	(407,348	)	$	87,345,034
Securities available for sale:
U.S. govt. sponsored agency securities	$	402,488,606	$	1,769,562	$	(418,236	)	$	403,839,932
Residential mortgage-backed and related securities		171,863,065		3,381,118		(441,951	)		174,802,232
Municipal securities		23,485,794		1,543,985		(38,738	)		24,991,041
Trust preferred securities		86,200		99,120		-			185,320
Other securities		1,365,794		366,719		(5,664	)		1,726,849
	$	599,289,459	$	7,160,504	$	(904,589	)	$	605,545,374
December 31, 2012:
Securities held to maturity:
Municipal securities	$	71,429,385	$	997,969	$	(71,648	)	$	72,355,706
Other securities		650,000		-		-			650,000
	$	72,079,385	$	997,969	$	(71,648	)	$	73,005,706
Securities available for sale:
U.S. govt. sponsored agency securities	$	336,570,995	$	2,198,655	$	(160,279	)	$	338,609,371
Residential mortgage-backed and related securities		160,035,196		3,736,821		(170,914	)		163,601,103
Municipal securities		24,508,015		1,696,555		(18,834	)		26,185,736
Trust preferred securities		86,200		53,200		-			139,400
Other securities		1,347,113		300,732		(23,469	)		1,624,376
	$	522,547,519	$	7,985,963	$	(373,496	)	$	530,159,986

The Company’s held to maturity municipal securities consist largely of private issues of municipal debt.  The municipalities are located within the Midwest with a portion in or adjacent to the communities of QCBT and CRBT.  The municipal debt investments are underwritten using specific guidelines with ongoing monitoring.

The Company’s residential mortgage-backed and related securities portfolio consists entirely of government sponsored or government guaranteed securities.  The Company has not invested in commercial mortgage-backed securities or pooled trust preferred securities.

Gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of March 31, 2013 and December 31, 2012, are summarized as follows:

	Less than 12 Months					12 Months or More					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
March 31, 2013:
Securities held to maturity:
Municipal securities	$	25,634,890	$	(407,348	)	$	-	$	-		$	25,634,890	$	(407,348	)
Securities available for sale:
U.S. govt. sponsored agency securities	$	129,197,592	$	(418,236	)	$	-	$	-		$	129,197,592	$	(418,236	)
Residential mortgage-backed and related securities		46,924,954		(441,951	)		-		-			46,924,954		(441,951	)
Municipal securities		2,223,597		(38,738	)		-		-			2,223,597		(38,738	)
Other securities		-		-			235,625		(5,664	)		235,625		(5,664	)
	$	178,346,143	$	(898,925	)	$	235,625	$	(5,664	)	$	178,581,768	$	(904,589	)
December 31, 2012:
Securities held to maturity:
Municipal securities	$	4,282,352	$	(71,648	)	$	-	$	-		$	4,282,352	$	(71,648	)
Securities available for sale:
U.S. govt. sponsored agency securities	$	55,621,718	$	(160,279	)	$	-	$	-		$	55,621,718	$	(160,279	)
Residential mortgage-backed and related securities		29,324,928		(170,914	)		-		-			29,324,928		(170,914	)
Municipal securities		1,039,625		(18,834	)		-		-			1,039,625		(18,834	)
Other securities		-		-			217,500		(23,469	)		217,500		(23,469	)
	$	85,986,271	$	(350,027	)	$	217,500	$	(23,469	)	$	86,203,771	$	(373,496	)

At March 31, 2013, the investment portfolio included 444 securities.  Of this number, 114 securities had current unrealized losses with aggregate depreciation of less than 1% from the total amortized cost basis.  Of these 114, only one had unrealized losses for twelve months or more and the amount of the unrealized loss was only $5,664.  All of the debt securities in unrealized loss positions are considered acceptable credit risks.  Based upon an evaluation of the available evidence, including the recent changes in market rates, credit rating information and information obtained from regulatory filings, management believes the declines in fair value for these debt securities are temporary.  In addition, the Company does not intend to sell these securities and it is not more-likely-than-not that the Company will be required to sell these debt securities before their anticipated recovery.  At March 31, 2013 and December 31, 2012, equity securities represented less than 1% of the total portfolio.

The Company did not recognize other-than-temporary impairment on any debt or equity securities for the three months ended March 31, 2013 and 2012.

The Company did not sell any securities during the three months ended March 31, 2013 and 2012.

The amortized cost and fair value of securities as of March 31, 2013 by contractual maturity are shown below.  Expected maturities of residential mortgage-backed and related securities may differ from contractual maturities because the residential mortgages underlying the residential mortgage-backed and related securities may be called or prepaid without any penalties.  Therefore, these securities are not included in the maturity categories in the following table.  “Other securities” are excluded from the maturity categories as there is no fixed maturity date for those securities.

	Amortized Cost		Fair Value
Securities held to maturity:
Due in one year or less	$	1,465,502	$	1,465,266
Due after one year through five years		13,406,654		13,426,853
Due after one year through five years		72,134,053		72,452,915
	$	87,006,209	$	87,345,034
Securities available for sale:
Due in one year or less	$	695,000	$	700,650
Due after one year through five years		29,282,063		29,712,248
Due after five years		396,083,537		398,603,395
	$	426,060,600	$	429,016,293
Residential mortgage-backed and related securities		171,863,065		174,802,232
Other securities		1,365,794		1,726,849
	$	599,289,459	$	605,545,374

Portions of the U.S. government sponsored agency securities and municipal securities contain call options, at the discretion of the issuer, to terminate the security at predetermined dates prior to the stated maturity, summarized as follows:

	Amortized Cost		Fair Value
Securities held to maturity:
Municipal securities	$	57,540,331	$	57,327,912
Securities available for sale:
U.S. govt. sponsored agency securities		370,595,745		371,574,015
Municipal securities		13,494,268		14,270,490
	$	384,090,013	$	385,844,505