Note 3 - Investment Securities

6 Months Ended

Jun. 30, 2013

Investment Holdings [Abstract]

Investment Holdings [Text Block]

NOTE 3 – INVESTMENT SECURITIES

The amortized cost and fair value of investment securities as of June 30, 2013 and December 31, 2012 are summarized as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
June 30, 2013:
Securities held to maturity:
Municipal securities	$	104,551,749	$	152,017	$	(5,853,172	)	$	98,850,594
Other securities		650,000		-		-			650,000
	$	105,201,749	$	152,017	$	(5,853,172	)	$	99,500,594
Securities available for sale:
U.S. govt. sponsored agency securities	$	395,513,928	$	238,359	$	(14,836,396	)	$	380,915,891
Residential mortgage-backed and related securities		179,822,160		1,807,687		(3,084,293	)		178,545,554
Municipal securities		36,478,946		1,102,715		(752,811	)		36,828,850
Trust preferred securities		86,200		130,000		-			216,200
Other securities		1,362,730		396,393		(218	)		1,758,905
	$	613,263,964	$	3,675,154	$	(18,673,718	)	$	598,265,400
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 June 30, 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
June 30, 2013:
Securities held to maturity:
Municipal securities	$	88,263,477	$	(5,853,172	)	$	-	$	-		$	88,263,477	$	(5,853,172	)
Securities available for sale:
U.S. govt. sponsored agency securities	$	351,380,421	$	(14,836,396	)	$	-	$	-		$	351,380,421	$	(14,836,396	)
Residential mortgage-backed and related securities		102,856,893		(3,054,077	)		2,065,109		(30,216	)		104,922,002		(3,084,293	)
Municipal securities		14,212,014		(752,811	)		-		-			14,212,014		(752,811	)
Other securities		-		-			241,345		(218	)		241,345		(218	)
	$	468,449,328	$	(18,643,284	)	$	2,306,454	$	(30,434	)	$	470,755,782	$	(18,673,718	)
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 June 30, 2013, the investment portfolio included 533 securities. Of this number, 350 securities had current unrealized losses with aggregate depreciation of less than 5% from the total amortized cost basis. Of these 350, only three had unrealized losses for twelve months or more and the amount of the unrealized losses was only $30,434. 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 June 30, 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 securities for the three and six months ended June 30, 2013 and 2012.

The Company did not recognize other-than-temporary impairment on any equity securities for the three and six months ended June 30, 2013. During the second quarter of 2012, the Company’s evaluation determined that one privately held equity security experienced a decline in fair value that was other-than-temporary. As a result, the Company wrote down the value of this security and recognized a loss in the amount of $62,400. The Company did not recognize other-than-temporary impairment on any equity securities during the first quarter of 2012.

All sales of securities for the three and six months ended June 30, 2013 and 2012, respectively, were from securities identified as available-for-sale. Information on proceeds received, as well as pre-tax gross gains from sales on those securities is as follows:

	Three Months Ended				Six Months Ended
	June 30, 2013		June 30, 2012		June 30, 2013		June 30, 2012
Proceeds from sales of securities	$	6,167,531	$	19,215,075	$	6,167,531	$	19,215,075
Pre-tax gross gains from sales of securities		16,460		104,600		16,460		104,600

The amortized cost and fair value of securities as of June 30, 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	$	1,785,269	$	1,784,577
Due after one year through five years		10,214,545		10,126,030
Due after one year through five years		93,201,935		87,589,987
	$	105,201,749	$	99,500,594
Securities available for sale:
Due in one year or less	$	5,334,543	$	5,329,272
Due after one year through five years		33,501,636		33,339,485
Due after five years		393,242,895		379,292,184
	$	432,079,074	$	417,960,941
Residential mortgage-backed and related securities		179,822,160		178,545,554
Other securities		1,362,730		1,758,905
	$	613,263,964	$	598,265,400

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	$	69,862,451	$	65,051,896
Securities available for sale:
U.S. govt. sponsored agency securities		355,831,837		342,070,506
Municipal securities		22,786,922		22,750,101
	$	378,618,759	$	364,820,607