Note 3 - Investment Securities

9 Months Ended

Sep. 30, 2013

Investment Holdings [Abstract]

Investment Holdings [Text Block]

NOTE 3 – INVESTMENT SECURITIES

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

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
September 30, 2013:
Securities held to maturity:
Municipal securities	$	130,311,845	$	456,156	$	(6,520,899	)	$	124,247,102
Other securities		1,050,000		-		(4,740	)		1,045,260
	$	131,361,845	$	456,156	$	(6,525,639	)	$	125,292,362
Securities available for sale:
U.S. govt. sponsored agency securities	$	383,193,241	$	75,797	$	(15,744,151	)	$	367,524,887
Residential mortgage-backed and related securities		167,759,290		1,318,307		(2,533,127	)		166,544,470
Municipal securities		36,242,570		978,391		(761,791	)		36,459,170
Other securities		1,358,524		450,278		-			1,808,802
	$	588,553,625	$	2,822,773	$	(19,039,069	)	$	572,337,329
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 September 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
September 30, 2013:
Securities held to maturity:
Municipal securities	$	92,786,083	$	(6,520,899	)	$	-	$	-		$	92,786,083	$	(6,520,899	)
Other securities		495,260		(4,740	)		-		-			495,260		(4,740	)
	$	93,281,343	$	(6,525,639	)	$	-	$	-		$	93,281,343	$	(6,525,639	)
Securities available for sale:
U.S. govt. sponsored agency securities	$	351,006,164	$	(15,744,151	)	$	-	$	-		$	351,006,164	$	(15,744,151	)
Residential mortgage-backed and related securities		106,889,560		(2,517,649	)		1,279,117		(15,478	)		108,168,677		(2,533,127	)
Municipal securities		16,263,130		(761,791	)		-		-			16,263,130		(761,791	)
	$	474,158,854	$	(19,023,591	)	$	1,279,117	$	(15,478	)	$	475,437,971	$	(19,039,069	)
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 September 30, 2013, the investment portfolio included 545 securities. Of this number, 341 securities had current unrealized losses with aggregate depreciation of less than 5% from the total amortized cost basis. Of these 341, only one had an unrealized loss for twelve months or more and the amount of the unrealized loss was only $15,478. 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 September 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 nine months ended September 30, 2013 and 2012.

The Company did not recognize other-than-temporary impairment on any equity securities for the three and nine months ended September 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 or the third quarter of 2012.

All sales of securities for the three and nine months ended September 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					Nine Months Ended
	September 30, 2013			September 30, 2012		September 30, 2013			September 30, 2012
Proceeds from sales of securities	$	31,225,516		$	-	$	37,393,047		$	19,215,075
Pre-tax gross gains from sales of securities		506,611			-		523,071			104,600
Pre-tax gross losses from sales of securities		(89,675	)		-		(89,675	)		-

The amortized cost and fair value of securities as of September 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” available for sale 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	$	2,066,615	$	2,066,245
Due after one year through five years		9,982,269		9,827,587
Due after one year through five years		119,312,961		113,398,530
	$	131,361,845	$	125,292,362
Securities available for sale:
Due in one year or less	$	5,220,265	$	5,231,685
Due after one year through five years		42,271,445		42,124,141
Due after five years		371,944,101		356,628,231
	$	419,435,811	$	403,984,057
Residential mortgage-backed and related securities		167,759,290		166,544,470
Other securities		1,358,524		1,808,802
	$	588,553,625	$	572,337,329

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 par and at predetermined dates prior to the stated maturity, summarized as follows:

	Amortized Cost		Fair Value
Securities held to maturity:
Municipal securities	$	94,833,231	$	89,637,985
Securities available for sale:
U.S. govt. sponsored agency securities		349,624,386		334,694,737
Municipal securities		23,163,866		22,996,424
	$	372,788,252	$	357,691,161