Note 9 - Other Borrowings and Unused Lines of Credit

12 Months Ended

Dec. 31, 2013

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

Note 9.     Other Borrowings and Unused Lines of Credit

Other borrowings as of December 31, 2013 and 2012 are summarized as follows:

	2013		2012
Wholesale repurchase agreements	$	130,000,000	$	130,000,000
Term note		9,800,000		-
364-day revolving note		-		5,600,000
Series A subordinated notes		2,648,362		2,639,762
	$	142,448,362	$	138,239,762

Maturity and interest rate information concerning wholesale structured repurchase agreements is summarized as follows:

	December 31, 2013					December 31, 2012
	Amount Due		Weighted Average Interest Rate at Year-End			Amount Due		Weighted Average Interest Rate at Year-End
Maturity:
Year ending December 31:
2015	$	5,000,000		2.77	%	$	35,000,000		3.00	%
2016		-		0.00			20,000,000		3.46
2017		10,000,000		3.00			10,000,000		3.00
Thereafter		115,000,000		3.25			65,000,000		3.71
Total Wholesale Structured Repurchase Agreements	$	130,000,000		3.21		$	130,000,000		3.43

Each wholesale structured repurchase agreement has a one-time put option, at the discretion of the counterparty, to terminate the agreement and require the subsidiary bank to repay at predetermined dates prior to the stated maturity date of the agreement.

As of December 31, 2013 and 2012, embedded within $30,000,000 and $50,000,000, respectively, of the wholesale structured repurchase agreements were interest rate cap options with varying terms. Of the $30,000,000 as of December 31, 2013, all of it matures in 2019 with the caps expiring in 2014 in conjunction with the one-time put option. Of the $50,000,000 as of December 31, 2012, $20,000,000 matures in 2016 with the caps expiring in 2013 in conjunction with the one-time put option, and $30,000,000 matures in 2019 with the caps expiring in 2014 in conjunction with the one-time put option. The interest rate cap options are effected when the 3-month LIBOR rate increases to certain levels. If that situation occurs, the rate paid will be decreased by the difference between the 3-month LIBOR rate and the particular cap level. In no case will the rate paid fall below 0.00%.

During 2013, the Company modified $50,000,000 of fixed rate wholesale structured repurchase agreements with a weighted average interest rate of 3.21% and a weighted average maturity of February 2016 into new fixed rate wholesale structured repurchase agreements with a weighted average interest rate of 2.65% and a weighted average maturity of May 2020. During 2012, the Company modified $25,000,000 of fixed rate wholesale structured repurchase agreements with a weighted average interest rate of 3.77% and a weighted average maturity of December 2015 into new fixed rate wholesale structured repurchase agreements with a weighted average interest rate of 3.21% and a weighted average maturity of April 2019. Of this $25,000,000, $15,000,000 had interest rate cap options embedded that were set to expire in 2013 in conjunction with the one-time put option. Upon modification, the interest rate cap options were cancelled.

The wholesale structured repurchase agreements are collateralized by securities with a carrying value of $151,592,944 and $160,772,093 as of December 31, 2013 and 2012, respectively.

At December 31, 2012, the Company had a single $20,000,000 secured revolving credit note which matures every 364 days. At December 31, 2012, the note carried a balance outstanding of $5,600,000. Interest was payable monthly at the effective LIBOR rate plus 2.50% per annum, as defined by the credit agreement. As of December 31, 2012, the interest rate on the note was 2.71%. In order to fund the cash portion of the consideration and pay off the $3,950,000 of Community National borrowings at acquisition, the Company borrowed $4,400,000 on its 364-day revolving credit note. The outstanding balance on the 364-day revolving credit note totaled $10,000,000 until maturity at June 26, 2013. Upon maturity, the credit facility was restructured whereby the $10,000,000 of outstanding debt was restructured into a secured 3-year term note with principal due quarterly and interest due monthly where the interest is calculated at the effective LIBOR rate plus 3.00% per annum (3.17% at December 31, 2013). Additionally, as part of the restructuring, the Company maintained a secured 364-day revolving credit note with availability of $10,000,000 where the interest is calculated at the effective LIBOR rate plus 2.50% per annum. At December 31, 2013, the Company had not borrowed on this revolving credit note and had the full amount available.

The current revolving note agreement contains certain covenants that place restrictions on additional debt and stipulate minimum capital and various operating ratios.

On March 19, 2010, the Company closed a private placement offering resulting in the issuance of 2,700 units (each, a “Unit”) to accredited investors for an aggregate purchase price of $2,700,000, or $1,000 per Unit. Each Unit consists of a 6.00% Series A Subordinated Note, due September 1, 2018 (collectively, the “Subordinated Notes”), $1,000 principal amount, and a detachable warrant (collectively, the “Warrants”) to acquire 20 shares of the Company’s common stock, par value $1.00 per share (the “Common Stock”), at a per share exercise price equal to $10.00 per share, subject to normal adjustments, as set forth in the Warrants. During the year ended December 31, 2012, all 54,000 Warrants were exercised by the holders for total proceeds in the amount of $540,000.

The Subordinated Notes have a maturity date of September 1, 2018. The Subordinated Notes bear interest payable semi-annually, in arrears, on June 30 and December 30 of each year, at a fixed interest rate of 6.00% per year. The Company may, at its option, subject to regulatory approvals, redeem some or all of the Subordinated Notes at a redemption price equal to 100% of the principal amount of the redeemed notes, plus any accrued but unpaid interest.

The Subordinated Notes are intended to qualify as Tier 2 capital of the Company for regulatory purposes. The Company used the net proceeds from the sale of the Units to further strengthen the capital positions of the Company and specifically RB&T.

Unused lines of credit of the subsidiary banks as of December 31, 2013 and 2012 are summarized as follows:

	2013		2012
Secured	$	26,791,107	$	52,703,791
Unsecured		324,500,000		259,000,000
	$	351,291,107	$	311,703,791

The Company pledges the eligible portion of its municipal securities portfolio and select commercial and industrial and commercial real estate loans to the Federal Reserve Bank of Chicago for borrowing at the Discount Window.