Note 3 - Investment Securities

12 Months Ended

Dec. 31, 2014

Investment Holdings [Abstract]

Investment Holdings [Text Block]

Note 3.          Investment Securities

The amortized cost and fair value of investment securities as of December 31, 2014 and 2013 are summarized as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		(Losses)			Value
December 31, 2014:
Securities held to maturity:
Municipal securities	$	198,829,574	$	2,420,298	$	(1,186,076	)	$	200,063,796
Other securities		1,050,000		-		-			1,050,000
	$	199,879,574	$	2,420,298	$	(1,186,076	)	$	201,113,796
Securities available for sale:
U.S. govt. sponsored agency securities	$	312,959,760	$	173,685	$	(5,263,873	)	$	307,869,572
Residential mortgage-backed and related securities		110,455,925		1,508,331		(541,032	)		111,423,224
Municipal securities		29,408,740		1,053,713		(62,472	)		30,399,981
Other securities		1,342,554		625,145		(846	)		1,966,853
	$	454,166,979	$	3,360,874	$	(5,868,223	)	$	451,659,630
December 31, 2013:
Securities held to maturity:
Municipal securities	$	144,401,895	$	299,789	$	(7,111,579	)	$	137,590,105
Other securities		1,050,000		-		-			1,050,000
	$	145,451,895	$	299,789	$	(7,111,579	)	$	138,640,105
Securities available for sale:
U.S. govt. sponsored agency securities	$	376,574,132	$	41,696	$	(20,142,841	)	$	356,472,987
Residential mortgage-backed and related securities		160,110,199		1,153,409		(3,834,157	)		157,429,451
Municipal securities		35,813,866		923,315		(778,324	)		35,958,857
Other securities		1,372,365		524,798		-			1,897,163
	$	573,870,562	$	2,643,218	$	(24,755,322	)	$	551,758,458

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 large portion located 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 December 31, 2014 and 2013, are summarized as follows:

	Less than 12 Months					12 Months or More					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
December 31, 2014:
Securities held to maturity:
Municipal securities	$	20,419,052	$	(587,992	)	$	38,779,545	$	(598,084	)	$	59,198,597	$	(1,186,076	)
Securities available for sale:
U.S. govt. sponsored agency securities	$	23,970,085	$	(102,695	)	$	255,743,056	$	(5,161,178	)	$	279,713,141	$	(5,263,873	)
Residential mortgage-backed and related securities		10,710,671		(10,139	)		37,570,774		(530,893	)		48,281,445		(541,032	)
Municipal securities		920,935		(1,773	)		4,425,337		(60,699	)		5,346,272		(62,472	)
Other securities		243,004		(846	)		-		-			243,004		(846	)
	$	35,844,695	$	(115,453	)	$	297,739,167	$	(5,752,770	)	$	333,583,862	$	(5,868,223	)
December 31, 2013:
Securities held to maturity:
Municipal securities	$	101,983,602	$	(6,711,240	)	$	2,697,375	$	(400,339	)	$	104,680,977	$	(7,111,579	)
Securities available for sale:
U.S. govt. sponsored agency securities	$	333,194,820	$	(19,141,077	)	$	10,978,390	$	(1,001,764	)	$	344,173,210	$	(20,142,841	)
Residential mortgage-backed and related securities		94,723,092		(2,947,770	)		14,117,719		(886,387	)		108,840,811		(3,834,157	)
Municipal securities		13,890,692		(724,939	)		985,687		(53,385	)		14,876,379		(778,324	)
	$	441,808,604	$	(22,813,786	)	$	26,081,796	$	(1,941,536	)	$	467,890,400	$	(24,755,322	)

At December 31, 2014, the investment portfolio included 495 securities. Of this number, 212 securities were in an unrealized loss position. The aggregate losses of these securities totaled approximately 1% of the total aggregate amortized cost. Of these 212 securities, 164 securities had an unrealized loss for 12 months or more. 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/or it is not more-likely-than-not that the Company will be required to sell these debt securities before their anticipated recovery. At December 31, 2014 and 2013, the Company’s equity securities represent less than 1% of the total portfolio.

The Company did not recognize other-than-temporary impairment on any debt securities for the years ended December 31, 2014, 2013 or 2012.

The Company did not recognize other-than-temporary impairment on any equity securities for the years ended December 31, 2014 or 2013.

For the year ended December 31, 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.

All sales of securities, as applicable, for the years ended December 31, 2014, 2013 and 2012, respectively, were from securities identified as available for sale. Information on proceeds received, as well as the gains and losses from the sale of those securities is as follows:

	2014			2013			2012
Proceeds from sales of securities	$	78,476,422		$	37,393,047		$	19,215,075
Gross gains from sales of securities		517,116			523,071			104,600
Gross losses from sales of securities		(424,753	)		(90,579	)		-

The amortized cost and fair value of securities as of December 31, 2014, by contractual maturity are shown below. Expected maturities of mortgage-backed and related securities may differ from contractual maturities because the mortgages underlying the securities may be called or prepaid without any penalties. Therefore, these securities are not included in the maturity categories in the following summary. “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	$	13,233,202	$	13,236,032
Due after one year through five years		18,369,970		18,455,551
Due after five years		168,276,402		169,422,213
	$	199,879,574	$	201,113,796
Securities available for sale:
Due in one year or less	$	1,465,251	$	1,472,292
Due after one year through five years		92,324,465		91,274,581
Due after five years		248,578,784		245,522,680
	$	342,368,500	$	338,269,553
Residential mortgage-backed and related securities		110,455,925		111,423,224
Other securities		1,342,554		1,966,853
	$	454,166,979	$	451,659,630

Portions of the U.S. government sponsored agencies 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	$	110,251,899	$	111,121,516
Securities available for sale:
U.S. govt. sponsored agency securities		232,619,254		228,580,781
Municipal securities		17,823,260		18,324,081
	$	250,442,514	$	246,904,862

As of December 31, 2014 and 2013, investment securities with a carrying value of $402,507,865 and $497,286,275, respectively, were pledged on Federal Home Loan Bank advances, customer and wholesale repurchase agreements, and for other purposes as required or permitted by law.

As of December 31, 2014, the Company’s municipal securities portfolios were comprised of general obligation bonds issued by 77 issuers with fair values totaling $68.8 million and revenue bonds issued by 64 issuers, primarily consisting of states, counties, towns, villages and school districts with fair values totaling $161.7 million. The Company held investments in general obligation bonds in 19 states, including three states in which the aggregate fair value exceeded $5.0 million. The Company held investments in revenue bonds in eight states, including four states in which the aggregate fair value exceeded $5.0 million.

As of December 31, 2013, the Company’s municipal securities portfolios were comprised of general obligation bonds issued by 84 issuers with fair values totaling $54.2 million and revenue bonds issued by 52 issuers, primarily consisting of states, counties, towns, villages and school districts with fair values totaling $119.3 million. The Company held investments in general obligation bonds in 20 states, including two states in which the aggregate fair value exceeded $5.0 million. The Company held investments in revenue bonds in eight states, including four states in which the aggregate fair value exceeded $5.0 million.

The amortized cost and fair values of the Company’s portfolio of general obligation bonds are summarized in the following tables by the issuer’s state:

December 31, 2014:
U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Iowa		14	$	20,156,969	$	20,446,655	$	1,460,475
Missouri		11		8,424,928		8,426,047		766,004
Illinois		10		22,447,799		22,784,638		2,278,464
Other		42		16,838,719		17,110,831		407,401
Total general obligation bonds		77	$	67,868,415	$	68,768,171	$	893,093

December 31, 2013:
U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Iowa		16	$	17,946,059	$	17,444,045	$	1,090,253
Illinois		12		15,063,325		15,264,718		1,272,060
Other		56		22,166,026		21,512,582		384,153
Total general obligation bonds		84	$	55,175,410	$	54,221,345	$	645,492

The amortized cost and fair values of the Company’s portfolio of revenue bonds are summarized in the following tables by the issuer’s state:

December 31, 2014:
U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Missouri		30	$	62,358,276	$	62,584,516	$	2,086,151
Iowa		20		59,417,246		60,402,941		3,020,147
Indiana		8		17,991,200		17,925,721		2,240,715
Kansas		2		12,307,866		12,332,528		6,166,264
Other		4		8,295,311		8,449,900		2,112,475
Total revenue bonds		64	$	160,369,899	$	161,695,606	$	2,526,494

December 31, 2013:
U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Iowa		17	$	47,903,572	$	46,257,997	$	2,721,059
Missouri		21		42,085,249		40,054,613		1,907,363
Indiana		7		15,020,000		14,324,717		2,046,388
Kansas		2		11,022,382		9,997,068		4,998,534
Other		5		9,009,148		8,693,222		1,738,644
Total revenue bonds		52	$	125,040,351	$	119,327,617	$	2,294,762

Both general obligation and revenue bonds are diversified across many issuers. As of December 31, 2014 and 2013, the Company did not hold general obligation or revenue bonds of any single issuer, the aggregate book or market value of which exceeded 10% of the Company’s stockholders’ equity. Of the general obligation and revenue bonds in the Company’s portfolio, the majority are unrated bonds that represent small, private issuances. All unrated bonds were underwritten according to loan underwriting standards and have an average risk rating of 2, indicating very high quality. Additionally, many of these bonds are funding essential municipal services (water, sewer, education, medical facilities).

The Company’s municipal securities are owned by each of the three charters, whose investment policies set forth limits for various subcategories within the municipal securities portfolio. Each charter is monitored individually and as of December 31, 2014, all were well-within policy limitations approved by the board of directors. Policy limits are calculated as a percentage of total risk-based capital.

As of December 31, 2014, the Company’s standard monitoring of its municipal securities portfolio had not uncovered any facts or circumstances resulting in significantly different credits ratings than those assigned by a nationally recognized statistical rating organization, or in the case of unrated bonds, the rating assigned using the credit underwriting standards.