Note 2 - Investment Securities

3 Months Ended

Mar. 31, 2015

Investment Holdings [Abstract]

Investment Holdings [Text Block]

NOTE 2 – INVESTMENT SECURITIES

The amortized cost and fair value of investment securities as of March 31, 2015 and December 31, 2014 are summarized as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		(Losses)			Value
March 31, 2015
Securities held to maturity:
Municipal securities	$	214,096,171	$	2,303,569	$	(1,812,743	)	$	214,586,997
Other securities		1,050,000		-		-			1,050,000
	$	215,146,171	$	2,303,569	$	(1,812,743	)	$	215,636,997
Securities available for sale:
U.S. govt. sponsored agency securities	$	300,131,663	$	444,159	$	(1,395,567	)	$	299,180,255
Residential mortgage-backed and related securities		90,632,701		1,192,895		(462,296	)		91,363,300
Municipal securities		28,649,282		1,107,755		(43,723	)		29,713,314
Other securities		1,370,532		630,797		(98	)		2,001,231
	$	420,784,178	$	3,375,606	$	(1,901,684	)	$	422,258,100
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

The Company’s held to maturity municipal securities consist largely of private issues of municipal debt. The municipalities are located within the Midwest. 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, 2015 and December 31, 2014, 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
March 31, 2015:
Securities held to maturity:
Municipal securities	$	48,692,267	$	(991,314	)	$	30,617,292	$	(821,429	)	$	79,309,559	$	(1,812,743	)
Securities available for sale:
U.S. govt. sponsored agency securities	$	102,286,952	$	(435,457	)	$	93,948,175	$	(960,110	)	$	196,235,127	$	(1,395,567	)
Residential mortgage-backed and related securities		27,194,344		(126,489	)		22,421,887		(335,807	)		49,616,231		(462,296	)
Municipal securities		598,285		(2,790	)		1,339,977		(40,933	)		1,938,262		(43,723	)
Other securities		476		(98	)		-		-			476		(98	)
	$	130,080,057	$	(564,834	)	$	117,710,039	$	(1,336,850	)	$	247,790,096	$	(1,901,684	)
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	)

At March 31, 2015, the investment portfolio included 474 securities. Of this number, 161 securities were in an unrealized loss position. The aggregate losses of these securities totaled less than 1% of the total amortized cost of the portfolio. Of these 161 securities, 59 securities had an unrealized loss for twelve 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 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, 2015 and December 31, 2014, 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, 2015 and 2014.   

All sales of securities for the three months ended March 31, 2015 and 2014, respectively, were from securities identified as available for sale. Information on proceeds received, as well as pre-tax gross gains and losses from sales on those securities are as follows:

	Three Months Ended
	March 31, 2015			March 31, 2014
Proceeds from sales of securities	$	54,971,056		$	7,020,625
Pre-tax gross gains from sales of securities		573,684			20,625
Pre-tax gross losses from sales of securities		(152,618	)		-

The amortized cost and fair value of securities as of March 31, 2015 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	$	3,866,598	$	3,871,276
Due after one year through five years		18,512,988		18,595,028
Due after five years		192,766,585		193,170,693
	$	215,146,171	$	215,636,997
Securities available for sale:
Due in one year or less	$	34,982,411	$	34,994,562
Due after one year through five years		104,102,115		104,066,092
Due after five years		189,696,419		189,832,915
	$	328,780,945	$	328,893,569
Residential mortgage-backed and related securities		90,632,701		91,363,300
Other securities		1,370,532		2,001,231
	$	420,784,178	$	422,258,100

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	$	127,760,995	$	128,323,293
Securities available for sale:
U.S. govt. sponsored agency securities		185,507,330		184,490,370
Municipal securities		17,800,256		18,353,901
	$	203,307,586	$	202,844,271

As of March 31, 2015, the Company’s municipal securities portfolios were comprised of general obligation bonds issued by 70 issuers with fair values totaling $56.2 million and revenue bonds issued by 84 issuers, primarily consisting of states, counties, towns, villages and school districts with fair values totaling $188.1 million. The Company held investments in general obligation bonds in 17 states, including three states in which the aggregate fair value exceeded $5.0 million. The Company held investments in revenue bonds in eleven states, including four states in which the aggregate fair value exceeded $5.0 million.

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.

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:

March 31, 2015:

U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Iowa		15	$	21,431,325	$	21,602,520	$	1,440,168
Missouri		11		7,091,686		7,085,546		644,141
Illinois		9		11,925,483		12,255,809		1,361,757
Other		35		14,918,372		15,295,418		437,012
Total general obligation bonds		70	$	55,366,866	$	56,239,293	$	803,418

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

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:

March 31, 2015:

U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Missouri		35	$	66,627,817	$	66,749,366	$	1,907,125
Iowa		25		73,326,036		73,890,396		2,955,616
Indiana		11		25,563,200		25,397,220		2,308,838
Kansas		3		12,120,688		12,100,898		4,033,633
Other		10		9,740,846		9,923,138		992,314
Total revenue bonds		84	$	187,378,587	$	188,061,018	$	2,238,822

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

Both general obligation and revenue bonds are diversified across many issuers. As of March 31, 2015 and December 31, 2014, 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 March 31, 2015, 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 March 31, 2015, 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.