Note 2 - Investment Securities

6 Months Ended

Jun. 30, 2015

Investment Holdings [Abstract]

Investment Holdings [Text Block]

NOTE 2 – INVESTMENT SECURITIES

The amortized cost and fair value of investment securities as of June 30, 2015 and December 31, 2014 are summarized as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		(Losses)			Value
June 30, 2015
Securities held to maturity:
Municipal securities	$	224,088,234	$	1,576,216	$	(3,173,269	)	$	222,491,181
Other securities		1,050,000		-		-			1,050,000
	$	225,138,234	$	1,576,216	$	(3,173,269	)	$	223,541,181
Securities available for sale:
U.S. govt. sponsored agency securities	$	260,141,312	$	222,875	$	(3,920,526	)	$	256,443,661
Residential mortgage-backed and related securities		81,029,967		893,687		(1,079,832	)		80,843,822
Municipal securities		27,150,148		855,670		(102,115	)		27,903,703
Other securities		1,389,291		654,319		(5,013	)		2,038,597
	$	369,710,718	$	2,626,551	$	(5,107,486	)	$	367,229,783
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 large majority of 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 June 30, 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
June 30, 2015:
Securities held to maturity:
Municipal securities	$	76,375,019	$	(2,218,961	)	$	34,698,604	$	(954,308	)	$	111,073,623	$	(3,173,269	)
Securities available for sale:
U.S. govt. sponsored agency securities	$	138,963,817	$	(1,920,958	)	$	87,910,053	$	(1,999,568	)	$	226,873,870	$	(3,920,526	)
Residential mortgage-backed and related securities		31,047,920		(413,983	)		21,312,400		(665,849	)		52,360,320		(1,079,832	)
Municipal securities		4,417,658		(49,532	)		1,322,180		(52,583	)		5,739,838		(102,115	)
Other securities		239,415		(5,013	)		-		-			239,415		(5,013	)
	$	174,668,810	$	(2,389,486	)	$	110,544,633	$	(2,718,000	)	$	285,213,443	$	(5,107,486	)
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 June 30, 2015, the investment portfolio included 479 securities. Of this number, 223 securities were in an unrealized loss position. The aggregate losses of these securities totaled less than 1.5% of the total amortized cost of the portfolio. Of these 223 securities, 61 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 June 30, 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 or six months ended June 30, 2015 and 2014.   

All sales of securities for the three and six months ended June 30, 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				Six Months Ended
	June 30, 2015		June 30, 2014		June 30, 2015			June 30, 2014
Proceeds from sales of securities	$	-	$	18,856,953	$	54,966,923		$	25,877,578
Pre-tax gross gains from sales of securities		-		571		569,551			21,196
Pre-tax gross losses from sales of securities		-		-		(152,618	)		-

The amortized cost and fair value of securities as of June 30, 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 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	$	4,400,190	$	4,406,723
Due after one year through five years		16,813,102		16,900,556
Due after five years		203,924,942		202,233,902
	$	225,138,234	$	223,541,181
Securities available for sale:
Due in one year or less	$	1,642,213	$	1,648,864
Due after one year through five years		117,746,437		117,089,821
Due after five years		167,902,810		165,608,679
	$	287,291,460	$	284,347,364
Residential mortgage-backed and related securities		81,029,967		80,843,822
Other securities		1,389,291		2,038,597
	$	369,710,718	$	367,229,783

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	$	126,157,613	$	125,222,912
Securities available for sale:
U.S. govt. sponsored agency securities		171,504,664		168,429,493
Municipal securities		16,797,862		17,134,333
	$	188,302,526	$	185,563,826

As of June 30, 2015, the Company’s municipal securities portfolios were comprised of general obligation bonds issued by 78 issuers with fair values totaling $57.3 million and revenue bonds issued by 81 issuers, primarily consisting of states, counties, towns, villages and school districts with fair values totaling $193.1 million. The Company held investments in general obligation bonds in 18 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, 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:

June 30, 2015:

U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Iowa		16	$	19,725,988	$	19,629,187	$	1,226,824
Missouri		12		7,903,655		7,859,378		654,948
Illinois		9		11,888,959		12,168,493		1,352,055
Other		41		17,471,122		17,642,717		430,310
Total general obligation bonds		78	$	56,989,724	$	57,299,775	$	734,613

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:

June 30, 2015:

U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Iowa		25	$	72,138,865	$	72,156,897	$	2,886,276
Missouri		34		66,832,018		66,174,793		1,946,317
Indiana		15		35,440,200		35,161,046		2,344,070
Kansas		3		11,944,312		11,596,325		3,865,442
Other		4		7,893,263		8,006,048		2,001,512
Total revenue bonds		81	$	194,248,658	$	193,095,109	$	2,383,890

December 31, 2014:

U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Iowa		20	$	59,417,246	$	60,402,941	$	3,020,147
Missouri		30		62,358,276		62,584,516		2,086,151
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 June 30, 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 5% and 10%, respectively, 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 loan risk rating of 2, indicating very high quality. Additionally, many of these bonds are funding essential municipal services such as water, sewer, education, and 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 June 30, 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 June 30, 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.