Note 2 - Investment Securities

9 Months Ended

Sep. 30, 2015

Investment Holdings [Abstract]

Investment Holdings [Text Block]

NOTE 2 – INVESTMENT SECURITIES

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

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		(Losses)			Value
September 30, 2015
Securities held to maturity:
Municipal securities	$	237,590,598	$	2,429,898	$	(1,649,655	)	$	238,370,841
Other securities		1,050,000		-		-			1,050,000
	$	238,640,598	$	2,429,898	$	(1,649,655	)	$	239,420,841
Securities available for sale:
U.S. govt. sponsored agency securities	$	247,911,701	$	577,904	$	(865,014	)	$	247,624,591
Residential mortgage-backed and related securities		74,444,924		938,379		(481,744	)		74,901,559
Municipal securities		26,815,175		925,922		(39,445	)		27,701,652
Other securities		1,344,814		633,415		(71,680	)		1,906,549
	$	350,516,614	$	3,075,620	$	(1,457,883	)	$	352,134,351
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 September 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
September 30, 2015:
Securities held to maturity:
Municipal securities	$	53,289,140	$	(1,053,551	)	$	15,450,731	$	(596,104	)	$	68,739,871	$	(1,649,655	)
Securities available for sale:
U.S. govt. sponsored agency securities	$	54,246,955	$	(229,249	)	$	74,289,108	$	(635,765	)	$	128,536,063	$	(865,014	)
Residential mortgage-backed and related securities		18,732,443		(126,214	)		20,731,733		(355,530	)		39,464,176		(481,744	)
Municipal securities		1,621,304		(11,388	)		852,734		(28,057	)		2,474,038		(39,445	)
Other securities		71,751		(71,680	)		-		-			71,751		(71,680	)
	$	74,672,453	$	(438,531	)	$	95,873,575	$	(1,019,352	)	$	170,546,028	$	(1,457,883	)
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 September 30, 2015, the investment portfolio included 483 securities. Of this number, 128 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 128 securities, 48 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 September 30, 2015 and December 31, 2014, equity securities represented less than 1% of the total portfolio.

The Company did not recognize OTTI on any debt or equity securities for the three or nine months ended September 30, 2015 and 2014.   

All sales of securities for the three and nine months ended September 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						Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
Proceeds from sales of securities	$	11,922,915		$	39,876,889		$	65,889,838		$	65,754,467
Pre-tax gross gains from sales of securities		102,766			357,934			672,317			379,130
Pre-tax gross losses from sales of securities		(46,186	)		(338,505	)		(198,804	)		(338,505	)

The amortized cost and fair value of securities as of September 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	$	4,391,209	$	4,396,637
Due after one year through five years		17,965,982		18,089,831
Due after five years		216,283,407		216,934,373
	$	238,640,598	$	239,420,841
Securities available for sale:
Due in one year or less	$	1,356,439	$	1,360,215
Due after one year through five years		120,148,336		120,643,573
Due after five years		153,222,101		153,322,455
	$	274,726,876	$	275,326,243
Residential mortgage-backed and related securities		74,444,924		74,901,559
Other securities		1,344,814		1,906,549
	$	350,516,614	$	352,134,351

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	$	131,904,972	$	132,612,402
Securities available for sale:
U.S. govt. sponsored agency securities		159,441,770		158,761,957
Municipal securities		16,774,804		17,200,807
	$	176,216,574	$	175,962,764

As of September 30, 2015, the Company’s municipal securities portfolios were comprised of general obligation bonds issued by 81 issuers with fair values totaling $64.7 million and revenue bonds issued by 87 issuers, primarily consisting of states, counties, towns, villages and school districts with fair values totaling $201.4 million. The Company held investments in general obligation bonds in 19 states, including four 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:

September 30, 2015:
U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Iowa		15	$	20,225,477	$	20,363,737	$	1,357,582
Illinois		10		11,851,955		12,191,238		1,219,124
Missouri		12		7,930,365		7,968,565		664,047
North Dakota		3		6,675,000		6,767,961		2,255,987
Other		41		17,122,829		17,398,100		424,344
Total general obligation bonds		81	$	63,805,626	$	64,689,601	$	798,637

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
Illinois		10		22,447,799		22,784,638		2,278,464
Missouri		11		8,424,928		8,426,047		766,004
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:

September 30, 2015:
U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Missouri		40	$	75,016,470	$	75,197,907	$	1,879,948
Iowa		26		71,365,816		71,890,381		2,765,015
Indiana		14		34,701,481		34,707,516		2,479,108
Kansas		3		11,751,560		11,688,179		3,896,060
Other		4		7,764,820		7,898,909		1,974,727
Total revenue bonds		87	$	200,600,147	$	201,382,892	$	2,314,746

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 September 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 September 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 September 30, 2015, the Company’s standard monitoring of its municipal securities portfolio had not uncovered any facts or circumstances resulting in significantly different credit 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.