Note 2 - Investment Securities

3 Months Ended

Mar. 31, 2016

Investment Holdings [Abstract]

Investment Holdings [Text Block]

NOTE 2 – INVESTMENT SECURITIES

The amortized cost and fair value of investment securities as of March 31, 2016 and December 31, 2015 are summarized as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
March 31, 2016
Securities held to maturity:
Municipal securities	$	260,079,586	$	4,143,965	$	(858,829	)	$	263,364,722
Other securities		1,050,000		-		-			1,050,000
	$	261,129,586	$	4,143,965	$	(858,829	)	$	264,414,722
Securities available for sale:
U.S. govt. sponsored agency securities	$	132,080,737	$	786,623	$	(125,538	)	$	132,741,822
Residential mortgage-backed and related securities		116,012,771		761,091		(321,488	)		116,452,374
Municipal securities		24,113,773		839,125		(23,243	)		24,929,655
Other securities		1,637,366		428,027		(1,377	)		2,064,016
	$	273,844,647	$	2,814,866	$	(471,646	)	$	276,187,867
December 31, 2015:
Securities held to maturity:
Municipal securities	$	252,624,159	$	3,190,558	$	(1,173,432	)	$	254,641,285
Other securities		1,050,000		-		-			1,050,000
	$	253,674,159	$	3,190,558	$	(1,173,432	)	$	255,691,285
Securities available for sale:
U.S. govt. sponsored agency securities	$	216,281,416	$	104,524	$	(2,848,561	)	$	213,537,379
Residential mortgage-backed and related securities		81,442,479		511,095		(1,283,439	)		80,670,135
Municipal securities		26,764,981		872,985		(59,378	)		27,578,588
Other securities		1,108,124		540,919		(163	)		1,648,880
	$	325,597,000	$	2,029,523	$	(4,191,541	)	$	323,434,982

The Company’s HTM 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 March 31, 2016 and December 31, 2015, 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, 2016:
Securities held to maturity:
Municipal securities	$	16,874,982	$	(669,283	)	$	7,610,345	$	(189,546	)	$	24,485,327	$	(858,829	)
Securities available for sale:
U.S. govt. sponsored agency securities	$	24,512,886	$	(76,931	)	$	4,946,100	$	(48,607	)	$	29,458,986	$	(125,538	)
Residential mortgage-backed and related securities		18,687,105		(81,719	)		29,708,984		(239,769	)		48,396,089		(321,488	)
Municipal securities		1,157,233		(2,185	)		849,972		(21,058	)		2,007,205		(23,243	)
Other securities		498,623		(1,377	)		-		-			498,623		(1,377	)
	$	44,855,847	$	(162,212	)	$	35,505,056	$	(309,434	)	$	80,360,903	$	(471,646	)
December 31, 2015:
Securities held to maturity:
Municipal securities	$	14,803,408	$	(294,438	)	$	19,927,581	$	(878,994	)	$	34,730,989	$	(1,173,432	)
Securities available for sale:
U.S. govt. sponsored agency securities	$	112,900,327	$	(1,397,591	)	$	64,476,661	$	(1,450,970	)	$	177,376,988	$	(2,848,561	)
Residential mortgage-backed and related securities		40,356,921		(730,466	)		19,836,637		(552,973	)		60,193,558		(1,283,439	)
Municipal securities		2,220,800		(31,807	)		848,329		(27,571	)		3,069,129		(59,378	)
Other securities		411		(163	)		-		-			411		(163	)
	$	155,478,459	$	(2,160,027	)	$	85,161,627	$	(2,031,514	)	$	240,640,086	$	(4,191,541	)

At March 31, 2016, the investment portfolio included 465 securities. Of this number, 58 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 58 securities, 21 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, 2016 and December 31, 2015, 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 months ended March 31, 2016 and 2015.   

All sales of securities for the three months ended March 31, 2016 and 2015, respectively, were from securities identified as AFS. 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, 2016			March 31, 2015
Proceeds from sales of securities	$	55,526,851		$	54,971,056
Pre-tax gross gains from sales of securities		515,515			573,684
Pre-tax gross losses from sales of securities		(157,035	)		(152,618	)

The amortized cost and fair value of securities as of March 31, 2016 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” AFS 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	$	4,206,670	$	4,213,609
Due after one year through five years		20,737,843		20,889,363
Due after five years		236,185,073		239,311,750
	$	261,129,586	$	264,414,722
Securities available for sale:
Due in one year or less	$	1,884,460	$	1,895,137
Due after one year through five years		68,198,829		69,027,450
Due after five years		86,111,221		86,748,890
	$	156,194,510	$	157,671,477
Residential mortgage-backed and related securities		116,012,771		116,452,374
Other securities		1,637,366		2,064,016
	$	273,844,647	$	276,187,867

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	$	135,926,431	$	137,921,557
Securities available for sale:
U.S. govt. sponsored agency securities		65,969,684		65,976,489
Municipal securities		15,335,099		15,728,025
	$	81,304,783	$	81,704,514

As of March 31, 2016, the Company’s municipal securities portfolios were comprised of general obligation bonds issued by 82 issuers with fair values totaling $72.7 million and revenue bonds issued by 95 issuers, primarily consisting of states, counties, towns, villages and school districts with fair values totaling $215.6 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 nine states, including four states in which the aggregate fair value exceeded $5.0 million.

As of December 31, 2015, the Company’s municipal securities portfolios were comprised of general obligation bonds issued by 82 issuers with fair values totaling $67.8 million and revenue bonds issued by 92 issuers, primarily consisting of states, counties, towns, villages and school districts with fair values totaling $214.4 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 nine 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, 2016:
U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Iowa		15	$	19,974,438	$	20,309,435	$	1,353,962
Illinois		10		12,665,888		13,014,865		1,301,487
Missouri		12		7,393,378		7,488,699		624,058
North Dakota		6		16,403,026		16,616,824		2,769,471
Other		39		14,954,651		15,233,176		390,594
Total general obligation bonds		82	$	71,391,381	$	72,662,999	$	886,134

December 31, 2015:
U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Iowa		15	$	19,974,939	$	20,247,108	$	1,349,807
Illinois		9		10,928,700		11,264,348		1,251,594
North Dakota		5		10,890,000		11,050,235		2,210,047
Missouri		12		7,924,800		7,986,856		665,571
Other		41		16,965,393		17,229,485		420,231
Total general obligation bonds		82	$	66,683,832	$	67,778,032	$	826,561

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, 2016:
U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Missouri		42	$	76,260,706	$	77,142,220	$	1,836,720
Iowa		27		74,013,142		75,274,793		2,787,955
Indiana		17		39,342,789		39,675,326		2,333,843
Kansas		4		12,022,852		12,116,209		3,029,052
Other		5		11,162,489		11,422,830		2,284,566
Total revenue bonds		95	$	212,801,978	$	215,631,378	$	2,269,804

December 31, 2015:
U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Missouri		41	$	78,593,590	$	79,015,378	$	1,927,204
Iowa		26		70,773,660		71,659,410		2,756,131
Indiana		17		40,018,381		40,210,320		2,365,313
Kansas		3		11,748,679		11,821,055		3,940,352
Other		5		11,570,998		11,735,678		2,347,136
Total revenue bonds		92	$	212,705,308	$	214,441,841	$	2,330,890

Both general obligation and revenue bonds are diversified across many issuers. As of March 31, 2016 and December 31, 2015, the Company did not hold general obligation or revenue bonds of any single issuer, the aggregate book or market value of which exceeded 4% 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 March 31, 2016, 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, 2016, 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.