Note 11 - Other Borrowings and Unused Lines of Credit

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Debt Disclosure [Text Block]

Note

11.

Other Borrowings and Unused Lines of Credit

Other borrowings as of

December 31,

2017

and

2016

are summarized as follows:

	2017		2016
Wholesale structured repurchase agreements	$	35,000,000	$	45,000,000
Term notes		31,000,000		30,000,000
Revolving line of credit		-		5,000,000
	$	66,000,000	$	80,000,000

The Company

’s wholesale structured repurchase agreements are collateralized by investment securities with carrying values as follows:

	2017		2016
U.S. govt. sponsored agency securities	$	3,474,555	$	20,798,703
Residential mortgage-backed and related securities		61,528,167		31,321,028
Total securities pledged to wholesale customer repurchase agreements		65,002,722		52,119,731
Less: overcollateralized position		30,002,722		7,119,731
	$	35,000,000	$	45,000,000

Inherent in the wholesale structured repurchase agreements

is a risk that the fair value of the collateral pledged on the agreements could decline below the amount obligated under the agreements. The Company considers this risk minimal. The Company maintains an overcollateralized position that is sufficient to cover any minor interest rate movements.

Throughout

2016,

the Company executed several balance sheet restructuring strategies in an effort to reduce reliance on wholesale funding. These strategies will continue to be evaluated in the future. A summary of prepayments of wholesale structured repurchase agreements related to those restructurings is summarized in the following table for the year ended

December 31, 2016:

2016
Date of Restructuring	Amount		Weighted Average Interest Rate			Range of Maturity Dates	Prepayment Fees
First Quarter of 2016	$	10,000,000		3.97	%	July 2018	$	759,000
Third Quarter of 2016		55,000,000		3.27	%	February 2019 to September 2020		4,010,000
Total for 2016	$	65,000,000		3.38	%		$	4,769,000

All prepayment fees shown in the table above are included in losses on debt extinguishment in the statements of income.

There were

no

material modifications of borrowings during

2017

or

2016.

Maturity and interest rate information

concerning wholesale structured repurchase agreements is summarized as follows:

	December 31, 2017					December 31, 2016
			Weighted					Weighted
			Average					Average
			Interest Rate					Interest Rate
	Amount Due		at Year-End			Amount Due		at Year-End
Maturity:
Year ending December 31:
2017	$	-		-		$	10,000,000	3.00	%
2019		10,000,000		3.44			10,000,000	3.44
2020		25,000,000		2.48			25,000,000	2.48
Total Wholesale Structured Repurchase Agreements	$	35,000,000		2.76	%	$	45,000,000	2.81	%

The Company has

two

term note

s. The

first

is a term note with a maturity date of

December 31, 2021.

The outstanding balance on the term note totals

$24.0

million and

$30.0

million at

December 31, 2017

and

2016,

respectively. Interest on the term note is calculated at the effective LIBOR rate plus

3.00%

per annum (

4.56%

and

3.77%

at

December 31, 2017

and

2016,

respectively). The

second

is a

$7.0

million term note originated in the

third

quarter of

2017

with a maturity date of

December 31, 2021

and interest calculated at the effective LIBOR rate plus

3.00%

per annum (

4.56%

at

December 31, 2017).

The proceeds from this note were used to fund a portion of the cash consideration for the acquisition of Guaranty Bank. The collateral on both borrowings is the original stock certificates and stock powers of all subsidiaries.

The Company has a

$10.0

million revolving line of credit note

available for which there is

no

outstanding balance as of

December 31, 2017.

If used, interest on the revolving line of credit is calculated at the effective LIBOR rate plus

2.50%

per annum (

4.06%

at

December 31, 2017).

The collateral on the revolving line of credit is the original stock certificates and stock powers of all subsidiaries.

For the term note

s, the Company is required to make quarterly principal payments of

$1,937,500

with maturity information as of

December 31, 2017,

summarized as follows:

	As of December 31, 2017
2018	$	7,750,000
2019		7,750,000
2020		7,750,000
2021		7,750,000
	$	31,000,000

Unused lines of credit of the subsidiary banks as of

December 31,

2017

and

2016

are summarized as follows:

	2017		2016
Secured	$	2,967,441	$	34,409,192
Unsecured		372,000,000		347,000,000
	$	374,967,441	$	381,409,192

T

he Company pledges the eligible portion of its municipal securities portfolio and select C&I and CRE loans to the Federal Reserve Bank of Chicago for borrowing at the Discount Window

.