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Note 2 - Investment Securities | 9 Months Ended
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Sep. 30, 2017
Notes to Financial Statements |
Investment Holdings [Text Block] | NOTE 2 – INVESTMENT SECURITIES The amortized cost and fair value of investment securities as of September 30, 2017 and December 31, 2016 are summarized as follows:
|  |  |  |  |  | Gross |  |  | Gross |  |  |  |  |
|  | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Fair |
|  | Cost |  |  | Gains |  |  | (Losses) |  |  | Value |
September 30, 2017: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities HTM: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Municipal securities |  | $ | 322,931,227 |  |  | $ | 2,084,997 |  |  | $ | (2,629,646 | ) |  | $ | 322,386,578 |
Other securities |  |  | 1,050,000 |  |  |  | - |  |  |  | - |  |  |  | 1,050,000 |
|  | $ | 323,981,227 |  |  | $ | 2,084,997 |  |  | $ | (2,629,646 | ) |  | $ | 323,436,578 |
Securities AFS: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. govt. sponsored agency securities |  | $ | 39,340,306 |  |  | $ | 129,768 |  |  | $ | (129,906 | ) |  | $ | 39,340,168 |
Residential mortgage-backed and related securities |  |  | 160,329,128 |  |  |  | 266,806 |  |  |  | (1,627,425 | ) |  |  | 158,968,509 |
Municipal securities |  |  | 56,621,412 |  |  |  | 435,356 |  |  |  | (293,708 | ) |  |  | 56,763,060 |
Other securities |  |  | 4,077,128 |  |  |  | 826,135 |  |  |  | (20,578 | ) |  |  | 4,882,685 |
|  | $ | 260,367,974 |  |  | $ | 1,658,065 |  |  | $ | (2,071,617 | ) |  | $ | 259,954,422 |
December 31, 2016: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities HTM: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Municipal securities |  | $ | 321,859,056 |  |  | $ | 2,200,577 |  |  | $ | (4,694,734 | ) |  | $ | 319,364,899 |
Other securities |  |  | 1,050,000 |  |  |  | - |  |  |  | - |  |  |  | 1,050,000 |
|  | $ | 322,909,056 |  |  | $ | 2,200,577 |  |  | $ | (4,694,734 | ) |  | $ | 320,414,899 |
Securities AFS: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. govt. sponsored agency securities |  | $ | 46,281,306 |  |  | $ | 132,886 |  |  | $ | (330,585 | ) |  | $ | 46,083,607 |
Residential mortgage-backed and related securities |  |  | 150,465,222 |  |  |  | 174,993 |  |  |  | (2,938,088 | ) |  |  | 147,702,127 |
Municipal securities |  |  | 52,816,541 |  |  |  | 425,801 |  |  |  | (637,916 | ) |  |  | 52,604,426 |
Other securities |  |  | 4,046,332 |  |  |  | 703,978 |  |  |  | (27,331 | ) |  |  | 4,722,979 |
|  | $ | 253,609,401 |  |  | $ | 1,437,658 |  |  | $ | (3,933,920 | ) |  | $ | 251,113,139 |
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 private 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 unre alized loss position as of September 30, 2017 and December 31, 2016, 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, 2017: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities HTM: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Municipal securities |  | $ | 17,779,999 |  |  | $ | (254,147 | ) |  | $ | 68,663,362 |  |  | $ | (2,375,499 | ) |  | $ | 86,443,361 |  |  | $ | (2,629,646 | )
Securities AFS: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. govt. sponsored agency securities |  | $ | 23,607,646 |  |  | $ | (129,906 | ) |  | $ | - |  |  | $ | - |  |  | $ | 23,607,646 |  |  | $ | (129,906 | )
Residential mortgage-backed and related securities |  |  | 111,996,030 |  |  |  | (1,255,971 | ) |  |  | 12,648,688 |  |  |  | (371,454 | ) |  |  | 124,644,718 |  |  |  | (1,627,425 | )
Municipal securities |  |  | 18,776,501 |  |  |  | (169,253 | ) |  |  | 12,872,616 |  |  |  | (124,455 | ) |  |  | 31,649,117 |  |  |  | (293,708 | )
Other securities |  |  | 928,772 |  |  |  | (20,578 | ) |  |  | - |  |  |  | - |  |  |  | 928,772 |  |  |  | (20,578 | )
|  | $ | 155,308,949 |  |  | $ | (1,575,708 | ) |  | $ | 25,521,304 |  |  | $ | (495,909 | ) |  | $ | 180,830,253 |  |  | $ | (2,071,617 | )
December 31, 2016: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities HTM: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Municipal securities |  | $ | 122,271,533 |  |  | $ | (4,076,647 | ) |  | $ | 13,010,803 |  |  | $ | (618,087 | ) |  | $ | 135,282,336 |  |  | $ | (4,694,734 | )
Securities AFS: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. govt. sponsored agency securities |  | $ | 21,788,139 |  |  | $ | (257,640 | ) |  | $ | 5,499,012 |  |  | $ | (72,945 | ) |  | $ | 27,287,151 |  |  | $ | (330,585 | )
Residential mortgage-backed and related securities |  |  | 121,506,582 |  |  |  | (2,641,664 | ) |  |  | 7,437,615 |  |  |  | (296,424 | ) |  |  | 128,944,197 |  |  |  | (2,938,088 | )
Municipal securities |  |  | 34,152,822 |  |  |  | (618,462 | ) |  |  | 338,099 |  |  |  | (19,454 | ) |  |  | 34,490,921 |  |  |  | (637,916 | )
Other securities |  |  | 3,177,414 |  |  |  | (27,331 | ) |  |  | - |  |  |  | - |  |  |  | 3,177,414 |  |  |  | (27,331 | )
|  | $ | 180,624,957 |  |  | $ | (3,545,097 | ) |  | $ | 13,274,726 |  |  | $ | (388,823 | ) |  | $ | 193,899,683 |  |  | $ | (3,933,920 | )
At September 30, 2017, the investment portfolio included 567 securities. Of this number, 203 securities were in an unrealized loss position. The aggregate losses of these securities totaled approximately 0.8% of the total amortized cost of the portfolio. Of these 203 securities, 80 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 lacks the intent 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, 2017 and December 31, 2016, 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, 2017 and 2016. All sales of securities for the three and nine months ended September 30, 2017 and 2016 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 |  |  | Nine Months Ended |
|  | September 30, 2017 |  |  | September 30, 2016 |  |  | September 30, 2017 |  |  | September 30, 2016 |
Proceeds from sales of securities* |  | $ | 8,415,795 |  |  | $ | 58,775,764 |  |  | $ | 21,969,870 |  |  | $ | 119,850,909 |
Pre-tax gross gains from sales of securities |  |  | 6,312 |  |  |  | 4,281,828 |  |  |  | 65,880 |  |  |  | 4,815,373 |
Pre-tax gross losses from sales of securities |  |  | (69,900 | ) |  |  | (30,055 | ) |  |  | (91,004 | ) |  |  | (187,090 | )
| * | Proceeds from sales of securities for the nine months ended September 30, 2016 includes $32.1 million receivable from the broker for the sale of securities
The amortized cost and fai r value of securities as of September 30, 2017 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 HTM: |  |  |  |  |  |  |  |
Due in one year or less |  | $ | 2,940,492 |  |  | $ | 2,940,378 |
Due after one year through five years |  |  | 18,268,264 |  |  |  | 18,374,059 |
Due after five years |  |  | 302,772,471 |  |  |  | 302,122,141 |
|  | $ | 323,981,227 |  |  | $ | 323,436,578 |
Securities AFS: |  |  |  |  |  |  |  |
Due in one year or less |  | $ | 3,135,008 |  |  | $ | 3,143,223 |
Due after one year through five years |  |  | 26,545,903 |  |  |  | 26,712,930 |
Due after five years |  |  | 66,280,807 |  |  |  | 66,247,075 |
|  |  | 95,961,718 |  |  |  | 96,103,228 |
Residential mortgage-backed and related securities |  |  | 160,329,128 |  |  |  | 158,968,509 |
Other securities |  |  | 4,077,128 |  |  |  | 4,882,685 |
|  | $ | 260,367,974 |  |  | $ | 259,954,422 |
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. These callable securities are summarized as follows:
|  | Amortized Cost |  |  | Fair Value |
Securities HTM: |  |  |  |  |  |  |  |
Municipal securities |  | $ | 170,900,193 |  |  | $ | 171,633,005 |
Securities AFS: |  |  |  |  |  |  |  |
U.S. govt. sponsored agency securities |  |  | 5,048,652 |  |  |  | 5,033,292 |
Municipal securities |  |  | 45,727,004 |  |  |  | 45,640,630 |
|  | $ | 50,775,656 |  |  | $ | 50,673,922 |
As of September 30, 2017, the Company’s municipal securities portfolios were comprised of general obligation bonds issued by 119 issuers with fair values totaling $100.4 million and revenue bonds issued by 132 issuers, primarily consisting of states, counties, towns, villages and school districts with fair values totaling $278.7 million. The Company held investments in general obligation bonds in 21 states, including six states in which the aggregate fair value exceeded $5.0 million. The Company held investments in revenue bonds in 14 states, including six states in which the aggregate fair value exceeded $5.0 million. As of December 31, 201 6, the Company’s municipal securities portfolios were comprised of general obligation bonds issued by 116 issuers with fair values totaling $116.5 million and revenue bonds issued by 120 issuers, primarily consisting of states, counties, towns, villages and school districts with fair values totaling $255.5 million. The Company held investments in general obligation bonds in 21 states, including five states in which the aggregate fair value exceeded $5.0 million. The Company held investments in revenue bonds in 12 states, including six 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, 2017: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. State: |  | Number of Issuers |  |  | Amortized Cost |  |  | Fair Value |  |  | Average Exposure Per Issuer (Fair Value) |
North Dakota |  |  | 7 |  |  | $ | 21,625,068 |  |  | $ | 21,593,895 |  |  | $ | 3,084,842 |
Illinois |  |  | 21 |  |  |  | 18,319,644 |  |  |  | 18,501,854 |  |  |  | 881,041 |
Iowa |  |  | 21 |  |  |  | 17,990,978 |  |  |  | 17,993,895 |  |  |  | 856,852 |
Missouri |  |  | 16 |  |  |  | 8,956,396 |  |  |  | 8,983,511 |  |  |  | 561,469 |
Ohio |  |  | 9 |  |  |  | 8,289,069 |  |  |  | 8,180,432 |  |  |  | 908,937 |
Texas |  |  | 10 |  |  |  | 6,609,101 |  |  |  | 6,543,660 |  |  |  | 654,366 |
Other |  |  | 35 |  |  |  | 18,520,725 |  |  |  | 18,626,763 |  |  |  | 532,193 |
Total general obligation bonds |  |  | 119 |  |  | $ | 100,310,981 |  |  | $ | 100,424,010 |  |  | $ | 843,899 |
December 31, 2016: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. State: |  | Number of Issuers |  |  | Amortized Cost |  |  | Fair Value |  |  | Average Exposure Per Issuer (Fair Value) |
Iowa |  |  | 27 |  |  | $ | 32,258,612 |  |  | $ | 32,231,936 |  |  | $ | 1,193,775 |
Illinois |  |  | 19 |  |  |  | 29,214,559 |  |  |  | 29,308,438 |  |  |  | 1,542,549 |
North Dakota |  |  | 7 |  |  |  | 22,169,050 |  |  |  | 21,499,075 |  |  |  | 3,071,296 |
Missouri |  |  | 14 |  |  |  | 8,291,192 |  |  |  | 8,323,245 |  |  |  | 594,518 |
Ohio |  |  | 8 |  |  |  | 6,790,398 |  |  |  | 6,651,897 |  |  |  | 831,487 |
Other |  |  | 41 |  |  |  | 18,481,496 |  |  |  | 18,458,044 |  |  |  | 450,196 |
Total general obligation bonds |  |  | 116 |  |  | $ | 117,205,307 |  |  | $ | 116,472,635 |  |  | $ | 1,004,074 |
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, 2017: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. State: |  | Number of Issuers |  |  | Amortized Cost |  |  | Fair Value |  |  | Average Exposure Per Issuer (Fair Value) |
Missouri |  |  | 55 |  |  | $ | 107,274,712 |  |  | $ | 107,108,520 |  |  | $ | 1,947,428 |
Iowa |  |  | 28 |  |  |  | 62,468,124 |  |  |  | 62,615,875 |  |  |  | 2,236,281 |
Indiana |  |  | 23 |  |  |  | 50,080,705 |  |  |  | 49,560,095 |  |  |  | 2,154,787 |
Ohio |  |  | 5 |  |  |  | 19,674,376 |  |  |  | 19,523,478 |  |  |  | 3,904,696 |
Kansas |  |  | 6 |  |  |  | 12,877,308 |  |  |  | 12,879,871 |  |  |  | 2,146,645 |
North Dakota |  |  | 5 |  |  |  | 11,496,420 |  |  |  | 11,471,544 |  |  |  | 2,294,309 |
Other |  |  | 10 |  |  |  | 15,370,013 |  |  |  | 15,566,245 |  |  |  | 1,556,625 |
Total revenue bonds |  |  | 132 |  |  | $ | 279,241,658 |  |  | $ | 278,725,628 |  |  | $ | 2,111,558 |
December 31, 2016: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. State: |  | Number of Issuers |  |  | Amortized Cost |  |  | Fair Value |  |  | Average Exposure Per Issuer (Fair Value) |
Missouri |  |  | 47 |  |  | $ | 90,784,441 |  |  | $ | 89,664,013 |  |  | $ | 1,907,745 |
Iowa |  |  | 31 |  |  |  | 70,788,393 |  |  |  | 71,142,393 |  |  |  | 2,294,916 |
Indiana |  |  | 22 |  |  |  | 47,994,737 |  |  |  | 47,582,138 |  |  |  | 2,162,824 |
Kansas |  |  | 6 |  |  |  | 13,476,366 |  |  |  | 13,427,491 |  |  |  | 2,237,915 |
North Dakota |  |  | 4 |  |  |  | 8,089,067 |  |  |  | 7,796,381 |  |  |  | 1,949,095 |
Ohio |  |  | 3 |  |  |  | 13,650,000 |  |  |  | 13,405,222 |  |  |  | 4,468,407 |
Other |  |  | 7 |  |  |  | 12,687,286 |  |  |  | 12,479,052 |  |  |  | 1,782,722 |
Total revenue bonds |  |  | 120 |  |  | $ | 257,470,290 |  |  | $ | 255,496,690 |  |  | $ | 2,129,139 |
Both general obligation and revenue bonds are diversified across many issuers. As of September 30, 2017 and December 31, 2016, the Company did not hold general obligation or revenue bonds of any single issuer, the aggregate book or market value of which exceeded 5% 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 four 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, 2017, all were well within policy limitations approved by the board of directors. Policy limits are calculated as a percentage of each charter’s total risk-based capital. As of September 30, 2017, 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.

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- Definition The entire disclosure for investment holdings. This includes the long positions of investments for the entity. It contains investments in affiliated and unaffiliated issuers. The investments include securities and non securities (i.e. commodities and futures contracts). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -Section S99 -Paragraph 4 -Subparagraph (SX 210.12-12C) -URI http://asc.fasb.org/extlink&oid=50485924&loc=d3e611225-123010 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -Section S99 -Paragraph 6 -Subparagraph (SX 210.12-14) -URI http://asc.fasb.org/extlink&oid=50485924&loc=d3e611322-123010 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -Section S99 -Paragraph 5 -Subparagraph (SX 210.12-13) -URI http://asc.fasb.org/extlink&oid=50485924&loc=d3e611282-123010 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -Section S99 -Paragraph 1 -Subparagraph (SX 210.12-12) -URI http://asc.fasb.org/extlink&oid=50485924&loc=d3e611133-123010 + Details
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