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Note 11 - Other Borrowings and Unused Lines of Credit | 12 Months Ended
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Dec. 31, 2018
Notes to Financial Statements |
Debt Disclosure [Text Block] | Note 11. Other Borrowings and Unused Lines of Credit Other borrowings as of December 31, 2018 and 2017 are summarized as follows:
|  | 2018 |  | 2017
Wholesale structured repurchase agreements |  | $ | 35,000,000 |  | $ | 35,000,000
Term notes |  |  | 23,250,000 |  |  | 31,000,000
Subordinated debentures |  |  | 4,782,318 |  |  | —
Revolving line of credit |  |  | 9,000,000 |  |  | —
|  | $ | 72,032,318 |  | $ | 66,000,000
The Company’s wholesale structured repurchase agreements are collateralized by investment securities with carrying values as follows:
|  | 2018 |  | 2017
Residential mortgage-backed and related securities |  | $ | 38,870,228 |  | $ | 40,503,002
Total securities pledged to wholesale customer repurchase agreements |  |  | 38,870,228 |  |  | 40,503,002
Less: overcollateralized position |  |  | 3,870,228 |  |  | 5,503,002
|  | $ | 35,000,000 |  | $ | 35,000,000
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 these restructurings is summarized in the following table for the year ended December 31, 2016.
|  | 2016
|  |  |  |  | Weighted |  | Range of |  |  |
|  |  |  |  | Average |  | Maturity |  |  | Prepayment
Date of Restructuring |  | Amount |  | Interest Rate |  | Dates |  |  | 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 2018 or 2017. Maturity and interest rate information concerning wholesale structured repurchase agreements is summarized as follows:
|  | December 31, 2018 | December 31, 2017
|  |  |  |  | Weighted |  |  |  |  | Weighted |
|  |  |  |  | Average |  |  |  |  | Average |
|  |  |  |  | Interest Rate |  |  |  |  | Interest Rate |
|  | Amount Due |  | at Year-End |  | Amount Due |  | at Year-End |
Maturity: |  |  |  |  |  |  |  |  |  |  |
Year ending December 31: |  |  |  |  |  |  |  |  |  |  |
2019 |  | $ | 10,000,000 |  | 3.59 | % | $ | 10,000,000 |  | 3.44 | %
2020 |  |  | 25,000,000 |  | 2.48 |  |  | 25,000,000 |  | 2.48 |
Total Wholesale Structured Repurchase Agreements |  | $ | 35,000,000 |  | 2.80 | % | $ | 35,000,000 |  | 2.76 | %
Note 11. Other Borrowings and Unused Lines of Credit (continued) The Company has two term notes. The first is a term note with a maturity date of December 31, 2021. The outstanding balance on the term note totals $18.0 million and $24.0 million at December 31, 2018 and 2017, respectively. Interest on the term note is calculated at the effective LIBOR rate plus 3.00% per annum (5.52% and 4.56% at December 31, 2018 and 2017, respectively). The proceeds from this note were used to fund a portion of the cash consideration for the acquisition of CSB. The second is a term note originated in the third quarter of 2017 with a maturity date of December 31, 2021 and a balance outstanding of $5.3 million and $7.0 million at December 31, 2018 and 2017, respectively. Interest is calculated at the effective LIBOR rate plus 3.00% per annum (5.52% and 4.56% at December 31, 2018 and 2017, respectively). 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 bank subsidiaries. For the term notes, the Company is required to make quarterly principal payments of $1,937,500 with maturity information as of December 31, 2018, summarized as follows:
|  | As of December 31, 2018
2019 |  | $ | 7,750,000
2020 |  |  | 7,750,000
2021 |  |  | 7,750,000
|  | $ | 23,250,000
As part of the merger with Springfield Bancshares, the Company assumed two subordinated debentures with a fair value of $4.8 million. Maturity and interest rate information concerning the subordinated debentures is summarized as follows:
| Amount Outstanding | Interest Rate |  |
| as of December 31, 2018 | as of December 31, 2018 |  | Maturity Date
Subordinated debenture dated 4/30/16 | $ 2,000,000 | 4.00 | % | 4/30/2026
Subordinated debenture dated 9/15/16 | 3,000,000 | 4.00 | % | 9/15/2026
Market Value Discount per ASC 805 | (217,682) |  |  |
Total Subordinated Debentures | $ 4,782,318 |  |  |
The interest rate on the subordinated debentures is fixed for the first five years of the term and then converts to floating for the remaining term, at a rate of Prime floating daily. The debentures may be called after a minimum of five years following issuance and at the prior approval of the appropriate regulatory agencies. The subordinated debentures are unsecured. The Company has a $10.0 million revolving line of credit note for which the outstanding balance is $9.0 million as of December 31, 2018. Interest on the revolving line of credit is calculated at the effective LIBOR rate plus 2.50% per annum (5.02% at December 31, 2018). The collateral on the revolving line of credit is the original stock certificates and stock powers of all bank subsidiaries. In February 2019, the Company completed a subordinated notes offering, a portion of the proceeds of which were used to pay off outstanding term notes and the revolving line of credit. See Note 23 of the Consolidated Financial Statements for further information on this subsequent event. Note 11. Other Borrowings and Unused Lines of Credit (continued) Unused lines of credit of the subsidiary banks as of December 31, 2018 and 2017 are summarized as follows:
|  | 2018 |  | 2017
Secured |  | $ | 1,690,108 |  | $ | 2,967,441
Unsecured |  |  | 362,000,000 |  |  | 372,000,000
|  | $ | 363,690,108 |  | $ | 374,967,441
The Company pledges select C&I and CRE loans to the Federal Reserve Bank of Chicago for borrowing at the Discount Window.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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