10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2015

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________ to ______________________

Commission File Number: 0-50820

First Clover Leaf Financial Corp.

(Exact Name of Registrant as Specified in its Charter)

Maryland	20-4797391
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
6814 Goshen Road, Edwardsville, Illinois	62025
(Address of Principal Executive Offices)	(Zip Code)

(618) 656-6122

(Issuer’s Telephone Number including area code)

Securities Registered Pursuant to Section 12(b) of the Act:

	Name of Each Exchange
Title of Each Class	On Which Registered
Common Stock, par value $0.10 per share	The NASDAQ Stock Market, LLC

Securities Registered Pursuant to Section 12(g) of the Act:

None

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ¨ NO x.

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

YES ¨ NO x.

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file reports), and (2) has been subject to such requirements for the past 90 days.

YES x NO ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x NO ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

	Large accelerated filer	¨	Accelerated filer	¨
	Non-accelerated filer	¨	Smaller reporting company	x
(Do not check if smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES ¨ NO x

As of June 30, 2015 the aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant, computed by reference to the closing price of the common stock as of June 30, 2015 ($9.14 per share) was $52.9 million.

As of March 15, 2016, there were 7,005,883 shares issued and outstanding of the Registrant’s Common Stock, par value $0.10 per share.

DOCUMENTS INCORPORATED BY REFERENCE

1. Proxy Statement for the 2016 Annual Meeting of Stockholders (Parts II and III).

2. Portions of Annual Report to Stockholders for the year ended December 31, 2015 (Part II).

PART I

ITEM 1.       BUSINESS

Forward-Looking Statements

When used in this Annual Report, the words or phrases “will,” “are expected to,” “we believe,” “should,” “is anticipated,” “estimate,” “project” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties including, but not limited to, (i) changes in general economic conditions, either nationally or in our market areas, that are worse than expected; (ii) competition among depository and other financial institutions; (iii) inflation and changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments; (iv) adverse changes in the securities markets; changes in laws or government regulations or policies affecting financial institutions, including Basel III, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and the regulations issued thereunder; (v) our ability to enter new markets successfully and capitalize on growth opportunities; (vi) our ability to successfully integrate acquired entities, if any; (vii) changes in consumer spending, borrowing and savings habits; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission (the “SEC”) and the Public Company Accounting Oversight Board; (viii) changes resulting from shutdowns of the federal government; (ix) changes in our organization, compensation and benefit plans; (x) changes in our financial condition or results of operations that reduce capital available to pay dividends; and (xi) changes in the financial condition or future prospects of issuers of securities that we own, that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The factors listed above could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.  These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements, which only speak as of the date made.

The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

General

First Clover Leaf Financial Corp. (the “Company” or “First Clover Leaf”) is a Maryland corporation that was incorporated in March 2006 and was formed by our predecessor company, First Federal Financial Services, Inc., in connection with the “second-step” conversion of First Federal Financial Services, MHC and the simultaneous acquisition of Clover Leaf Financial Corp. and its wholly owned savings bank subsidiary, Clover Leaf Bank, a former Illinois state bank headquartered in Edwardsville, Illinois. The second-step conversion, stock offering and acquisition of Clover Leaf Financial Corp. were consummated in July 2006. As a result of these transactions, Clover Leaf Financial Corp. was merged with and into First Clover Leaf and Clover Leaf Bank was merged with and into our wholly owned subsidiary, First Federal Savings and Loan Association of Edwardsville, which was renamed First Clover Leaf Bank (the “Bank”). In August 2014, the Bank converted from a federal savings and loan association to a nationally chartered bank.

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At December 31, 2015, we had total consolidated assets of $654.9 million, net loans of $420.5 million, total deposits of $533.2 million and stockholders’ equity of $80.3 million. We had net income of $4.6 million for the year ended December 31, 2015.

Our headquarters are located at 6814 Goshen Road, Edwardsville, Illinois 62025, and our telephone number is (618) 656-6122.

Our website address is www.firstcloverleafbank.com. Information on our website is not and should not be considered a part of this Annual Report on Form 10-K. Our website contains a direct link to our filings with the SEC, including copies of annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these filings, if any. Copies may also be obtained, without charge, by written request to Secretary, First Clover Leaf Financial Corp., PO Box 540, Edwardsville, Illinois 62025.

First Clover Leaf Bank

General

We conduct our business through our six branch offices located in Edwardsville, Wood River, Highland, and Swansea, Illinois. In addition, the Bank recently opened a loan production office in Clayton, Missouri. Our principal business consists of attracting retail deposits from the general public in the areas surrounding our office locations and investing those deposits, together with funds generated from operations, primarily in one-to-four family residential real estate loans, multi-family real estate loans, commercial real estate loans, construction and land loans, commercial business loans and consumer loans, and in investment securities. Our revenues are derived principally from interest on loans and securities. Our primary sources of funds are deposits and principal and interest payments on loans and securities.

Competition

We face intense competition within our market area both in making loans and attracting deposits. The City of Edwardsville and the surrounding area have a high concentration of financial institutions, including large commercial banks, community banks and credit unions. We face additional competition for deposits from short-term money market funds, brokerage firms, mutual funds and insurance companies. Some of our competitors offer products and services that we currently do not offer, such as trust services. Based on Federal Deposit Insurance Corporation (the “FDIC”) data as of June 30, 2015 (the latest date for which information is available), our market share of deposits was 10.04% of all FDIC-insured deposits in Madison County, making us the third largest institution out of 26 institutions located in Madison County by deposit size as of that date. Our primary focus is to build and develop profitable customer relationships across all lines of business while maintaining our role as a community bank.

Market Area

Our primary lending area is concentrated in Madison, Macoupin, and St. Clair Counties in Illinois. The economy of our market area is characterized by a large number of small retail establishments and small industry. Additionally, major employers in our immediate market area include Southern Illinois University-Edwardsville, Phillips 66 refinery, the local school districts, the Madison County government, Scott Air Force Base, and area hospitals. Historically, these markets have tended to be less volatile than other parts of the country. We have recently expanded into St. Louis County, Missouri, which is approximately 20 miles southwest of our headquarters in Edwardsville, Illinois.

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Lending Activities

Historically, our principal lending activity included the origination of first mortgage loans for the purchase or refinancing of one-to-four family residential property and the origination of multi-family loans. Over the past few years, in addition to these segments, we have focused our efforts on the origination of commercial real estate loans, construction and land loans, and commercial business loans. Our decision to convert to a national charter in August 2014 was due in large part to further these efforts.

Commercial real estate loans represented $153.6 million, or 36.0% of our loan portfolio at December 31, 2015. One-to-four family residential real estate mortgage loans represented $110.8 million, or 26.0%, of our loan portfolio at December 31, 2015. We offer commercial business loans, and these loans represented $89.7 million, or 21.1% of our loan portfolio, at December 31, 2015. Our multi-family loans represented $41.2 million, or 9.7% of our loan portfolio at December 31, 2015. We offer construction and land loans secured by single-family properties and residential subdivisions. Construction and land loans represented $13.6 million, or 3.2%, of our loan portfolio at December 31, 2015. We also originate consumer loans, including home equity loans and automobile loans, which totaled $17.2 million, or 4.0%, of our loan portfolio at December 31, 2015.

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Loan Portfolio Composition. The following table sets forth the composition of our loan portfolio at the dates indicated.

	At December 31,
	2015						2014						2013						2012						2011
	Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent
							(Dollars in thousands)
Real Estate Loans:
One-to-four family	$	110,793			26.0	%	$	117,592			29.0	%	$	118,885			31.4	%	$	112,351			28.0	%	$	115,540			29.2	%
Multi-family		41,182			9.7			41,392			10.2			40,262			10.7			42,203			10.5			39,482			10.0
Commercial real estate		153,634			36.0			129,415			31.9			120,839			32.0			138,767			34.6			128,657			32.6
Construction and land		13,589			3.2			28,591			7.0			12,848			3.4			22,767			5.7			42,467			10.7
Total real estate loans		319,198			74.9			316,990			78.1			292,834			77.5			316,088			78.8			326,146			82.5
Commercial business		89,743			21.1			73,985			18.2			71,940			19.0			71,251			17.8			48,677			12.3
Consumer Loans:
Home equity		13,656			3.2			13,524			3.3			11,713			3.1			12,062			3.0			19,140			4.8
Automobile and other		3,524			0.8			1,772			0.4			1,526			0.4			1,463			0.4			1,414			0.4
Total consumer loans		17,180			4.0			15,296			3.7			13,239			3.5			13,525			3.4			20,554			5.2
Total gross loans		426,121			100.0	%		406,271			100.0	%		378,013			100.0	%		400,864			100.0	%		395,377			100.0	%
Deferred loan origination costs (fees), net		229						194						147						(50	)					47
Allowance for loan losses		(5,886	)					(5,561	)					(5,591	)					(5,945	)					(7,789	)
Total loans, net	$	420,464					$	400,904					$	372,569					$	394,869					$	387,635

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Loan Portfolio Maturities and Yields. The following table summarizes the scheduled repayments of our loan portfolio at December 31, 2015.

	One-to-Four Family					Multi-Family					Commercial Real Estate					Construction and Land(2)
	Amount		Weighted Average Yield			Amount		Weighted Average Yield			Amount		Weighted Average Yield			Amount		Weighted Average Yield
	(Dollars in thousands)
Due During the Years
Ending December 31,
2016(1)	$	7,508		4.81	%	$	5,781		4.03	%	$	23,180		4.79	%	$	5,000		3.68	%
2017 to 2020		26,477		4.63			21,807		4.43			63,669		4.41			8,288		3.78
2021 and beyond		76,808		4.12			13,594		4.35			66,785		3.91			301		4.12
Total	$	110,793		4.29	%	$	41,182		4.35	%	$	153,634		4.25	%	$	13,589		3.75	%

	Commercial Business					Home Equity					Other Consumer					Total
	Amount		Weighted Average Yield			Amount		Weighted Average Yield			Amount		Weighted Average Yield			Amount		Weighted Average Yield
	(Dollars in thousands)
Due During the Years
Ending December 31,
2016(1)	$	32,962		3.71	%	$	1,588		4.52	%	$	181		6.63	%	$	76,200		4.19	%
2017 to 2020		22,923		4.13			8,731		4.22			1,749		3.92			153,644		4.36
2021 and beyond		33,858		3.28			3,337		4.91			1,594		3.41			196,277		3.93
Total	$	89,743		3.66	%	$	13,656		4.42	%	$	3,524		3.83	%	$	426,121		4.13	%

⁽¹⁾ Includes demand loans, loans having no stated repayment schedule or maturity, overdraft loans and loans in process of renewal.

⁽²⁾ Includes land acquisition loans.

The following table sets forth the scheduled repayments of fixed- and adjustable-rate loans at December 31, 2015 that are contractually due after December 31, 2016.

	Due After December 31, 2016
	Fixed		Adjustable		Total
	(Dollars in thousands)
Real Estate Loans:
One-to-four family	$	96,408	$	6,877	$	103,285
Multi-family		34,440		961		35,401
Commercial real estate		104,065		26,389		130,454
Construction and land		8,108		481		8,589
Total real estate loans		243,021		34,708		277,729
Commercial business		48,751		8,030		56,781
Consumer Loans:
Home equity		1,983		10,085		12,068
Automobile and other		3,343		-		3,343
Total consumer loans		5,326		10,085		15,411
Total loans	$	297,098	$	52,823	$	349,921

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One-to-Four Family Real Estate Loans. As of December 31, 2015, one-to-four family residential loans totaled $110.8 million, or 26.0%, of our total loan portfolio. These loans are predominately collateralized by properties located in our primary market area. Virtually all of our residential real estate loans have fixed rates of interest primarily because consumers in our markets generally prefer fixed-rate mortgage loans in the continuing low interest rate environment. We generally sell most of the conforming, fixed-rate loans that we originate, but we generally retain the servicing rights on these loans. At December 31, 2015, we were servicing $123.3 million in loans for others.

We currently offer one-to-four family residential mortgage loans with terms of 10, 15, 20, and 30 years. Our 10-year balloon loans provide for principal and interest amortization of up to 30 years with a balloon payment at the end of the term. All of our loans with terms of 15 years or greater amortize over the term of the loan.

For one-to-four family first mortgage residential real estate loans, we may generally lend up to 80% of the property’s appraised value, or up to 90% of the property’s appraised value if the borrower obtains private mortgage insurance. We require title insurance on all of our one-to-four family first mortgage loans, and we also require that fire and extended coverage casualty insurance (and, if appropriate, flood insurance) be maintained in an amount equal to at least the lesser of the loan balance or the replacement cost of the improvements on the property. We require a property appraisal for all mortgage loans that are underwritten to comply with secondary market standards. Appraisals are conducted by independent or in-house licensed appraisers from a list approved by our board of directors. Our residential real estate loans include “due-on-sale” clauses.

We do not originate, sell, or place any loans in our loan portfolio that are considered sub-prime or Alt-A.

Multi-Family Real Estate Loans. Loans secured by multi-family real estate totaled $41.2 million, or 9.7%, of our total loan portfolio at December 31, 2015. Multi-family real estate loans generally are secured by apartment buildings and rental properties. The majority of our multi-family real estate loans are secured by properties located within our lending area. At December 31, 2015, our largest multi-family real estate loan relationship had a principal balance of $8.3 million, and the loans were secured by apartment buildings. At December 31, 2015, these loans were performing in accordance with their repayment terms. Multi-family real estate loans generally are offered with interest rates that adjust after one, three or five years. The majority of these loans either float with the prime rate or they are fixed balloon loans.

We consider a number of factors in originating multi-family real estate loans. We evaluate the qualifications and financial condition of the borrower (including credit history), profitability and expertise, as well as the value and condition of the mortgaged property securing the loan. When evaluating the qualifications of the borrower, we consider the financial resources of the borrower, the borrower’s experience in owning or managing similar property and the borrower’s payment history with us and other financial institutions. In evaluating the property securing the loan, the factors we consider include the net operating income of the mortgaged property before debt service and depreciation, the debt service coverage ratio (the ratio of net operating income to debt service), and the ratio of the loan amount to the appraised value of the mortgaged property. Multi-family real estate loans are generally originated in amounts up to 85% of the lower of the sale price or the appraised value of the mortgaged property securing the loan. All multi-family real estate loans over $250,000 are appraised by independent or in-house licensed appraisers approved by the board of directors. All multi-family real estate loans below $250,000 must either have an independent or in-house licensed appraisal or valuation.

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Loans secured by multi-family real estate generally involve a greater degree of credit risk than one-to-four family residential mortgage loans and carry larger loan balances. This increased credit risk is a result of several factors, including the concentration of principal in a limited number of loans and borrowers, the effects of general economic conditions on income producing properties, and the increased difficulty of evaluating and monitoring these types of loans. Furthermore, the repayment of loans secured by multi-family real estate typically depends upon the successful operation of the real estate property securing the loan. If the cash flow from the project is reduced, the borrower’s ability to repay the loan may be impaired.

Commercial Real Estate Loans. Loans secured by commercial real estate totaled $153.6 million, or 36.0%, of our total loan portfolio as of December 31, 2015. Our commercial real estate loans are secured predominately by office buildings, and to a lesser extent warehouse properties, and more specialized properties such as churches and schools. We originate commercial real estate loans generally with a typical term of five years with balloon payments. These loans generally amortize over 15 to 25 years. We offer both adjustable and fixed rates of interest on commercial real estate loans, with the interest rate for adjustable rate loans tied to the prime interest rate. Our largest commercial real estate loan relationship at December 31, 2015, comprised of separate credits, had an aggregate principal balance of $9.1 million and was secured by hotels. These loans were performing in accordance with their repayment terms as of December 31, 2015.

Commercial real estate loans generally have higher interest rates than residential mortgage loans. In addition, commercial real estate loans are more sensitive to changes in market interest rates because they often have shorter terms to maturity, and therefore, the interest rates adjust more frequently. Commercial real estate loans often have significant additional risk compared to one-to-four family residential mortgage loans, as they typically involve large loan balances concentrated with single borrowers or groups of related borrowers. In addition, the repayment of commercial real estate loans typically depends on the successful operation of the related real estate project, and thus may be subject, to a greater extent than residential mortgage loans, to adverse conditions in the real estate market or in the economy generally.

In our underwriting of commercial real estate loans, we may generally lend up to 85% of the property’s appraised value. We require independent or in-house licensed appraisals for all commercial real estate loans in excess of $250,000. For loans that do not exceed this amount, we utilize a valuation. Decisions to lend are based on the economic viability of the property and the creditworthiness of the borrower. Creditworthiness is determined by considering the character, experience, management and financial strength of the borrower, and the ability of the property to generate adequate funds to cover both operating expenses and debt service. In evaluating whether to make a commercial real estate loan, we place primary emphasis on the ratio of net cash flow to debt service on the property, and we generally require a ratio of cash flow to debt service of at least 120%, computed after deduction for a vacancy factor and property expenses we deem appropriate.

We require title insurance on all of our commercial real estate loans, and we also require that fire and extended coverage casualty insurance (and, if appropriate, flood insurance) be maintained. In addition, we generally require that the borrower personally guarantee the repayment of the loan.

Construction and Land Loans. As of December 31, 2015, construction and land loans totaled $13.6 million, or 3.2%, of our total loan portfolio, which is down significantly from 2014 due to loans that were transferred into permanent financing or were sold to outside investors. This portfolio consists of construction/speculative loans, construction/permanent loans and land development loans.

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Construction/speculative loans are made to area homebuilders or developers who do not have, at the time the loan is originated, a signed contract with a homebuyer who has a commitment for permanent financing with either the Bank or another lender. The homebuyer may enter into a purchase contract either during or after the construction period. These loans have the risk that the builder will have to make interest and principal payments on the loan, and finance real estate taxes and other holding costs of the completed home or lot for a significant time after the completion of construction. Funds are disbursed in phases as construction is completed. All construction/speculative loans typically require that the builder-borrower personally guarantee the full repayment of the principal and interest on the loan and make interest payments during the construction phase. These loans are generally originated for a term of 12 months, with interest rates that are tied to the prime lending rate. The Bank recognizes the relative increased risk element for these types of loans and therefore generally observes a loan-to-value ratio of no more than 80% of the lower of cost or the estimated value of the completed property. In addition, we generally limit the number of our construction/speculative loans per borrower based on their available liquidity.

Construction/permanent loans are generally made to either a homebuilder or a homeowner who, at the time of construction, has a signed contract together with a commitment for permanent financing from the Bank or another lender for the finished home. The construction phase of a loan for a one-to-four family, owner-occupied property generally lasts up to six months with loan-to-value ratios of up to 80% (or up to 90% if the borrower obtains private mortgage insurance) of the appraised estimated value of the completed property or cost, whichever is less. Following the initial six-month period, construction/permanent loans convert to permanent loans, regardless of whether the construction phase has been completed.

Construction lending generally involves a greater degree of risk than our other one-to-four family mortgage lending. The repayment of the construction loan is, to a great degree, dependent upon the successful and timely completion of the home construction. Construction delays or the financial impairment of the builder may further impair the borrower’s ability to repay the loan.

Our procedures for underwriting construction/speculative loans include an assessment of the borrower’s credit history and the borrower’s ability to meet other existing debt obligations, as well as payment of principal and interest on the proposed loan. We use the same underwriting standards and procedures for construction/permanent lending as we do for one-to-four family residential real estate lending.

We also originate land development loans to area homebuilders that are secured by individual unimproved or improved residential building lots. Land loans are generally offered with variable prime-based interest rates with terms of up to two years. The general loan-to-value ratio is 75% of the lower of cost or appraised value of the property. At December 31, 2015, the largest construction and land loan relationship, comprised of separate credits, had an aggregate principal balance of $4.0 million and was secured by residential lots and land to be developed. The loans were performing in accordance with the repayment terms.

Commercial Business Loans. We offer commercial business loans to customers in our market area. Some of these loans are secured in part by additional real estate collateral. We make various types of secured and unsecured commercial business loans for the purpose of financing equipment acquisition, expansion, working capital and other general business purposes. The terms of these loans are generally for less than five years. Equipment loans usually involve a one-time disbursement of funds, with repayment over the term of the loan, while operating lines of credit involve multiple disbursements and revolving notes that can be renewed annually. The loans are either negotiated on a fixed-rate basis or carry variable interest rates indexed to the prime rate. At December 31, 2015, we had commercial

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business loans outstanding with an aggregate balance of $89.7 million, or 21.1%, of the total loan portfolio. As of December 31, 2015, our largest commercial business loan relationship, comprised of separate credits, had an aggregate principal balance of $14.2 million. The loans were secured primarily by a floor plan for new and used vehicles located in our primary market area. The loans were performing in accordance with their repayment terms as of December 31, 2015.

We have continued our emphasis on the origination of commercial business lending. These loans tend to have higher rates of interest and are more sensitive than other loan categories to changes in market interest rates because they often have shorter terms to maturity, and therefore, the interest rates adjust more frequently. In addition, commercial business lending gives us greater access to commercial borrowers that may open transactional checking accounts with the Bank.

Commercial credit decisions are based upon a complete credit review of the borrower. A determination is made as to the borrower’s ability to repay in accordance with the proposed terms as well as an overall assessment of the credit risks involved. Personal guarantees of borrowers are generally required. In evaluating a commercial business loan, we consider debt service capabilities, actual and projected cash flows and the borrower’s inherent industry risks. Credit agency reports of an individual borrower’s or guarantor’s credit history as well as bank checks and trade investigations supplement the analysis of the borrower’s creditworthiness. Collateral supporting a secured transaction is also analyzed to determine its marketability and liquidity. Commercial business loans generally bear higher interest rates than residential loans, but they also may involve a higher risk of default since their repayment generally depends on the successful operation of the borrower’s business.

Repayment of our commercial business loans is often dependent on the cash flows of the borrower, which may be unpredictable, and the collateral securing these loans may fluctuate in value. Our commercial business loans are originated primarily based on the identified cash flow of the borrower and secondarily on the underlying collateral provided by the borrower. Most often, this collateral consists of accounts receivable, inventory, equipment or real estate. Credit support provided by the borrower for most of these loans and the probability of repayment is based on the projected cash flow of the company or liquidation of the pledged collateral and enforcement of a personal guarantee, if any. As a result, in the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers. The collateral securing other loans may depreciate over time, may be difficult to appraise and may fluctuate in value based on the success of the business.

Consumer Loans. Our consumer loans consist primarily of home equity lines of credit, automobile loans, loans secured by deposits and securities, and unsecured personal loans. As of December 31, 2015, consumer loans totaled $17.2 million, or 4.0%, of our total loan portfolio.

At December 31, 2015, home equity lines of credit totaled $13.7 million, or 3.2%, of total loans. Home equity lines of credit are generally made for owner-occupied homes, and are secured by first or second mortgages on residential properties. We generally offer home equity lines of credit with a maximum loan to appraised value ratio of 90% (including senior liens on the subject property). We currently offer these loans for terms of up to five years and with adjustable rates that are tied to the prime lending rate. To date, we are seeing minimal stress in our home equity portfolio or signs of material default risks. We review reports periodically of the higher advanced credit lines and look at payment patterns and advance patterns in an effort to detect potential problems.

Automobile loans are generally offered with maturities of up to 72 months for new automobiles, while loans secured by used automobiles have maximum terms that vary depending on the age of the automobile. We require all borrowers to maintain collision insurance on automobiles securing loans in

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excess of $1,000, with the Bank listed as loss payee. In those instances where the borrower fails to maintain adequate insurance coverage, we are further protected against loss through a third-party policy insurance coverage. Our automobile loan portfolio totaled $3.5 million, or 0.8%, of total loans at December 31, 2015.

Consumer loans generally entail greater credit risk than residential mortgage loans, particularly in the case of loans that are unsecured or are secured by assets that tend to depreciate in value, such as automobiles. In these cases, repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment for the outstanding loan and the remaining value often does not warrant further substantial collection efforts against the borrower. Further, consumer loan collections depend on the borrower’s continuing financial stability, and therefore are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy.

Our procedures for underwriting consumer loans include an assessment of the borrower’s credit history and ability to meet other existing debt obligations, as well as payments of principal and interest on the proposed loans. The stability of the borrower’s monthly income may be determined by verification of gross monthly income from primary employment, and additionally from any verifiable secondary income. Although the borrower’s creditworthiness is a primary consideration, the underwriting process also includes a comparison of the value of the collateral security, if any, to the proposed loan amount. We require either an independent or in-house licensed appraisal or valuation for all consumer loans in excess of $50,000 if secured by real estate.

Loan Originations, Purchases, Sales and Servicing. Although we originate fixed-rate and adjustable-rate loans, our ability to generate each type of loan depends upon borrower demand, market interest rates, and the interest rates offered on each type of loan by competing lenders in our market area. This includes banks, savings institutions, credit unions, mortgage banking companies, and life insurance companies. Loan originations are derived from a number of sources, including existing or prior customers and walk-in customers.

Loan originations are adversely affected by rising interest rates, which typically result in decreased loan demand. Accordingly, the volume of our loan originations and the interest rates we can charge on loans vary from period to period. One-to-four family residential mortgage loans are generally underwritten to conform to Fannie Mae seller/servicer guidelines, and are currently originated primarily on a fixed interest rate basis. We generally sell most of our conforming, fixed-rate, one-to-four family loans that we originate with servicing rights retained, which means that we will continue to collect payments on the loans and supervise foreclosure proceedings, if necessary. We retain a portion of the interest paid by the borrower on the loans, generally 25 basis points, as consideration for our services. We currently service $123.3 million of loans for others. In 2015, we originated $32.3 million in one-to-four family residential mortgage loans and received proceeds of $32.1 million from the sale of residential loans into the secondary market.

Loan Approval Procedures and Authority. Our lending activities are subject to written underwriting standards and loan origination procedures adopted by management and the board of directors. Authorized officers have predetermined approval levels, and they may approve renewals of commercial business and commercial real estate loans by a total of their combined lending limits where there has been no deterioration in either the payment pattern or financial strength of the borrower. However, all loans in excess of $5.0 million must be presented to the entire board of directors and approved by simple majority. In addition, a list of all preauthorized loans is presented to the board of directors’ loan committee on a monthly basis.

11

Loans to One Borrower. At December 31, 2015, the maximum amount that the Bank could have loaned to any one borrower under the 15% limit of risk-based capital was approximately $11.3 million. In addition, the Supplemental Lending Limit Program under the Office of the Comptroller of the Currency (the “OCC”) allows a national bank to make residential real estate loans, small business loans, or small farm loans in the lesser of the following two amounts: (1) 10% of the bank’s capital and surplus; or (2) the percentage of its capital and surplus, in excess of 15%, that a state bank is permitted to lend under the state lending limit that is available for any such residential real estate, small business, small farm loans, or any unsecured loans in the state where the main office of the national bank is located. The largest lending relationship with the Bank at December 31, 2015 was in accordance with these supplemental terms and totaled $14.5 million. This relationship, comprised of separate credits, consisted of a floor plan for new and used vehicles, a real estate loan for a commercial building, and a separate commercial loan. These loans were performing in accordance with their repayment terms as of December 31, 2015.

Appraisal Policies. In general, we obtain appraisals for new loan originations in excess of $250,000 secured by real estate. For reasons of safety and soundness, we may also require an appraisal for loan originations under the $250,000 threshold. The regulations also permit us to obtain an appropriate evaluation under certain circumstances. Appraisals are conducted by independent or in-house licensed appraisers from a list approved by our board of directors. We also request a new appraisal on a renewing loan if the credit appears to be distressed or the market has had significant changes and we do not feel that we can properly assess the value from our own resources. We also subscribe to a service that provides access to current property listings and sales on single family residences which allows access to comparative sales prices. We obtain a new appraisal on a commercial property when a borrower is experiencing cash flow difficulties which appear to be more than temporarily impaired and we do not feel that we have the resources necessary to properly assess the situation. In addition, if we determine that it is necessary to foreclose on a property, we obtain a new appraisal.

Asset Quality

Loan Delinquencies and Collection Procedures. When a borrower fails to make required payments on a loan, we take a number of steps to induce the borrower to correct the delinquency and restore the loan to a current status. We send a borrower a reminder notice 15 days after an account becomes delinquent, and our employees are authorized to use their discretion whether direct telephone contact is required at that time. If the borrower does not remit the entire payment due by the end of the month, we try to make direct contact with the borrower to arrange a payment plan. If a satisfactory payment plan is not established within 60 days of a delinquency, we send a demand letter to the borrower. If a satisfactory payment plan has not been arranged within 90 days following a delinquency, we may instruct our attorneys to institute foreclosure proceedings depending on the loan-to-value ratio or our relationship with the borrower. Foreclosed property is held as other real estate owned.

Our policies require that management regularly monitor the status of the loan portfolio and report to the board of directors on a monthly basis. These reports include information on delinquent loans and foreclosed real estate and our actions and plans to cure the delinquent status of the loans and to dispose of any real estate acquired through foreclosure.

During 2015, the Company experienced a decline in our non-performing and impaired loans along with a decrease in our foreclosed assets. This decline has been the Company’s trend for the past several years as the local economy has improved and many creditors have experienced improved cash flows, or improved their position through collateral liquidation. Detailed information concerning the Company’s non-performing and impaired loans is described in the paragraphs that follow. Overall, the loans that would be classified as high risk loans by the Company are very limited in number and in value.

12

The Company does not originate subprime loans and holds a very small number and dollar value of adjustable rate mortgage products. The Company does hold some junior lien mortgages and high loan-to-value ratio mortgages; however, they total an immaterial portion of its loan portfolio. The Company is reviewing these loans regularly and has not seen any increase in the delinquency trends for these loans. As commercial loans mature and requests for renewals are processed, either a new appraisal is obtained or the Company performs an internal valuation of the collateral based on comparable sales. Additionally, the original appraisal is discounted if the Company believes it is warranted.

Non-Accrual Loan Procedures. All loans are reviewed on a regular basis and are placed on non-accrual status when, in the opinion of management, there is reasonable probability of loss of principal or the collection of additional interest is deemed insufficient to warrant further accrual. Generally, we place all loans 90 days or more past due on non-accrual status. However, exceptions may occur when a loan is in process of renewal, but it has not yet been completed. In addition, we may place any loan on non-accrual status if any part of it is classified as loss or if any part has been charged-off. When a loan is placed on non-accrual status, total interest accrued and unpaid to date is reversed. Subsequent payments are applied to the outstanding principal balance. Loans are charged-off no later than 120 days following their delinquency, unless the loans are well-collateralized or in the process of collection.

Non-Performing and Impaired Loans and Other Non-Performing Assets. At December 31, 2015, our total non-performing and impaired loans and other non-performing assets were $8.6 million compared to $10.6 million at December 31, 2014. At December 31, 2015, the Company’s non-accrual loans decreased $1.5 million to $3.2 million from $4.7 million at December 31, 2014.

At December 31, 2015, the Bank had two relationships classified as non-accrual with a balance in excess of $500,000. The largest credit is a $996,000 credit to a real estate investor. This credit was placed on non-accrual status in 2012. The investor has experienced cash flow difficulties due to higher vacancy rates and the need for property repairs. Since being placed on non-accrual, $1.3 million in pay-downs from the sale of collateral has been received on this relationship, and a charge-off of $483,000 was recorded in June 2013. A property manager is overseeing the daily operations, and all non-rented properties have been listed for sale. The borrower has signed a forbearance agreement with the Bank to aid in selling some of the properties to further reduce the debt. We believe the collateral on this loan is sufficient to cover the majority of the outstanding balance and that sufficient allowances have been set aside for the remaining outstanding balance. The second credit is for a special use facility and the borrower has entered into a short sale agreement with an expected closing date during the first quarter of 2016. A charge-off of $53,000 was recorded in December 2015.

In addition to the non-accrual loans discussed above, we may have loans that are still accruing interest that we categorize as impaired due to observed credit deterioration or restructured status. This allows us to individually evaluate them for our allowance for loan losses. At December 31, 2015, there were six credits in this classification with a total balance of $2.3 million. The bank has one relationship classified in this category with a balance in excess of $500,000. The largest is a $720,000 credit for a special purpose facility. The borrower has been experiencing insufficient cash flow and the credit has been recently restructured to allow the borrower time to improve cash flow. The loan was performing in accordance with the restructured terms at December 31, 2015.

13

The following table presents a summary of our past-due loans as of December 31, 2015 and December 31, 2014:

	December 31,		December 31,
	2015		2014
Loans 30-59 Days Past Due	$	389,604	$	985,335
Loans 60-89 Days Past Due		259,240		192,060
Loans 90 or more Days Past Due		322,206		486,126
Total Past Due Loans	$	971,050	$	1,663,521

Past due balances decreased $693,000, from $1.7 million at December 31, 2014 to $971,000 at December 31, 2015. The category with the largest decrease was the 30-59 day category, with the majority of that balance being one-to-four family residential loans.

The allowance for loan losses to non-performing and impaired loans ratio increased to 105.86% at December 31, 2015 compared to 82.76% at December 31, 2014. The increase in this ratio was primarily the result of a decline in non-performing and impaired loans to $5.6 million at December 31, 2015 compared to $6.7 million at December 31, 2014, as well as a slight increase in the allowance for loan losses. The allowance for loan losses to total loans increased to 1.38% at December 31, 2015 compared to 1.37% at December 31, 2014.

At December 31, 2015, the Bank had six properties classified as foreclosed assets valued at $3.1 million, which was a decrease of $800,000 from December 31, 2014. The collateral on these properties consists of farmland, two residential lot developments, a commercial development, and two single-family residences. All of these properties were transferred into foreclosed assets at cost or the property’s fair value, less estimated costs of disposal, at the date of foreclosure. Initial valuation adjustments, if any, are charged against the allowance for loan losses. The properties are evaluated on a non-recurring basis to verify that the recorded amount is supported by its current fair value.

14

The table below sets forth the amount and categories of our non-performing and impaired loans and other non-performing assets at the dates indicated. At December 31, 2015, 2014, 2013, 2012 and 2011, we had loans of approximately $3.9 million, $5.7 million, $6.2 million, $8.9 million and $9.3 million, respectively, that were classified as troubled debt restructurings (loans for which a portion of interest or principal has been forgiven and loans modified at interest rates materially less than current market rates) which are considered to be impaired loans.

	At December 31,
	2015			2014			2013			2012			2011
	(Dollars in thousands)
Non-accrual loans:
One-to-four family	$	602		$	589		$	1,671		$	2,087		$	1,203
Multi-family		996			1,341			2,100			3,006			1,120
Commercial real estate		1,245			1,242			1,389			3,466			762
Construction and land		-			1,432			1,141			2,456			7,690
Commercial business		263			25			-			260			250
Consumer		133			48			145			196			142
Total non-accrual loans		3,239			4,677			6,446			11,471			11,167
Accruing loans delinquent 90 days or more:
One-to-four family		-			-			-			183			405
Commercial business		-			-			-			26			-
Total accruing loans delinquent 90 days or more		-			-			-			209			405
Total non-performing loans		3,239			4,677			6,446			11,680			11,572
Other impaired loans:
One-to-four family		304			678			49			-			923
Multi-family		-			-			-			-			2,521
Commercial real estate		1,491			1,025			589			-			2,595
Construction and land		187			207			-			-			155
Commercial business		323			116			132			-			1,314
Consumer		17			17			18			-			509
Total other impaired loans		2,322			2,043			788			-			8,017
Total non-performing and impaired loans		5,561			6,720			7,234			11,680			19,589
Foreclosed assets:
One-to-four family		6			20			635			782			1,157
Multi-family		-			-			118			-			-
Commercial real estate		19			31			692			826			755
Construction and land		3,034			3,837			4,132			4,898			3,911
Total foreclosed assets	$	3,059		$	3,888		$	5,577		$	6,506		$	5,823
Total non-performing and impaired assets	$	8,620		$	10,608		$	12,811		$	18,186		$	25,412
Ratios:
Non-performing and impaired loans to total loans		1.30	%		1.65	%		1.94	%		2.96	%		5.05	%
Non-performing and impaired assets to total assets		1.32	%		1.75	%		2.06	%		3.03	%		4.52	%

15

For the year ended December 31, 2015, $146,113 of gross interest income would have been recorded had our non-accruing loans (including those identified as troubled debt restructurings) been current in accordance with their original terms. We recorded $32,962 of income on such loans for the year ended December 31, 2015.

For the year ended December 31, 2015, $114,871 of gross interest income would have been recorded had our troubled debt restructured loans been current in accordance with their original terms. We did not record any income on such loans for the year ended December 31, 2015.

At December 31, 2015, we had no loans which were not already classified as non-accrual, 90 days past due, or impaired, with known information about possible credit problems of the borrower, that caused management to have serious concerns and would have resulted in disclosure as non-accrual, 90 days past due, or impaired.

Foreclosed Assets. Foreclosed assets consists of property acquired through formal foreclosure or by deed in lieu of foreclosure and is recorded at the property’s fair value at the date of foreclosure less estimated selling costs. Initial valuation adjustments, if any, are charged against the allowance for losses on loans. Property is evaluated regularly to ensure the recorded amount is supported by its current fair value. Subsequent declines in estimated fair value are charged to expense when incurred. Revenues and expenses related to holding and operating these properties are recognized or expensed as incurred. At December 31, 2015, we held six properties as foreclosed assets with a total value of $3.1 million.

Classification of Assets. Our policies, consistent with regulatory guidelines, require that we classify loans and other assets, such as securities, that are considered to be of lesser quality, as substandard, doubtful, or loss assets. An asset is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard assets include those characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Assets classified as doubtful have all of the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Assets classified as loss are those considered uncollectable and of such little value that their continuance as assets is not warranted. Assets that do not expose us to risk sufficient to warrant classification in one of the aforementioned categories, but which possess some weaknesses, are required to be designated as special mention by management.

General allowances represent loss allowances that have been established to recognize the probable incurred risk associated with lending activities, but which have not been allocated to particular problem assets. When we classify problem assets as impaired, we establish a specific allowance for losses equal to the difference between the current outstanding loan balance and the value of the collateral securing the loan. Our determination as to the classification of assets and the amount of valuation allowances is subject to review by regulatory agencies, which can order the establishment of additional loss allowances. All loans classified as doubtful are also classified as impaired. Loans classified as substandard may also be classified as impaired if it is probable the borrower will not be able to meet the contracted terms. Management regularly reviews our asset portfolio to determine whether any assets require classification in accordance with applicable regulatory guidelines and accounting principles generally accepted in the United States of America.

On the basis of management’s review of our assets, at December 31, 2015, we had classified $7.7 million of our assets as substandard, of which $5.6 million were also impaired, and $92,000 as doubtful.

16

The following table sets forth certain information with respect to our loan portfolio delinquencies at the dates indicated.

	Loans Delinquent For
	60-89 Days				90 Days or Over				Total
	Number		Amount		Number		Amount		Number		Amount
	(Dollars in thousands)
At December 31, 2015
One-to-four family		3	$	259		1	$	34		4	$	293
Multi-family		-		-		-		-		-		-
Commercial real estate		-		-		1		112		1		112
Construction and land		-		-		-		-		-		-
Commercial business		-		-		2		87		2		87
Consumer		-		-		2		89		2		89
Total		3	$	259		6	$	322		9	$	581
At December 31, 2014
One-to-four family		3	$	167		8	$	408		11	$	575
Multi-family		-		-		-		-		-		-
Commercial real estate		-		-		2		30		2		30
Construction and land		-		-		-		-		-		-
Commercial business		1		25		-		-		1		25
Consumer		-		-		2		48		2		48
Total		4	$	192		12	$	486		16	$	678
At December 31, 2013
One-to-four family		2	$	116		7	$	674		9	$	790
Multi-family		-		-		-		-		-		-
Commercial real estate		-		-		1		30		1		30
Construction and land		-		-		-		-		-		-
Commercial business		-		-		-		-		-		-
Consumer		-		-		1		30		1		30
Total		2	$	116		9	$	734		11	$	850
At December 31, 2012
One-to-four family		7	$	578		16	$	1,811		23	$	2,389
Multi-family		-		-		-		-		-		-
Commercial real estate		-		-		2		535		2		535
Construction and land		-		-		2		375		2		375
Commercial business		-		-		4		287		4		287
Consumer		3		39		3		55		6		94
Total		10	$	617		27	$	3,063		37	$	3,680
At December 31, 2011
One-to-four family		1	$	50		18	$	947		19	$	997
Multi-family		-		-		1		236		1		236
Commercial real estate		1		1,746		4		762		5		2,508
Construction and land		1		229		5		7,130		6		7,359
Commercial business		1		127		3		194		4		321
Consumer		3		124		2		142		5		266
Total		7	$	2,276		33	$	9,411		40	$	11,687

17

Allowance for Loan Losses. The following table sets forth activity in our allowance for loan losses for the years indicated.

	At or For the Years Ended
	December 31,
	2015			2014			2013			2012			2011
	(Dollars in thousands)
Balance at beginning of year	$	5,561		$	5,591		$	5,945		$	7,789		$	5,728
Charge -offs:
One-to-four family		(25	)		(263	)		(550	)		(263	)		(421	)
Multi-family		-			-			(482	)		-			(228	)
Commercial real estate		(79	)		(2	)		(217	)		(576	)		(379	)
Construction and land		-			-			-			(2,123	)		(1,754	)
Commercial business		-			(190	)		(141	)		(650	)		(483	)
Consumer		(2	)		(44	)		(38	)		(94	)		(105	)
Total charge-offs		(106	)		(499	)		(1,428	)		(3,706	)		(3,370	)
Recoveries:
One-to-four family		21			466			17			2			37
Multi-family		12			-			-			34			-
Commercial real estate		12			-			205			235			8
Construction and land		811			230			302			22			72
Commercial business		74			13			59			18			22
Consumer		1			10			6			1			-
Total recoveries		931			719			589			312			139
Net recoveries (charge-offs)		825			220			(839	)		(3,394	)		(3,231	)
Provision (credit) for loan losses		(500	)		(250	)		485			1,550			5,292
Balance at end of year	$	5,886		$	5,561		$	5,591		$	5,945		$	7,789
Ratios:
Net (recoveries) charge-offs to average loans outstanding		(0.20	)%		(0.06	)%		0.22	%		0.85	%		0.82	%
Allowance for loan losses to non-performing and impaired loans		105.86	%		82.76	%		77.28	%		50.89	%		39.76	%
Allowance for loan losses to total loans		1.38	%		1.37	%		1.50	%		1.51	%		2.01	%

18

The allowance for loan losses is a valuation account that reflects our evaluation of the probable incurred credit losses in our loan portfolio. We maintain the allowance through provisions for loan losses that we charge against income. We charge losses on loans against the allowance for loan losses when we believe the collection of loan principal is unlikely.

Our evaluation of risk in maintaining the allowance for loan losses includes the review of all loans on which the collectibility of principal may not be reasonably assured. We consider the following factors as part of this evaluation: our historical loan loss experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions. Management evaluates the total balance of the allowance for loan losses based on several factors that are not loan specific but are reflective of the probable incurred losses in the loan portfolio, including management’s periodic review of loan collectibility in light of historical experience, the nature and volume of the loan portfolio, prevailing economic conditions such as housing trends, inflation rates and unemployment rates, and geographic concentrations of loans within the Bank’s immediate market area.

There may be other factors that may warrant our consideration in maintaining an allowance at a level sufficient to provide for probable incurred losses. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available or as future events change.

In addition, the OCC, as an integral part of its examination process, periodically reviews our loan portfolio and the related allowance for loan losses. The OCC may require us to increase the allowance for loan losses based on its judgments of information available to it at the time of its examination, thereby adversely affecting our results of operations.

19

Allocation of Allowance for Loan Losses. The following table sets forth the allowance for loan losses allocated by loan category, the total loan balances by category, and the percent of loans in each category to total loans at the dates indicated. The allowance for loan losses allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories.

	At December 31,
	2015							2014							2013
	Allowance for Loan Losses		Loan Balances by Category		Percent of Loans in Each Category to Total Loans			Allowance for Loan Losses		Loan Balances by Category		Percent of Loans in Each Category to Total Loans			Allowance for Loan Losses		Loan Balances by Category		Percent of Loans in Each Category to Total Loans
	(Dollars in thousands)
Real Estate Loans:
One-to-four family	$	1,140	$	110,793		26.0	%	$	1,120	$	117,592		29.0	%	$	1,425	$	118,885		31.4	%
Multi-family		474		41,182		9.7			437		41,392		10.2			661		40,262		10.7
Commercial		1,984		153,634		36.0			1,650		129,415		31.9			1,455		120,839		32.0
Construction and land		498		13,589		3.2			1,195		28,591		7.0			668		12,848		3.4
Commercial business		1,435		89,743		21.1			951		73,985		18.2			1,219		71,940		19.0
Consumer		355		17,180		4.0			208		15,296		3.7			163		13,239		3.5
Total	$	5,886	$	426,121		100.0	%	$	5,561	$	406,271		100.0	%	$	5,591	$	378,013		100.0	%

	At December 31,
	2012							2011
	Allowance for Loan Losses		Loan Balances by Category		Percent of Loans in Each Category to Total Loans			Allowance   for Loan Losses		Loan Balances by Category		Percent of Loans in Each Category to Total Loans
	(Dollars in thousands)
Real Estate Loans:
One-to-four family	$	847	$	112,351		28.0	%	$	777	$	115,540		29.2	%
Multi-family		959		42,203		10.5			780		39,482		10.0
Commercial		1,268		138,767		34.6			1,157		128,657		32.6
Construction and land		1,413		22,767		5.7			3,934		42,467		10.7
Commercial business		1,296		71,251		17.8			970		48,677		12.3
Consumer		162		13,525		3.4			171		20,554		5.2
Total	$	5,945	$	400,864		100.0	%	$	7,789	$	395,377		100.0	%

20

Investment Activities

We are permitted under federal law to invest in various types of liquid assets, including U.S. Government obligations, securities of various federal agencies and of state and municipal governments, deposits at the FHLB, certificates of deposit of federally insured institutions, certain bankers’ acceptances and federal funds. Within certain regulatory limits, we may also invest a portion of our assets in commercial paper and corporate debt securities. The Bank is also required, as a member bank, to invest in FHLB and Federal Reserve Bank stock.

The Financial Accounting Standards Board’s guidance regarding the accounting for certain investments in debt and equity securities requires that securities be categorized as “held to maturity,” “trading securities” or “available for sale,” based on management’s intent as to the ultimate disposition of each security. We classified all of our securities as available for sale at December 31, 2015.

The guidance allows debt securities to be classified as “held to maturity” and reported in financial statements at amortized cost only if the reporting entity has the positive intent and ability to hold those securities to maturity. Securities that might be sold in response to changes in market interest rates, changes in the security’s prepayment risk, increases in loan demand, or other similar factors cannot be classified as “held to maturity.”

Debt and equity securities held for current resale are classified as “trading securities.” These securities are reported at fair value, and unrealized gains and losses on the securities are included in earnings. We do not currently use or maintain a trading account. Debt and equity securities not classified as either “held to maturity” or “trading securities” are classified as “available for sale.” These securities are reported at fair value, and unrealized gains and losses on the securities are excluded from earnings and reported, net of deferred taxes, as a separate component of equity.

All of our securities carry market risk insofar as increases in market interest rates may cause a decrease in their market value. Many also carry prepayment risk insofar as they may be called prior to maturity in times of low market interest rates, so that we may have to reinvest the funds at a lower interest rate. Investments in securities are made based on certain considerations, which include the interest rate, tax considerations, yield, settlement date and maturity of the security, our liquidity position, and anticipated cash needs and sources. The effect that the proposed security would have on our credit and interest rate risk and risk-based capital is also considered. We purchase securities to provide necessary liquidity for day-to-day operations, and when investable funds exceed loan demand.

Generally, our investment policy, as established by the board of directors, is to invest funds among various categories of investments and maturities based upon our liquidity needs, asset/liability management policies, investment quality, marketability, and performance objectives.

Our investment policy does not permit engaging directly in hedging activities or purchasing high-risk mortgage derivative products.

Our debt securities are mainly composed of securities issued by the U.S. Government, government agencies and government-sponsored enterprises (primarily the Federal Home Loan Bank (the “FHLB”), Fannie Mae and Freddie Mac), state and local municipalities, although from time to time we make other investments as permitted by applicable laws and regulations.

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The Company utilizes a third party vendor for investment portfolio accounting. The vendor provides a monthly report indicating by individual bond the gain or loss position of the security, as well as any downgrades that have occurred. When a bond is downgraded, we contact a broker to gain a better understanding of the reason for the downgrade and any known or anticipated defaults by the issuer. We consider the grade of the bond and the payment history when determining if a bond should be classified as other than temporarily impaired and if a write down of the security is necessary. The board of directors is informed quarterly of any bond downgrades and the overall gain or loss position of the investment portfolio. As of December 31, 2015, we had no securities considered to be other-than-temporarily impaired.

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Available for Sale Portfolio. The following table sets forth the composition of our available for sale portfolio at the dates indicated. For further information see Notes 1 and 2 to our Consolidated Financial Statements.

	At December 31,
	2015				2014				2013
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
Investment Securities:
U.S. government agency obligations	$	29,183	$	29,048	$	26,280	$	25,870	$	41,983	$	40,915
U.S. treasury securities		-		-		-		-		5,000		5,000
State and municipal securities		44,746		45,734		44,828		45,573		39,827		38,745
Other securities		4		4		4		4		4		4
Mortgage-backed: residential		29,171		28,971		32,800		32,779		33,404		32,868
Total investment securities available for sale	$	103,104	$	103,757	$	103,912	$	104,226	$	120,218	$	117,532

At December 31, 2015, we held 47 available-for-sale securities that had been in a loss position for less than 12 months, and 20 available-for-sale securities that had been in a loss position for 12 months or more. Included in the 47 securities in the less-than-12 month position are (1) 11 agency securities, seven of which have been in a loss position for one month, three of which have been in a loss position for two months, and one has been in a loss position for three months, (2) 16 state and municipal securities, five of which have been in a loss position for two months, one has been in a loss position for three months, one has been in a loss position for four months, two have been in a loss position for eight months and seven have been in a loss position for 11 months, and (3) 20 mortgage-backed securities, four of which have been in a loss position for one month, nine have been in a loss position for two months, one has been in a loss position for three months, four have been in a loss position for eight months, and two have been in a loss position for 10 months. Included in the 20 securities in the 12-months-or-more position are four agency securities, 11 state and municipal securities, and 5 mortgage-backed securities.

As of December 31, 2015, management believes that the estimated fair values of the securities noted above were primarily dependent on movements in market interest rates. These investment securities were comprised of securities that are rated investment grade by at least one bond credit rating service. Management believes that these fair values will recover as the underlying portfolios mature. We do not intend to sell or expect that it is more likely than not that we will be required to sell these investment securities prior to the anticipated recovery in fair value. Accordingly, management does not believe any individual unrealized loss as of December 31, 2015, represents an other-than-temporary impairment.

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Portfolio Maturities and Yields. The composition and maturities of the investment securities portfolio and the mortgage-backed securities portfolio at December 31, 2015 are summarized in the following table. Maturities are based on the final contractual payment dates except for mortgage-backed securities, which are based on accounting speed to reflect the impact of prepayments. State and municipal securities yields have been adjusted to a tax-equivalent basis.

	One Year or Less					More than One Year   through Five Years					More than Five Years through Ten Years					More than Ten Years					Total Securities
	Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Fair Value		Weighted Average Yield
	(Dollars in thousands)
Available for Sale:
Investment Securities
U.S. government agency obligations	$	5,544		1.30	%	$	17,503		1.48	%	$	6,136		1.98	%	$	-		-	%	$	29,183	$	29,048		1.55	%
State and municipal securities		565		6.03			7,477		3.13			25,288		3.91			11,416		4.35			44,746		45,734		3.92
Other securities		4		-			-		-			-		-			-		-			4		4		-
Mortgage-backed: residential		-		-			28,656		1.86			515		2.11			-		-			29,171		28,971		1.86
Total investment securities  available for sale	$	6,113		1.74	%	$	53,636		1.91	%	$	31,939		3.51	%	$	11,416		4.35	%	$	103,104	$	103,757		2.67	%

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Sources of Funds

General. Deposits are our primary source of funds for lending and other investment purposes. In addition to deposits, we derive funds primarily from principal and interest payments on loans. Loan repayments are a relatively stable source of funds, while deposit inflows and outflows are significantly influenced by market interest rates. Borrowings may be used on a short-term basis to compensate for reductions in the availability of funds from other sources, and may be used on a longer-term basis for general business purposes.

Deposits. Residents of our primary market area are our main source of deposits. Deposit account terms vary, with the principal differences being the minimum balance required, the time periods the funds must remain on deposit, and the interest rate. From time to time, we supplement our funding with brokered deposits. At December 31, 2015, we had $70.5 million of brokered deposits, which included $59.7 million of interest-bearing transaction deposit accounts and $10.8 million of time deposits generated from our local customer base that utilize these brokered deposit products in order to obtain full FDIC insurance coverage. We have several additional sources for obtaining wholesale and brokered deposits if needed in the future. Our deposit products include demand and NOW, money market, savings, and term certificate accounts. The interest rates, maturity terms, service fees and withdrawal penalties are established by the Bank on a periodic basis. Management determines the rates and terms based on competitive market rates, our needs for funds or liquidity, growth goals and federal and state regulations.

Noninterest-Bearing Deposits. The balances of our noninterest-bearing deposits at December 31, 2015 and 2014 were $69.3 million and $68.2 million, respectively.

Interest-Bearing Deposits. The balances of our interest-bearing deposits at December 31, 2015 and 2014 were $463.9 million and $442.1 million, respectively.

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Deposit Accounts by Type. The following table sets forth the average balances of our deposits in the various types of deposit programs for the years indicated.

	Years Ended December 31,
	2015								2014								2013
	Average Balance		Percent			Weighted Average Rate			Average Balance		Percent			Weighted Average Rate			Average Balance		Percent			Weighted Average Rate
	(Dollars in Thousands)
Noninterest-bearing transaction	$	62,261		12.5	%		-	%	$	56,850		11.0	%		-	%	$	57,082		11.9	%		-	%
Interest-bearing transaction		275,949		55.4			0.24			305,375		58.9			0.24			258,136		53.8			0.39
Savings deposits		30,180		6.1			0.17			28,460		5.5			0.18			27,029		5.6			0.29
		368,390		73.9						390,685		75.4						342,247		71.3
Time deposits		129,973		26.1			1.12			127,482		24.6			1.09			138,024		28.7			1.21
Total average deposits	$	498,363		100.0	%		0.44	%	$	518,167		100.0	%		0.42	%	$	480,271		100.0	%		0.57	%

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Time Deposit Balances and Maturities. The following table sets forth certificates of deposit by time remaining until maturity as of December 31, 2015.

	Maturity
	3 Months or Less		Over 3 to 6 Months		Over 6 to 12 months		Over 12 Months		Total
	(Dollars in thousands)
Certificates of deposit less than $100,000	$	7,225	$	6,515	$	11,794	$	39,926	$	65,460
Certificates of deposit of $100,000 or more (1)		5,712		15,072		14,513		32,415		67,712
Total certificates of deposit	$	12,937	$	21,587	$	26,307	$	72,341	$	133,172

(1) The weighted average interest rates for these accounts, by maturity period, were: 0.73% for 3 months or less; 0.67% for over 3 to 6 months; 0.92% for over 6 to 12 months; and 1.53% for over 12 months. The overall weighted average interest rate for accounts of $100,000 or more was 1.14%.

Borrowings. Our borrowings consist of FHLB advances, repurchase agreements and subordinated debentures. At December 31, 2015, we had $16.0 million in advances and access to additional FHLB advances of up to $76.2 million, and we had $19.7 million in securities sold under agreements to repurchase. For additional information on our subordinated debentures, please see Note 11 to our Consolidated Financial Statements.

The following table sets forth information concerning balances and interest rates on all of our borrowings at or for the periods shown:

	At or For the Years Ended December 31,
	2015			2014			2013
	(Dollars in thousands)
Balance at end of year	$	39,728		$	18,336		$	44,746
Average balance during year		31,845			33,509			52,607
Maximum outstanding at any month end		42,258			39,483			56,933
Weighted average interest rate at end of year		0.88	%		0.85	%		0.65	%
Average interest rate during year		0.83	%		1.02	%		1.04	%

Subsidiary Activities

The Company’s primary subsidiary is the Bank. The financial statements also include a wholly-owned entity on a deconsolidated basis, First Clover Leaf Statutory Trust I.

Personnel

As of December 31, 2015, we had 91 full-time employees and 14 part-time employees. Our employees are not represented by any collective bargaining group. Management believes that we have good working relations with our employees.

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SUPERVISION AND REGULATION

In August of 2014, the Bank converted its charter from a federal savings and loan association to a national bank, making First Clover Leaf a bank holding company. While the charter conversion did not change our regulators, it fundamentally changed the laws and regulations applicable to us. The following is a summary of the material elements of the supervisory and regulatory framework applicable to us under our new regulatory regime. It does not describe all of the statutes, regulations and regulatory policies that apply, nor does it restate all of the requirements of those that are described. The descriptions are qualified in their entirety by reference to the particular statutory and regulatory provision.

General

FDIC-insured institutions, like the Bank, as well as their holding companies and their affiliates, are extensively regulated under federal and state law. As a result, the Company’s growth and earnings performance may be affected not only by management decisions and general economic conditions, but also by the requirements of federal and state statutes and by the regulations and policies of various bank regulatory agencies, including the OCC, the Board of Governors of the Federal Reserve System (the “Federal Reserve”), the FDIC and the Bureau of Consumer Financial Protection (the “CFPB”). Furthermore, taxation laws administered by the Internal Revenue Service and state taxing authorities, accounting rules developed by the Financial Accounting Standards Board, securities laws administered by the SEC and state securities authorities, and anti-money laundering laws enforced by the U.S. Department of the Treasury (the “Treasury”) have an impact on the business of the Company and the Bank. The effect of these statutes, regulations, regulatory policies and accounting rules are significant to the operations and results of the Company and the Bank, and the nature and extent of future legislative, regulatory or other changes affecting financial institutions are impossible to predict with any certainty.

Federal and state banking laws impose a comprehensive system of supervision, regulation and enforcement on the operations of FDIC-insured institutions, their holding companies and affiliates that is intended primarily for the protection of the FDIC-insured deposits and depositors of banks, rather than shareholders. These federal and state laws, and the regulations of the bank regulatory agencies issued under them, affect, among other things, the scope of the Company’s and the Bank’s business, the kinds and amounts of investments they may make, Bank reserve requirements, capital levels relative to assets, the nature and amount of collateral for loans, the establishment of branches, the Company’s ability to merge, consolidate and acquire, dealings with insiders and affiliates and the Bank’s payment of dividends. In the last several years, the Company and the Bank have experienced heightened regulatory requirements and scrutiny following the global financial crisis and as a result of the Dodd-Frank Act. Although the reforms primarily targeted systemically important financial service providers, their influence filtered down in varying degrees to community banks over time, and the reforms have caused the Company’s compliance and risk management processes, and the costs thereof, to increase.

This supervisory and regulatory framework subjects FDIC-insured institutions and their holding companies to regular examination by their respective regulatory agencies, which results in examination reports and ratings that are not publicly available and that can impact the conduct and growth of their business. These examinations consider not only compliance with applicable laws and regulations, but also capital levels, asset quality and risk, management ability and performance, earnings, liquidity, and various other factors. The regulatory agencies generally have broad discretion to impose restrictions and limitations on the operations of a regulated entity where the agencies determine, among other things, that such operations are unsafe or unsound, fail to comply with applicable law or are otherwise inconsistent with laws and regulations or with the supervisory policies of these agencies.  

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The following is a summary of the material elements of the supervisory and regulatory framework applicable to the Company and the Bank, beginning with a discussion of the continuing regulatory emphasis on capital levels. It does not describe all of the statutes, regulations and regulatory policies that apply, nor does it restate all of the requirements of those that are described. The descriptions are qualified in their entirety by reference to the particular statutory and regulatory provision.

Regulatory Emphasis on Capital

Regulatory capital represents the net assets of a banking organization available to absorb losses. Because of the risks attendant to their business, FDIC-insured institutions are generally required to hold more capital than other businesses, which directly affects the Company’s earnings capabilities. Although capital has historically been one of the key measures of the financial health of banks, its role became fundamentally more important in the wake of the global financial crisis, as the banking regulators recognized that the amount and quality of capital held by banks prior to the crisis was insufficient to absorb losses during periods of severe stress. Certain provisions of the Dodd-Frank Act and Basel III, discussed below, establish strengthened capital standards for banking organizations, require more capital to be held in the form of common stock and disallow certain funds from being included in capital determinations. These standards represent regulatory capital requirements that are meaningfully more stringent than those in place previously.

Minimum Required Capital Levels. Bank holding companies have historically had to comply with less stringent capital standards than their bank subsidiaries and have been able to raise capital with hybrid instruments such as trust preferred securities. The Dodd-Frank Act mandated that the Federal Reserve establish minimum capital levels for holding companies on a consolidated basis as stringent as those required for FDIC-insured institutions. As a consequence, the components of holding company permanent capital known as “Tier 1 Capital” were restricted to those capital instruments that were considered Tier 1 Capital for FDIC-insured institutions. A result of this change is that the proceeds of hybrid instruments, such as trust preferred securities, are being excluded from Tier 1 Capital over a phase-out period. However, if such securities were issued prior to May 19, 2010 by bank holding companies with less than $15 billion of assets, they may be retained, subject to certain restrictions. Because the Company has assets of less than $15 billion, the Company is able to maintain its trust preferred proceeds as Tier 1 Capital but the Company has to comply with new capital mandates in other respects and will not be able to raise Tier 1 Capital in the future through the issuance of trust preferred securities.

The capital standards for the Company and the Bank changed on January 1, 2015 to add the requirements of Basel III, discussed below. The minimum capital standards effective prior to and including December 31, 2014 are:

· A leverage requirement, consisting of a minimum ratio of Tier 1 Capital to total adjusted average quarterly assets of 3% for the most highly-rated banks with a minimum requirement of at least 4% for all others, and

· A risk-based capital requirement, consisting of a minimum ratio of Total Capital to total risk-weighted assets of 8% and a minimum ratio of Tier 1 Capital to total risk-weighted assets of 4%.

For these purposes, “Tier 1 Capital” consists primarily of common stock, noncumulative perpetual preferred stock and related surplus less intangible assets (other than certain loan servicing rights and purchased credit card relationships). Total Capital consists primarily of Tier 1 Capital plus “Tier 2 Capital,” which includes other non-permanent capital items, such as certain other debt and equity instruments that do not qualify as Tier 1 Capital, and the Bank’s allowance for loan losses, subject to a limitation of 1.25% of risk-weighted assets. Further, risk-weighted assets for the purpose of the risk-

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weighted ratio calculations are balance sheet assets and off-balance sheet exposures to which required risk weightings of 0% to 100% are applied.  

The Basel International Capital Accords. The risk-based capital guidelines described above are based upon the 1988 capital accord known as “Basel I” adopted by the international Basel Committee on Banking Supervision, a committee of central banks and bank supervisors, as implemented by the U.S. federal banking regulators on an interagency basis. In 2008, the banking agencies collaboratively began to phase-in capital standards based on a second capital accord, referred to as “Basel II,” for large or “core” international banks (generally defined for U.S. purposes as having total assets of $250 billion or more, or consolidated foreign exposures of $10 billion or more).  On September 12, 2010, the Group of Governors and Heads of Supervision, the oversight body of the Basel Committee on Banking Supervision, announced agreement on a strengthened set of capital requirements for banking organizations around the world, known as Basel III, to address deficiencies recognized in connection with the global financial crisis.  Because of Dodd-Frank Act requirements, Basel III essentially layers a new set of capital standards on the previously existing Basel I standards.

The Basel III Rule. In July 2013, the U.S. federal banking agencies approved the implementation of the Basel III regulatory capital reforms in pertinent part, and, at the same time, promulgated rules effecting certain changes required by the Dodd-Frank Act (the “Basel III Rule”). In contrast to capital requirements historically, which were in the form of guidelines, Basel III was released in the form of regulations by each of the regulatory agencies. The Basel III Rule is applicable to all banking organizations that are subject to minimum capital requirements, including federal and state banks and savings and loan associations, as well as to bank and savings and loan holding companies, other than “small bank holding companies” (generally bank holding companies with consolidated assets of less than $1 billion which are not publically traded companies).

The Basel III Rule not only increased most of the required minimum capital ratios effective January 1, 2015, but it introduced the concept of Common Equity Tier 1 Capital, which consists primarily of common stock, related surplus (net of treasury stock), retained earnings, and Common Equity Tier 1 minority interests subject to certain regulatory adjustments. The Basel III Rule also expanded the definition of capital by establishing more stringent criteria that instruments must meet to be considered Additional Tier 1 Capital (Tier 1 Capital in addition to Common Equity) and Tier 2 Capital. A number of instruments that qualified as Tier 1 Capital do not qualify, or their qualifications will change. For example, noncumulative perpetual preferred stock, which qualified as simple Tier 1 Capital, does not qualify as Common Equity Tier 1 Capital, but qualifies as Additional Tier 1 Capital. The Basel III Rule also constrained the inclusion of minority interests, mortgage-servicing assets, and deferred tax assets in capital and requires deductions from Common Equity Tier 1 Capital in the event that such assets exceed a certain percentage of a banking organization’s Common Equity Tier 1 Capital.

The Basel III Rule requires minimum capital ratios beginning January 1, 2015, as follows:

· A new ratio of minimum Common Equity Tier 1 equal to 4.5% of risk-weighted assets;

· An increase in the minimum required amount of Tier 1 Capital to 6% of risk-weighted assets;

· A continuation of the current minimum required amount of Total Capital (Tier 1 plus Tier 2) at 8% of risk-weighted assets; and

· A minimum leverage ratio of Tier 1 Capital to total adjusted quarterly average assets equal to 4% in all circumstances.

Not only did the capital requirements change but the risk weightings (or their methodologies) for bank assets that are used to determine the capital ratios changed as well. For nearly every class of assets,

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the Basel III Rule requires a more complex, detailed and calibrated assessment of credit risk and calculation of risk weightings.

Banking organizations (except for large, internationally active banking organizations) became subject to the new rules on January 1, 2015. However, there are separate phase-in/phase-out periods for: (i) the capital conservation buffer; (ii) regulatory capital adjustments and deductions; (iii) nonqualifying capital instruments; and (iv) changes to the prompt corrective action rules. The phase-in periods commenced on January 1, 2016 and extend until 2019.

Well-Capitalized Requirements. The ratios described above are minimum standards in order for banking organizations to be considered “adequately capitalized” under the Prompt Corrective Action rules discussed below. Bank regulatory agencies uniformly encourage banking organizations to hold more capital and be “well-capitalized” and, to that end, federal law and regulations provide various incentives for such organizations to maintain regulatory capital at levels in excess of minimum regulatory requirements. For example, a banking organization that is well-capitalized may: (i) qualify for exemptions from prior notice or application requirements otherwise applicable to certain types of activities; (ii) qualify for expedited processing of other required notices or applications; and (iii) accept, roll-over or renew brokered deposits. Higher capital levels could also be required if warranted by the particular circumstances or risk profiles of individual banking organizations. Moreover, the Federal Reserve’s capital guidelines contemplate that additional capital may be required to take adequate account of, among other things, interest rate risk, or the risks posed by concentrations of credit, nontraditional activities or securities trading activities. Further, any banking organization experiencing or anticipating significant growth would be expected to maintain capital ratios, including tangible capital positions (i.e., Tier 1 Capital less all intangible assets), well above the minimum levels.

Under the capital regulations of the OCC and Federal Reserve, in order to be well-capitalized, a banking organization must maintain:

· A new Common Equity Tier 1 Capital ratio to risk-weighted assets of 6.5% or more;

· A minimum ratio of Tier 1 Capital to total risk-weighted assets of 8% (6% under Basel I);

· A minimum ratio of Total Capital to total risk-weighted assets of 10% (the same as Basel I); and

· A leverage ratio of Tier 1 Capital to total adjusted quarterly average assets of 5% or greater.

In addition, banking organizations that seek the freedom to make capital distributions (including for dividends and repurchases of stock) and pay discretionary bonuses to executive officers without restriction must also maintain 2.5% in Common Equity Tier 1 attributable to a capital conservation buffer to be phased in over three years beginning in 2016. The purpose of the conservation buffer is to ensure that banking organizations maintain a buffer of capital that can be used to absorb losses during periods of financial and economic stress. Factoring in the fully phased-in conservation buffer increases the minimum ratios depicted above to:

· 7% for Common Equity Tier 1Capital,

· 8.5% for Tier 1 Capital and

· 10.5% for Total Capital.

It is possible under the Basel III Rule to be well-capitalized while remaining out of compliance with the capital conservation buffer.

As of December 31, 2015: (i) the Bank was not subject to a directive from the OCC to increase its capital and (ii) the Bank was well-capitalized, as defined by OCC regulations. As of December 31, 2015, the Company had regulatory capital in excess of the Federal Reserve’s requirements and met the Basel III Rule requirements to be well-capitalized.

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Prompt Corrective Action. An FDIC-insured institution’s capital plays an important role in connection with regulatory enforcement as well. This regime applies to FDIC-insured institutions, not holding companies, and provides escalating powers to bank regulatory agencies as a bank’s capital diminishes. Federal law provides the federal banking regulators with broad power to take prompt corrective action to resolve the problems of undercapitalized institutions. The extent of the regulators’ powers depends on whether the institution in question is “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized,” in each case as defined by regulation. Depending upon the capital category to which an institution is assigned, the regulators’ corrective powers include: (i) requiring the institution to submit a capital restoration plan; (ii) limiting the institution’s asset growth and restricting its activities; (iii) requiring the institution to issue additional capital stock (including additional voting stock) or to sell itself; (iv) restricting transactions between the institution and its affiliates; (v) restricting the interest rate that the institution may pay on deposits; (vi) ordering a new election of directors of the institution; (vii) requiring dismissal of senior executive officers or directors; (viii) prohibiting the institution from accepting deposits from correspondent banks; (ix) requiring the institution to divest certain subsidiaries; (x) prohibiting the payment of principal or interest on subordinated debt; and (xi) ultimately, appointing a receiver for the institution.

Regulation and Supervision of the Company

General. The Company, as the sole shareholder of the Bank, is a bank holding company. As a bank holding company, the Company is registered with, and subject to regulation by, the Federal Reserve under the Bank Holding Company Act of 1956, as amended (the “BHCA”). The Company is legally obligated to act as a source of financial and managerial strength to the Bank and to commit resources to support the Bank in circumstances where it might not otherwise do so. The Company is subject to periodic examination by the Federal Reserve and is required to file with the Federal Reserve periodic reports of its operations and such additional information regarding its operations as the Federal Reserve may require.

Acquisitions, Activities and Change in Control. The primary purpose of a bank holding company is to control and manage banks. The BHCA generally requires the prior approval of the Federal Reserve for any merger involving a bank holding company or any acquisition by a bank holding company of another bank or bank holding company. Subject to certain conditions (including deposit concentration limits established by the BHCA), the Federal Reserve may allow a bank holding company to acquire banks located in any state of the United States. In approving interstate acquisitions, the Federal Reserve is required to give effect to applicable state law limitations on the aggregate amount of deposits that may be held by the acquiring bank holding company and its FDIC-insured institution affiliates in the state in which the target bank is located (provided that those limits do not discriminate against out-of-state institutions or their holding companies) and state laws that require that the target bank have been in existence for a minimum period of time (not to exceed five years) before being acquired by an out-of-state bank holding company. Furthermore, in accordance with the Dodd-Frank Act, bank holding companies must be well-capitalized and well-managed in order to effect interstate mergers or acquisitions. For a discussion of the capital requirements, see “Regulatory Emphasis on Capital” above.

The BHCA generally prohibits the Company from acquiring direct or indirect ownership or control of more than 5% of the voting shares of any company that is not a bank and from engaging in any business other than that of banking, managing and controlling banks or furnishing services to banks and their subsidiaries. This general prohibition is subject to a number of exceptions. The principal exception allows bank holding companies to engage in, and to own shares of companies engaged in, certain businesses found by the Federal Reserve prior to November 11, 1999 to be “so closely related to banking ... as to be a proper incident thereto.” This authority would permit the Company to engage in a variety of banking-related businesses, including the ownership and operation of a savings association, or any entity

32

engaged in consumer finance, equipment leasing, the operation of a computer service bureau (including software development) and mortgage banking and brokerage services. The BHCA does not place territorial restrictions on the domestic activities of nonbank subsidiaries of bank holding companies.

Additionally, bank holding companies that meet certain eligibility requirements prescribed by the BHCA and elect to operate as financial holding companies may engage in, or own shares in companies engaged in, a wider range of nonbanking activities, including securities and insurance underwriting and sales, merchant banking and any other activity that the Federal Reserve, in consultation with the Secretary of the Treasury, determines by regulation or order is financial in nature or incidental to any such financial activity or that the Federal Reserve determines by order to be complementary to any such financial activity and does not pose a substantial risk to the safety or soundness of FDIC-insured institutions or the financial system generally. The Company has not elected to operate as a financial holding company.

Federal law also prohibits any person or company from acquiring “control” of an FDIC-insured depository institution or its holding company without prior notice to the appropriate federal bank regulator. “Control” is conclusively presumed to exist upon the acquisition of 25% or more of the outstanding voting securities of a bank or bank holding company, but may arise under certain circumstances between 10% and 24.99% ownership.

Capital Requirements. Bank holding companies are required to maintain capital in accordance with Federal Reserve capital adequacy requirements, as impacted by the Dodd-Frank Act and Basel III. For a discussion of capital requirements, see “—Regulatory Emphasis on Capital” above.

Dividend Payments. The Company’s ability to pay dividends to its shareholders may be affected by both general corporate law considerations and policies of the Federal Reserve applicable to bank holding companies. As a Maryland corporation, the Company is subject to the limitations of Maryland corporate law, which permits the Company to pay dividends from the net earnings of the Company for the fiscal year in which the distribution is made; the net earnings of the Company for the preceding fiscal year; or the sum of the net earnings of the Company for the preceding eight fiscal quarters. No distribution may be made if, after giving effect to the distribution: (i) the Company would not be able to pay its indebtedness as the indebtedness becomes due in the usual course of business; or (ii) the Company’s total assets would be less than the sum of the Company’s total liabilities plus the amount that would be needed, if the Company were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of stockholders whose preferential rights on dissolution are superior to those receiving the distribution.

As a general matter, the Federal Reserve has indicated that the board of directors of a bank holding company should eliminate, defer or significantly reduce dividends to shareholders if: (i) its net income available to shareholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends; (ii) the prospective rate of earnings retention is inconsistent with its capital needs and overall current and prospective financial condition; or (iii) it will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios. The Federal Reserve also possesses enforcement powers over bank holding companies and their non-bank subsidiaries to prevent or remedy actions that represent unsafe or unsound practices or violations of applicable statutes and regulations. Among these powers is the ability to proscribe the payment of dividends by banks and bank holding companies. In addition, under the Basel III Rule, institutions that seek the freedom to pay dividends will have to maintain 2.5% in Common Equity Tier 1 attributable to the capital conservation buffer to be phased in over three years beginning in 2016. See “—Regulatory Emphasis on Capital” above.

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Monetary Policy. The monetary policy of the Federal Reserve has a significant effect on the operating results of financial or bank holding companies and their subsidiaries. Among the tools available to the Federal Reserve to affect the money supply are open market transactions in U.S. government securities, changes in the discount rate on bank borrowings and changes in reserve requirements against bank deposits. These means are used in varying combinations to influence overall growth and distribution of bank loans, investments and deposits, and their use may affect interest rates charged on loans or paid on deposits.

Federal Securities Regulation. The Company’s common stock is registered with the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Consequently, the Company is subject to the information, proxy solicitation, insider trading and other restrictions and requirements of the SEC under the Exchange Act.

Corporate Governance. The Dodd-Frank Act addressed many investor protection, corporate governance and executive compensation matters that will affect most U.S. publicly traded companies. The Dodd-Frank Act increased stockholder influence over boards of directors by requiring companies to give stockholders a non-binding vote on executive compensation and so-called “golden parachute” payments, and authorizing the SEC to promulgate rules that would allow stockholders to nominate and solicit voters for their own candidates using a company’s proxy materials. The legislation also directed the Federal Reserve to promulgate rules prohibiting excessive compensation paid to executives of bank holding companies, regardless of whether such companies are publicly traded.

Regulation and Supervision of the Bank

General. The Bank is a national bank, chartered by the OCC under the National Bank Act. The deposit accounts of the Bank are insured by the FDIC’s Deposit Insurance Fund (the “DIF”) to the maximum extent provided under federal law and FDIC regulations, and the Bank is a member of the Federal Reserve System. As a national bank, the Bank is subject to the examination, supervision, reporting and enforcement requirements of the OCC. The FDIC, as administrator of the DIF, also has regulatory authority over the Bank.

Deposit Insurance. As an FDIC-insured institution, the Bank is required to pay deposit insurance premium assessments to the FDIC.  The FDIC has adopted a risk-based assessment system whereby FDIC-insured institutions pay insurance premiums at rates based on their risk classification.  An institution’s risk classification is assigned based on its capital levels and the level of supervisory concern the institution poses to the regulators.   For deposit insurance assessment purposes, an FDIC-insured institution is placed in one of four risk categories each quarter. An institution’s assessment is determined by multiplying its assessment rate by its assessment base. The total base assessment rates range from 2.5 basis points to 45 basis points. The assessment base is calculated using average consolidated total assets minus average tangible equity. At least semi-annually, the FDIC will update its loss and income projections for the DIF and, if needed, will increase or decrease the assessment rates, following notice and comment on proposed rulemaking.

Amendments to the Federal Deposit Insurance Act revised the assessment base against which an FDIC-insured institution’s deposit insurance premiums paid to the DIF are calculated to be its average consolidated total assets less its average tangible equity. This change shifted the burden of deposit insurance premiums toward those large depository institutions that rely on funding sources other than U.S. deposits.  Additionally, the Dodd-Frank Act altered the minimum designated reserve ratio of the DIF, increasing the minimum from 1.15% to 1.35% of the estimated amount of total insured deposits and eliminating the requirement that the FDIC pay dividends to FDIC-insured institutions. In lieu of dividends, the FDIC has adopted progressively lower assessment rate schedules that will take effect when the reserve ratio exceeds 1.15%, 2%, and 2.5%. As a consequence, premiums will decrease once the

34

1.15% threshold is exceeded. The FDIC has until September 30, 2020 to meet the 1.35% reserve ratio target. Several of these provisions could increase the Bank’s FDIC deposit insurance premiums. 

The Dodd-Frank Act also permanently established the maximum amount of deposit insurance for banks, savings institutions and credit unions to $250,000 per insured depositor.

FICO Assessments.   In addition to paying basic deposit insurance assessments, FDIC-insured institutions must pay Financing Corporation (“FICO”) assessments. FICO is a mixed-ownership governmental corporation chartered by the former Federal Home Loan Bank Board pursuant to the Competitive Equality Banking Act of 1987 to function as a financing vehicle for the recapitalization of the former Federal Savings and Loan Insurance Corporation. FICO issued 30-year noncallable bonds of approximately $8.1 billion that mature in 2017 through 2019. FICO’s authority to issue bonds ended on December 12, 1991. Since 1996, federal legislation has required that all FDIC-insured institutions pay assessments to cover interest payments on FICO’s outstanding obligations. The FICO assessment rate is adjusted quarterly and for the fourth quarter of 2015 was 0.58 basis points ($0.06 per $1,000 dollars of assessable deposits).

Supervisory Assessments. National banks are required to pay supervisory assessments to the OCC to fund the operations of the OCC. The amount of the assessment is calculated using a formula that takes into account the bank’s size and its supervisory condition. During the year ended December 31, 2015, the Bank paid supervisory assessments to the OCC totaling $161,000.

Capital Requirements. Banks are generally required to maintain capital levels in excess of other businesses. For a discussion of capital requirements, see “—Regulatory Emphasis on Capital” above.

Liquidity Requirements. Liquidity is a measure of the ability and ease with which assets may be converted to cash. Liquid assets are those that can be converted to cash quickly if needed to meet financial obligations. To remain viable, FDIC-insured institutions must have enough liquid assets to meet their near-term obligations, such as withdrawals by depositors. Because the global financial crisis was in part a liquidity crisis, Basel III also includes a liquidity framework that requires FDIC-insured institutions to measure their liquidity against specific liquidity tests. One test, referred to as the Liquidity Coverage Ratio (“LCR”), is designed to ensure that the institution has an adequate stock of unencumbered high-quality liquid assets that can be converted easily and immediately in private markets into cash to meet liquidity needs for a 30-calendar day liquidity stress scenario. The other test, known as the Net Stable Funding Ratio, is designed to promote more medium- and long-term funding of the assets and activities of institutions over a one-year horizon. These tests provide an incentive for institutions to increase their holdings in Treasury securities and other sovereign debt as a component of assets, increase the use of long-term debt as a funding source and rely on stable funding like core deposits (in lieu of brokered deposits).

In addition to liquidity guidelines already in place, the U.S. bank regulatory agencies implemented the Basel III LCR in September 2014, which requires large financial firms to hold levels of liquid assets sufficient to protect against constraints on their funding during times of financial turmoil. While the LCR only applies to the largest banking organizations in the country, certain elements are expected to filter down to all FDIC-insured institutions.

Stress Testing. A stress test is an analysis or simulation designed to determine the ability of a given FDIC-insured institution to deal with an economic crisis. In October 2012, U.S. bank regulators unveiled new rules mandated by the Dodd-Frank Act that require the largest U.S. banks to undergo stress tests twice per year, once internally and once conducted by the regulators, and began recommending portfolio stress testing as a sound risk management practice for community banks. Although stress tests are not officially required for banks with less than $10 billion in assets, they have become part of annual regulatory exams even for banks small enough to be officially exempted from the process. The OCC now

35

recommends stress testing as means to identify and quantify loan portfolio risk and the Bank has begun the process.

Dividend Payments. The primary source of funds for the Company is dividends from the Bank. Under the National Bank Act, a national bank may pay dividends out of its undivided profits in such amounts and at such times as the bank’s board of directors deems prudent. Without prior OCC approval, however, a national bank may not pay dividends in any calendar year that, in the aggregate, exceed the bank’s year-to-date net income plus the bank’s retained net income for the two preceding years. In addition, under the Basel III Rule, institutions that seek the freedom to pay dividends will have to maintain 2.5% in Common Equity Tier 1 attributable to the capital conservation buffer to be phased in over three years beginning in 2016. See “Regulatory Emphasis on Capital” above.

Insider Transactions. The Bank is subject to certain restrictions imposed by federal law on “covered transactions” between the Bank and its “affiliates.” The Company is an affiliate of the Bank for purposes of these restrictions, and covered transactions subject to the restrictions include extensions of credit to the Company, investments in the stock or other securities of the Company and the acceptance of the stock or other securities of the Company as collateral for loans made by the Bank. The Dodd-Frank Act enhanced the requirements for certain transactions with affiliates, including an expansion of the definition of “covered transactions” and an increase in the amount of time for which collateral requirements regarding covered transactions must be maintained.

Limitations and reporting requirements are also placed on extensions of credit by the Bank to its directors and officers, to directors and officers of the Company and its subsidiaries, to principal shareholders of the Company and to “related interests” of such directors, officers and principal shareholders. In addition, federal law and regulations may affect the terms upon which any person who is a director or officer of the Company or the Bank, or a principal shareholder of the Company, may obtain credit from banks with which the Bank maintains a correspondent relationship.

Safety and Soundness Standards/Risk Management. The federal banking agencies have adopted guidelines that establish operational and managerial standards to promote the safety and soundness of FDIC-insured institutions. The guidelines set forth standards for internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, compensation, fees and benefits, asset quality and earnings.

In general, the safety and soundness guidelines prescribe the goals to be achieved in each area, and each institution is responsible for establishing its own procedures to achieve those goals. If an institution fails to comply with any of the standards set forth in the guidelines, the FDIC-insured institution’s primary federal regulator may require the institution to submit a plan for achieving and maintaining compliance. If an FDIC-insured institution fails to submit an acceptable compliance plan, or fails in any material respect to implement a compliance plan that has been accepted by its primary federal regulator, the regulator is required to issue an order directing the institution to cure the deficiency. Until the deficiency cited in the regulator’s order is cured, the regulator may restrict the FDIC-insured institution’s rate of growth, require the FDIC-insured institution to increase its capital, restrict the rates the institution pays on deposits or require the institution to take any action the regulator deems appropriate under the circumstances. Noncompliance with the standards established by the safety and soundness guidelines may also constitute grounds for other enforcement action by the federal bank regulatory agencies, including cease and desist orders and civil money penalty assessments.

During the past decade, the bank regulatory agencies have increasingly emphasized the importance of sound risk management processes and strong internal controls when evaluating the activities of the FDIC-insured institutions they supervise.  Properly managing risks has been identified as critical to the conduct of safe and sound banking activities and has become even more important as new

36

technologies, product innovation, and the size and speed of financial transactions have changed the nature of banking markets.  The agencies have identified a spectrum of risks facing a banking institution including, but not limited to, credit, market, liquidity, operational, legal, and reputational risk. In particular, recent regulatory pronouncements have focused on operational risk, which arises from the potential that inadequate information systems, operational problems, breaches in internal controls, fraud, or unforeseen catastrophes will result in unexpected losses. New products and services, third-party risk management and cybersecurity are critical sources of operational risk that FDIC-insured institutions are expected to address in the current environment. The Bank is expected to have active board and senior management oversight; adequate policies, procedures, and limits; adequate risk measurement, monitoring, and management information systems; and comprehensive internal controls.

Branching Authority. National banks headquartered in Illinois, such as the Bank, have the same branching rights in Illinois as banks chartered under Illinois law, subject to OCC approval. Illinois law grants Illinois-chartered banks the authority to establish branches anywhere in the State of Illinois, subject to receipt of all required regulatory approvals.

Federal law permits state and national banks to merge with banks in other states subject to: (i) regulatory approval; (ii) federal and state deposit concentration limits; and (iii) state law limitations requiring the merging bank to have been in existence for a minimum period of time (not to exceed five years) prior to the merger. The establishment of new interstate branches or the acquisition of individual branches of a bank in another state (rather than the acquisition of an out-of-state bank in its entirety) has historically been permitted only in those states the laws of which expressly authorize such expansion. However, the Dodd-Frank Act permits well-capitalized and well-managed banks to establish new branches across state lines without these impediments.

Financial Subsidiaries. Under federal law and OCC regulations, national banks are authorized to engage, through “financial subsidiaries,” in any activity that is permissible for a financial holding company and any activity that the Secretary of the Treasury, in consultation with the Federal Reserve, determines is financial in nature or incidental to any such financial activity, except (i) insurance underwriting, (ii) real estate development or real estate investment activities (unless otherwise permitted by law), (iii) insurance company portfolio investments and (iv) merchant banking. The authority of a national bank to invest in a financial subsidiary is subject to a number of conditions, including, among other things, requirements that the bank must be well-managed and well-capitalized (after deducting from capital the bank’s outstanding investments in financial subsidiaries). The Bank has not applied for approval to establish any financial subsidiaries.

Federal Home Loan Bank System. The Bank is a member of the FHLB, which serves as a central credit facility for its members. The FHLB is funded primarily from proceeds from the sale of obligations of the FHLB system. It makes loans to member banks in the form of FHLB advances. All advances from the FHLB are required to be fully collateralized as determined by the FHLB.

Transaction Account Reserves. Federal Reserve regulations require FDIC-insured institutions to maintain reserves against their transaction accounts (primarily NOW and regular checking accounts). For 2016: the first $15.2 million of otherwise reservable balances are exempt from reserves and have a zero percent reserve requirement; for transaction accounts aggregating more than $15.2 million to $110.2 million, the reserve requirement is 3% of total transaction accounts; and for net transaction accounts in excess of $110.2 million, the reserve requirement is 3% up to $110.2 million plus 10% of the aggregate amount of total transaction accounts in excess of $110.2 million. These reserve requirements are subject to annual adjustment by the Federal Reserve.

Community Reinvestment Act Requirements. The Community Reinvestment Act requires the Bank to have a continuing and affirmative obligation in a safe and sound manner to help meet the credit

37

needs of its entire community, including low- and moderate-income neighborhoods. Federal regulators regularly assess the Bank’s record of meeting the credit needs of its communities. Applications for additional acquisitions would be affected by the evaluation of the Bank’s effectiveness in meeting its Community Reinvestment Act requirements.

Anti-Money Laundering. The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA Patriot Act”), along with anti-money laundering and bank secrecy laws (“AML-BSA”), are designed to deny terrorists and criminals the ability to obtain access to the U.S. financial system and has significant implications for FDIC-insured institutions, brokers, dealers and other businesses involved in the transfer of money. The laws mandate financial services companies to have policies and procedures with respect to measures designed to address any or all of the following matters: (i) customer identification and ongoing due diligence programs; (ii) money laundering; (iii) terrorist financing; (iv) identifying and reporting suspicious activities and currency transactions; (v) currency crimes; and (vi) cooperation among FDIC-insured institutions and law enforcement authorities.

Concentrations in Commercial Real Estate. Concentration risk exists when FDIC-insured institutions deploy too many assets to any one industry or segment. A concentration in commercial real estate is one example of regulatory concern. The interagency Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices guidance (“CRE Guidance”) provides supervisory criteria, including the following numerical indicators, to assist bank examiners in identifying banks with potentially significant commercial real estate loan concentrations that may warrant greater supervisory scrutiny: (i) commercial real estate loans exceeding 300% of capital and increasing 50% or more in the preceding three years; or (ii) construction and land development loans exceeding 100% of capital. The CRE Guidance does not limit banks’ levels of commercial real estate lending activities, but rather guides institutions in developing risk management practices and levels of capital that are commensurate with the level and nature of their commercial real estate concentrations. On December 18, 2015, the federal banking agencies issued a statement to reinforce prudent risk-management practices related to CRE lending, having observed substantial growth in many CRE asset and lending markets, increased competitive pressures, rising CRE concentrations in banks, and an easing of CRE underwriting standards. The federal bank agencies reminded FDIC-insured institutions to maintain underwriting discipline and exercise prudent risk-management practices to identify, measure, monitor, and manage the risks arising from CRE lending. In addition, FDIC-insured institutions must maintain capital commensurate with the level and nature of their CRE concentration risk.

Based on the Bank’s loan portfolio as of December 31, 2015, the Bank does not exceed these guidelines.

Consumer Financial Services. The historical structure of federal consumer protection regulation applicable to all providers of consumer financial products and services changed significantly on July 21, 2011, when the CFPB commenced operations to supervise and enforce consumer protection laws. The CFPB has broad rulemaking authority for a wide range of consumer protection laws that apply to all providers of consumer products and services, including the Bank, as well as the authority to prohibit “unfair, deceptive or abusive” acts and practices. The CFPB has examination and enforcement authority over providers with more than $10 billion in assets. FDIC-insured institutions with $10 billion or less in assets, like the Bank, continue to be examined by their applicable bank regulators.

Because abuses in connection with residential mortgages were a significant factor contributing to the global financial crisis, many new rules issued by the CFPB and required by the Dodd-Frank Act address mortgage and mortgage-related products, their underwriting, origination, servicing and sales. The Dodd-Frank Act significantly expanded underwriting requirements applicable to loans secured by 1-4 family residential real property and augmented federal law combating predatory lending practices. In

38

addition to numerous disclosure requirements, the Dodd-Frank Act imposed new standards for mortgage loan originations on all lenders, including all FDIC-insured institutions, in an effort to strongly encourage lenders to verify a borrower’s “ability to repay,” while also establishing a presumption of compliance for certain “qualified mortgages.” In addition, the Dodd-Frank Act generally required lenders or securitizers to retain an economic interest in the credit risk relating to loans that the lender sells, and other asset-backed securities that the securitizer issues, if the loans have not complied with the ability-to-repay standards. The Bank does not currently expect the CFPB’s rules to have a significant impact on the Company’s operations, except for higher compliance costs.

TAXATION

Federal Taxation

General. The Company and the Bank file a consolidated tax return and are subject to federal income taxation in the same general manner as other corporations, with some exceptions discussed below. The Company’s and the Bank’s tax returns have not been audited during the past five years. The following discussion of federal taxation is intended only to summarize certain pertinent federal income tax matters and is not a comprehensive description of the tax rules applicable to the Company or the Bank.

Method of Accounting. For federal income tax purposes, the Company and the Bank currently report their income and expenses on the accrual method of accounting and use a tax year ending December 31 for filing their federal income tax returns.

Bad Debt Reserves. Prior to the Small Business Protection Act of 1996 (the “1996 Act”), we were permitted to establish a reserve for bad debts and to make annual additions to the reserve. These additions could, within specified formula limits, be deducted in arriving at our taxable income. We were required to use the specific charge off method in computing our bad debt deduction beginning with our 1996 federal tax return. Savings institutions were required to recapture any excess reserves over those established as of December 31, 1987 (base year reserve). At December 31, 2015, the Bank had no reserves subject to recapture.

Taxable Distributions and Recapture. Prior to the 1996 Act, bad debt reserves created prior to January 1, 1988 were subject to recapture into taxable income if the Bank failed to meet certain thrift asset and definitional tests. Federal legislation has eliminated these thrift related recapture rules. At December 31, 2015, our total federal pre-1988 base year reserve was approximately $3.0 million. However, under current law, pre-1988 base year reserves remain subject to recapture if the Bank makes certain non-dividend distributions, repurchases any of its stock, pays dividends in excess of tax earnings and profits, or ceases to maintain a bank charter.

Alternative Minimum Tax. The Internal Revenue Code of 1986, as amended (the “Code”) imposes an alternative minimum tax (“AMT”) at a rate of 20% on a base of regular taxable income plus certain tax preferences (“alternative minimum taxable income” or “AMTI”). The AMT is payable to the extent such AMTI is in excess of an exemption amount and the AMT exceeds the regular income tax. Net operating losses can offset no more than 90% of AMTI. Certain payments of alternative minimum tax may be used as credits against regular tax liabilities in future years. The Bank has not been subject to the alternative minimum tax and has no such amounts available as credits for carryover.

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Net Operating Loss Carryovers. A financial institution may carry back net operating losses to the preceding two taxable years and forward to the succeeding 20 taxable years. At December 31, 2015, the Bank had no net operating loss carryforwards for federal income tax purposes.

Corporate Dividends-Received Deduction. The Company may exclude from its income 100% of dividends received from the Bank as a member of the same affiliated group of corporations. The corporate dividends-received deduction is 80% in the case of dividends received from corporations with which a corporate recipient does not file a consolidated return, and corporations which own less than 20% of the stock of a corporation distributing a dividend may deduct only 70% of dividends received or accrued on their behalf.

State Taxation

Illinois State Taxation. The Company is required to file Illinois income tax returns and pay tax at a stated tax rate of 7.75% for 2015 and 9.5% for 2014 and 2013 of Illinois taxable income. For these purposes, Illinois taxable income generally means federal taxable income subject to certain modifications, primarily the exclusion of interest income on United States obligations.

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ITEM 1A.               RISK FACTORS

Not Required.

ITEM 1B.              UNRESOLVED STAFF COMMENTS

None.

ITEM 2.                 PROPERTIES

The following table provides certain information with respect to our offices as of December 31, 2015:

Location	Leased or Owned	Year Acquired		Net Book Value of Real Property
				(In thousands)
Main Office 6814 Goshen Road Edwardsville, Illinois 62025	Owned	2006	$	3,149
2143 S. State Route 157 Edwardsville, Illinois 62025	Owned	2006		812
300 St. Louis Street Edwardsville, Illinois 62025	Owned	1964		1,296
1046 E. Madison Street Wood River, Illinois 62095	Owned	2008		1,559
12551 State Route 143 Highland, Illinois 62249	Leased	2011		‒
4101 N. Illinois Street Swansea, Illinois 62226	Owned	2014		944
Loan Production Office 255 S. Meramec Ave, Ste 302 St. Louis, Missouri 63105	Leased	2015		‒

The net book value of our premises, land and equipment was approximately $9.9 million at December 31, 2015. In 2008, we purchased land in Highland, Illinois which is still being held for possible future branch expansion. The Bank continues to pursue other expansion opportunities.

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ITEM 3.                 LEGAL PROCEEDINGS

We and our subsidiaries are involved, from time to time, as plaintiff or defendant in various legal actions arising in the normal course of our business. At December 31, 2015, we and our subsidiaries were not involved in any legal proceedings, the outcome of which would be material to our financial condition or results of operations.

ITEM 4.                 MINE SAFETY DISCLOSURES

Not Applicable.

PART II

ITEM 5.              MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

(a) The information required by this item is set forth under the section captioned “Market for Common Stock” in our Annual Report to Stockholders, pertinent portions of which are included as Exhibit 13 to this Form 10-K, and is incorporated herein by reference. No equity securities were sold during the year ended December 31, 2015 that were not registered under the Securities Act.

(b) Not applicable.

(c) The Company did not repurchase any shares of its common stock during the fourth quarter of 2015. The Company’s board of directors approved a stock repurchase plan (the “Plan”) in 2008, which has been incrementally amended to increase the number of shares subject to the program. Effective September 3, 2015, the Company’s board of directors approved a new stock repurchase program for the repurchase of up to 350,344 shares of common stock. The repurchase program has no expiration date and replaces the Plan that was originally approved in 2008, and amended most recently in 2013. As of December 31, 2015, 349,344 shares of common stock were available for repurchase by the Company pursuant to the program.

ITEM 6.                SELECTED FINANCIAL DATA

The information required by this item is set forth under the section captioned “Selected Consolidated Financial and Other Data of First Clover Leaf Financial Corp.” in our Annual Report to Stockholders, pertinent portions of which are included as Exhibit 13 to this Form 10-K, and is incorporated herein by reference.

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ITEM 7.            MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information required by this item is set forth under the section captioned “Management’s Discussion and Analysis of First Clover Leaf Financial Corp.’s Financial Condition and Results of Operations” in our Annual Report to Stockholders, pertinent portions of which are included as Exhibit 13 to this Form 10-K, and is incorporated herein by reference.

ITEM 7A.           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required by this item is set forth under the section captioned “Management of Market Risk” in our Annual Report to Stockholders, pertinent portions of which are included as Exhibit 13 to this Form 10-K, and is incorporated herein by reference.

ITEM 8.               FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this item is set forth under the section captioned “First Clover Leaf Financial Corp. Consolidated Financial Statements” in our Annual Report to Stockholders, pertinent portions of which are included as Exhibit 13 to this Form 10-K, and is incorporated herein by reference.

ITEM 9.             CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.            CONTROLS AND PROCEDURES

(a)           Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective.

There were no changes in our internal control over financial reporting during the quarter ended December 31, 2015, that have materially affected, or are reasonably likely to materially affect, our control over financial reporting.

(b) Management’s annual report on internal control over financial reporting.

Management of First Clover Leaf is responsible for establishing and maintaining adequate internal control over financial reporting.

The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable

43

assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2015, based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in the 1992 “Internal Control-Integrated Framework.” Based on the assessment, management determined that, as of December 31, 2015, the Company’s internal control over financial reporting was effective, based on those criteria.

This Form 10-K does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the rules of the SEC that permit the Company to provide only the management’s report in this annual report.

ITEM 9B.             OTHER INFORMATION

None.

PART III

ITEM 10.              DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this item is set forth under the section captioned “Proposal I–Election of Directors” in our Proxy Statement for the 2016 Annual Meeting of Stockholders, and is incorporated herein by reference.

ITEM 11.              EXECUTIVE COMPENSATION

The information required by this item is set forth under the section captioned “Executive Compensation” in our Proxy Statement for the 2016 Annual Meeting of Stockholders, and is incorporated herein by reference.

ITEM 12.             SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this item is set forth under the section captioned “Voting Securities and Principal Holders Thereof” in our Proxy Statement for the 2016 Annual Meeting of Stockholders, and is incorporated herein by reference.

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ITEM 13.            CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information concerning relationships and transactions is incorporated herein by reference from the Proxy Statement; specifically the section captioned “Transactions with Certain Related Persons.”

ITEM 14.              PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information concerning principal accountant fees and services is incorporated herein by reference from the Proxy Statement; specifically the section captioned “Proposal II-Ratification of Appointment of Auditors.”

PART IV

ITEM 15.              EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following exhibits are either filed or attached as part of this report or are incorporated herein by reference:

3.1 Articles of Incorporation of First Clover Leaf Financial Corp. ⁽¹⁾

3.2 Bylaws of First Clover Leaf Financial Corp. ⁽¹⁾

4 Form of common stock certificate of First Clover Leaf Financial Corp. ⁽¹⁾

10.1 Employment Agreement of William D. Barlow ⁽²⁾

10.2 Employment Agreement of P. David Kuhl ⁽³⁾

10.3 Employment Agreement of Dennis M. Terry ⁽³⁾

10.4 First Amendment to Employment Agreement of William D. Barlow ⁽³⁾

10.5 Amended and Restated Employment Agreement of Lisa M. Fowler ⁽⁴⁾

10.6 Amended and Restated Employment Agreement of Darlene F. McDonald ⁽⁴⁾

10.7 Employment Agreement of Lisa M. Fowler ⁽⁵⁾

10.8 First Amendment to Employment Agreement of Lisa M. Fowler ⁽⁵⁾

10.9 First Clover Leaf Bank First Amendment to Employment Agreement of Lisa M. Fowler ⁽⁵⁾

10.10 Salary Continuation Agreement of William D. Barlow ⁽⁵⁾

10.11 Salary Continuation Agreement of Lisa M. Fowler ⁽⁵⁾

10.12 Salary Continuation Agreement of Darlene F. McDonald ⁽⁵⁾

10.13 First Clover Leaf Bank Amended and Restated Director Deferred Fee Plan ⁽⁵⁾

45

10.14 First Amendment to Employment Agreement of P. David Kuhl ⁽⁶⁾

13 Portions of Annual Report to Stockholders

21 Subsidiaries of the Registrant

31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101 The following financial statements as of and for the years ended December 31, 2015 and 2014, formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Stockholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements.

(1) Incorporated by reference to the Registration Statement on Form SB-2 of First Clover Leaf Financial Corp. (File No. 333-132423), originally filed with the Securities and Exchange Commission on March 14, 2006.

(2) Incorporated by reference to the Annual Report on Form 10-K of First Clover Leaf Financial Corp. for the year ended December 31, 2012, filed with the Commission on March 29, 2013.

(3) Incorporated by reference to the Current Report on Form 8-K of First Clover Leaf Financial Corp., filed with the Commission on September 30, 2013.

(4) Incorporated by reference to the Annual Report on Form 10-KSB of First Clover Leaf Financial Corp. for the year ended December 31, 2006, filed with the Commission on April 2, 2007.

(5) Incorporated by reference to the Annual Report on Form 10-K of First Clover Leaf Financial Corp. for the year ended December 31, 2014, filed with the Commission on March 31, 2015.

(6) Incorporated by reference to the Current Report on Form 8-K of First Clover Leaf Financial Corp., filed with the Commission on September 8, 2015.

46

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	First Clover Leaf Financial Corp.
Date: March 24, 2016	By:	/s/ P. David Kuhl
		P. David Kuhl, President and
		Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:	/s/ P. David Kuhl	By:	/s/ Gerard Schuetzenhofer
	P. David Kuhl, President, and Chief		Gerard Schuetzenhofer
	Executive Officer and Director		Chairman of the Board
	(Principal Executive Officer)
Date: March 24, 2016		Date: March 24, 2016

By:	/s/ Darlene F. McDonald	By:	/s/ Joseph J. Gugger
	Darlene F. McDonald, Executive Vice		Joseph J. Gugger
	President and Chief Financial Officer		Director
	(Principal Financial and Accounting Officer)
Date: March 24, 2016		Date: March 24, 2016

By:	/s/ Mona Haberer	By:	/s/ Kenneth Highlander
	Mona Haberer		Kenneth Highlander
	Director		Director
Date: March 24, 2016		Date: March 24, 2016

By:	/s/ Gary Niebur	By:	/s/ Joseph Stevens
	Gary Niebur		Joseph Stevens
	Director		Director
Date: March 24, 2016		Date: March 24, 2016
By:	/s/ Dennis M. Terry	By:	/s/ Mary Westerhold
	Dennis M. Terry		Mary Westerhold
	Director		Director
Date: March 24, 2016		Date: March 24, 2016

EX-13

EXHIBIT 13

PORTIONS OF ANNUAL REPORT TO STOCKHOLDERS

Exhibit 13

PORTIONS OF 2015 ANNUAL REPORT TO STOCKHOLDERS

SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

OF FIRST CLOVER LEAF FINANCIAL CORP.

The following information is derived from the audited consolidated financial statements of First Clover Leaf Financial Corp. For additional information, reference is made to "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements of First Clover Leaf Financial Corp. and related notes included elsewhere in this Annual Report.

	At December 31,
	2015		2014		2013		2012		2011
	(Dollars in thousands)
Selected Financial Condition Data:
Total assets	$	654,874	$	607,615	$	622,044	$	600,769	$	562,725
Loans, net		420,463		400,904		372,569		394,869		387,635
Cash and cash equivalents		79,233		49,066		84,694		71,415		39,361
Securities available for sale		103,757		104,471		117,777		88,280		85,575
Federal Home Loan Bank stock		1,748		2,888		2,888		2,888		6,306
Federal Reserve Bank stock		1,677		1,677		-		-		-
Deposits		533,158		510,307		502,540		460,374		414,758
Securities sold under agreements to repurchase		19,733		11,848		26,766		34,495		36,874
Subordinated debentures		4,000		4,000		4,000		4,000		4,000
Federal Home Loan Bank advances		15,995		2,488		13,980		21,967		26,944
Stockholders' equity (1)		80,274		77,130		73,096		78,256		77,714

	Years Ended December 31,
	2015			2014			2013		2012		2011
	(Dollars in thousands, except per share data)
Selected Operating Data:
Total interest income	$	19,710		$	19,317		$	19,822	$	21,653	$	23,728
Total interest expense		2,428			2,516			3,316		4,468		6,453
Net interest income		17,282			16,801			16,506		17,185		17,275
Provision (credit) for loan losses		(500	)		(250	)		485		1,550		5,292
Net interest income after provision for loan losses		17,782			17,051			16,021		15,635		11,983
Other income		2,672			2,227			2,169		2,969		2,089
Other expense		14,141			14,091			13,448		12,494		11,742
Income before income taxes		6,313			5,187			4,742		6,110		2,330
Income tax expense		1,675			1,361			1,386		2,045		435
Net income	$	4,638		$	3,826		$	3,356	$	4,065	$	1,895
Basic and diluted earnings per share	$	0.66		$	0.55		$	0.46	$	0.53	$	0.24

⁽¹⁾ Stockholders’ equity is restricted due to capital requirements imposed under federal capital regulations.

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	At or For the Years Ended December 31,
	2015			2014			2013			2012			2011
Selected Financial Ratios and Other Data:
Performance Ratios:
Return on assets (ratio of net income to average total assets)		0.76	%		0.61	%		0.55	%		0.74	%		0.33	%
Return on equity (ratio of net income to average stockholders' equity)		5.86			5.07			4.40			5.17			2.41
Average interest rate spread (1)		3.00			2.86			2.85			3.22			3.09
Dividend payout ratio (2)		36.36			43.64			52.17			45.28			100.00
Dividends per share		0.24			0.24			0.24			0.24			0.24
Net interest margin (3)		3.09			2.93			2.95			3.39			3.29
Efficiency ratio (4)		70.87			74.05			72.01			61.99			60.64
Non-interest expense to average total assets		2.31			2.24			2.20			2.26			2.06
Average interest-earning assets to average interest-bearing liabilities		119.58			115.97			117.43			119.23			116.14
Asset Quality Ratios:
Non-performing assets and impaired loans to total assets		1.32	%		1.75	%		2.06	%		3.03	%		4.52	%
Non-performing and impaired loans to total loans		1.30			1.65			1.94			2.96			5.05
Net (recoveries) charge-offs to average loans outstanding		(0.20	)		(0.06	)		0.22			0.85			0.82
Allowance for loan losses to non-performing and impaired loans		105.86			82.76			77.28			50.89			39.76
Allowance for loan losses to total loans		1.38			1.37			1.50			1.51			2.01
Capital Ratios:
Stockholders' equity to total assets at end of year		12.26	%		12.69	%		11.75	%		13.03	%		13.81	%
Average stockholders' equity to average assets		12.95			12.00			12.48			14.23			13.81
Common equity tier 1 capial ratio (5)		14.89			N/A			N/A			N/A			N/A
Tier 1 (core) capital ratio		11.47			11.22			10.75			11.45			11.33
Tier 1 risk-based capital ratio (6)		14.89			16.36			16.63			17.89			16.80
Total risk-based capital ratio (7)		15.91			17.31			17.53			18.82			17.62
Other Data:
Number of full service offices		6			6			5			4			4

⁽¹⁾ The average interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities for the year.

⁽²⁾ Dividends declared per share divided by diluted earnings per share.

⁽³⁾ The net interest margin represents net interest income as a percent of average interest-earning assets for the year.

⁽⁴⁾ The efficiency ratio represents non-interest expense divided by the sum of net interest income and non-interest income.

⁽⁵⁾ The common equity tier 1 capital ratio based on the Basel III Rules was effective January 1, 2015.

⁽⁶⁾ Tier 1 risk-based capital ratio represents Tier 1 capital divided by its risk-weighted assets as defined in federal regulations on required capital.

⁽⁷⁾ Total risk-based capital ratio represents total capital divided by risk-weighted assets.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion and analysis reflects First Clover Leaf Financial Corp.’s consolidated financial statements and other relevant statistical data and is intended to enhance your understanding of our financial condition and results of operations. The information in this section has been derived from our audited consolidated financial statements, which appear elsewhere in this Annual Report. You should read the information in this section in conjunction with the business and financial information regarding First Clover Leaf Financial Corp. (the “Company” or “First Clover Leaf”) provided elsewhere in this annual report.

Forward Looking Statements

When used in this Annual Report, the words or phrases “will,” “are expected to,” “we believe,” “should,” “is anticipated,” “estimate,” “project” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties including, but not limited to, (i) changes in general economic conditions, either nationally or in our market areas, that are worse than expected; (ii) competition among depository and other financial institutions; (iii) inflation and changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments; (iv) adverse changes in the securities markets; changes in laws or government regulations or policies affecting financial institutions, including Basel III, the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations issued thereunder; (v) our ability to enter new markets successfully and capitalize on growth opportunities; (vi) our ability to successfully integrate acquired entities, if any; (vii) changes in consumer spending, borrowing and savings habits; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission and the Public Company Accounting Oversight Board; (viii) changes resulting from shutdowns of the federal government; (ix) changes in our organization, compensation and benefit plans; (x) changes in our financial condition or results of operations that reduce capital available to pay dividends; and (xi) changes in the financial condition or future prospects of issuers of securities that we own, that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The factors listed above could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.  These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements, which only speak as of the date made.

The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Critical Accounting Policies

First Clover Leaf considers the allowance for loan losses and goodwill and other intangible assets to be its critical accounting estimates, due to the higher degree of judgment and complexity than its other significant accounting estimates.

Allowance for loan losses. The allowance for loan losses is a valuation account that reflects our evaluation of the probable incurred credit losses in our loan portfolio. We maintain the allowance through provisions for loan losses that we charge against income. We charge losses on loans against the allowance for loan losses when we believe the collection of loan principal is unlikely.

Our evaluation of risk in maintaining the allowance for loan losses includes the review of all loans on which the collectibility of principal may not be reasonably assured. We consider the following factors as part of this evaluation: our historical loan loss experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying 

3 

collateral, and prevailing economic conditions. Management evaluates the total balance of the allowance for loan losses based on several factors that are not loan specific but are reflective of the probable incurred losses in the loan portfolio, including management’s periodic review of loan collectibility in light of historical experience, the nature and volume of the loan portfolio, prevailing economic conditions such as housing trends, inflation rates and unemployment rates, and geographic concentrations of loans within First Clover Leaf Bank’s immediate market area.

There may be other factors that may warrant our consideration in maintaining an allowance at a level sufficient to provide for probable incurred losses. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available or as future events change.

In addition, the Office of the Comptroller of the Currency (“OCC”), as an integral part of its examination process, periodically reviews our loan portfolio and the related allowance for loan losses. The OCC may require us to increase the allowance for loan losses based on its judgments of information available to it at the time of its examination, thereby adversely affecting our results of operations.

Goodwill and Other Intangible Assets. In the past, First Clover Leaf has been involved in acquisitions accounted for under the purchase method of accounting. Under the purchase method, First Clover Leaf was required to allocate the cost of an acquired company to the assets acquired, including identified intangible assets, and liabilities assumed based on their estimated fair values at the date of acquisition. The excess cost over the net assets acquired represents goodwill, which is not subject to periodic amortization.

Customer relationship intangibles are required to be amortized over their estimated useful lives.  The method of amortization reflects the pattern in which the economic benefits of these intangible assets are estimated to be consumed or otherwise used up. Our customer relationship intangibles are being amortized over 9.7 years using the double declining balance method. Since First Clover Leaf’s acquired customer relationships are subject to routine customer attrition, the relationships are more likely to produce greater benefits in the near-term than in the long-term, which typically supports the use of an accelerated method of amortization for the related intangible assets. Management is required to evaluate the useful life of customer relationship intangibles to determine if events or circumstances warrant a change in the estimated life. Should management determine the estimated life of any intangible asset is shorter than originally estimated, First Clover Leaf would adjust the amortization of that asset, which could increase future amortization expense.

Goodwill arising from business combinations represents the value attributable to unidentifiable intangible elements in the business acquired. Goodwill recorded by First Clover Leaf in connection with its acquisitions relates to the inherent value in the businesses acquired and this value is dependent upon First Clover Leaf’s ability to provide quality, cost effective services in a competitive market place. The continued value of recorded goodwill is impacted by the value of our stock and continued profitability of the organization. In the event that the stock price experiences significant declines or the operations of the company lack profitability an impairment of goodwill may need to be recognized. Any impairment recognized would adversely impact earnings in the period in which it is recognized.

The goodwill impairment analysis allows the assessment of qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than the carrying value. If it is determined that we should proceed with impairment testing, we then estimate the fair value of our single reporting unit as of the measurement date utilizing two approaches including the comparable transactions approach, and the control premium approach which utilizes the company’s stock price. We then compare the estimated fair value of the reporting unit to the current carrying value of the reporting unit to determine if goodwill impairment had occurred as of the measurement date. At our annual impairment assessment date of September 30, 2015, our analysis indicated that no additional impairment existed. Future events, such as adverse changes to First Clover Leaf’s business or changes in the economic market, could cause management to conclude that impairment indicators exist and require management to re-evaluate goodwill. Should such re-evaluation determine goodwill is impaired; the resulting impairment loss recognized could have a material, adverse impact on First Clover Leaf’s financial condition and results of

4 

operations. In accordance with current accounting guidance, management has determined that the Company has only one reporting unit for purposes of evaluating goodwill.

Overview

First Clover Leaf is a financial holding company incorporated under the laws of Maryland. Located in Edwardsville Illinois, First Clover Leaf has a wholly-owned subsidiary, First Clover Leaf Bank, National Association (“First Clover Leaf Bank”), which is a community bank operating with six branch locations in Madison and St. Clair Counties in Illinois along with a loan production office in Clayton, Missouri. First Clover Leaf Bank is the source of all of the Company’s revenue. First Clover Leaf common stock is listed on the NASDAQ Capital Market and is traded under the symbol “FCLF”.

First Clover Leaf’s results of operations depend primarily on net interest income. Net interest income is the difference between the interest earned on interest-earning assets, and the interest paid on interest-bearing liabilities. Our results of operations also are affected by our provision for loan losses, non-interest income and non-interest expense. The results of operations also may be affected significantly by general and local economic and competitive conditions, changes in market interest rates, governmental policies and actions of regulatory authorities.

We continued our strategic emphasis on growth and increased profitability in 2015. Our Customer Acquisition and Growth program was successful in growing our core deposit base in 2015 as well as expanding our existing customer relationships. Our total deposits at December 31, 2015 were $533.2 million compared to $510.3 million at December 31, 2014. Our expansion into the St. Louis, Missouri market as well as our organic growth in our existing markets resulted in a 4.8% increase in loans. Our total loans at December 31, 2015 were $420.5 million compared to $400.9 million at December 31, 2014. We remained focused on continuing to improve our asset quality as our non-performing and impaired loans and other non-performing assets declined to $8.6 million at December 31, 2015, compared to $10.6 million at December 31, 2014. At December 31, 2015, the Company’s non-accrual loans decreased to $3.2 million compared to $4.7 million at December 31, 2014.

First Clover Leaf had net income of $4.6 million for the year ended December 31, 2015 compared to net income of $3.8 million for the same period in 2014. Despite being in a very competitive market, our loan and deposit growth allowed us to increase our net interest margin to 3.09% for the year ended December 31, 2015 compared to 2.93% for the same period in 2014. We also increased our non-interest income primarily through gain on sale of loans and service charges. We continue our strategic focus to maximize shareholder value. Basic and diluted earnings per share were $0.66 for the year ended December 31, 2015 compared to $0.55 for the year ended December 31, 2014.

The following discussion and analysis of our Financial Condition and Operating Results provides a comparison of our results as of and for the years ended December 31, 2015 and 2014. This discussion should be read in conjunction with the Consolidated Financial Statements and related Notes.

Comparison of Financial Condition at December 31, 2015 and December 31, 2014

Total Assets. Total assets increased to $654.9 million at December 31, 2015 from $607.6 million at December 31, 2014. The increase was primarily due to higher balances of cash and cash equivalents, and loans.

Cash and cash equivalents increased to $79.2 million at December 31, 2015 from $49.1 million at December 31, 2014 primarily due to an increase of $25.5 million in federal funds sold. The increase in federal funds sold was primarily due to increases in deposits, Federal Home Loan Bank advances, and securities sold under agreements to repurchase, partially offset by an increase in loans.

Loans, net, increased to $420.5 million at December 31, 2015 from $400.9 million at December 31, 2014, as we experienced a solid level of originations with both new and existing customers. The categories with significant increases were commercial real estate and commercial business partially offset by declines in one-to-four family and construction and land. Commercial real estate loans increased $24.2 million to

5 

$153.6 million at December 31, 2015 from $129.4 million at December 31, 2014. Commercial business loans increased $15.7 million to $89.7 million at December 31, 2015 from $74.0 million at December 31, 2014. One-to-four family loans decreased to $110.8 million at December 31, 2015 from $117.6 million at December 31, 2014. Construction and land loans declined to $13.6 million at December 31, 2015 from $28.6 million at December 31, 2014, with approximately $6.5 million transferred into the commercial real estate category, and approximately $6.4 million of projects sold to outside investors.

Total Liabilities. Total liabilities increased to $574.6 million at December 31, 2015 from $530.5 million at December 31, 2014. Deposits increased to $533.2 million at December 31, 2015 from $510.3 million at December 31, 2014. The increase in deposits was primarily due to an increase of $15.3 million in our interest-bearing transaction accounts and an increase of $5.5 million in our time deposits. The significant increase in interest-bearing transaction accounts was due to an increase of $38.9 million from our Customer Acquisition and Growth program growing our core deposit base as well as fluctuations in certain customers’ accounts, due to the transitional nature of these accounts, partially offset by a reduction of $23.6 million in brokered accounts.

Federal Home Loan Bank advances at December 31, 2015 were $16.0 million compared to $2.5 million at December 31, 2014. The increase was due to new short and long term advances as a result of fluctuations in our core deposit base.

Securities sold under agreements to repurchase increased $7.9 million to $19.7 million at December 31, 2015 from $11.8 million at December 31, 2014. This increase was due primarily to normal fluctuations in these business accounts.

Stockholders’ Equity. Stockholders’ equity increased to $80.3 million at December 31, 2015 from $77.1 million at December 31, 2014 primarily due to net income of $4.6 million, partially offset by the payment of cash dividends to the holders of our common stock in the amount of $1.7 million.

Comparison of Operating Results for the Years Ended December 31, 2015 and 2014.

General. We recorded net income of $4.6 million and $3.8 million for the years ended December 31, 2015 and 2014, respectively. The increase in net income for the year ended December 31, 2015 resulted primarily from higher net interest income, an increase in credit provision for loan losses, and higher non-interest income partially offset by higher income taxes.

During 2015, yields on loans continued to decline primarily due to assets re-pricing in the current rate environment. Our commercial loans are the most sensitive to changes in market interest rates because they often have shorter terms to maturity, and, therefore, the interest rates adjust more frequently.

We have experienced a slight increase in rate on time deposits re-pricing as they mature due to shorter term time deposits re-pricing into longer term time deposits. Our ability to lower rates paid on deposits is limited due to the already low deposit rates and the competitive environment in which we operate. The Company’s yield on earning assets and cost of funds are largely dependent on the interest rate environment. The competitive and market forces continue to pressure the yield on our earning assets.

Net interest income. Net interest income increased to $17.3 million for the year ended December 31, 2015 from $16.8 million for the year ended December 31, 2014. Net average interest-earning assets were $91.6 million for 2015, compared to $79.0 million for 2014. The ratio of average interest-earning assets to average interest-bearing liabilities increased to 119.58% for 2015 from 115.97% for 2014. Our interest rate spread increased to 3.00% for 2015 from 2.86% for 2014, and our net interest margin increased to 3.09% in 2015 from 2.93% for 2014. The average rate earned on interest-earning assets increased by 15 basis points during 2015 to 3.52% from 3.37% during 2014, while the average rate paid on interest-bearing liabilities increased by 1 basis point during 2015 to 0.52% from 0.51% during 2014.

6 

The following table sets forth average balance sheets, average yields and costs, and certain other information for the years indicated. No tax-equivalent yield adjustments were made, as the effect thereof was not material. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances, but have been reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of deferred loan fees, and discounts and premiums that are amortized or accreted to interest income or expense.

	Years Ended December 31,
	2015							2014							2013
	Average Outstanding Balance		Interest (5)		Yield/ Rate			Average Outstanding Balance		Interest (5)		Yield/ Rate			Average Outstanding Balance		Interest (5)		Yield/ Rate
	(Dollars in thousands)
Interest-earning assets:
Loans, gross (1)	$	407,223	$	17,244		4.23	%	$	386,018	$	16,715		4.33	%	$	381,791	$	17,589		4.61	%
Securities (1)		106,451		2,223		2.09			112,373		2,369		2.11			105,344		2,051		1.95
Federal Reserve Bank stock		1,677		101		6.00			631		37		5.84			-		-		0.00
Interest-earning balance from depository institutions		44,223		141		0.32			74,843		196		0.26			71,583		182		0.25
Total interest-earning assets		559,574		19,709		3.52			573,865		19,317		3.37			558,718		19,822		3.55
Non-interest-earning assets		51,723							54,904							51,993
Total assets	$	611,297						$	628,769						$	610,711
Interest-bearing liabilities:
Interest-bearing transactions	$	275,949	$	651		0.24	%	$	305,375	$	739		0.24	%	$	258,136	$	1,018		0.39	%
Savings deposits		30,180		51		0.17			28,460		50		0.18			27,029		78		0.29
Time deposits		129,973		1,460		1.12			127,482		1,385		1.09			138,024		1,674		1.21
Federal Home Loan Bank advances		12,028		172		1.43			10,534		250		2.37			20,111		444		2.21
Securities sold under agreement to repurchase		15,817		3		0.02			18,975		5		0.03			28,496		14		0.05
Subordinated debentures		4,000		90		2.25			4,000		87		2.18			4,000		88		2.20
Total interest-bearing liabilities		467,947		2,427		0.52			494,826		2,516		0.51			475,796		3,316		0.70
Non-interest-bearing liabilities		64,166							58,488							58,703
Total liabilities		532,113							553,314							534,499
Stockholders' equity		79,184							75,455							76,212
Total liabilities and stockholders' equity	$	611,297						$	628,769						$	610,711
Net interest income			$	17,282						$	16,801						$	16,506
Net interest rate spread (2)						3.00	%						2.86	%						2.85	%
Net interest-earning assets (3)	$	91,627						$	79,039						$	82,922
Net interest margin (4)						3.09	%						2.93	%						2.95	%
Ratio of interest-earning assets to interest-bearing liabilities						119.58	%						115.97	%						117.43	%

⁽¹⁾ Yields on loans and securities have not been adjusted to a tax-equivalent basis. Net interest margin on a fully tax-equivalent basis would have been 3.27%, 3.10%, and 3.09% for 2015, 2014, and 2013, respectively. The tax equivalent basis was computed by calculating the deemed interest on tax-exempt loans and municipal bonds that would have been earned on a fully taxable basis to yield the same after-tax income using a combined federal and state marginal tax rate of 36%.

⁽²⁾ Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

⁽³⁾ Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

⁽⁴⁾ Net interest margin represents net interest income divided by average total interest-earning assets.

⁽⁵⁾ Interest on loans includes $94,884, $116,637, and $118,054 of loan fees collected in 2015, 2014, and 2013, respectively.

7 

The following tables present the dollar amount of changes in interest income and interest expense for the major categories of our interest-earning assets and interest-bearing liabilities. Information is provided for each category of interest-earning assets and interest-bearing liabilities with respect to (i) changes attributable to changes in volume (i.e., changes in average balances multiplied by the prior-period average rate) and (ii) changes attributable to rate (i.e., changes in average rate multiplied by prior-period average balances). For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately to the change due to volume and the change due to rate.

	Year Ended December 31,
	2015 vs. 2014
	Increase (Decrease) Due to						Total Increase
	Volume			Rate			(Decrease)
	(Dollars in thousands)
Interest-earning assets:
Loans	$	917		$	(388	)	$	529
Securities		(125	)		(21	)		(146	)
Federal Reserve Bank stock		63			-			63
Interest-earning balances from depository institutions		(81	)		26			(55	)
Total interest-earning assets		774			(383	)		391
Interest-bearing liabilities:
Interest-bearing transactions		(80	)		(8	)		(88	)
Savings deposits		4			(3	)		1
Time deposits		32			43			75
Federal Home Loan Bank advances		35			(113	)		(78	)
Securities sold under agreement to repurchase		-			(2	)		(2	)
Subordinated debentures		-			3			3
Total interest-bearing liabilities		(9	)		(80	)		(89	)
Change in net interest income	$	783		$	(303	)	$	480
	Year Ended December 31,
	2014 vs. 2013
	Increase (Decrease) Due to						Total Increase
	Volume			Rate			(Decrease)
	(Dollars in thousands)
Interest-earning assets:
Loans	$	195		$	(1,069	)	$	(874	)
Securities		138			180			318
Federal Reserve Bank stock		-			38			38
Interest-earning balances from depository institutions		7			7			14
Total interest-earning assets		340			(844	)		(504	)
Interest-bearing liabilities:
Interest-bearing transactions		181			(460	)		(279	)
Savings deposits		3			(31	)		(28	)
Time deposits		(132	)		(157	)		(289	)
Federal Home Loan Bank advances		(211	)		17			(194	)
Securities sold under agreement to repurchase		(5	)		(4	)		(9	)
Subordinated debentures		-			(1	)		(1	)
Total interest-bearing liabilities		(164	)		(636	)		(800	)
Change in net interest income	$	504		$	(208	)	$	296

8 

Interest and dividend income. Interest and fee income on loans increased to $17.2 million for 2015 from $16.7 million for 2014. This increase was primarily a result of a higher average balance of loans which was partially offset by a decline in yield, which primarily resulted due to competitive pressure. The average balance of loans was $407.2 million and $386.0 million during 2015 and 2014, respectively. The average yield on loans decreased to 4.23% for 2015 from 4.33% for 2014.

Interest income on securities decreased to $2.2 million for 2015 from $2.4 million for 2014. Interest income on securities decreased primarily due to a lower average balance of securities. The average balance of securities was $106.5 million and $112.4 million for 2015 and 2014, respectively. The average yield on securities decreased to 2.09% for 2015 from 2.11% for 2014.

Dividends on Federal Reserve Bank stock were $101,000 and $38,000 for 2015 and 2014, respectively. The average balance was $1.7 million for 2015 and $631,000 for 2014. The Company was required to purchase the Federal Reserve Bank stock as a result of the Bank’s conversion from a thrift charter to a national bank charter in August 2014.

Interest on other interest-earning deposits decreased primarily due to a decrease in average balances. The average balance of other interest-earning deposits was $44.2 million and $74.8 million for 2015 and 2014, respectively. The average yield on other interest-earning deposits was 0.32% for 2015 and 0.26% for 2014.

Components of interest income vary from time to time based on the availability and interest rates of loans, securities and other interest-earning assets.

Interest expense. Interest expense on deposits decreased $12,000, but remained at $2.2 million for 2015 and 2014. While the average balance of interest-bearing deposits decreased to $436.1 million during 2015 from $461.3 million for 2014, the average rate on interest-bearing deposits increased to 0.50% for 2015 from 0.47% for 2014.

Interest on Federal Home Loan Bank advances decreased in 2015 due to a decrease in rate partially offset by a higher average balance. The average rate on Federal Home Loan Bank advances decreased to 1.43% for 2015 compared to 2.37% for 2014. The average balance of Federal Home Loan Bank advances was $12.0 million and $10.5 million for 2015 and 2014, respectively.

Interest on securities sold under agreements to repurchase decreased to $3,000 from $5,000 primarily due to a lower average balance. The average balance of securities sold under agreements to repurchase was $15.8 million and $19.0 million for 2015 and 2014, respectively. The average rate decreased to 0.02% for 2015 from 0.03% for 2014.

Interest expense on subordinated debentures increased to $90,000 for 2015 from $87,000 for 2014. The average rate increased to 2.25% for 2015 compared to 2.18% for 2014.

Provision for loan losses. Credit provisions of $500,000 and $250,000 were recorded in 2015 and 2014, respectively. Management determined that the credit provisions were appropriate due to improvements in credit quality trends and recoveries received on previously charged-off loans. Non-performing and impaired loans totaled $5.6 million and $6.7 million at December 31, 2015 and 2014, respectively. The allowance for loan losses to non-performing and impaired loans increased to 105.86% at December 31, 2015, compared to 82.76% at December 31, 2014. We received net recoveries of $825,000 and $221,000 during 2015 and 2014, respectively. The provision for loan losses is based upon management’s consideration of current economic conditions, First Clover Leaf’s loan portfolio and historical loss experience coupled with current market valuations on collateral, and management’s estimate of probable losses in the portfolio as well as the level of non-performing and impaired loans. Management also reviews individual loans for which full collectability may not be reasonably assured and considers, among other matters, the estimated fair value of the underlying collateral. This evaluation is

9 

ongoing and results in variations in First Clover Leaf’s provision for loan losses. There may be other factors that may warrant our consideration in maintaining an allowance at a level sufficient to provide for probable incurred losses. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available or as future events change.

In addition, the OCC, as an integral part of its examination process, periodically reviews our loan portfolio and the related allowance for loan losses. The OCC may require us to increase the allowance for loan losses based on its judgments of information available to it at the time of its examination, thereby adversely affecting our results of operations.

Non-interest income. Non-interest income increased $446,000 to $2.7 million for the year ended December 31, 2015, compared to $2.2 million for the year ended December 31, 2014, primarily due to increases on service fees on deposit accounts, other service charges and fees, and gain on sale of loans, along with lower losses on the sale of assets and on the sale of foreclosed assets, partially offset by a reduction in gain on sale of securities.

Service fees on deposit accounts increased $46,000 to $501,000 for the year ended December 31, 2015 from $455,000 for the year ended December 31, 2014. The increase was due to higher non-sufficient funds income and treasury management fees in 2015.

Other service charges and fees increased $60,000 to $475,000 for the year ended December 31, 2015 from $415,000 for the year ended December 31, 2014. The increase was primarily due to higher visa fee income in 2015.

Gain on sale of loans totaled $893,000 for the year ended December 31, 2015 compared to $631,000 for the comparable period in 2014. The increase was due to a higher volume of loan sales despite a lower average yield in 2015 compared to 2014. The average loan portfolio yield in 2015 was 2.8% compared to 3.1% in 2014. In 2015, we sold loans totaling $32.1 million, compared to $20.6 million in 2014.

We experienced a loss of $81,000 on the sale of property and equipment during 2014 compared to no such loss in 2015. We incurred a loss on the sale of foreclosed assets of $15,000 during 2015 compared to a loss of $164,000 during 2014.

Gain on sale of securities totaled $11,000 for the year ended December 31, 2015 compared to $110,000 for the same period in 2014. We sold fewer securities in 2015 than we did in 2014, primarily due to the 2015 interest rate markets not being as favorable for security sales. In 2015 we sold securities of $1.6 million compared to $5.3 million in 2014.

Non-interest expense. Non-interest expense increased $50,000, but remained at $14.1 million for 2015 and 2014. The increase was primarily due to higher compensation and employee benefits, partially offset by a decrease in occupancy expense, FDIC insurance premiums, and foreclosed asset related expenses.

Compensation and employee benefits increased to $7.6 million for 2015 from $7.2 million for 2014. These increases were primarily due to the addition of a supplemental retirement plan effective July 1, 2014, and increased employee insurance expenses. Salary expense also increased due to increased commission expense on production-based earners.

Occupancy expense decreased to $1.6 million for 2015 compared to $1.7 million for 2014 primarily due to less repair and maintenance expenses, and a reduction in rent expense.

FDIC insurance premiums decreased to $356,000 for 2015 from $459,000 for 2014. The decrease was due to lower assessment bases and rates throughout 2015 compared to 2014.

10 

Foreclosed asset related expenses decreased to $441,000 for 2015 compared to $507,000 for 2014. The decrease was primarily due to fewer properties owned in 2015 and less property repairs, partially offset by an increase in write-downs on foreclosed assets.

Income taxes. Income tax expense increased to $1.7 million for 2015 from $1.4 million for 2014 primarily due to higher pre-tax income for 2015. The effective tax rate was 26.5% for 2015 compared to 26.2% for 2014. Beginning January 2015, the state tax rate was lowered to 7.75% from the previous rate of 9.5%.

Management of Market Risk

General

The majority of First Clover Leaf’s assets and liabilities are monetary in nature. Consequently, the most significant form of market risk is interest rate risk. First Clover Leaf’s assets, consisting primarily of loans, have longer maturities than its liabilities, consisting primarily of deposits. As a result, the principal part of First Clover Leaf’s business strategy is to manage interest rate risk and reduce the exposure of our net interest income to changes in market interest rates. Accordingly, the board of directors has established an Asset/Liability Management Committee which is responsible for evaluating the interest rate risk inherent in assets and liabilities, for determining the level of risk that is appropriate given First Clover Leaf’s business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the board of directors. Senior management monitors the level of interest rate risk on a regular basis, and the Asset/Liability Management Committee meets at least quarterly to review the asset/liability policies and interest rate risk position.

During the relatively low interest rate environment that has existed in recent years, we have implemented the following strategies to manage interest rate risk: (i) maintaining a high equity-to-assets ratio; and (ii) offering a variety of adjustable rate loan products, including adjustable rate one-to-four family, multi-family and non-residential mortgage loans, short-term consumer loans, and a variety of adjustable-rate commercial loans. By maintaining a high equity-to-assets ratio and by investing in adjustable-rate and short-term assets, we are better positioned to react to increases in market interest rates. However, maintaining high equity balances reduces the return-on-equity ratio, and investments in shorter-term assets generally bear lower yields than longer-term investments.

Net Portfolio Value

The Office of the Comptroller of Currency requires the Company to monitor and test interest rate risk under increasing and decreasing rate shocks. First Clover Leaf utilized an independent third party to analyze interest rate risk sensitivity as of December 31, 2015 and 2014. The model uses a discounted cash flow analysis and an option-based pricing approach to measure the interest rate sensitivity of net portfolio value (“NPV”). The model estimates the economic value of each type of asset, liability and off-balance-sheet contract under the assumption of instantaneous rate increases of up to 400 basis points or decreases of 100 points in 100 basis point increments. An increase in interest rates from 3% to 4% would mean, for example, a 100 basis point increase in the “Change In Rates” column.

11 

The tables below set forth, as of December 31, 2015 and 2014, the estimated changes in the NPV that would result from the designated instantaneous changes in the U.S. Treasury yield curve. Computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions including relative levels of market interest rates, loan prepayments and deposit decay, and should not be relied upon as indicative of actual results.

The 2015 table below indicates that at December 31, 2015, in the event of a 100 basis point decrease in interest rates, we would experience a 9% decrease in the net portfolio value. In the event of a 400 basis point increase in interest rates, we would experience a 19% decrease in net portfolio value.

December 31, 2015
	NPV								Net Portfolio Value as a Percentage
Change in			Estimated Increase						of Present Value of Assets
Interest Rates	Estimated		(Decrease) in NPV									Change in
(basis points)	NPV		Amount			Percent			NPV Ratio			(basis points)
	(Dollars in thousands)
+400	$	84,743	$	(19,577	)		(19	)%		14.40	%		(142	)
+300		91,987		(12,333	)		(12	)		15.21			(61	)
+200		97,818		(6,502	)		(6	)		15.70			(12	)
+100		102,388		(1,932	)		(2	)		15.98			16
—		104,320		—			—			15.82			—
-100		95,264		(9,056	)		(9	)		14.22			(160	)
December 31, 2014
	NPV								Net Portfolio Value as a Percentage
Change in			Estimated Increase						of Present Value of Assets
Interest Rates	Estimated		(Decrease) in NPV									Change in
(basis points)	NPV		Amount			Percent			NPV Ratio			(basis points)
	(Dollars in thousands)
+400	$	65,349	$	(20,120	)		(24	)%		12.03	%		(201	)
+300		73,117		(12,352	)		(14	)		13.08			(96	)
+200		79,432		(6,037	)		(7	)		13.78			(26	)
+100		84,576		(893	)		(1	)		14.25			21
—		85,469		—			—			14.04			—
-100		88,703		3,234			4			14.28			24

Certain shortcomings are inherent in the methodology used in the above interest rate risk measurement. Modeling changes in net portfolio value require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the net portfolio value table presented assumes that the composition of the interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the net portfolio value table provides an indication of the interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on its net interest income and will differ from actual results.

12 

Liquidity and Capital Resources

First Clover Leaf maintains liquid assets at levels considered adequate to meet liquidity needs. We adjust our liquidity levels to fund deposit outflows, repay our borrowings and fund loan commitments. We also adjust liquidity as appropriate to meet asset and liability management objectives.

Our primary sources of liquidity are deposits, amortization and prepayment of loans, maturities of investment securities and other short-term investments, and earnings and funds provided from operations. While scheduled principal repayments on loans are a relatively predictable source of funds, deposit flows and loan prepayments are greatly influenced by market interest rates, economic conditions, and rates offered by our competition. We set the interest rates on our deposits to maintain a desired level of total deposits. In addition, we invest excess funds in short-term interest-earning assets, which provide liquidity to meet lending requirements.

A portion of our liquidity consists of cash and cash equivalents, which are a product of our operating, investing and financing activities. At December 31, 2015 and 2014, $79.2 million and $49.1 million, respectively, were invested in cash and cash equivalents. The increase in our cash and cash equivalents was due to increases in deposits, Federal Home Loan Bank advances, and securities sold under agreements to repurchase, partially offset by an increase in loans. The primary sources of cash are principal repayments on loans, proceeds from the calls and maturities of investment securities, increases in deposit accounts and related securities sold under agreements to repurchase, and advances from the Federal Home Loan Bank of Chicago.

Cash flows are derived from operating activities, investing activities and financing activities as reported in the Consolidated Statements of Cash Flows included with the Consolidated Financial Statements.

Our primary investing activities are the origination of loans and the purchase of investment securities. During the years ended December 31, 2015 and 2014, loan originations exceeded principal collections by $18.7 million and $27.9 million, respectively. We received proceeds from sales of loans of $32.1 million and $20.6 million of one-to-four family real estate loans in 2015 and 2014, respectively. Cash received from calls, maturities and principal repayments of available-for-sale investment securities totaled $41.7 million and $37.0 million for 2015 and 2014, respectively. During 2015 and 2014, we also received proceeds of $1.6 million and $5.3 million, respectively, from sales of available-for-sale investment securities. We purchased $43.3 million and $26.7 million in available-for-sale investment securities during 2015 and 2014, respectively. During 2014, the Company also purchased $6.0 million of bank-owned life insurance for investment purposes and to offset some of the expenses of our existing employee benefit plans, as permitted by federal regulation. There were no purchases of bank-owned life insurance during 2015.

Deposit flows are generally affected by market interest rates, the products offered by local competitors, and other factors. The net increase in total deposits was $22.9 million and $7.8 million for 2015 and 2014, respectively.

Liquidity management is both a daily and long-term function of business management. If we require funds beyond our ability to generate them internally, borrowing agreements exist with the Federal Home Loan Bank of Chicago, which provides an additional source of funds. At December 31, 2015, we had $16.0 million in advances from the Federal Home Loan Bank of Chicago and an additional available borrowing limit of approximately $76.2 million. Additionally, we will sell investment securities under agreements to repurchase (commonly referred to as “repurchase agreements”) if we require additional liquidity. At December 31, 2015, our repurchase agreements totaled $19.7 million.

13 

First Clover Leaf Bank is required to maintain certain minimum capital requirements under OCC regulations. Failure by a banking organization to meet minimum capital requirements can result in certain mandatory and possible discretionary actions by regulators, which, if undertaken, could have a direct material effect on First Clover Leaf Bank’s financial statements. First Clover Leaf Bank was considered “well-capitalized” at December 31, 2015. See Note 14 to the Consolidated Financial Statements, and the section captioned “Supervision and Regulation” in Part I, Item 1. Business, of our Form 10-K for additional discussion of capital requirements.

At December 31, 2015, certificates of deposit scheduled to mature within one year totaled $60.8 million. Based on prior experience, management believes that a significant portion of such deposits will remain with First Clover Leaf Bank, although there can be no assurance that this will be the case. In the event a significant portion of our deposits are not retained, First Clover Leaf Bank will have to utilize other funding sources, such as Federal Home Loan Bank of Chicago advances, in order to maintain our level of assets. Alternatively, First Clover Leaf Bank would reduce the level of liquid assets, such as cash and cash equivalents. In addition, the cost of such deposits may be significantly higher if market interest rates are higher at the time of renewal.

Off-Balance Sheet Arrangements

In the ordinary course of business, First Clover Leaf Bank is a party to credit-related financial instruments with off-balance sheet risk to meet the financing needs of our customers. These financial instruments include commitments to extend credit. First Clover Leaf Bank follows the same credit policies in making commitments as it does for on-balance sheet instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The commitments for equity lines of credit may expire without being drawn upon. Therefore, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if it is deemed necessary by First Clover Leaf Bank, is based on management’s credit evaluation of the customer.

Unfunded commitments under construction lines of credit for residential and multi-family properties are commitments for possible future extensions of credit to existing customers. These lines of credit are uncollateralized and usually do not contain a specified maturity date and may not be drawn upon to the total extent to which First Clover Leaf Bank is committed.

At December 31, 2015 and 2014, First Clover Leaf Bank had $80.3 million and $58.8 million, respectively, of commitments to extend credit, and $1.8 million and $1.7 million, respectively, of standby letters of credit.

14 

Contractual Obligations. In the ordinary course of our operations, we enter into certain contractual obligations. Such obligations include agreements with respect to borrowed funds and deposit liabilities, agreements with respect to investments, and agreements with respect to securities sold under agreements to repurchase.

The following table summarizes our significant fixed and determinable contractual obligations and other funding needs by payment date at December 31, 2015. The payment amounts represent those amounts due to the recipient and do not include any unamortized premiums or discounts or other similar carrying amount adjustments.

	Payments Due by Period
Contractual Obligations	Less than One Year		More than One Year through Three Years		More than Three Years through Five Years		More than Five Years		Total
	(Dollars in thousands)
Federal Home Loan Bank advances	$	996	$	15,000	$	-	$	-	$	15,996
Subordinated debentures		-		-		-		4,000		4,000
Certificates of deposit		60,831		55,135		16,623		583		133,172
Securities sold under agreements to repurchase		19,733		-		-		-		19,733
Total	$	81,560	$	70,135	$	16,623	$	4,583	$	172,901

Recent Accounting Pronouncements

See Note 1 to the Consolidated Financial Statements.

Impact of Inflation and Changing Prices

The consolidated financial statements and related notes of First Clover Leaf have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). GAAP generally requires the measurement of financial position and operating results in terms of historical dollars without consideration for changes in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the increased cost of our operations. Unlike industrial companies, our assets and liabilities are primarily monetary in nature. As a result, changes in market interest rates have a greater impact on performance than the effects of inflation.

15 

Market for Common Stock

First Clover Leaf Financial Corp.’s common stock trades on the Nasdaq Capital Market under the trading symbol “FCLF.”

The information in the following table for 2015 and 2014 indicates the high and low closing prices for the common stock, based upon information provided by the Nasdaq Capital Market, and the cash dividend payment for each quarter is also presented. As of March 15, 2016, there were 7,005,883 shares of our common stock issued and outstanding held by approximately 590 holders of record.

We expect that, subject to regulatory requirements and our financial condition and results of operations, quarterly dividends will continue to be paid in the future. See Note 14 to our Consolidated Financial Statements for information on regulatory restrictions on the payment of dividends. In addition, the Company is subject to state law limitations on the payment of dividends. Maryland law generally limits dividends if (1) the corporation would not be able to pay its debts in the usual course of business after giving effect to the dividend, or (2) if the corporation’s total assets would be less than the corporation’s total liabilities plus the amount needed to satisfy the preferential rights upon dissolution of stockholders whose preferential rights on dissolution are superior to those receiving the distribution.

Year Ended December 31, 2015	High		Low		Dividend Declared Per Share
Fourth quarter	$	9.89	$	9.07	$	0.06
Third quarter		9.70		8.96		0.06
Second quarter		9.30		8.53		0.06
First quarter		9.10		8.60		0.06

Year Ended December 31, 2014	High		Low		Dividend Declared Per Share
Fourth quarter	$	9.21	$	8.66	$	0.06
Third quarter		9.83		9.01		0.06
Second quarter		10.53		9.26		0.06
First quarter		9.78		8.90		0.06

STOCKHOLDER INFORMATION

STOCK LISTING The Company's Common Stock trades on the Nasdaq Capital Market under the symbol "FCLF."	TRANSFER AGENT Computershare, Inc. PO Box 30170 College Station, TX 77842 If you have any questions concerning your stockholder account, please call our transfer agent, noted above, at (800) 368-5948. This is the number to call if you require a change of address or need records or information about lost certificates.
SPECIAL COUNSEL Barack Ferrazzano Kirschbaum & Nagelberg LLP 200 West Madison Street Chicago, Illinois 60606	INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Crowe Horwath LLP One Mid America Plaza PO Box 3697 Oak Brook, Illinois 60522
ANNUAL REPORT ON FORM 10-K A copy of the Company's Form 10-K for the year ended December 31, 2015, will be furnished without charge to stockholders as of the record date, upon written request to the Secretary, First Clover Leaf Financial Corp., PO Box 540, Edwardsville, Illinois 62025.

DIRECTORS

Gerard A. Schuetzenhofer Chairman of the Board; President, Coldwell Banker Brown Realtors/ Coldwell Banker Commercial Brown Realtors Mona Haberer President & Chief Executive Officer, Hortica Insurance & Employee Benefits P. David Kuhl President & Chief Executive Officer, First Clover Leaf Bank Joseph Stevens Owner, Market Basket Grocery & Garden Center Mary Westerhold Vice President & Chief Financial Officer, Madison Communications Company

Joseph J. Gugger Vice Chairman of the Board; Partner, Fastechnology LLC; Owner, Gugger Group, Inc. Kenneth P. Highlander Retired, President, Ready-Mix Services Inc. Gary D. Niebur President & Chief Executive Officer, Edwardsville YMCA Dennis M. Terry Director of Market Relations and Board Projects, First Clover Leaf Bank

OFFICERS

P. David Kuhl

President &

Chief Executive Officer

William D. Barlow

Executive Vice President &

Chief Lending Officer

Lisa R. Fowler

Executive Vice President &

Chief Credit Officer

Darlene F. McDonald

Executive Vice President &

Chief Financial Officer

FIRST CLOVER LEAF FINANCIAL CORP.

Edwardsville, Illinois

CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

FIRST CLOVER LEAF FINANCIAL CORP.

CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

CONTENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	1
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS	2
CONSOLIDATED STATEMENTS OF INCOME	3
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	4
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY	4
CONSOLIDATED STATEMENTS OF CASH FLOWS	5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	7

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

First Clover Leaf Financial Corp.

Edwardsville, Illinois

We have audited the accompanying consolidated balance sheets of First Clover Leaf Financial Corp. (the Company) as of December 31, 2015 and 2014, and the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of First Clover Leaf Financial Corp. as of December 31, 2015 and 2014, and the results of its operations and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

/s/Crowe Horwath LLP

Oak Brook, Illinois

March 10, 2016

1.

FIRST CLOVER LEAF FINANCIAL CORP.

CONSOLIDATED BALANCE SHEETS

December 31, 2015 and 2014

	2015		2014
ASSETS
Cash and due from banks	$	14,865,466	$	9,047,872
Interest-earning deposits		17,041,862		18,238,145
Federal funds sold		47,325,238		21,780,445
Total cash and cash equivalents		79,232,566		49,066,462
Interest-earning time deposits		1,685,000		2,021,970
Securities available for sale		103,756,614		104,225,692
Federal Home Loan Bank stock		1,747,763		2,887,763
Federal Reserve Bank stock		1,676,700		1,676,700
Loans, net of allowance for loan losses of $5,886,225 and $5,561,442 at 2015 and 2014, respectively		420,463,583		400,904,404
Loans held for sale		1,078,785		100,000
Property and equipment, net		9,871,440		10,380,310
Goodwill		11,385,323		11,385,323
Bank-owned life insurance		15,336,442		14,876,960
Core deposit intangible		138,000		196,000
Foreclosed assets		3,059,101		3,887,587
Mortgage servicing rights		1,109,720		961,823
Accrued interest receivable		1,620,309		1,762,310
Other assets		2,712,911		3,281,496
Total assets	$	654,874,257	$	607,614,800
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing	$	69,296,354	$	68,170,743
Interest-bearing		463,861,939		442,135,896
Total deposits		533,158,293		510,306,639
Federal Home Loan Bank advances		15,995,485		2,487,745
Securities sold under agreements to repurchase		19,732,766		11,848,266
Subordinated debentures		4,000,000		4,000,000
Accrued interest payable		227,947		174,480
Other liabilities		1,485,891		1,667,777
Total liabilities		574,600,382		530,484,907
Commitments and Contingent Liabilities (Note 15)
Stockholders' Equity
Preferred stock, $.10 par value, 10,000,000 shares authorized, no shares issued		-		-
Common stock, $.10 par value, 20,000,000 shares authorized, 7,005,883 and 7,007,283shares issued and outstanding at December 31, 2015 and December 31, 2014		700,588		700,728
Additional paid-in capital		55,806,256		55,818,936
Retained earnings		23,369,037		20,412,898
Accumulated other comprehensive income		397,994		197,331
Total stockholders' equity		80,273,875		77,129,893
Total liabilities and stockholders' equity	$	654,874,257	$	607,614,800

See notes to consolidated financial statements.

2.

FIRST CLOVER LEAF FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF INCOME

Years ended December 31, 2015 and 2014

	2015			2014
Interest and dividend income:
Interest and fees on loans	$	17,244,225		$	16,714,749
Securities:
Taxable interest income		1,081,056			1,232,399
Nontaxable interest income		1,142,291			1,136,630
Federal Reserve Bank dividends		100,602			37,726
Interest-earning deposits, federal funds sold, and other		141,305			196,224
Total  interest and dividend income		19,709,479			19,317,728
Interest expense:
Deposits		2,161,937			2,174,066
Federal Home Loan Bank advances		172,159			250,018
Securities sold under agreements to repurchase		3,312			5,437
Subordinated debentures		90,174			86,901
Total  interest expense		2,427,582			2,516,422
Net interest income		17,281,897			16,801,306
Provision (credit) for loan losses		(500,000	)		(250,000	)
Net interest income after provision (credit) for loan losses		17,781,897			17,051,306
Non-interest income:
Service fees on deposit accounts		500,841			454,903
Other service charges and fees		475,194			414,992
Loan servicing fees		299,435			281,979
Gain on sale of securities		10,821			109,712
Gain on sale of loans		893,342			630,779
Loss on sale of property and equipment		-			(80,545	)
Loss on sale of foreclosed assets		(14,684	)		(164,084	)
Other		507,610			579,195
		2,672,559			2,226,931
Non-interest expense:
Compensation and employee benefits		7,609,189			7,224,771
Occupancy expense		1,558,585			1,699,734
Data processing services		774,990			767,213
Director fees		197,233			183,300
Professional fees		544,164			587,907
FDIC insurance premiums		355,655			459,059
Foreclosed asset related expenses		441,284			506,885
Amortization of core deposit intangible		58,000			75,000
Amortization of mortgage servicing rights		82,929			106,970
Other		2,519,204			2,480,608
		14,141,233			14,091,447
Income before income taxes		6,313,223			5,186,790
Income tax expense		1,675,469			1,360,598
Net income	$	4,637,754		$	3,826,192
Basic and diluted earnings per share	$	0.66		$	0.55
Dividends per share	$	0.24		$	0.24

See notes to consolidated financial statements.

3.

FIRST CLOVER LEAF FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years ended December 31, 2015 and 2014

	2015			2014
Net income	$	4,637,754		$	3,826,192
Other comprehensive income:
Unrealized gains on securities available for sale arising during the period		350,050			3,109,425
Reclassification adjustment for realized gains included in income		(10,821	)		(109,712	)
Tax effect		(138,566	)		(1,109,894	)
Total other comprehensive income		200,663			1,889,819
Comprehensive income	$	4,838,417		$	5,716,011

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Years ended December 31, 2015 and 2014

										Accumulated
				Additional						Other
	Common			Paid-in			Retained			Comprehensive
	Stock			Capital			Earnings			Income (Loss)			Total
Balance, January 1, 2014	$	700,728		$	55,818,936		$	18,268,454		$	(1,692,488	)	$	73,095,630
Net income		-			-			3,826,192			-			3,826,192
Other comprehensive income		-			-			-			1,889,819			1,889,819
Dividends ($0.24 per share)		-			-			(1,681,748	)		-			(1,681,748	)
Balance, December 31, 2014		700,728			55,818,936			20,412,898			197,331			77,129,893
Net income		-			-			4,637,754			-			4,637,754
Other comprehensive income		-			-			-			200,663			200,663
Dividends ($0.24 per share)		-			-			(1,681,615	)		-			(1,681,615	)
Repurchase of 1,400 shares of common stock		(140	)		(12,680	)		-			-			(12,820	)
Balance, December 31, 2015	$	700,588		$	55,806,256		$	23,369,037		$	397,994		$	80,273,875

See notes to consolidated financial statements.

4.

FIRST CLOVER LEAF FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 2015 and 2014

	2015			2014
Cash flows from operating activities
Net income	$	4,637,754		$	3,826,192
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Deferred income taxes		(202,665	)		148,198
Amortization (accretion) of:
Deferred loan origination costs, net		(33,880	)		(47,784	)
Premiums and discounts on securities		782,936			953,830
Core deposit intangible		58,000			75,000
Mortgage servicing rights		82,929			106,970
Fair value adjustments		(62,869	)		(92,677	)
Credit for loan losses		(500,000	)		(250,000	)
Depreciation		581,985			597,526
Gain on sale of securities available for sale		(10,821	)		(109,712	)
Gain on sale of loans		(893,342	)		(630,779	)
Loss on sale of property and equipment		-			80,545
Loss on sale of foreclosed assets		14,684			164,084
Write-down on foreclosed assets		355,500			202,694
Earnings on bank-owned life insurance		(459,482	)		(379,065	)
Increase in mortgage servicing rights		(230,826	)		(150,546	)
Proceeds from sales of loans held for sale		32,065,679			20,638,117
Originations of loans held for sale		(32,326,632	)		(20,107,338	)
Change in assets and liabilities:
Accrued interest receivable and other assets		774,685			(474,625	)
Accrued interest payable		53,467			(25,284	)
Other liabilities		(181,886	)		204,595
Net cash provided by operating activities		4,505,216			4,729,941
Cash flows from investing activities
Purchase of interest-earning time deposits		(1,454,355	)		(10,477	)
Proceeds from maturities of interest-earning time deposits		1,791,325			-
Available for sale securities:
Purchases		(43,273,890	)		(26,749,263	)
Proceeds from calls, maturities, and principal repayments		41,719,661			37,021,352
Proceeds from sales		1,630,421			5,259,541
Redemption of FHLB stock		1,140,000			-
Purchase of Federal Reserve Bank stock		-			(1,676,700	)
Increase in loans		(18,719,080	)		(27,895,667	)
Purchase of property and equipment		(89,186	)		(1,456,558	)
Proceeds from the sale of property and equipment		-			255,304
Proceeds from the sale of foreclosed assets		374,273			1,227,868
Purchase of bank-owned life insurance		-			(6,000,000	)
Net cash used in investing activities		(16,880,831	)		(20,024,600	)

(Continued)

See notes to consolidated financial statements.

5.

FIRST CLOVER LEAF FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 2015 and 2014

	2015			2014
Cash flows from financing activities
Net increase in deposit accounts	$	22,851,654		$	7,766,947
Net increase (decrease) in securities sold under agreements to repurchase		7,884,500			(14,917,903	)
Proceeds from Federal Home Loan Bank advances		25,000,000			-
Repayments of Federal Home Loan Bank advances		(11,500,000	)		(11,500,000	)
Repurchase of common stock		(12,820	)		-
Cash dividends paid		(1,681,615	)		(1,681,748	)
Net cash provided by (used in) financing activities		42,541,719			(20,332,704	)
Net increase (decrease) in cash and cash equivalents		30,166,104			(35,627,363	)
Cash and cash equivalents:
Beginning		49,066,462			84,693,825
Ending	$	79,232,566		$	49,066,462
Supplemental schedule of noncash investing and financing activities
Assets acquired in settlement of loans	$	-		$	287,982
Loans made to finance sales of foreclosed assets		84,029			383,230
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest	$	2,366,375		$	2,533,966
Income taxes, net of refunds		1,342,500			1,535,000

See notes to consolidated financial statements.

6.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

First Clover Leaf Financial Corp. (the “Company” or “First Clover Leaf”) is a single-bank holding company, whose wholly-owned bank subsidiary, First Clover Leaf Bank (the “Bank”), provides deposits and loans to individual and corporate customers in Madison and St. Clair Counties in Illinois. In addition, the Bank recently opened a loan production office in Clayton, Missouri. The Bank is subject to competition from other financial institutions and nonfinancial institutions providing financial products and services. Additionally, the Company and the Bank are subject to the regulations of certain regulatory agencies and undergo periodic examinations by those regulatory agencies. In August 2014, the Bank converted from a federal savings and loan association to a nationally chartered bank. First Clover Leaf’s common stock is traded on the NASDAQ Capital Market under the symbol “FCLF.”

Principles of Consolidation: The consolidated financial statements include the accounts of the Company and the Bank and have been prepared in conformity with U.S. generally accepted accounting principles and conform to preponderant practices in the banking industry. The financial statements also include a wholly-owned entity on a deconsolidated basis, First Clover Leaf Statutory Trust I. All material intercompany accounts and transactions have been eliminated in the consolidation.

Use of Estimates: In preparing the accompanying consolidated financial statements, the Company’s management is required to make estimates and assumptions which affect the reported amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash Equivalents: For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks, cash items in process of clearing, and federal funds sold. Generally, federal funds are sold for one-day periods. Cash flows from loans, deposits, and securities sold under agreements to repurchase are treated as net increases or decreases in the statements of cash flows.

The Company is required to maintain reserve balances in cash or on deposit with the Federal Reserve Bank. Those reserve balances were approximately $10,438,000 and $6,575,000, respectively, at December 31, 2015 and 2014.

The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents.

Interest-Earning Time Deposits: Interest-earning time deposits in banks are carried at cost. At December 31, 2015 and 2014, interest-earning time deposits amounted to $1,685,000 and $2,021,970, respectively.

Securities: Securities classified as available for sale are those debt securities that the Company intends to hold for an indefinite period of time, but not necessarily to maturity. Any decision to sell a security classified as available for sale would be based on various factors, including significant movements in interest rates, changes in the maturity mix of the Company’s assets and liabilities, liquidity needs, regulatory capital considerations and other similar factors.

Securities available for sale are carried at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income, net of tax. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Gains and losses on the sale of securities are calculated on the trade date and are determined using the specific identification method.

(Continued)

7.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The Company evaluates its debt securities for other-than-temporary impairment (“OTTI”) on an ongoing basis for those securities with a fair value below amortized cost. The review takes into consideration current market conditions, issuer rating changes and trends, the credit worthiness of the obligator of the security, current analysts’ evaluations, failure of the issuer to make scheduled interest or principal payments, the Company’s lack of intent to sell the security or whether it is more-likely-than-not that the Company will be required to sell the debt security before its anticipated recovery, as well as other qualitative factors. The term OTTI is not intended to indicate that the decline is permanent, but indicates that the prospects for a near-term recovery of value is not necessarily favorable, or that there is a lack of evidence to support a realizable value equal to or greater than the carrying value of the investment. Any portion of such a decline in value associated with credit loss is recognized in earnings as an impairment loss with the remaining noncredit-related component being recognized in other comprehensive income. A credit loss is determined by assessing whether the amortized cost basis of the security will be recovered, by comparing the present value of cash flows expected to be collected from the security, computed using original yield as the discount rate, to the amortized cost basis of the security. The shortfall of the present value of the cash flows expected to be collected in relation to the amortized cost basis is considered to be the "credit loss."

Federal Home Loan Bank Stock: The Company held Federal Home Loan Bank of Chicago (“FHLB”) stock of $1,747,763 and $2,887,763 for the years ended December 31, 2015 and 2014, respectively. The Company is required to maintain these equity securities as a member of the FHLB and in amounts as required by this institution. These equity securities are carried at cost, classified as "restricted" in that they can only be redeemed by the respective institution at par, and periodically evaluated for impairment based on ultimate recovery of par value. Therefore, they are less liquid than other tradable equity securities and their fair value is not readily available.

Federal Reserve Bank Stock: Federal Reserve Bank stock totaled $1,676,700 at December 31, 2015 and 2014. The Company is required to maintain these equity securities as a member of the Federal Reserve Bank and in amounts as required by this institution. These equity securities are carried at cost, classified as "restricted" in that they can only be sold back to the respective institution or another member institution at par, and periodically evaluated for impairment based on ultimate recovery of par value. Therefore, they are less liquid than other tradable securities and their fair value is not readily available.

Loans: The Company offers real estate, commercial and consumer loans to customers. A substantial portion of the loan portfolio is represented by real estate loans throughout Edwardsville, Illinois and the surrounding area. The ability of the Company’s debtors to comply with repayment terms is dependent upon the real estate and general economic conditions in this area.

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding unpaid principal balances adjusted for charge-offs, for the allowance for loan losses, and for any deferred costs (fees) on originated loans.

Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs (fees), are deferred and recognized as an adjustment of the related loan yield using the interest method.

The accrual of interest on real estate, commercial business, and consumer loans is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Consumer loans are typically charged off no later than 180 days past due. Past due status is based on contractual terms of the loan. In all cases, loans are placed on non-accrual or charged-off at an earlier date if collection of principal or interest is considered doubtful.

(Continued)

8.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

All interest accrued but not collected for loans that are placed on non-accrual or charged-off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Loans held for sale: Loans originated and intended for sale are carried at the lower of cost or estimated fair value which is based on market pricing. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income.

Allowance for Loan Losses: The allowance for loan losses is a valuation account for probable incurred credit losses. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required using our historical loan loss experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged off.

The allowance for loan losses is evaluated on at least a quarterly basis by management. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. Management considers the allowance for loan losses at December 31, 2015 and 2014 to be at an adequate level. However, changes may be necessary if further economic and other conditions differ substantially from the current environment. To the extent actual outcomes differ from the estimates, additional provision for credit losses may be required that would reduce future earnings.

Loans identified as losses by management, internal loan review and/or bank examiners are charged-off. Furthermore, consumer loan accounts are charged-off automatically based on regulatory requirements related to delinquency.

The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired. A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings. All troubled debt restructurings are classified as impaired.

Factors considered by management in determining impairment include payment status, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

(Continued)

9.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

All loans classified as substandard and loans over $250,000 categorized as special mention are evaluated for impairment. If a loan is impaired, we further test to see if it is considered collateral dependent. If the loan is collateral dependent, a portion of the allowance is allocated so that the loan is reported at the fair value of the collateral. If the loan is not collateral dependent, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate.

Troubled debt restructurings are separately identified for impairment disclosures and are measured at the present value of estimated future cash flows using the loan’s effective rate at inception. If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, the Company determines the amount of reserve in accordance with the accounting policy for the allowance for loan losses.

The general component of the allowance covers non-impaired loans. Once the non-impaired loans are separated into the specified loan pools, we analyze the pools using two criteria: historical loss data, and qualitative adjustments. Historical data is based on actual loss history specific to each portfolio segment. We utilize five years of data summarized by quarter. These data are analyzed and used to arrive at a base for our reserve percentage. The qualitative adjustments are determined based on various publications, market research, economic reports and management’s expertise and knowledge of the immediate lending market and include the following:

· Changes in sector’s portfolio health

· Changes in non-impaired classified assets

· National and/or local economic conditions

· Changes in financial industry/regulation

· Changes in value of underlying collateral

· Changes in segment concentrations

· Changes in volume/nature of loan portfolio

· Changes in past dues, non-accruals/asset quality

· Changes in lending policies/underwriting practices

· Changes in loan review/oversight

· Changes in staff depth/experience

· Changes in competition/legal

The consideration of all of these factors results in a loss allocation percentage for each portfolio segment. The following portfolio segments have been identified:

Real Estate Loans:

One-to-four family (owner occupied and non-owner occupied)

Multi-family

Commercial (owner occupied, non-owner occupied, farmland, and raw land)

Construction and land

Commercial

Commercial business

Consumer:

Home equity

Automobile and other

(Continued)

10.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The Company has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and presents these policies to the board of directors at least annually. A reporting system supplements the review process by providing management with reports related to loan production, loan quality, loan delinquencies and non-performing and potential problem loans.

One-to-four family real estate loans are predominately collateralized by properties located in our primary market area. Due to high customer demand in the continuing low interest rate environment, virtually all of these loans have fixed rates of interest. We generally sell most of the conforming, fixed-rate loans that we originate, but we generally retain the servicing rights on these loans. We may generally lend up to 80% of the property’s appraised value, or up to 90% of the property’s appraised value if the borrower obtains private mortgage insurance. We require title insurance on all of our one-to-four family real estate loans, and we also require that fire and extended coverage casualty insurance be maintained in an amount equal to at least the lesser of the loan balance or the replacement cost of the improvements on the property. We also require a property appraisal for all one-to-four family loans that are underwritten to comply with secondary market standards. Appraisals are conducted by independent or in-house licensed appraisers from a list approved by our board of directors.

Multi-family real estate loans are generally secured by apartment buildings and rental properties with five or more units. The majority of our multi-family real estate loans are secured by properties located within our market area. Multi-family real estate loans generally are offered with interest rates that adjust after one, three or five years. The majority of these loans either float with the prime rate or they are fixed balloon loans. When originating multi-family real estate loans we evaluate the qualifications and financial condition of the borrower, profitability and expertise, as well as the value and condition of the mortgaged property securing the loans. We also consider the financial resources of the borrower, the borrower’s experience in owning or managing a similar property, and the borrower’s payment history with us and other financial institutions. Multi-family real estate loans are generally originated in amounts up to 85% of the lower of the sale price or the appraised value of the mortgaged property securing the loans. All multi-family real estate loans over $250,000 are appraised by independent or in-house licensed appraisers approved by the board of directors.

Commercial real estate loans are secured predominately by office buildings, and to a lesser extent warehouse properties and more specialized properties such as churches and schools. We originate commercial real estate loans generally with a typical term of five years with balloon payments. These loans generally amortize over 15 to 25 years. We offer both adjustable and fixed rates of interest on commercial real estate loans, with the interest rate for adjustable rate loans tied to the prime interest rate. We may generally lend up to 85% of the properties appraised value. We require independent or in-house licensed appraisals for all commercial real estate loans in excess of $250,000. Creditworthiness is determined by considering the character, experience, management and financial strength of the borrower and the ability of the property to generate adequate funds to cover both operating expenses and debt service. We require title insurance on all of our commercial real estate loans, and we also require that fire and extended coverage casualty insurance be maintained.

(Continued)

11.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Construction lending generally involves a greater degree of risk than our other real estate lending. The repayment of the construction loan is, to a great degree, dependent upon the successful and timely completion of the project. The construction phase of a loan for a one-to-four family, owner-occupied property generally lasts up to six months with loan-to- value ratios of up to 80%, (or up to 90% if the borrower obtains private mortgage insurance) of the appraised estimated value of the completed property or cost, whichever is less. The duration and loan to value ratios for non one-to-four family, owner-occupied properties vary depending on the property type. Our procedures for underwriting construction loans include an assessment of the borrower’s credit history and the borrower’s ability to meet other existing debt obligations, as well as payment of principal and interest on the proposed loan. We use the same underwriting standards and procedures for construction/permanent lending as we do for one-to-four family residential real estate lending.

Commercial business loans vary in type and may be secured or unsecured for the purpose of financing equipment acquisition, expansion, working capital and other general business purposes. The terms of these loans are generally for less than five years. The loans are either fixed-rate or carry variable interest rates indexed to the prime rate. Commercial credit decisions are based upon a complete credit review of the borrower. A determination is made as to the borrower’s ability to repay in accordance with the proposed terms as well as an overall assessment of the credit risks involved. Personal guarantees of borrowers are generally required. In evaluating a commercial business loan, we consider debt service capabilities, actual and projected cash flows, and the borrower’s inherent industry risks. Credit agency reports of an individual borrower’s or guarantor’s credit history as well as bank checks and trade investigations supplement the analysis of the borrower’s creditworthiness.

Although we originate fixed-rate and adjustable-rate loans, our ability to generate each type of loan depends upon borrower demand, market interest rates, borrower preference for fixed-versus adjustable-rate loans, and the interest rates offered on each type of loan by competing lenders in our market area. Loan originations are derived from a number of sources, including existing or prior customers and walk-in customers.

Consumer loans consist primarily of home equity lines of credit, automobile loans, loans secured by deposits and securities, and unsecured personal loans. Home equity lines of credit account for the largest segment of our consumer loans. They are generally made for owner-occupied homes and are secured by first or second mortgages on the residential properties. We generally offer home equity lines of credit with a maximum loan to appraised value ratio of 90%, including senior liens on the subject property. Our procedures for underwriting consumer loans include an assessment of the borrower’s credit history and ability to meet other existing debt obligations, as well as payments of principal and interest on the proposed loans. Although the borrower’s creditworthiness is a primary consideration, the underwriting process also includes a comparison of the value of the collateral security, if any, to the proposed loan.

(Continued)

12.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Property and Equipment: Land is stated at cost. Property and equipment are stated at cost less accumulated depreciation. Depreciation is determined under the straight-line method over the balance of estimated useful lives of the assets, which are 15-50 years for buildings and improvements and 3-10 years for furniture and equipment.

Goodwill: Goodwill resulting from business combinations is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually or more frequently if events and circumstances exist that indicate that a goodwill impairment test should be performed. The Company has selected September 30 as the date to perform the annual impairment test. Our annual impairment assessment for 2015 and 2014 resulted in no goodwill impairment. Goodwill is the only intangible asset with an indefinite life on our balance sheet.

Bank-Owned Life Insurance: The Bank has purchased life insurance policies on certain key employees. Bank-owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

Core Deposit Intangible: Core deposit intangible represents the value of acquired customer relationships. The balance created from our 2008 acquisition of Partners Financial Holdings, Inc. is being amortized over 9.7 years using the double declining balance method.

Foreclosed Assets: Real estate acquired through foreclosure or deed in lieu of foreclosure represents specific assets to which the Bank has acquired legal title in satisfaction of indebtedness. Such real estate is initially recorded at the property’s fair value at the date of foreclosure less estimated selling costs. Initial valuation adjustments, if any, are charged against the allowance for losses on loans. Property is evaluated regularly to ensure the recorded amount is supported by its current fair value. Subsequent declines in estimated fair value are charged to expense when incurred. Revenues and expenses related to holding and operating these properties are recognized or expensed as incurred.

Mortgage Servicing Rights: Servicing assets are recognized as separate assets when rights are acquired through purchase or through sale of financial assets. For sales of one-to-four family loans, a portion of the cost of originating the loan is allocated to the servicing right based on fair value. Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, the custodial earnings rate, an inflation rate, ancillary income, prepayment speeds and default rates and losses. Servicing assets are evaluated for impairment based upon the fair value of the rights as compared to amortized cost. To determine impairment the Company applies a pooling methodology to the servicing valuation, in which loans with similar characteristics are "pooled" together for valuation purposes. Once pooled, each grouping of loans is evaluated on a discounted earnings basis to determine the present value of future earnings that a purchaser could expect to realize from the portfolio. Earnings are projected from a variety of sources including loan servicing fees, interest earned on float, net interest earned on escrows, miscellaneous income and costs to service the loans. If the Company later determines that all or a portion of the impairment no longer exists for a particular pool, a reduction of the allowance may be recorded as an increase to income. Capitalized servicing rights are amortized in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets.

(Continued)

13.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes: Deferred income tax assets and liabilities are computed annually for differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to amounts which are more likely than not realizable. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Income tax expense (benefit) is the tax payable (refundable) for the period plus or minus the change during the period in deferred tax assets and liabilities.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

The Company recognizes interest and/or penalties related to income tax matters in income tax expense.

Earnings Per Common Share: Basic earnings per share represents net income available to common stockholders divided by the weighted average number of common shares outstanding. Diluted earnings per share reflect additional common shares that would have been outstanding if dilutive potential common shares had been issued. No dilutive potential common shares existed at December 31, 2015 and 2014.

	Year Ended
	December 31,
	2015		2014
Net income	$	4,637,754	$	3,826,192
Basic weighted average shares outstanding		7,006,715		7,007,283
Dilutive potential common shares		-		-
Diluted weighted average shares outstanding		7,006,715		7,007,283
Basic and diluted earnings per share	$	0.66	$	0.55

Fair Value Measurements: Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Notes 16 and 17. Fair value estimates involve uncertainties and matters of significant judgment. Changes in assumptions or in market conditions could significantly affect the estimates.

Comprehensive Income: Comprehensive income consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses on securities available for sale which are also recognized as separate components of equity.

(Continued)

14.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there are any such matters at this time that will have a material effect on the financial statements.

Operating Segments: While management monitors revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Company-wide basis. Operating segments are aggregated into one as operating results for all segments are similar. Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment.

Recent Accounting Pronouncements: The following provides a description of recently adopted or newly issued but not yet effective accounting standards that could have a material effect on our financial statements:

In May 2014, the Financial Accounting Standard Board (the “FASB”) issued an update creating FASB Topic 606, Revenue from Contracts with Customers.  The guidance in this update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts).  The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.  The guidance provides steps to follow to achieve the core principle.  An entity should disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.  Qualitative and quantitative information is required about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract.  The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2017.  We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements.

In June 2014, the FASB amended existing guidance related to repurchase-to-maturity transactions, repurchase financings, and disclosures (ASU 2014-11, Transfers and Servicing (Topic 860) - Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures). These amendments align the accounting for repurchase-to-maturity transactions and repurchase agreements executed as a repurchase financing with the accounting for other typical repurchase agreements. Pursuant to the revised guidance, these transactions are accounted for as secured borrowings. The guidance eliminates sale accounting for repurchase-to-maturity transactions and supersedes the guidance under which a transfer of a financial asset and a contemporaneous repurchase financing could be accounted for on a combined basis as a forward agreement, which result in outcomes referred to as off-balance-sheet accounting. These amendments require a new disclosure for transactions economically similar to repurchase agreements in which the transferor retains substantially all of the exposure to the economic return on the transferred financial assets throughout the term of the transaction. These amendments also require expanded disclosures about the nature of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings. The accounting changes in this update are effective for the first interim or annual period beginning after December 15, 2014. In addition, for public companies, the disclosure for certain transactions accounted for as a sale is effective for the first interim or annual period beginning on or after December 15, 2014, and the disclosure for transactions accounted for as secured borrowings is required for annual periods beginning after December 15, 2014, and interim

(Continued)

15.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

periods beginning after March 15, 2015. The adoption of this standard did not have a material effect on the Company’s operating results or financial condition.

In January 2016, the FASB issued an update (ASU No. 2016-01, Financial Instruments - Recognition and Measurement of Financial Assets and Liabilities). The new guidance is intended to improve the recognition and measurement of financial instruments by requiring: equity investments (other than equity method or consolidation) to be measured at fair value with changes in fair value recognized in net income; public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; separate presentation of financial assets and financial liabilities by measurement category and form of financial assets (i.e. securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are not public business entities; eliminating the requirement for non-public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is to be required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and requiring a reporting organization to present separately in other comprehensiveincome the portion of the total change in fair value of a liability resulting from the change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with thefair value option for financial instruments. The new guidance is effective for public business entities for fiscal years beginningafter December 15, 2017. We are currently evaluating the impact of adopting the new guidance on the consolidated financialstatements.

Reclassifications: Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior year net income or stockholders’ equity.

(Continued)

16.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 2 – SECURITIES AVAILABLE FOR SALE

The amortized cost and fair values of securities with gross unrealized gains and losses are summarized as follows:

	December 31, 2015
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		(Losses)			Value
U.S. government agency obligations	$	29,183,789	$	26,006	$	(161,693	)	$	29,048,102
State and municipal securities		44,746,083		1,156,547		(168,391	)		45,734,239
Other securities		3,501		-		-			3,501
Mortgage-backed: residential		29,170,791		60,300		(260,319	)		28,970,772
	$	103,104,164	$	1,242,853	$	(590,403	)	$	103,756,614

	December 31, 2014
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		(Losses)			Value
U.S. government agency obligations	$	26,280,359	$	31,628	$	(442,381	)	$	25,869,606
State and municipal securities		44,828,579		1,025,719		(280,690	)		45,573,608
Other securities		3,501		-		-			3,501
Mortgage-backed: residential		32,800,032		176,321		(197,376	)		32,778,977
	$	103,912,471	$	1,233,668	$	(920,447	)	$	104,225,692

(Continued)

17.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 2 – SECURITIES AVAILABLE FOR SALE (Continued)

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 December 31, 2015 and 2014, are summarized as follows:

	December 31, 2015
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
U.S. government agency obligations	$	15,928,702	$	(82,008	)	$	5,934,944	$	(79,685	)	$	21,863,646	$	(161,693	)
State and municipal securities		7,666,691		(66,224	)		4,927,928		(102,167	)		12,594,619		(168,391	)
Mortgage-backed: residential		18,251,546		(183,188	)		4,227,473		(77,131	)		22,479,019		(260,319	)
	$	41,846,939	$	(331,420	)	$	15,090,345	$	(258,983	)	$	56,937,284	$	(590,403	)

	December 31, 2014
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
U.S. government agency obligations	$	6,477,461	$	(26,717	)	$	12,615,391	$	(415,664	)	$	19,092,852	$	(442,381	)
State and municipal securities		7,102,666		(43,614	)		9,369,188		(237,076	)		16,471,854		(280,690	)
Mortgage-backed: residential		1,474,590		(28,841	)		15,744,126		(168,535	)		17,218,716		(197,376	)
	$	15,054,717	$	(99,172	)	$	37,728,705	$	(821,275	)	$	52,783,422	$	(920,447	)

Management evaluates the investment portfolio on at least a quarterly basis to determine if investments have suffered an other-than-temporary decline in value. In addition, management monitors market trends, investment grades, bond defaults and other circumstances to identify trends and circumstances that might impact the carrying value of securities.

At December 31, 2015, the Company had 67 securities in an unrealized loss position which included: 15 agency securities, 27 state and municipal securities, and 25 mortgage-backed securities. This was a decrease from 72 securities at December 31, 2014. The securities in an unrealized loss position at December 31, 2015 had an aggregate valuation adjustment of 1.02% from the Company’s amortized cost basis of these securities. The unrealized losses resulted from changes in market interest rates and liquidity, not from changes in the probability of contractual cash flows. While 20 of our securities have been in an unrealized loss position for more than 12 months and were at a 1.68% unrealized loss position of the Company’s amortized cost basis on these securities at December 31, 2015, which we believe is interest rate driven, there have been no defaults to date, and the securities remain above investment grade. The Company does not intend to sell the securities, and it is not more-likely-than-not that the Company will be required to sell the securities prior to recovery of the amortized cost. Full collection of the amounts due according to the contractual terms of the securities is expected; therefore, the Company does not consider these investments to be other-than-temporarily impaired at December 31, 2015.

(Continued)

18.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 2 – SECURITIES AVAILABLE FOR SALE (Continued)

The amortized cost and fair value at December 31, 2015, by contractual maturity, are shown below. Maturities may differ from contractual maturities in mortgage-backed securities because the mortgages underlying the securities may be called or repaid without any penalties. Other securities have no stated maturity. Therefore, stated maturities are not disclosed for these categories.

	Amortized		Fair
	Cost		Value
Due in one year or less	$	6,109,210	$	6,113,631
Due after one year through five years		24,981,003		24,977,510
Due after five years through ten years		31,423,272		32,025,396
Due after ten years		11,416,387		11,665,804
Other securities - non-maturing		3,501		3,501
Mortgage-backed: residential		29,170,791		28,970,772
	$	103,104,164	$	103,756,614

Securities with a carrying amount of approximately $66,882,000 and $66,600,000 were pledged to secure deposits as required or permitted by law at December 31, 2015 and 2014, respectively.

At year-end 2015 and 2014, there were no holdings of securities of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10% of stockholders’ equity. The Company received proceeds of $1,630,421 from the sale of securities during 2015 resulting in gross realized gains of $30,860 and gross realized losses of $20,039. The Company received proceeds of $5,259,541 from the sale of securities during 2014 resulting in gross realized gains of $131,586 and gross realized losses of $21,874. The tax related to these net realized gains and losses was $4,220 and $40,593 for 2015 and 2014, respectively.

(Continued)

19.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 3 - LOANS

The components of loans are as follows:

	At December 31,
	2015			2014
Real estate loans:
One-to-four family	$	110,792,710		$	117,591,822
Multi-family		41,182,067			41,391,862
Commercial		153,634,426			129,415,314
Construction and land		13,588,626			28,590,745
		319,197,829			316,989,743
Commercial business		89,743,511			73,984,867
Consumer:
Home equity		13,656,008			13,523,985
Automobile and other		3,523,696			1,772,431
		17,179,704			15,296,416
Total gross loans		426,121,044			406,271,026
Deferred loan origination costs, net		228,764			194,820
Allowance for loan losses		(5,886,225	)		(5,561,442	)
Loans, net	$	420,463,583		$	400,904,404

On occasion, the Company originates loans secured by single-family dwellings with loan to value ratios exceeding 90%. As of December 31, 2015 and December 31, 2014, these loans represented 2.07% and 2.17%, respectively, of our combined one-to-four family and home equity portfolios. The Company does not consider the level of such loans to be a significant concentration of credit as of December 31, 2015 or December 31, 2014.

The recorded investment in loans does not include accrued interest and loan origination fees due to immateriality. The allowance for loan losses does not include a component for undisbursed loan commitments; rather, this amount is included in other liabilities.

(Continued)

20.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 3 - LOANS (Continued)

The following tables present our past-due loans, segregated by class:

December 31, 2015
	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Past Due Loans		Current Loans		Total		Accruing Loans 90 or More Days Past Due
Real estate loans:
One-to-four family	$	331,479	$	259,240	$	33,839	$	624,558	$	110,168,152	$	110,792,710	$	-
Multi-family		-		-		-		-		41,182,067		41,182,067		-
Commercial		-		-		111,706		111,706		153,522,720		153,634,426		-
Construction and land		-		-		-		-		13,588,626		13,588,626		-
		331,479		259,240		145,545		736,264		318,461,565		319,197,829		-
Commercial business		-		-		87,254		87,254		89,656,257		89,743,511		-
Consumer:
Home equity		57,625		-		89,407		147,032		13,508,976		13,656,008		-
Automobile and other		500		-		-		500		3,523,196		3,523,696		-
		58,125		-		89,407		147,532		17,032,172		17,179,704		-
Total	$	389,604	$	259,240	$	322,206	$	971,050	$	425,149,994	$	426,121,044	$	-

December 31, 2014
	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Past Due Loans		Current Loans		Total		Accruing Loans 90 or More Days Past Due
Real estate loans:
One-to-four family	$	843,185	$	166,965	$	408,228	$	1,418,378	$	116,173,444	$	117,591,822	$	-
Multi-family		-		-		-		-		41,391,862		41,391,862		-
Commercial		100,220		-		29,810		130,030		129,285,284		129,415,314		-
Construction and land		-		-		-		-		28,590,745		28,590,745		-
		943,405		166,965		438,038		1,548,408		315,441,335		316,989,743		-
Commercial business		-		25,095		-		25,095		73,959,772		73,984,867		-
Consumer:
Home equity		41,930		-		48,088		90,018		13,433,967		13,523,985		-
Automobile and other		-		-		-		-		1,772,431		1,772,431		-
		41,930		-		48,088		90,018		15,206,398		15,296,416		-
Total	$	985,335	$	192,060	$	486,126	$	1,663,521	$	404,607,505	$	406,271,026	$	-

(Continued)

21.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 3 - LOANS (Continued)

All loans are reviewed on a regular basis and are placed on non-accrual status when, in the opinion of management, there is reasonable probability of loss of principal or collection of additional interest is deemed insufficient to warrant further accrual. Generally, we place all loans 90 days or more past due on non-accrual status. However, exceptions may occur when a loan is in process of renewal, but it has not yet been completed. In addition, we may place any loan on non-accrual status if any part of it is classified as loss or if any part has been charged-off. When a loan is placed on non-accrual status, total interest accrued and unpaid to date is reversed. Subsequent payments are either applied to the outstanding principal balance or recorded as interest income, depending on the assessment of the ultimate collectability of the loan.

Year-end non-accrual loans, segregated by class, are as follows:

	At December 31,
	2015		2014
Real estate loans:
One-to-four family	$	601,833	$	589,170
Multi-family		995,659		1,340,779
Commercial		1,245,023		1,242,009
Construction and land		-		1,431,619
		2,842,515		4,603,577
Commercial business		263,233		25,095
Consumer:
Home equity		124,627		48,088
Automobile and other		8,558		-
		133,185		48,088
Total non-accrual loans	$	3,238,933	$	4,676,760

(Continued)

22.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 3 - LOANS (Continued)

The following tables present the activity in the allowance for loan losses for the years ended December 31, 2015 and 2014. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

Year ended December 31, 2015
	Beginning Balance		Charge-offs			Recoveries		Provision			Ending Balance
Real estate loans:
One-to-four family	$	1,119,762	$	(25,258	)	$	21,576	$	23,650		$	1,139,730
Multi-family		436,833		-			11,753		25,782			474,368
Commercial		1,650,290		(79,248	)		11,923		401,123			1,984,088
Construction and land		1,194,917		-			811,350		(1,508,275	)		497,992
		4,401,802		(104,506	)		856,602		(1,057,720	)		4,096,178
Commercial business		951,215		-			73,761		409,711			1,434,687
Consumer
Home equity		198,150		-			-		81,520			279,670
Automobile and other		10,275		(1,900	)		826		66,489			75,690
		208,425		(1,900	)		826		148,009			355,360
Total	$	5,561,442	$	(106,406	)	$	931,189	$	(500,000	)	$	5,886,225

Year ended December 31, 2014
	Beginning Balance		Charge-offs			Recoveries		Provision			Ending Balance
Real estate loans:
One-to-four family	$	1,424,663	$	(263,258	)	$	466,287	$	(507,930	)	$	1,119,762
Multi-family		661,358		-			-		(224,525	)		436,833
Commercial		1,454,455		(1,876	)		-		197,711			1,650,290
Construction and land		668,085		-			230,000		296,832			1,194,917
		4,208,561		(265,134	)		696,287		(237,912	)		4,401,802
Commercial business		1,219,080		(190,255	)		13,048		(90,658	)		951,215
Consumer
Home equity		116,478		(43,519	)		9,402		115,789			198,150
Automobile and other		46,549		-			945		(37,219	)		10,275
		163,027		(43,519	)		10,347		78,570			208,425
Total	$	5,590,668	$	(498,908	)	$	719,682	$	(250,000	)	$	5,561,442

(Continued)

23.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 3 - LOANS (Continued)

The following tables separate the allocation of the allowance for loan losses and the loan balances between loans evaluated both individually and collectively as of December 31, 2015 and 2014:

December 31, 2015
	Period-end allowance allocated to loans:						Loans evaluated for impairment:
	Individually evaluated for impairment		Collectively evaluated for impairment		Ending Balance		Individually		Collectively		Ending Balance
Real estate loans:
One-to-four family	$	116,724	$	1,023,006	$	1,139,730	$	905,974	$	109,886,736	$	110,792,710
Multi-family		-		474,368		474,368		995,659		40,186,408		41,182,067
Commercial		183,966		1,800,122		1,984,088		2,735,652		150,898,774		153,634,426
Construction and land		-		497,992		497,992		186,888		13,401,738		13,588,626
		300,690		3,795,488		4,096,178		4,824,173		314,373,656		319,197,829
Commercial business		259,787		1,174,900		1,434,687		586,103		89,157,408		89,743,511
Consumer:
Home equity		49,782		229,888		279,670		141,649		13,514,359		13,656,008
Automobile and other		-		75,690		75,690		8,558		3,515,138		3,523,696
		49,782		305,578		355,360		150,207		17,029,497		17,179,704
Total	$	610,259	$	5,275,966	$	5,886,225	$	5,560,483	$	420,560,561	$	426,121,044

December 31, 2014
	Period-end allowance allocated to loans:						Loans evaluated for impairment:
	Individually evaluated for impairment		Collectively evaluated for impairment		Ending Balance		Individually		Collectively		Ending Balance
Real estate loans:
One-to-four family	$	91,688	$	1,028,074	$	1,119,762	$	1,266,717	$	116,325,105	$	117,591,822
Multi-family		-		436,833		436,833		1,340,779		40,051,083		41,391,862
Commercial		155,863		1,494,427		1,650,290		2,267,362		127,147,952		129,415,314
Construction and land		-		1,194,917		1,194,917		1,639,030		26,951,715		28,590,745
		247,551		4,154,251		4,401,802		6,513,888		310,475,855		316,989,743
Commercial business		115,446		835,769		951,215		140,541		73,844,326		73,984,867
Consumer:
Home equity		9,902		188,248		198,150		65,452		13,458,533		13,523,985
Automobile and other		-		10,275		10,275		-		1,772,431		1,772,431
		9,902		198,523		208,425		65,452		15,230,964		15,296,416
Total	$	372,899	$	5,188,543	$	5,561,442	$	6,719,881	$	399,551,145	$	406,271,026

(Continued)

24.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 3 - LOANS (Continued)

Credit Quality Indicators: As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt and comply with various terms of their loan agreements. The Company considers current financial information, historical payment experience, credit documentation, public information and current economic trends. Generally, all sizeable credits receive a financial review no less than annually to monitor and adjust, if necessary, the credit’s risk profile. Credits classified as watch generally receive a review more frequently than annually. The risk category of homogeneous loans such as consumer loans and smaller balance loans is evaluated when the loan becomes delinquent. For special mention, substandard, and doubtful credit classifications, the frequency of review is increased to no less than quarterly in order to determine potential impact on credit loss estimates.

The Company categorizes loans into the following risk categories based on relevant information about the ability of borrowers to service their debt:

Pass - A pass asset is well protected by the current worth and paying capacity of the obligor (or guarantors, if any) or by the fair value, less cost to acquire and sell, of any underlying collateral in a timely manner. Pass assets also include certain assets considered watch, which are still protected by the worth and paying capacity of the borrower but deserve closer attention and a higher level of credit monitoring.

Special Mention - A special mention asset has potential weaknesses that deserve management’s close attention. The asset may also be subject to a weak or speculative market or to economic conditions, which may, in the future adversely affect the obligor. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Bank’s credit position at some future date. Special mention assets are not adversely classified and do not expose the Bank to sufficient risk to warrant adverse classification.

Substandard - A substandard asset is an asset with a well-defined weakness that jeopardizes repayment, in whole or in part, of the debt. These credits are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged. These assets are characterized by the distinct possibility that the institution will sustain some loss of principal and/or interest if the deficiencies are not corrected. It is not necessary for a loan to have an identifiable loss potential in order to receive this rating.

Doubtful - An asset that has all the weaknesses inherent in the substandard classification, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable. The possibility of loss is extremely likely, but it is not identified at this point due to pending factors.

Loss - An asset, or portion thereof, classified as loss is considered uncollectible and of such little value that its continuance on the Company’s books as an asset is not warranted. This classification does not necessarily mean that an asset has no recovery or salvage value; rather, there is much doubt about whether, how much, or when the recovery would occur. As such, it is not practical or desirable to defer the write-off. Therefore, there is no balance to report at December 31, 2015 or 2014.

(Continued)

25.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 3 - LOANS (Continued)

The following tables present our credit quality indicators, segregated by class, as of December 31, 2015 and 2014:

December 31, 2015
	Pass		Special Mention		Substandard		Doubtful		Total
Real estate loans:
One-to-four family	$	109,161,526	$	772,127	$	859,057	$	-	$	110,792,710
Multi-family		37,571,827		2,614,581		995,659		-		41,182,067
Commercial		143,837,755		5,295,878		4,500,793		-		153,634,426
Construction and land		13,143,977		-		444,649		-		13,588,626
		303,715,085		8,682,586		6,800,158		-		319,197,829
Commercial business		85,604,981		3,323,003		815,527		-		89,743,511
Consumer:
Home equity		13,504,552		-		68,241		83,215		13,656,008
Automobile and other		3,510,289		-		4,849		8,558		3,523,696
		17,014,841		-		73,090		91,773		17,179,704
Total	$	406,334,907	$	12,005,589	$	7,688,775	$	91,773	$	426,121,044

December 31, 2014
	Pass		Special Mention		Substandard		Doubtful		Total
Real estate loans:
One-to-four family	$	116,218,120	$	280,067	$	936,372	$	157,263	$	117,591,822
Multi-family		37,340,022		2,711,061		1,340,779		-		41,391,862
Commercial		113,447,231		12,016,499		3,951,584		-		129,415,314
Construction and land		26,892,171		-		1,698,574		-		28,590,745
		293,897,544		15,007,627		7,927,309		157,263		316,989,743
Commercial business		73,372,401		471,925		140,541		-		73,984,867
Consumer:
Home equity		13,444,685		-		79,300		-		13,523,985
Automobile and other		1,772,431		-		-		-		1,772,431
		15,217,116		-		79,300		-		15,296,416
Total	$	382,487,061	$	15,479,552	$	8,147,150	$	157,263	$	406,271,026

(Continued)

26.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 3 - LOANS (Continued)

The following tables provide details of impaired loans, segregated by class, as of and for the periods indicated. The unpaid contractual balance represents the recorded balance prior to any partial charge-offs. The recorded investment represents customer balances net of any partial charge-offs recognized on the loans.

	As of December 31, 2015						As of December 31, 2014
	Unpaid Contractual Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Contractual Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no related allowance recorded:
Real estate loans:
One-to-four family	$	648,750	$	648,750	$	-	$	551,510	$	467,191	$	-
Multi-family		1,478,137		995,659		-		1,823,257		1,340,779		-
Commercial		2,246,797		2,193,291		-		768,533		768,533		-
Construction and land		186,888		186,888		-		3,412,264		1,639,030		-
		4,560,572		4,024,588		-		6,555,564		4,215,533		-
Commercial business		87,254		87,254		-		215,350		25,095		-
Consumer:
Home equity		52,242		52,242		-		55,550		55,550		-
Automobile and other		8,558		8,558		-		-		-		-
		60,800		60,800		-		55,550		55,550		-
Subtotal	$	4,708,626	$	4,172,642	$	-	$	6,826,464	$	4,296,178	$	-
With an allowance recorded:
Real estate loans:
One-to-four family	$	257,224	$	257,224	$	116,724	$	851,010	$	799,526	$	91,688
Commercial		685,759		542,361		183,966		1,691,064		1,498,829		155,863
		942,983		799,585		300,690		2,542,074		2,298,355		247,551
Commercial business		498,849		498,849		259,787		115,446		115,446		115,446
Consumer:
Home equity		89,407		89,407		49,782		9,902		9,902		9,902
Subtotal		1,531,239		1,387,841		610,259		2,667,422		2,423,703		372,899
Total	$	6,239,865	$	5,560,483	$	610,259	$	9,493,886	$	6,719,881	$	372,899

(Continued)

27.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 3 - LOANS (Continued)

	For the year ended December 31, 2015						For the year ended December 31, 2014
	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized		Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized
With no related allowance recorded:
Real estate loans:
One-to-four family	$	710,678	$	2,200	$	-	$	633,963	$	2,306	$	-
Multi-family		1,123,043		30		-		1,309,419		30		-
Commercial		1,417,242		26,003		-		853,898		7,709		-
Construction and land		745,332		2,144		-		1,183,097		2,376		-
		3,996,295		30,377		-		3,980,377		12,421		-
Commercial business		22,470		389		-		345,137		-		-
Consumer:
Home equity		53,926		1,096		-		106,734		1,101		-
Automobile and other		1,712		-		-		-		-		-
		55,638		1,096		-		106,734		1,101		-
Subtotal	$	4,074,403	$	31,862	$	-	$	4,432,248	$	13,522	$	-
With an allowance recorded:
Real estate loans:
One-to-four family	$	481,678	$	8,968	$	-	$	667,999	$	11,874	$	-
Multi-family		-		-		-		414,443		-		-
Commercial		933,199		8,823		-		1,367,490		18,584		-
Construction and land		-		2,430		-		53,062		2,430		-
		1,414,877		20,221		-		2,502,994		32,888		-
Commercial business		305,930		11,498		-		121,785		8,577		-
Consumer:
Home equity		58,779		68		-		2,475		-		-
Automobile and other		394		-		-		-		-		-
		59,173		68		-		2,475		-		-
Subtotal		1,779,980		31,787		-		2,627,254		41,465		-
Total	$	5,854,383	$	63,649	$	-	$	7,059,502	$	54,987	$	-

(Continued)

28.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 3 - LOANS (Continued)

Troubled Debt Restructurings:

During the years ending December 31, 2015 and 2014, the terms of certain loans were modified as troubled debt restructurings. The modification of the terms of such loans included one or a combination of the following: (1) payment and maturity changes not available in the market; and (2) a reduction of the stated interest rate of the loan.

The Company had allocations of $380,593 of specific reserves on $3,925,262 of loans to customers whose loan terms were modified in troubled debt restructurings as of December 31, 2015. The Company had allocations of $328,442 of specific reserves on $5,661,342 of loans to customers whose loan terms were modified in troubled debt restructurings as of December 31, 2014. The Company had no commitments to lend additional amounts as of December 31, 2015 to customers with outstanding loans that are classified as troubled debt restructurings. The amount the Company had committed to lend to loan customers that are classified as troubled debt restructurings was not material as of December 31, 2014.

The following tables present loans, by class, modified as troubled debt restructurings that occurred during the years ended December 31, 2015 and 2014:

Year ended December 31, 2015
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Real estate loans:
Commercial		2	$	1,000,116	$	1,000,116
Commercial business		1		162,167	$	162,167
Consumer:
Home equity		1		35,221		35,221
Total		4	$	1,197,504	$	1,197,504

The troubled debt restructurings described above resulted in a net increase in the allowance for loan losses of $27,897 but resulted in no charge offs during the year ended December 31, 2015.

(Continued)

29.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 3 - LOANS (Continued)

Year ended December 31, 2014
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Real estate loans:
One-to-four family		2	$	504,465	$	504,465
Construction and land		1		985,787		985,787
Total		3	$	1,490,252	$	1,490,252

The troubled debt restructurings described above resulted in a net increase in the allowance for loan losses of $46,420 but resulted in no charge offs during the year ended December 31, 2014.

There were no payment defaults within twelve months following the modifications during the years ended December 31, 2015 and 2014.

A loan is considered to be in payment default once it is 60 days contractually past due under the modified terms.

Loans to Affiliates:

The Bank has had, and may be expected to have in the future, banking transactions in the ordinary course of business with directors, executive officers, their immediate families, and companies in which these individuals have a 10% or more beneficial ownership. Changes in these loans for the years ended December 31, 2015 and 2014 are summarized as follows:

	Year Ended
	December 31,
	2015			2014
Balance, beginning of year	$	11,845,673		$	7,932,877
Additions		1,219,504			7,066,199
Repayments		(1,231,984	)		(3,050,455	)
Change in status of borrower		-			(102,948	)
Balance, end of year	$	11,833,193		$	11,845,673

The change in status of borrower represents the loans that are no longer required to be reported due to an executive officer or director no longer being associated with the Company.

(Continued)

30.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 4 - PROPERTY AND EQUIPMENT

The components of property and equipment are as follows:

	December 31,
	2015			2014
Land	$	1,829,738		$	1,829,738
Buildings and improvements		10,001,146			9,997,562
Furniture and equipment		2,362,143			2,296,531
		14,193,027			14,123,831
Less accumulated depreciation		(4,321,587	)		(3,743,521	)
	$	9,871,440		$	10,380,310

Depreciation expense for the years ended December 31, 2015 and 2014 amounted to $581,985 and $597,526, respectively.

NOTE 5 - MORTGAGE SERVICING RIGHTS

Loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of loans serviced for others were approximately $123,302,000 and $113,156,000 at December 31, 2015 and 2014, respectively.

The carrying amount of servicing rights recorded on loans serviced for others was $1,109,720 and $961,823, respectively, at December 31, 2015 and 2014, which approximated their fair value. The fair value of servicing rights at December 31, 2015 was determined using a discount rate of 9%, monthly prepayment speeds ranging from 149% to 407%, depending on the stratification of the specific right, ancillary income of $48 per loan annually, and incremental cost to service of approximately $43 per loan annually. The fair value of servicing rights at December 31, 2014 was determined using a discount rate of 9%, monthly prepayment speeds ranging from 262% to 407%, depending on the stratification of the specific right, ancillary income of $48 per loan annually, and incremental cost to service of approximately $43 per loan annually. The ancillary income and cost to service assumptions include projected loan defaults.

(Continued)

31.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 5 - MORTGAGE SERVICING RIGHTS (Continued)

The following summarizes the activity pertaining to mortgage servicing rights along with the aggregate activity in related valuation allowances:

	Year Ended
	December 31,
	2015			2014
Balance, beginning	$	961,823		$	918,247
Mortgage servicing rights capitalized		230,826			150,546
Mortgage servicing rights amortized		(144,607	)		(106,970	)
Decrease in provision for loss in fair value		61,678			-
Balance, ending	$	1,109,720		$	961,823
Valuation allowances:
Balance, beginning	$	178,896		$	178,896
Decrease		(61,678	)		-
Balance, ending	$	117,218		$	178,896

Estimated future amortization expense on mortgage servicing rights is as follows:

Year Ending December 31,	Amount
2016	$	138,384
2017		133,145
2018		111,111
2019		67,291
2020		43,786
Thereafter		616,003
	$	1,109,720

(Continued)

32.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 6 - CORE DEPOSIT INTANGIBLE

The gross carrying value and accumulated amortization of the core deposit intangible is presented below:

	December 31,
	2015			2014
Core deposit intangible	$	3,258,000		$	3,258,000
Less accumulated amortization		(3,120,000	)		(3,062,000	)
	$	138,000		$	196,000

Amortization expense on core deposit intangible for the years ended December 31, 2015 and 2014 was $58,000 and $75,000, respectively.

Estimated future amortization expense on our remaining core deposit intangible is as follows:

Year Ending December 31,	Amount
2016	$	58,000
2017		58,000
2018		22,000

NOTE 7 - GOODWILL

In accordance with ASC Topic 350, Intangibles- Goodwill and Other, goodwill and intangible assets with indefinite useful lives are no longer amortized; rather they are assessed, at least annually, for impairment. The Company tests goodwill for impairment on an annual basis as of September 30, or more often if events or circumstances indicate there may be impairment. Management has determined that the Company has only one reporting unit for purposes of evaluating goodwill.

Due to the current economic environment and other uncertainties, it is possible that our estimates and assumptions may adversely change in the future, and we may be required to record additional goodwill impairment losses in future periods. It is not possible at this time to determine if any such future impairment loss would result or, it if does, whether such charge would be material. However, any such future impairment loss would be limited to the remaining goodwill balance of $11,385,323 at December 31, 2015. Subsequent reversal of goodwill impairment losses is not permitted. At our annual impairment assessment date of September 30, 2015, our analysis indicated that no impairment existed.

(Continued)

33.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 8 - DEPOSITS

Deposits are summarized as follows:

	At December 31,
	2015		2014
Noninterest-bearing	$	69,296,354	$	68,170,743
Interest-bearing transaction accounts		300,782,040		285,437,812
Savings		29,907,675		29,070,422
Time		133,172,224		127,627,662
	$	533,158,293	$	510,306,639

Included in time deposits were approximately $10,781,000 and $13,872,000 of brokered deposits at December 31, 2015 and 2014, respectively. Included in interest-bearing transaction accounts were approximately $59,670,000 and $83,281,000 of brokered deposits at December 31, 2015 and 2014, respectively.

Interest expense on deposits is summarized as follows:

	Year Ended
	December 31,
	2015		2014
Interest-bearing transaction accounts	$	651,465	$	738,536
Savings		50,662		50,422
Time		1,459,810		1,385,108
	$	2,161,937	$	2,174,066

Time deposits that meet or exceed the FDIC Insurance limit of $250,000 at year-end 2015 and 2014 were approximately $26,159,000 and $19,643,000.

(Continued)

34.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 8 - DEPOSITS (Continued)

At December 31, 2015, the scheduled maturities of time deposits were as follows:

Year Ending December 31,	Amount
2016	$	60,831,144
2017		33,735,619
2018		21,398,998
2019		4,149,552
2020		12,473,886
Thereafter		583,025
	$	133,172,224

NOTE 9 - FEDERAL HOME LOAN BANK ADVANCES

The Bank had total advances from the FHLB of $15,995,485 and $2,487,745 at December 31, 2015 and 2014, respectively. The weighted average interest rate on the advances was 1.58% and 2.89% at December 31, 2015 and 2014, respectively. The range of rates on the outstanding advances at December 31, 2015 varied from 1.30% to 4.58%.

At December 31, 2015, the contractual maturities of advances were as follows:

Year Ending December 31,	Amount
2016	$	995,485
2018		15,000,000
	$	15,995,485

At December 31, 2015, in addition to FHLB stock, eligible residential real estate loans totaling approximately $92,610,000 were pledged to the FHLB to secure advances outstanding compared to $77,790,000 at December 31, 2014.

NOTE 10 - SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Securities sold under agreements to repurchase, which are classified as secured borrowings, generally mature daily. Securities sold under agreements to repurchase are reflected at the amount of cash received in connection with the transaction. The balance of our securities sold under agreements to repurchase fluctuates based upon our customers’ needs and activity. The Company has one significant customer whose balances fluctuate on a regular basis. Due to the nature of this customer’s business, large fluctuations in its accounts are a normal occurrence. The Company may be required to provide additional collateral based on the fair value of the underlying securities.

Securities sold under agreements to repurchase were primarily secured by U.S. government agency obligations and state and municipal securities with an approximate carrying amount of $26,458,000 and $32,639,000 at December 31, 2015 and 2014, respectively.

(Continued)

35.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 10 - SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE (Continued)

Information concerning securities sold under agreements to repurchase is summarized as follows:

	2015			2014
Average daily balance during the year	$	15,817,024		$	18,974,688
Average interest rate during the year		0.02	%		0.02	%
Maximum month-end balance during the year	$	20,765,781		$	23,275,868
Weighted average interest rate at year-end		0.02	%		0.02	%

NOTE 11 - SUBORDINATED DEBENTURES

The financial statements also include the following wholly-owned entity on a deconsolidated basis, First Clover Leaf Statutory Trust I. The sole asset of this trust is junior subordinated deferrable interest debentures. The Company issued $4,000,000 in May 2005 in cumulative trust preferred securities through this newly formed special-purpose trust. The proceeds of the offering were invested by the trust in junior subordinated debentures of Trust I. Distributions are cumulative and were payable at a fixed rate of 6.08% through May 2010 and then adjusted quarterly at a variable rate of 1.85% over the three month LIBOR rate, per annum of the stated liquidation amount of $1,000 per preferred security. At December 31, 2015 the interest rate was 2.36%. The Company has the option to defer interest payments on the subordinated debentures from time to time for a period not to exceed five consecutive years. The obligations of the trust are fully and unconditionally guaranteed, on a subordinated basis, by the Company. The trust preferred securities for Trust I are mandatorily redeemable upon the maturity of the debentures in May 2025, or to the extent of any earlier redemption of any debentures by the Company, and were callable beginning in May 2010. Holders of the capital securities have no voting rights, are unsecured, and rank junior in priority of payment to all of the Company’s indebtedness and senior to the Company’s capital stock. For regulatory purposes, the trust preferred securities qualify as Tier I capital subject to certain provisions.

(Continued)

36.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 12 - INCOME TAXES

The Company and the Bank file consolidated federal income tax returns and Illinois state income tax returns. The Company and the Bank are no longer subject to examination by federal and state taxing authorities for years prior to 2012.

Allocation of federal and state income taxes between current and deferred portions was as follows:

	Year Ended
	December 31,
	2015			2014
Federal:
Current	$	1,411,154		$	815,120
Deferred		(202,931	)		71,545
		1,208,223			886,665
State:
Current		466,980			397,280
Deferred		266			76,653
		467,246			473,933
	$	1,675,469		$	1,360,598

The Company’s income tax expense differed from the maximum statutory federal rate of 35% as follows:

	Year Ended
	December 31,
	2015			2014
Expected income taxes	$	2,209,628		$	1,815,376
Income tax effect of:
State taxes, net of federal income tax benefit		277,177			278,391
Tax exempt interest, net		(613,220	)		(586,302	)
Income taxed at lower rates		(63,132	)		(51,868	)
Other		(134,984	)		(94,999	)
	$	1,675,469		$	1,360,598

(Continued)

37.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 12 - INCOME TAXES (Continued)

The tax effects of principal temporary differences are shown in the following table:

	December 31,
	2015			2014
Deferred tax assets:
Allowance for loan losses	$	2,286,438		$	2,161,135
Deferred compensation		306,653			256,106
Accrued expenses		79,623			19,041
Purchase accounting adjustments for:
Loans		-			18,136
Securities		90,895			106,474
OREO writedowns and expenses		563,385			464,326
Other		107,467			367,148
		3,434,461			3,392,366
Deferred tax liabilities:
Federal Home Loan Bank stock		(177,613	)		(293,580	)
Core deposit intangible		(53,605	)		(76,164	)
Mortgage servicing rights		(431,058	)		(373,757	)
Unrealized gain on securities available for sale		(254,456	)		(115,890	)
Purchase accounting adjustments for:
Premises and equipment		(272,023	)		(278,376	)
Federal Home Loan Bank advances		(1,754	)		(4,762	)
Premises and equipment		(184,571	)		(254,555	)
		(1,375,080	)		(1,397,084	)
Net deferred taxes	$	2,059,381		$	1,995,282

Retained earnings at December 31, 2015 and 2014 include approximately $3,044,000 of the tax bad debt reserve which accumulated prior to 1988, for which no deferred income tax liability has been recognized. This amount represents an allocation of income to bad debt deductions for tax purposes only. Reduction of amounts so allocated for purposes other than tax bad debt losses or adjustments arising from carryback of net operating losses would create income for tax purposes only, which would be subject to the then current corporate income tax rate. The unrecorded deferred income tax liability on the above amount was approximately $1,157,000 at December 31, 2015 and 2014. Management has determined that the probability of recapturing the reserve is not sufficient to record a liability.

(Continued)

38.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 13 - EMPLOYEE BENEFITS

The Company has adopted a 401(k) plan and defined contribution profit sharing plan covering substantially all of its employees. The contribution to the plan for the profit sharing contribution is determined by the Board of Directors. The Company contributed $176,074 and $165,227 to the plan for the profit sharing contribution for the years ended December 31, 2015 and 2014, respectively. The 401(k) component of the plan allows participants to defer up to 50% of their compensation. Such deferral accumulates on a tax deferred basis until the employee withdraws the funds. The Company matched the employee contributions for the 401(k) plan up to 3% of compensation for the years ended December 31, 2015 and 2014. Total expense recorded for the Company’s match for the 401(k) plan was $155,088 and $144,807 for the years ended December 31, 2015 and 2014, respectively.

NOTE 14 - CAPITAL RATIOS

Banks and holding companies are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory—and possibly additional discretionary—actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank and the Company must meet specific capital guidelines that involve quantitative measures of the Bank’s and the Company’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s and the Company’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

In July 2013, the U.S. federal banking authorities approved the implementation of the Basel III regulatory capital reforms and issued rules effecting certain changes required by the Dodd-Frank Act (the “Basel III Rules”). The Basel III Rules are applicable to all U.S. banks that are subject to minimum capital requirements, as well as to bank and savings and loan holding companies other than “small bank holding companies” (generally non-public bank holding companies with consolidated assets of less than $1 billion). The Bank, along with other community banking organizations, and the Company became subject to the Basel III Rules effective January 1, 2015.

The Basel III Rules not only increased most of the required minimum regulatory capital ratios, but they introduced a new common equity Tier 1 capital ratio and the concept of a capital conservation buffer. The Basel III Rules also expanded the definition of capital as in effect currently by establishing criteria that instruments must meet to be considered additional Tier 1 capital (Tier 1 capital in addition to common equity) and Tier 2 capital. A number of instruments that qualified previously as Tier 1 capital no longer qualify, or their qualifications may change as the Basel III rules are fully implemented. The Basel III Rules also permit banking organizations with less than $15.0 billion in assets to retain, through a one-time election, the previous treatment for accumulated other comprehensive income. The Bank elected this one-time opt-out to exclude accumulated other comprehensive income from regulatory capital with the filing of its regulatory reports during the first quarter of 2015.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. The Basel III Rules have maintained the general structure of the current prompt corrective action framework, while incorporating the increased requirements. The prompt corrective action guidelines were also revised to add the common equity Tier 1 capital ratio.  In order to be a “well-capitalized” depository institution under the new regime, a bank and holding company must maintain a common equity Tier 1 capital ratio of 6.5% or more; a Tier 1 capital ratio of 8% or more; a total capital ratio of 10% or more; and a leverage ratio of 5% or more. 

(Continued)

39.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 14 - CAPITAL RATIOS (Continued)

Management will continue to assess the effect of the Basel III Rules during the phase-in period and the impact they may have on the Bank’s and the Company’s capital positions and will monitor developments in this area. As of December 31, 2015, management concluded that the Company’s and the Bank’s current capital structure and the execution of the capital plan was sufficient to meet and exceed the revised regulatory capital ratios as required by the new Basel III Rules. As of December 31, 2015, the Bank was considered well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Bank’s category. Management believes, as of December 31, 2015 and 2014, that the Bank and the Company meet all capital adequacy requirements to which they were subject.

The Company’s principal source of funds for dividend payments is dividends received from the Bank. Banking regulations limit the amount of dividends that may be paid without prior approval from the Office of the Comptroller of the Currency. Under these regulations, the amount of dividends that may be paid without prior consent in any calendar year is generally limited to the current year’s profits combined with retained net profits of the preceding two years, subject to the capital requirements described above.

The Bank’s actual capital amounts and ratios under Basel III as of December 31, 2015 are presented in the following table. The Bank’s actual capital amounts and ratios as of December 31, 2014 are presented for comparison.

	Actual					For Capital  Adequacy Purposes					To be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	2015
Common Equity Tier 1 Capital to Risk Weighted Assets	$	71,273,000		14.89	%	$	21,546,000		4.50	%	$	31,122,000		6.50	%
Tier I Capital to Adjusted Total Assets		71,273,000		11.47	%		24,855,000		4.00	%		31,069,000		5.00	%
Tier I Capital to Risk Weighted Assets		71,273,000		14.89	%		28,728,000		6.00	%		38,303,000		8.00	%
Total Capital to Risk Weighted Assets		76,195,000		15.91	%		38,303,000		8.00	%		47,879,000		10.00	%
	2014
Tier I Capital to Adjusted Total Assets	$	67,995,000		11.22	%	$	24,235,000		4.00	%	$	30,294,000		5.00	%
Tier I Capital to Risk Weighted Assets		67,995,000		16.36	%		16,623,000		4.00	%		24,935,000		6.00	%
Total Capital to Risk Weighted Assets		71,949,000		17.31	%		33,247,000		8.00	%		41,558,000		10.00	%

(Continued)

40.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 14 - CAPITAL RATIOS (Continued)

The Company’s actual consolidated capital amounts and ratios under Basel III as of December 31, 2015 are presented in the following table. The Company’s actual consolidated capital amounts and ratios as of December 31, 2014 are presented for comparison.

											To be Well Capitalized
						For Capital					Under Prompt Corrective
	Actual					Adequacy Purposes					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	2015
Common Equity Tier 1 Capital to Risk Weighted Assets	$	68,467,000		14.29	%	$	21,555,000		4.50	%		N/A		N/A
Tier I Capital to Adjusted Total Assets		68,467,000		10.28	%		26,651,000		4.00	%		N/A		N/A
Tier I Capital to Risk Weighted Assets		68,467,000		14.29	%		28,740,000		6.00	%		N/A		N/A
Total Capital to Risk Weighted Assets		77,389,000		16.16	%		38,321,000		8.00	%		N/A		N/A
	2014
Tier I Capital to Adjusted Total Assets	$	65,256,000		10.54	%	$	24,764,000		4.00	%		N/A		N/A
Tier I Capital to Risk Weighted Assets		65,256,000		15.70	%		16,630,000		4.00	%		N/A		N/A
Total Capital to Risk Weighted Assets		73,210,000		17.61	%		33,260,000		8.00	%		N/A		N/A

NOTE 15 - COMMITMENTS, CONTINGENCIES AND CREDIT RISK

The Company and the Bank could be a party to legal actions in the normal course of business. In the opinion of management, the ultimate resolution of these matters is generally not expected to have a material effect on the financial position or the results of operations of the Company.

The Company is party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financial needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in addition to the amounts recognized in the consolidated balance sheets.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

(Continued)

41.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 15 - COMMITMENTS, CONTINGENCIES AND CREDIT RISK (Continued)

A summary of the notional or contractual amounts of financial instruments, primarily variable rate, with off-balance-sheet risk follows:

							Range of Rates
	Variable Rate		Fixed Rate		Total		on Fixed Rate
	Commitments		Commitments		Commitments		Commitments
	2015
Commitments to extend credit	$	43,735,051	$	36,533,191	$	80,268,242	3.00% - 18.00%
Standby letters of credit		1,726,114		49,000		1,775,114	4.00% - 6.00%
	2014
Commitments to extend credit	$	34,570,790	$	24,254,679	$	58,825,469	3.00% - 18.00%
Standby letters of credit		1,361,322		300,765		1,662,087	3.50% - 6.00%

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount and type of collateral obtained, if deemed necessary by the Company upon extension of credit, varies and is based on management’s credit evaluation of the counterparty.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Standby letters of credit generally have fixed expiration dates or other termination clauses and may require payment of a fee. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities of customers. The Company’s policy for obtaining collateral, and the nature of such collateral, is essentially the same as that involved in making commitments to extend credit. Those guarantees are primarily issued to support public and private borrowing arrangements and, generally, have terms of one year or less. The Bank holds collateral, which may include accounts receivables, inventory, property and equipment, and income producing properties, if deemed necessary to support such commitments. In the event the customer does not perform in accordance with the terms of the agreement with the third party, the Bank would be required to fund the commitment. The maximum potential amount of future payments the Bank could be required to make is represented by the contractual amount shown in the summary above. If the commitment is funded, the Bank would be entitled to seek recovery from the customer. At December 31, 2015 and 2014, no amounts have been recorded as liabilities for the Bank’s potential obligations under these guarantees.

(Continued)

42.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 16 - FAIR VALUE MEASUREMENTS

The Company determines the fair market values of its financial instruments based on the fair value hierarchy established in ASC Topic 820, Fair Value Measurements and Disclosures, which requires an entity to maximize the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The guidance also describes three levels of inputs that may be used to measure fair value.

· Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

· Level 2 - Inputs other than quoted prices included with Level 1 that are observable for the asset or liability either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived from or corroborated by market data by correlation or other means.

· Level 3 - Unobservable inputs for determining the fair value of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

Securities: The fair value of available-for-sale securities are determined by various valuation methodologies. Where quoted market prices are available in an active market, securities are classified within Level 1. If quoted market prices are not available, then fair values are estimated by using pricing models or quoted prices of securities with similar characteristics. For these investments, the pricing applications apply available information as applicable through processes such as benchmark curves, benchmarking of like securities, sector groupings and matrix pricing to prepare evaluations. They also use model processes, such as the Option Adjusted Spread model to assess interest rate impact and develop prepayment scenarios. In the case of municipal securities, information on the Bloomberg terminal such as credit ratings, credit support, and call features are used to set the matrix values for the issues, which will be used to determine the yields from which the market values are calculated each month. Because they are not price quote valuations, the pricing methods are considered Level 2 inputs. At December 31, 2015 and 2014, all of the Company’s securities fall within the Level 2 hierarchy for pricing. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. During the years ended December 31, 2015 and 2014, there were no transfers between Level 1 and Level 2. The valuation methodology was consistent for the years ended December 31, 2015 and 2014.

Foreclosed Assets:  Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals which are updated no less frequently than annually. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.  Foreclosed assets are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

(Continued)

43.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 16 - FAIR VALUE MEASUREMENTS (Continued)

Impaired Loans:  The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification.  Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Appraisals for both foreclosed assets and collateral-dependent impaired loans are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, a member of the loan department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. On an annual basis, the Company compares the actual selling price of collateral that has been sold to the most recent appraised value to determine what additional adjustment should be made to the appraisal value to arrive at fair value.

Mortgage Servicing Rights: Annually, loan servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. If the carrying amount exceeds fair value, impairment is recorded so that the servicing asset is carried at fair value. Fair value is determined based on market prices for comparable mortgage servicing contracts, when available, resulting in a Level 2 classification, or alternatively based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model utilizes assumptions that market participants would use in estimating future net servicing income and that can be validated against available market data which also results in a Level 2 classification.

(Continued)

44.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 16 - FAIR VALUE MEASUREMENTS (Continued)

Assets measured at fair value on a recurring basis segregated by fair value hierarchy level during the periods ended December 31, 2015 and 2014 are summarized below:

	Fair Value Measurements at December 31, 2015 Using:
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Assets:	(Level 1)		(Level 2)		(Level 3)		Total
Securities:
U.S. government agency obligations	$	-	$	29,048,102	$	-	$	29,048,102
State and municipal securities		-		45,734,239		-		45,734,239
Other securities		-		3,501		-		3,501
Mortgage-backed: residential		-		28,970,772		-		28,970,772
Total securities available for sale	$	-	$	103,756,614	$	-	$	103,756,614

	Fair Value Measurements at December 31, 2014 Using:
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Assets:	(Level 1)		(Level 2)		(Level 3)		Total
Securities:
U.S. government agency obligations	$	-	$	25,869,606	$	-	$	25,869,606
State and municipal securities		-		45,573,608		-		45,573,608
Other securities		-		3,501		-		3,501
Mortgage-backed: residential		-		32,778,977		-		32,778,977
Total securities available for sale	$	-	$	104,225,692	$	-	$	104,225,692

(Continued)

45.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 16 - FAIR VALUE MEASUREMENTS (Continued)

Assets measured at fair value on a nonrecurring basis by fair value hierarchy level during the periods ended December 31, 2015 and 2014 are summarized below:

	Fair Value Measurements at December 31, 2015 Using:
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Assets:	(Level 1)		(Level 2)		(Level 3)		Total
Foreclosed assets:
Real estate:
Commercial	$	-	$	-	$	19,000	$	19,000
Construction and land		-		-		604,500	$	604,500
Total foreclosed assets	$	-	$	-	$	623,500	$	623,500
Impaired loans:
Real estate loans:
One-to-four family	$	-	$	-	$	140,500	$	140,500
Commercial		-		-		358,395		358,395
		-		-		498,895		498,895
Commercial business		-		-		239,062		239,062
Consumer:
Home equity		-		-		39,625		39,625
Total impaired loans	$	-	$	-	$	777,582	$	777,582
Mortgage Servicing Rights	$	-	$	1,109,720	$	-	$	1,109,720

(Continued)

46.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 16 - FAIR VALUE MEASUREMENTS (Continued)

	Fair Value Measurements at December 31, 2014 Using:
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Assets:	(Level 1)		(Level 2)		(Level 3)		Total
Foreclosed assets:
Real estate:
Construction and land		-		-		1,042,087		1,042,087
Total foreclosed assets	$	-	$	-	$	1,042,087	$	1,042,087
Impaired loans:
Real estate loans:
One-to-four family	$	-	$	-	$	707,838	$	707,838
Commercial		-		-		1,342,966		1,342,966
		-		-		2,050,804		2,050,804
Total impaired loans	$	-	$	-	$	2,050,804	$	2,050,804

Foreclosed assets are collateral dependent and are recorded at the lesser of the recorded investment in the receivable or the appraised value less costs to sell and may be revalued on a nonrecurring basis. Foreclosed assets measured at fair value less costs to sell on a nonrecurring basis during the year ended December 31, 2015, had a net carrying amount of $623,500, which is made up of the outstanding balance of $1,337,678, net of cumulative write-downs of $714,178 which includes $355,500 that occurred during the year ended December 31, 2015. At December 31, 2014, foreclosed assets had a carrying amount of $1,042,087, which was made up of the outstanding balance of $1,754,187, net of write-downs of $712,100.

(Continued)

47.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 16 - FAIR VALUE MEASUREMENTS (Continued)

Impaired loans that are measured for impairment using the fair value of the collateral for collateral dependent loans, had a principal balance of $1,387,841, with a valuation allowance of $610,259 at December 31, 2015, resulting in a net increase in provision for loan losses of $241,673 for the year ended December 31, 2015. At December 31, 2014, impaired loans had a principal balance of $2,423,703 with a valuation allowance of $372,899, resulting in a net decrease in provision for loan losses of $43,704 for the year ended December 31, 2014.

The following table presents quantitative information about Level 3 fair value measurements for significant categories of financial instruments measured at fair value on a non-recurring basis at December 31, 2015:

	Fair Value		Valuation Techniques	Unobservable Inputs	Range	Weighted Average
Foreclosed assets:
Real estate:
Construction and land	$	604,500	Sales Comparison	Adjustment for difference between comparable sales	-29% to 5%		-8.9	%
Impaired loans:
Real estate loans:
One-to-four family	$	140,500	Sales Comparison	Adjustment for difference between comparable sales	-19% to -7%		-13.0	%
Commercial		88,000	Sales Comparison	Adjustment for difference between comparable sales	9% to 16%		12.8	%
Commercial		270,395	Income Approach	Investment Capitalization Rates	9.0%		9.0	%
Commercial business		121,094	Fair Value of Collateral	Discount for type of business assets	0% to 10%		7.0	%

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2014:

	Fair Value		Valuation Techniques	Unobservable Inputs	Range	Weighted Average
Foreclosed assets:
Real estate:
Construction and land	$	1,042,087	Sales Comparison	Adjustment for difference between comparable sales	-10% to 30%		10.3	%
Impaired loans:
Real estate loans:
One-to-four family	$	707,838	Sales Comparison	Adjustment for difference between comparable sales	-23% to 13%		-7.2	%
Commercial		1,342,966	Income Approach	Investment Capitalization Rates	3% to 27%		12.3	%

(Continued)

48.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 17 - FAIR VALUE OF FINANCIAL INSTRUMENTS

FASB ASC Topic 825, Financial Instruments, requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet. Fair value is determined under the framework established by ASC Topic 820, Fair Value Measurement and Disclosures. ASC Topic 825 excludes certain financial instruments and all non-financial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments:

Cash and Cash Equivalents: The carrying amounts of cash and cash equivalents approximate fair values given the short-term nature and active market for U.S. currency and are classified as Level 1.

Interest-Earning Time Deposits: Due to the short-term nature of these deposits, the carrying amounts of these deposits approximate fair values. However, since it is unusual to observe a quoted price in an active market during the outstanding term, these deposits are classified as Level 2.

Federal Home Loan Bank Stock: The Company is required to maintain these equity securities as a member of the FHLB and in amounts as required by this institution. These equity securities are "restricted" in that they can only be sold back to the respective institution or another member institution at par. Therefore, they are less liquid than other tradable securities and their fair value is not readily available.

Federal Reserve Bank Stock: The Company is required to maintain these equity securities as a member of the Federal Reserve Bank and in amounts as required by this institution. These equity securities are "restricted" in that they can only be sold back to the respective institution or another member institution at par. Therefore, they are less liquid than other tradable securities and their fair value is not readily available.

Loans: Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segmented by type such as real estate, commercial business, and consumer loans. Each loan segment is further segregated into fixed and adjustable rate interest terms and by performing and non-performing classifications. The fair value of fixed rate loans is estimated by either observable market prices or by discounting future cash flows using discount rates that reflect the Company’s current pricing for loans with similar characteristics, such as loan type, pricing and remaining maturity resulting in a Level 3 classification. Impaired loans that have no specific reserve are classified as Level 3. Impaired loans that have been written down to the fair value of the corresponding collateral, less estimated costs to sell, are not included in this table as those amounts were presented previously. The fair value computed is not necessarily an exit price.

Loans Held for Sale: The fair value of loans held for sale is estimated based upon binding contracts and quotes from third party investors resulting in a Level 2 classification.

Accrued Interest Receivable: The carrying amount of accrued interest receivable approximates its fair value. Accrued interest receivable related to interest-earning time deposits and securities is classified as Level 2. Accrued interest receivable related to loans is classified as Level 3.

(Continued)

49.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 17 - FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Deposits: The fair values disclosed for demand deposits are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts) and are classified as Level 1. The carrying amounts for interest-bearing money market and savings accounts approximate their fair values at the reporting date and are classified as Level 1. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

Federal Home Loan Bank Advances: The fair value of FHLB advances, which are at a fixed rate, are estimated using discounted cash flow analyses based on current rates for similar advances resulting in a Level 2 classification.

Securities Sold Under Agreements to Repurchase: The carrying amounts of securities sold under agreements to repurchase approximate fair value resulting in a Level 2 classification.

Subordinated Debentures: This debenture is a floating rate instrument which re-prices quarterly. The fair value of variable rate trust preferred debentures approximate carrying value resulting in a Level 2 classification.

Accrued Interest Payable: The carrying amount of accrued interest payable approximates its fair value. Accrued interest payable related to interest-bearing money market and savings accounts is classified as Level 1. All other accrued interest payable is classified as Level 2.

(Continued)

50.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 17 - FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

The following information presents estimated fair values of the Company’s financial instruments as of December 31, 2015 and 2014 that have not been previously presented and the methods and assumptions used to estimate those fair values.

			Fair Value Measurements at December 31, 2015 Using:
	Carrying		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Fair
	Amount		(Level 1)		(Level 2)		(Level 3)		Value
Financial assets:
Cash and cash equivalents	$	79,232,566	$	79,232,566	$	-	$	-	$	79,232,566
Interest-earning time deposits		1,685,000		-		1,685,000		-		1,685,000
Federal Home Loan Bank stock		1,747,763		-		-		-		N/A
Federal Reserve Bank stock		1,676,700		-		-		-		N/A
Loans, net (excluding impaired loans at fair value)		419,686,001		-		-		421,795,305		421,795,305
Loans held for sale		1,078,785		-		1,078,785		-		1,078,785
Accrued interest receivable		1,620,309		-		510,231		1,110,078		1,620,309
Financial liabilities:
Non-interest bearing deposits		69,296,354		69,296,354		-		-		69,296,354
Interest-bearing deposits		463,861,939		330,689,715		133,976,643		-		464,666,358
Federal Home Loan Bank advances		15,995,485		-		16,315,262		-		16,315,262
Securities sold under agreement to repurchase		19,732,766		-		19,732,766		-		19,732,766
Subordinated debentures		4,000,000		-		4,000,000		-		4,000,000
Accrued interest payable		227,947		14,621		213,326		-		227,947

(Continued)

51.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 17 - FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

			Fair Value Measurements at December 31, 2014 Using:
	Carrying		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Fair
	Amount		(Level 1)		(Level 2)		(Level 3)		Value
Financial assets:
Cash and cash equivalents	$	49,066,462	$	49,066,462	$	-	$	-	$	49,066,462
Interest-earning time deposits		2,021,970		-		2,021,970		-		2,021,970
Federal Home Loan Bank stock		2,887,763		-		-		-		N/A
Federal Reserve Bank stock		1,676,700		-		-		-		N/A
Loans, net (excluding impaired loans at fair value)		398,853,600		-		-		402,238,073		402,238,073
Loans held for sale		100,000		-		100,000		-		100,000
Accrued interest receivable		1,762,310		-		506,888		1,255,422		1,762,310
Financial liabilities:
Non-interest bearing deposits		68,170,743		68,170,743		-		-		68,170,743
Interest-bearing deposits		442,135,896		314,508,234		128,258,671		-		442,766,905
Federal Home Loan Bank advances		2,487,745		-		2,542,945		-		2,542,945
Securities sold under agreement to repurchase		11,848,266		-		11,848,266		-		11,848,266
Subordinated debentures		4,000,000		-		4,000,000		-		4,000,000
Accrued interest payable		174,480		14,359		160,121		-		174,480

In addition, other assets and liabilities of the Company that are not defined as financial instruments are not included in the above disclosures, such as property and equipment.

(Continued)

52.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 18 - ACCUMULATED OTHER COMPREHENSIVE INCOME

The following tables summarize the changes within each classification of accumulated other comprehensive income, net of tax, for the year ended December 31, 2015 and summarizes the significant amounts reclassified out of each component of accumulated other comprehensive income.

Changes in Accumulated Other Comprehensive Income by Component
For the Year Ended December 31, 2015(1)
	Unrealized Gains and Losses on Available-for-Sale Securities			Total
Accumulated Other Comprehensive Income at January 1, 2015	$	197,331		$	197,331
Other comprehensive income before reclassifications		207,264			207,264
Amount reclassified from accumulated other comprehensive income(2)		(6,601	)		(6,601	)
Net current-period other comprehensive income		200,663			200,663
Accumulated Other Comprehensive Income at December 31, 2015	$	397,994		$	397,994

⁽¹⁾ All amounts are net of tax.

⁽²⁾ See table below for details about reclassifications.

Reclassifications out of Accumulated Other Comprehensive Income
For the Year Ended December 31, 2015
Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income			Affected Line Item in the Statement Where Net Income is Presented
Unrealized gains and losses on available-for-sale securities	$	10,821		Gain on sale of securities
		(4,220	)	Tax expense
Total reclassifications for the period	$	6,601		Net of tax

(Continued)

53.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 18 - ACCUMULATED OTHER COMPREHENSIVE INCOME (Continued)

The following tables summarize the changes within each classification of accumulated other comprehensive income, net of tax, for the year ended December 31, 2014, and summarizes the significant amounts reclassified out of each component of accumulated other comprehensive income:

Changes in Accumulated Other Comprehensive Income by Component
For the Year Ended December 31, 2014(1)
	Unrealized Gains and Losses on Available-for-Sale Securities			Total
Accumulated Other Comprehensive Loss at January 1, 2014	$	(1,692,488	)	$	(1,692,488	)
Other comprehensive income before reclassifications		1,958,938			1,958,938
Amount reclassified from accumulated other comprehensive income(2)		(69,119	)		(69,119	)
Net current-period other comprehensive income		1,889,819			1,889,819
Accumulated Other Comprehensive Income at December 31, 2014	$	197,331		$	197,331

⁽¹⁾ All amounts are net of tax.

⁽²⁾ See table below for details about reclassifications.

Reclassifications out of Accumulated Other Comprehensive Income
For the Year Ended December 31, 2014
Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income			Affected Line Item in the Statement Where Net Income is Presented
Unrealized gains and losses on available-for-sale securities	$	109,712		Gain on sale of securities
		(40,593	)	Tax expense
Total reclassifications for the period	$	69,119		Net of tax

(Continued)

54.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 19 - LIQUIDATION ACCOUNT

As required by federal regulations, a liquidation account in the amount of $20,700,000 was established in conjunction with our 2006 conversion from a mutual savings bank to a federal savings association.

As a result, each eligible account holder or supplemental account holder at the time of conversion is entitled to a proportionate share of this account in the unlikely event of a complete liquidation of the Bank, and only in such event. This share will be reduced if the eligible account holder’s or supplemental account holder’s deposit balance falls below the amounts on the date of record and will cease to exist if the account is closed. The liquidation account will never be increased despite any increase after conversion in the related deposit balance. The Bank may not declare, pay a dividend on, or repurchase any of its capital stock of the Bank, if the effect thereof would cause retained earnings to be reduced below the liquidation account amount or regulatory capital requirements. Due to various natural events, such as death, relocation, and general attrition of accounts, the balance in the liquidation account has been reduced to $2,389,000 at December 31, 2015.

NOTE 20 - CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY

Financial information pertaining only to First Clover Leaf Financial Corp. is as follows:

BALANCE SHEETS

December 31, 2015 and 2014

	2015		2014
Assets
Cash and cash equivalents	$	996,950	$	1,141,653
Investment in common stock of subsidiary		83,079,782		79,868,529
Other assets		214,079		173,079
Total assets	$	84,290,811	$	81,183,261
Liabilities and Stockholders' Equity
Subordinated debentures	$	4,000,000	$	4,000,000
Accrued interest payable		8,388		7,424
Other liabilities		8,548		45,944
Total liabilities		4,016,936		4,053,368
Stockholders' Equity
Common stock		700,588		700,728
Additional paid-in-capital		55,806,256		55,818,936
Retained earnings		23,369,037		20,412,898
Accumulated other comprehensive income		397,994		197,331
		80,273,875		77,129,893
Total liabilities and stockholders' equity	$	84,290,811	$	81,183,261

(Continued)

55.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 20 - CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY (Continued)

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

Years ended December 31, 2015 and 2014

	2015			2014
Dividends from subsidiary	$	2,000,000		$	2,000,000
Interest income		2,682			2,614
Interest expense		(90,174	)		(86,901	)
Other income		-			51,205
Other expenses		(534,045	)		(524,678	)
Income before income tax benefit and equity in undistributed net income of subsidiary		1,378,463			1,442,240
Income tax benefit		248,700			223,200
Income before equity in undistributed net income of subsidiary		1,627,163			1,665,440
Equity in undistributed (distributions in excess of) net income of subsidiary		3,010,591			2,160,752
Net income	$	4,637,754		$	3,826,192
Comprehensive income	$	4,838,417		$	5,716,011

(Continued)

56.

FIRST CLOVER LEAF FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 and 2014

NOTE 20 - CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY (Continued)

CONDENSED STATEMENTS OF CASH FLOWS

Years ended December 31, 2015 and 2014

	2015			2014
Cash Flows from Operating Activities
Net income	$	4,637,754		$	3,826,192
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Distributions in excess of (equity in undistributed) net income of subsidiary		(3,010,591	)		(2,160,752	)
Decrease (increase) in other assets		(41,000	)		507,606
Increase (decrease) in accrued interest payable		964			(49	)
Decrease in other liabilities		(37,395	)		(40,722	)
Net cash provided by operating activities		1,549,732			2,132,275
Cash Flows from Investing Activities
Loan payments		-			-
Net cash provided by investing activities		-			-
Cash Flows from Financing Activities
Repurchase of common stock		(12,820	)		-
Dividends		(1,681,615	)		(1,681,748	)
Net cash used in financing activities		(1,694,435	)		(1,681,748	)
Net increase (decrease) in cash and cash equivalents		(144,703	)		450,527
Cash and cash equivalents:
Beginning of year		1,141,653			691,126
End of year	$	996,950		$	1,141,653

57.

EX-21

EXHIBIT 21

SUBSIDIARIES OF THE REGISTRANT

Exhibit 21

SUBSIDIARIES OF THE REGISTRANT

				State or Jurisdiction
Subsidiary	Ownership			of Incorporation
First Clover Leaf Bank		100	%	Federal
First Clover Leaf Statutory Trust I		100	%	Maryland

EX-31.1

EXHIBITS 31.1 AND 31.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION

302 OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, P. David Kuhl, certify that:

1. I have reviewed this annual report on Form 10-K of First Clover Leaf Financial Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

A. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

B. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 24, 2016	/s/ P. David Kuhl
	P. David Kuhl
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Darlene F. McDonald, certify that:

1. I have reviewed this annual report on Form 10-K of First Clover Leaf Financial Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f))for the registrant and have:

a) designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 24, 2016	/s/ Darlene F. McDonald
	Darlene F. McDonald
	Executive Vice President and Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATE PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 32

Certification pursuant to

18 U.S.C. Section 1350,

as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

P. David Kuhl, President and Chief Executive Officer and Darlene F. McDonald, Executive Vice President and Chief Financial Officer of First Clover Leaf Financial Corp. (the “Company”) each certify in their capacity as officers of the Company that they have reviewed the annual report of the Company on Form 10-K for the year ended December 31, 2015 and that to the best of their knowledge:

1. the report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

2. the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company at and for the year ended December 31, 2015.

The purpose of this statement is solely to comply with Title 18, Chapter 63, Section 1350 of the United States Code, as amended by Section 906 of the Sarbanes-Oxley Act of 2002.

Date: March 24, 2016	/s/ P. David Kuhl
	P. David Kuhl
	President and Chief Executive Officer
Date: March 24, 2016	/s/ Darlene F. McDonald
	Darlene F. McDonald
	Executive Vice President and Chief Financial Officer

XML

Document and Entity Information - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Mar. 15, 2016	Jun. 30, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	First Clover Leaf Financial Corp.
Entity Central Index Key	0001283582
Trading Symbol	fclf
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding		7,005,883
Entity Public Float			$ 52.9
Document Type	10-K
Document Period End Date	Dec. 31, 2015
Amendment Flag	false
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	FY

XML

CONSOLIDATED BALANCE SHEETS - USD ($)		Dec. 31, 2015	Dec. 31, 2014
ASSETS
Cash and due from banks		$ 14,865,466	$ 9,047,872
Interest-earning deposits		17,041,862	18,238,145
Federal funds sold		47,325,238	21,780,445
Total cash and cash equivalents		79,232,566	49,066,462
Interest-earning time deposits		1,685,000	2,021,970
Securities available for sale		103,756,614	104,225,692
Federal Home Loan Bank stock		1,747,763	2,887,763
Federal Reserve Bank stock		1,676,700	1,676,700
Loans, net of allowance for loan losses of $5,886,225 and $5,561,442 at 2015 and 2014, respectively		420,463,583	400,904,404
Loans held for sale		1,078,785	100,000
Property and equipment, net		9,871,440	10,380,310
Goodwill		11,385,323	11,385,323
Bank-owned life insurance		15,336,442	14,876,960
Core deposit intangible		138,000	196,000
Foreclosed assets		3,059,101	3,887,587
Mortgage servicing rights		1,109,720	961,823
Accrued interest receivable		1,620,309	1,762,310
Other assets		2,712,911	3,281,496
Total assets		654,874,257	607,614,800
Deposits:
Noninterest-bearing		69,296,354	68,170,743
Interest-bearing		463,861,939	442,135,896
Total deposits		533,158,293	510,306,639
Federal Home Loan Bank advances		15,995,485	2,487,745
Securities sold under agreements to repurchase		19,732,766	11,848,266
Subordinated debentures		4,000,000	4,000,000
Accrued interest payable		227,947	174,480
Other liabilities		1,485,891	1,667,777
Total liabilities		$ 574,600,382	$ 530,484,907
Commitments and Contingent Liabilities (Note 15)
Stockholders' Equity
Preferred stock, $.10 par value, 10,000,000 shares authorized, no shares issued
Common stock, $.10 par value, 20,000,000 shares authorized, 7,005,883 and 7,007,283 shares issued and outstanding at December 31, 2015 and December 31, 2014		$ 700,588	$ 700,728
Additional paid-in capital		55,806,256	55,818,936
Retained earnings		23,369,037	20,412,898
Accumulated other comprehensive income	[1]	397,994	197,331
Total stockholders' equity		80,273,875	77,129,893
Total liabilities and stockholders' equity		$ 654,874,257	$ 607,614,800

[1] All amounts are net of tax.

XML

CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Allowance for loan losses (in dollars)	$ 5,886,225	$ 5,561,442
Preferred stock, par value (in dollars per share)	$ 0.10	$ 0.10
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Common stock, par value (in dollars per share)	$ 0.10	$ 0.10
Common stock, shares authorized	20,000,000	20,000,000
Common stock, shares issued	7,005,883	7,007,283
Common stock, shares outstanding	7,005,883	7,007,283

XML

CONSOLIDATED STATEMENTS OF INCOME - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Interest and dividend income:
Interest and fees on loans	$ 17,244,225	$ 16,714,749
Securities:
Taxable interest income	1,081,056	1,232,399
Nontaxable interest income	1,142,291	1,136,630
Federal Reserve Bank dividends	100,602	37,726
Interest-earning deposits, federal funds sold, and other	141,305	196,224
Total interest and dividend income	19,709,479	19,317,728
Interest expense:
Deposits	2,161,937	2,174,066
Federal Home Loan Bank advances	172,159	250,018
Securities sold under agreements to repurchase	3,312	5,437
Subordinated debentures	90,174	86,901
Total interest expense	2,427,582	2,516,422
Net interest income	17,281,897	16,801,306
Provision (credit) for loan losses	(500,000)	(250,000)
Net interest income after provision (credit) for loan losses	17,781,897	17,051,306
Non-interest income:
Service fees on deposit accounts	500,841	454,903
Other service charges and fees	475,194	414,992
Loan servicing fees	299,435	281,979
Gain on sale of securities	10,821	109,712
Gain on sale of loans	893,342	630,779
Loss on sale of property and equipment		(80,545)
Loss on sale of foreclosed assets	(14,684)	(164,084)
Other	507,610	579,195
Total Other income	2,672,559	2,226,931
Non-interest expense:
Compensation and employee benefits	7,609,189	7,224,771
Occupancy expense	1,558,585	1,699,734
Data processing services	774,990	767,213
Director fees	197,233	183,300
Professional fees	544,164	587,907
FDIC insurance premiums	355,655	459,059
Foreclosed asset related expenses	441,284	506,885
Amortization of core deposit intangible	58,000	75,000
Amortization of mortgage servicing rights	82,929	106,970
Other	2,519,204	2,480,608
Total Other expenses	14,141,233	14,091,447
Income before income taxes	6,313,223	5,186,790
Income tax expense	1,675,469	1,360,598
Net income	$ 4,637,754	$ 3,826,192
Basic and diluted earnings per share (in dollars per share)	$ 0.66	$ 0.55
Dividends per share (in dollars per share)	$ 0.24	$ 0.24

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($)		12 Months Ended
		Dec. 31, 2015	Dec. 31, 2014
Statement of Comprehensive Income [Abstract]
Net income		$ 4,637,754	$ 3,826,192
Other comprehensive income:
Unrealized gains on securities available for sale arising during the period		350,050	3,109,425
Reclassification adjustment for realized gains included in income		(10,821)	(109,712)
Tax effect		(138,566)	(1,109,894)
Total other comprehensive income	[1]	200,663	1,889,819
Comprehensive income		$ 4,838,417	$ 5,716,011

[1] All amounts are net of tax.

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Total
Balance at Dec. 31, 2013	$ 700,728	$ 55,818,936	$ 18,268,454	$ (1,692,488)	$ 73,095,630
Increase (Decrease) in Stockholders' Equity
Net income			3,826,192		3,826,192
Other comprehensive income				1,889,819	1,889,819
Dividends ($0.24 per share)			(1,681,748)		(1,681,748)
Balance at Dec. 31, 2014	700,728	55,818,936	20,412,898	197,331	77,129,893
Increase (Decrease) in Stockholders' Equity
Net income			4,637,754		4,637,754
Other comprehensive income				200,663	200,663
Dividends ($0.24 per share)			(1,681,615)		(1,681,615)
Repurchase of 1,400 shares of common stock	(140)	(12,680)			(12,820)
Balance at Dec. 31, 2015	$ 700,588	$ 55,806,256	$ 23,369,037	$ 397,994	$ 80,273,875

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parentheticals) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Statement of Stockholders' Equity [Abstract]
Dividends paid per share (in dollars per share)	$ 0.24	$ 0.24
Stock repurchased, shares	1,400

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Cash flows from operating activities
Net income	$ 4,637,754	$ 3,826,192
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Deferred income taxes	(202,665)	148,198
Amortization (accretion) of:
Deferred loan origination costs, net	(33,880)	(47,784)
Premiums and discounts on securities	782,936	953,830
Core deposit intangible	58,000	75,000
Mortgage servicing rights	82,929	106,970
Fair value adjustments	(62,869)	(92,677)
Credit for loan losses	(500,000)	(250,000)
Depreciation	581,985	597,526
Gain on sale of securities available for sale	(10,821)	(109,712)
Gain on sale of loans	(893,342)	(630,779)
Loss on sale of property and equipment		80,545
Loss on sale of foreclosed assets	14,684	164,084
Write-down on foreclosed assets	355,500	202,694
Earnings on bank-owned life insurance	(459,482)	(379,065)
Increase in mortgage servicing rights	(230,826)	(150,546)
Proceeds from sales of loans held for sale	32,065,679	20,638,117
Originations of loans held for sale	(32,326,632)	(20,107,338)
Change in assets and liabilities:
Accrued interest receivable and other assets	774,685	(474,625)
Accrued interest payable	53,467	(25,284)
Other liabilities	(181,886)	204,595
Net cash provided by operating activities	4,505,216	4,729,941
Cash flows from investing activities
Purchase of interest-earning time deposits	(1,454,355)	(10,477)
Proceeds from maturities of interest-earning time deposits	1,791,325
Available for sale securities:
Purchases	(43,273,890)	(26,749,263)
Proceeds from calls, maturities, and principal repayments	41,719,661	37,021,352
Proceeds from sales	1,630,421	5,259,541
Redemption of FHLB stock	1,140,000
Purchase of Federal Reserve Bank stock		(1,676,700)
Increase in loans	(18,719,080)	(27,895,667)
Purchase of property and equipment	(89,186)	(1,456,558)
Proceeds from the sale of property and equipment		255,304
Proceeds from the sale of foreclosed assets	374,273	1,227,868
Purchase of bank-owned life insurance		(6,000,000)
Net cash used in investing activities	(16,880,831)	(20,024,600)
Cash flows from financing activities
Net increase in deposit accounts	22,851,654	7,766,947
Net increase (decrease) in securities sold under agreements to repurchase	7,884,500	(14,917,903)
Proceeds from Federal Home Loan Bank advances	25,000,000
Repayments of Federal Home Loan Bank advances	(11,500,000)	(11,500,000)
Repurchase of common stock	(12,820)
Cash dividends paid	(1,681,615)	(1,681,748)
Net cash provided by (used in) financing activities	42,541,719	(20,332,704)
Net increase (decrease) in cash and cash equivalents	30,166,104	(35,627,363)
Cash and cash equivalents:
Beginning	49,066,462	84,693,825
Ending	79,232,566	49,066,462
Supplemental schedule of noncash investing and financing activities
Assets acquired in settlement of loans		287,982
Loans made to finance sales of foreclosed assets	84,029	383,230
Cash paid during the period for:
Interest	2,366,375	2,533,966
Income taxes, net of refunds	$ 1,342,500	$ 1,535,000

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

First Clover Leaf Financial Corp. (the “Company” or “First Clover Leaf”) is a single-bank holding company, whose wholly-owned bank subsidiary, First Clover Leaf Bank (the “Bank”), provides deposits and loans to individual and corporate customers in Madison and St. Clair Counties in Illinois. In addition, the Bank recently opened a loan production office in Clayton, Missouri. The Bank is subject to competition from other financial institutions and nonfinancial institutions providing financial products and services. Additionally, the Company and the Bank are subject to the regulations of certain regulatory agencies and undergo periodic examinations by those regulatory agencies. In August 2014, the Bank converted from a federal savings and loan association to a nationally chartered bank. First Clover Leaf’s common stock is traded on the NASDAQ Capital Market under the symbol “FCLF.”

Principles of Consolidation: The consolidated financial statements include the accounts of the Company and the Bank and have been prepared in conformity with U.S. generally accepted accounting principles and conform to preponderant practices in the banking industry. The financial statements also include a wholly-owned entity on a deconsolidated basis, First Clover Leaf Statutory Trust I. All material intercompany accounts and transactions have been eliminated in the consolidation.

Use of Estimates: In preparing the accompanying consolidated financial statements, the Company’s management is required to make estimates and assumptions which affect the reported amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash Equivalents: For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks, cash items in process of clearing, and federal funds sold. Generally, federal funds are sold for one-day periods. Cash flows from loans, deposits, and securities sold under agreements to repurchase are treated as net increases or decreases in the statements of cash flows.

The Company is required to maintain reserve balances in cash or on deposit with the Federal Reserve Bank. Those reserve balances were approximately $10,438,000 and $6,575,000, respectively, at December 31, 2015 and 2014.

The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents.

Interest-Earning Time Deposits: Interest-earning time deposits in banks are carried at cost. At December 31, 2015 and 2014, interest-earning time deposits amounted to $1,685,000 and $2,021,970, respectively.

Securities: Securities classified as available for sale are those debt securities that the Company intends to hold for an indefinite period of time, but not necessarily to maturity. Any decision to sell a security classified as available for sale would be based on various factors, including significant movements in interest rates, changes in the maturity mix of the Company’s assets and liabilities, liquidity needs, regulatory capital considerations and other similar factors.

Securities available for sale are carried at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income, net of tax. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Gains and losses on the sale of securities are calculated on the trade date and are determined using the specific identification method.

The Company evaluates its debt securities for other-than-temporary impairment (“OTTI”) on an ongoing basis for those securities with a fair value below amortized cost. The review takes into consideration current market conditions, issuer rating changes and trends, the credit worthiness of the obligator of the security, current analysts’ evaluations, failure of the issuer to make scheduled interest or principal payments, the Company’s lack of intent to sell the security or whether it is more-likely-than-not that the Company will be required to sell the debt security before its anticipated recovery, as well as other qualitative factors. The term OTTI is not intended to indicate that the decline is permanent, but indicates that the prospects for a near-term recovery of value is not necessarily favorable, or that there is a lack of evidence to support a realizable value equal to or greater than the carrying value of the investment. Any portion of such a decline in value associated with credit loss is recognized in earnings as an impairment loss with the remaining noncredit-related component being recognized in other comprehensive income. A credit loss is determined by assessing whether the amortized cost basis of the security will be recovered, by comparing the present value of cash flows expected to be collected from the security, computed using original yield as the discount rate, to the amortized cost basis of the security. The shortfall of the present value of the cash flows expected to be collected in relation to the amortized cost basis is considered to be the "credit loss."

Federal Home Loan Bank Stock: The Company held Federal Home Loan Bank of Chicago (“FHLB”) stock of $1,747,763 and $2,887,763 for the years ended December 31, 2015 and 2014, respectively. The Company is required to maintain these equity securities as a member of the FHLB and in amounts as required by this institution. These equity securities are carried at cost, classified as "restricted" in that they can only be redeemed by the respective institution at par, and periodically evaluated for impairment based on ultimate recovery of par value. Therefore, they are less liquid than other tradable equity securities and their fair value is not readily available.

Federal Reserve Bank Stock: Federal Reserve Bank stock totaled $1,676,700 at December 31, 2015 and 2014. The Company is required to maintain these equity securities as a member of the Federal Reserve Bank and in amounts as required by this institution. These equity securities are carried at cost, classified as "restricted" in that they can only be sold back to the respective institution or another member institution at par, and periodically evaluated for impairment based on ultimate recovery of par value. Therefore, they are less liquid than other tradable securities and their fair value is not readily available.

Loans: The Company offers real estate, commercial and consumer loans to customers. A substantial portion of the loan portfolio is represented by real estate loans throughout Edwardsville, Illinois and the surrounding area. The ability of the Company’s debtors to comply with repayment terms is dependent upon the real estate and general economic conditions in this area.

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding unpaid principal balances adjusted for charge-offs, for the allowance for loan losses, and for any deferred costs (fees) on originated loans.

Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs (fees), are deferred and recognized as an adjustment of the related loan yield using the interest method.

The accrual of interest on real estate, commercial business, and consumer loans is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Consumer loans are typically charged off no later than 180 days past due. Past due status is based on contractual terms of the loan. In all cases, loans are placed on non-accrual or charged-off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not collected for loans that are placed on non-accrual or charged-off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Loans held for sale: Loans originated and intended for sale are carried at the lower of cost or estimated fair value which is based on market pricing. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income.

Allowance for Loan Losses: The allowance for loan losses is a valuation account for probable incurred credit losses. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required using our historical loan loss experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged off.

The allowance for loan losses is evaluated on at least a quarterly basis by management. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. Management considers the allowance for loan losses at December 31, 2015 and 2014 to be at an adequate level. However, changes may be necessary if further economic and other conditions differ substantially from the current environment. To the extent actual outcomes differ from the estimates, additional provision for credit losses may be required that would reduce future earnings.

Loans identified as losses by management, internal loan review and/or bank examiners are charged-off. Furthermore, consumer loan accounts are charged-off automatically based on regulatory requirements related to delinquency.

The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired. A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings. All troubled debt restructurings are classified as impaired.

Factors considered by management in determining impairment include payment status, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

All loans classified as substandard and loans over $250,000 categorized as special mention are evaluated for impairment. If a loan is impaired, we further test to see if it is considered collateral dependent. If the loan is collateral dependent, a portion of the allowance is allocated so that the loan is reported at the fair value of the collateral. If the loan is not collateral dependent, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate.

Troubled debt restructurings are separately identified for impairment disclosures and are measured at the present value of estimated future cash flows using the loan’s effective rate at inception. If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, the Company determines the amount of reserve in accordance with the accounting policy for the allowance for loan losses.

The general component of the allowance covers non-impaired loans. Once the non-impaired loans are separated into the specified loan pools, we analyze the pools using two criteria: historical loss data, and qualitative adjustments. Historical data is based on actual loss history specific to each portfolio segment. We utilize five years of data summarized by quarter. These data are analyzed and used to arrive at a base for our reserve percentage. The qualitative adjustments are determined based on various publications, market research, economic reports and management’s expertise and knowledge of the immediate lending market and include the following:

· Changes in sector’s portfolio health

· Changes in non-impaired classified assets

· National and/or local economic conditions

· Changes in financial industry/regulation

· Changes in value of underlying collateral

· Changes in segment concentrations

· Changes in volume/nature of loan portfolio

· Changes in past dues, non-accruals/asset quality

· Changes in lending policies/underwriting practices

· Changes in loan review/oversight

· Changes in staff depth/experience

· Changes in competition/legal

The consideration of all of these factors results in a loss allocation percentage for each portfolio segment. The following portfolio segments have been identified:

Real Estate Loans:

One-to-four family (owner occupied and non-owner occupied)

Multi-family

Commercial (owner occupied, non-owner occupied, farmland, and raw land)

Construction and land

Commercial

Commercial business

Consumer:

Home equity

Automobile and other

The Company has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and presents these policies to the board of directors at least annually. A reporting system supplements the review process by providing management with reports related to loan production, loan quality, loan delinquencies and non-performing and potential problem loans.

One-to-four family real estate loans are predominately collateralized by properties located in our primary market area. Due to high customer demand in the continuing low interest rate environment, virtually all of these loans have fixed rates of interest. We generally sell most of the conforming, fixed-rate loans that we originate, but we generally retain the servicing rights on these loans. We may generally lend up to 80% of the property’s appraised value, or up to 90% of the property’s appraised value if the borrower obtains private mortgage insurance. We require title insurance on all of our one-to-four family real estate loans, and we also require that fire and extended coverage casualty insurance be maintained in an amount equal to at least the lesser of the loan balance or the replacement cost of the improvements on the property. We also require a property appraisal for all one-to-four family loans that are underwritten to comply with secondary market standards. Appraisals are conducted by independent or in-house licensed appraisers from a list approved by our board of directors.

Multi-family real estate loans are generally secured by apartment buildings and rental properties with five or more units. The majority of our multi-family real estate loans are secured by properties located within our market area. Multi-family real estate loans generally are offered with interest rates that adjust after one, three or five years. The majority of these loans either float with the prime rate or they are fixed balloon loans. When originating multi-family real estate loans we evaluate the qualifications and financial condition of the borrower, profitability and expertise, as well as the value and condition of the mortgaged property securing the loans. We also consider the financial resources of the borrower, the borrower’s experience in owning or managing a similar property, and the borrower’s payment history with us and other financial institutions. Multi-family real estate loans are generally originated in amounts up to 85% of the lower of the sale price or the appraised value of the mortgaged property securing the loans. All multi-family real estate loans over $250,000 are appraised by independent or in-house licensed appraisers approved by the board of directors.

Commercial real estate loans are secured predominately by office buildings, and to a lesser extent warehouse properties and more specialized properties such as churches and schools. We originate commercial real estate loans generally with a typical term of five years with balloon payments. These loans generally amortize over 15 to 25 years. We offer both adjustable and fixed rates of interest on commercial real estate loans, with the interest rate for adjustable rate loans tied to the prime interest rate. We may generally lend up to 85% of the properties appraised value. We require independent or in-house licensed appraisals for all commercial real estate loans in excess of $250,000. Creditworthiness is determined by considering the character, experience, management and financial strength of the borrower and the ability of the property to generate adequate funds to cover both operating expenses and debt service. We require title insurance on all of our commercial real estate loans, and we also require that fire and extended coverage casualty insurance be maintained.

Construction lending generally involves a greater degree of risk than our other real estate lending. The repayment of the construction loan is, to a great degree, dependent upon the successful and timely completion of the project. The construction phase of a loan for a one-to-four family, owner-occupied property generally lasts up to six months with loan-to- value ratios of up to 80%, (or up to 90% if the borrower obtains private mortgage insurance) of the appraised estimated value of the completed property or cost, whichever is less. The duration and loan to value ratios for non one-to-four family, owner-occupied properties vary depending on the property type. Our procedures for underwriting construction loans include an assessment of the borrower’s credit history and the borrower’s ability to meet other existing debt obligations, as well as payment of principal and interest on the proposed loan. We use the same underwriting standards and procedures for construction/permanent lending as we do for one-to-four family residential real estate lending.

Commercial business loans vary in type and may be secured or unsecured for the purpose of financing equipment acquisition, expansion, working capital and other general business purposes. The terms of these loans are generally for less than five years. The loans are either fixed-rate or carry variable interest rates indexed to the prime rate. Commercial credit decisions are based upon a complete credit review of the borrower. A determination is made as to the borrower’s ability to repay in accordance with the proposed terms as well as an overall assessment of the credit risks involved. Personal guarantees of borrowers are generally required. In evaluating a commercial business loan, we consider debt service capabilities, actual and projected cash flows, and the borrower’s inherent industry risks. Credit agency reports of an individual borrower’s or guarantor’s credit history as well as bank checks and trade investigations supplement the analysis of the borrower’s creditworthiness.

Although we originate fixed-rate and adjustable-rate loans, our ability to generate each type of loan depends upon borrower demand, market interest rates, borrower preference for fixed-versus adjustable-rate loans, and the interest rates offered on each type of loan by competing lenders in our market area. Loan originations are derived from a number of sources, including existing or prior customers and walk-in customers.

Consumer loans consist primarily of home equity lines of credit, automobile loans, loans secured by deposits and securities, and unsecured personal loans. Home equity lines of credit account for the largest segment of our consumer loans. They are generally made for owner-occupied homes and are secured by first or second mortgages on the residential properties. We generally offer home equity lines of credit with a maximum loan to appraised value ratio of 90%, including senior liens on the subject property. Our procedures for underwriting consumer loans include an assessment of the borrower’s credit history and ability to meet other existing debt obligations, as well as payments of principal and interest on the proposed loans. Although the borrower’s creditworthiness is a primary consideration, the underwriting process also includes a comparison of the value of the collateral security, if any, to the proposed loan.

Property and Equipment: Land is stated at cost. Property and equipment are stated at cost less accumulated depreciation. Depreciation is determined under the straight-line method over the balance of estimated useful lives of the assets, which are 15-50 years for buildings and improvements and 3-10 years for furniture and equipment.

Goodwill: Goodwill resulting from business combinations is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually or more frequently if events and circumstances exist that indicate that a goodwill impairment test should be performed. The Company has selected September 30 as the date to perform the annual impairment test. Our annual impairment assessment for 2015 and 2014 resulted in no goodwill impairment. Goodwill is the only intangible asset with an indefinite life on our balance sheet.

Bank-Owned Life Insurance: The Bank has purchased life insurance policies on certain key employees. Bank-owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

Core Deposit Intangible: Core deposit intangible represents the value of acquired customer relationships. The balance created from our 2008 acquisition of Partners Financial Holdings, Inc. is being amortized over 9.7 years using the double declining balance method.

Foreclosed Assets: Real estate acquired through foreclosure or deed in lieu of foreclosure represents specific assets to which the Bank has acquired legal title in satisfaction of indebtedness. Such real estate is initially recorded at the property’s fair value at the date of foreclosure less estimated selling costs. Initial valuation adjustments, if any, are charged against the allowance for losses on loans. Property is evaluated regularly to ensure the recorded amount is supported by its current fair value. Subsequent declines in estimated fair value are charged to expense when incurred. Revenues and expenses related to holding and operating these properties are recognized or expensed as incurred.

Mortgage Servicing Rights: Servicing assets are recognized as separate assets when rights are acquired through purchase or through sale of financial assets. For sales of one-to-four family loans, a portion of the cost of originating the loan is allocated to the servicing right based on fair value. Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, the custodial earnings rate, an inflation rate, ancillary income, prepayment speeds and default rates and losses. Servicing assets are evaluated for impairment based upon the fair value of the rights as compared to amortized cost. To determine impairment the Company applies a pooling methodology to the servicing valuation, in which loans with similar characteristics are "pooled" together for valuation purposes. Once pooled, each grouping of loans is evaluated on a discounted earnings basis to determine the present value of future earnings that a purchaser could expect to realize from the portfolio. Earnings are projected from a variety of sources including loan servicing fees, interest earned on float, net interest earned on escrows, miscellaneous income and costs to service the loans. If the Company later determines that all or a portion of the impairment no longer exists for a particular pool, a reduction of the allowance may be recorded as an increase to income. Capitalized servicing rights are amortized in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets. 

Income Taxes: Deferred income tax assets and liabilities are computed annually for differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to amounts which are more likely than not realizable. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Income tax expense (benefit) is the tax payable (refundable) for the period plus or minus the change during the period in deferred tax assets and liabilities.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

The Company recognizes interest and/or penalties related to income tax matters in income tax expense.

Earnings Per Common Share: Basic earnings per share represents net income available to common stockholders divided by the weighted average number of common shares outstanding. Diluted earnings per share reflect additional common shares that would have been outstanding if dilutive potential common shares had been issued. No dilutive potential common shares existed at December 31, 2015 and 2014.

	Year Ended
	December 31,
	2015		2014
Net income	$	4,637,754	$	3,826,192
Basic weighted average shares outstanding		7,006,715		7,007,283
Dilutive potential common shares		-		-
Diluted weighted average shares outstanding		7,006,715		7,007,283
Basic and diluted earnings per share	$	0.66	$	0.55

Fair Value Measurements: Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Notes 16 and 17. Fair value estimates involve uncertainties and matters of significant judgment. Changes in assumptions or in market conditions could significantly affect the estimates.

Comprehensive Income: Comprehensive income consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses on securities available for sale which are also recognized as separate components of equity.

Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there are any such matters at this time that will have a material effect on the financial statements.

Operating Segments: While management monitors revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Company-wide basis. Operating segments are aggregated into one as operating results for all segments are similar. Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment.

Recent Accounting Pronouncements: The following provides a description of recently adopted or newly issued but not yet effective accounting standards that could have a material effect on our financial statements:

In May 2014, the Financial Accounting Standard Board (the “FASB”) issued an update creating FASB Topic 606, Revenue from Contracts with Customers.  The guidance in this update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts).  The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.  The guidance provides steps to follow to achieve the core principle.  An entity should disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.  Qualitative and quantitative information is required about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract.  The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2017.  We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements.

In June 2014, the FASB amended existing guidance related to repurchase-to-maturity transactions, repurchase financings, and disclosures (ASU 2014-11, Transfers and Servicing (Topic 860) - Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures). These amendments align the accounting for repurchase-to-maturity transactions and repurchase agreements executed as a repurchase financing with the accounting for other typical repurchase agreements. Pursuant to the revised guidance, these transactions are accounted for as secured borrowings. The guidance eliminates sale accounting for repurchase-to-maturity transactions and supersedes the guidance under which a transfer of a financial asset and a contemporaneous repurchase financing could be accounted for on a combined basis as a forward agreement, which result in outcomes referred to as off-balance-sheet accounting. These amendments require a new disclosure for transactions economically similar to repurchase agreements in which the transferor retains substantially all of the exposure to the economic return on the transferred financial assets throughout the term of the transaction. These amendments also require expanded disclosures about the nature of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings. The accounting changes in this update are effective for the first interim or annual period beginning after December 15, 2014. In addition, for public companies, the disclosure for certain transactions accounted for as a sale is effective for the first interim or annual period beginning on or after December 15, 2014, and the disclosure for transactions accounted for as secured borrowings is required for annual periods beginning after December 15, 2014, and interim periods beginning after March 15, 2015. The adoption of this standard did not have a material effect on the Company’s operating results or financial condition.

In January 2016, the FASB issued an update (ASU No. 2016-01, Financial Instruments - Recognition and Measurement of Financial Assets and Liabilities). The new guidance is intended to improve the recognition and measurement of financial instruments by requiring: equity investments (other than equity method or consolidation) to be measured at fair value with changes in fair value recognized in net income; public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; separate presentation of financial assets and financial liabilities by measurement category and form of financial assets (i.e. securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are not public business entities; eliminating the requirement for non-public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is to be required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and requiring a reporting organization to present separately in other comprehensiveincome the portion of the total change in fair value of a liability resulting from the change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with thefair value option for financial instruments. The new guidance is effective for public business entities for fiscal years beginningafter December 15, 2017. We are currently evaluating the impact of adopting the new guidance on the consolidated financialstatements.

Reclassifications: Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior year net income or stockholders’ equity.

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SECURITIES AVAILABLE FOR SALE

12 Months Ended

Dec. 31, 2015

Investments, Debt and Equity Securities [Abstract]

SECURITIES AVAILABLE FOR SALE

NOTE 2 – SECURITIES AVAILABLE FOR SALE

The amortized cost and fair values of securities with gross unrealized gains and losses are summarized as follows:

	December 31, 2015
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		(Losses)			Value
U.S. government agency obligations	$	29,183,789	$	26,006	$	(161,693	)	$	29,048,102
State and municipal securities		44,746,083		1,156,547		(168,391	)		45,734,239
Other securities		3,501		-		-			3,501
Mortgage-backed: residential		29,170,791		60,300		(260,319	)		28,970,772
	$	103,104,164	$	1,242,853	$	(590,403	)	$	103,756,614

	December 31, 2014
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		(Losses)			Value
U.S. government agency obligations	$	26,280,359	$	31,628	$	(442,381	)	$	25,869,606
State and municipal securities		44,828,579		1,025,719		(280,690	)		45,573,608
Other securities		3,501		-		-			3,501
Mortgage-backed: residential		32,800,032		176,321		(197,376	)		32,778,977
	$	103,912,471	$	1,233,668	$	(920,447	)	$	104,225,692

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 December 31, 2015 and 2014, are summarized as follows:

	December 31, 2015
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
U.S. government agency obligations	$	15,928,702	$	(82,008	)	$	5,934,944	$	(79,685	)	$	21,863,646	$	(161,693	)
State and municipal securities		7,666,691		(66,224	)		4,927,928		(102,167	)		12,594,619		(168,391	)
Mortgage-backed: residential		18,251,546		(183,188	)		4,227,473		(77,131	)		22,479,019		(260,319	)
	$	41,846,939	$	(331,420	)	$	15,090,345	$	(258,983	)	$	56,937,284	$	(590,403	)

	December 31, 2014
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
U.S. government agency obligations	$	6,477,461	$	(26,717	)	$	12,615,391	$	(415,664	)	$	19,092,852	$	(442,381	)
State and municipal securities		7,102,666		(43,614	)		9,369,188		(237,076	)		16,471,854		(280,690	)
Mortgage-backed: residential		1,474,590		(28,841	)		15,744,126		(168,535	)		17,218,716		(197,376	)
	$	15,054,717	$	(99,172	)	$	37,728,705	$	(821,275	)	$	52,783,422	$	(920,447	)

Management evaluates the investment portfolio on at least a quarterly basis to determine if investments have suffered an other-than-temporary decline in value. In addition, management monitors market trends, investment grades, bond defaults and other circumstances to identify trends and circumstances that might impact the carrying value of securities.

At December 31, 2015, the Company had 67 securities in an unrealized loss position which included: 15 agency securities, 27 state and municipal securities, and 25 mortgage-backed securities. This was a decrease from 72 securities at December 31, 2014. The securities in an unrealized loss position at December 31, 2015 had an aggregate valuation adjustment of 1.02% from the Company’s amortized cost basis of these securities. The unrealized losses resulted from changes in market interest rates and liquidity, not from changes in the probability of contractual cash flows. While 20 of our securities have been in an unrealized loss position for more than 12 months and were at a 1.68% unrealized loss position of the Company’s amortized cost basis on these securities at December 31, 2015, which we believe is interest rate driven, there have been no defaults to date, and the securities remain above investment grade. The Company does not intend to sell the securities, and it is not more-likely-than-not that the Company will be required to sell the securities prior to recovery of the amortized cost. Full collection of the amounts due according to the contractual terms of the securities is expected; therefore, the Company does not consider these investments to be other-than-temporarily impaired at December 31, 2015.

The amortized cost and fair value at December 31, 2015, by contractual maturity, are shown below. Maturities may differ from contractual maturities in mortgage-backed securities because the mortgages underlying the securities may be called or repaid without any penalties. Other securities have no stated maturity. Therefore, stated maturities are not disclosed for these categories.

	Amortized		Fair
	Cost		Value
Due in one year or less	$	6,109,210	$	6,113,631
Due after one year through five years		24,981,003		24,977,510
Due after five years through ten years		31,423,272		32,025,396
Due after ten years		11,416,387		11,665,804
Other securities - non-maturing		3,501		3,501
Mortgage-backed: residential		29,170,791		28,970,772
	$	103,104,164	$	103,756,614

Securities with a carrying amount of approximately $66,882,000 and $66,600,000 were pledged to secure deposits as required or permitted by law at December 31, 2015 and 2014, respectively.

At year-end 2015 and 2014, there were no holdings of securities of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10% of stockholders’ equity. The Company received proceeds of $1,630,421 from the sale of securities during 2015 resulting in gross realized gains of $30,860 and gross realized losses of $20,039. The Company received proceeds of $5,259,541 from the sale of securities during 2014 resulting in gross realized gains of $131,586 and gross realized losses of $21,874. The tax related to these net realized gains and losses was $4,220 and $40,593 for 2015 and 2014, respectively.

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LOANS

12 Months Ended

Dec. 31, 2015

Loans and Leases Receivable Disclosure [Abstract]

LOANS

NOTE 3 - LOANS

The components of loans are as follows:

	At December 31,
	2015			2014
Real estate loans:
One-to-four family	$	110,792,710		$	117,591,822
Multi-family		41,182,067			41,391,862
Commercial		153,634,426			129,415,314
Construction and land		13,588,626			28,590,745
		319,197,829			316,989,743
Commercial business		89,743,511			73,984,867
Consumer:
Home equity		13,656,008			13,523,985
Automobile and other		3,523,696			1,772,431
		17,179,704			15,296,416
Total gross loans		426,121,044			406,271,026
Deferred loan origination costs, net		228,764			194,820
Allowance for loan losses		(5,886,225	)		(5,561,442	)
Loans, net	$	420,463,583		$	400,904,404

On occasion, the Company originates loans secured by single-family dwellings with loan to value ratios exceeding 90%. As of December 31, 2015 and December 31, 2014, these loans represented 2.07% and 2.17%, respectively, of our combined one-to-four family and home equity portfolios. The Company does not consider the level of such loans to be a significant concentration of credit as of December 31, 2015 or December 31, 2014.

The recorded investment in loans does not include accrued interest and loan origination fees due to immateriality. The allowance for loan losses does not include a component for undisbursed loan commitments; rather, this amount is included in other liabilities.

The following tables present our past-due loans, segregated by class:

December 31, 2015
	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Past Due Loans		Current Loans		Total		Accruing Loans 90 or More Days Past Due
Real estate loans:
One-to-four family	$	331,479	$	259,240	$	33,839	$	624,558	$	110,168,152	$	110,792,710	$	-
Multi-family		-		-		-		-		41,182,067		41,182,067		-
Commercial		-		-		111,706		111,706		153,522,720		153,634,426		-
Construction and land		-		-		-		-		13,588,626		13,588,626		-
		331,479		259,240		145,545		736,264		318,461,565		319,197,829		-
Commercial business		-		-		87,254		87,254		89,656,257		89,743,511		-
Consumer:
Home equity		57,625		-		89,407		147,032		13,508,976		13,656,008		-
Automobile and other		500		-		-		500		3,523,196		3,523,696		-
		58,125		-		89,407		147,532		17,032,172		17,179,704		-
Total	$	389,604	$	259,240	$	322,206	$	971,050	$	425,149,994	$	426,121,044	$	-

December 31, 2014
	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Past Due Loans		Current Loans		Total		Accruing Loans 90 or More Days Past Due
Real estate loans:
One-to-four family	$	843,185	$	166,965	$	408,228	$	1,418,378	$	116,173,444	$	117,591,822	$	-
Multi-family		-		-		-		-		41,391,862		41,391,862		-
Commercial		100,220		-		29,810		130,030		129,285,284		129,415,314		-
Construction and land		-		-		-		-		28,590,745		28,590,745		-
		943,405		166,965		438,038		1,548,408		315,441,335		316,989,743		-
Commercial business		-		25,095		-		25,095		73,959,772		73,984,867		-
Consumer:
Home equity		41,930		-		48,088		90,018		13,433,967		13,523,985		-
Automobile and other		-		-		-		-		1,772,431		1,772,431		-
		41,930		-		48,088		90,018		15,206,398		15,296,416		-
Total	$	985,335	$	192,060	$	486,126	$	1,663,521	$	404,607,505	$	406,271,026	$	-

All loans are reviewed on a regular basis and are placed on non-accrual status when, in the opinion of management, there is reasonable probability of loss of principal or collection of additional interest is deemed insufficient to warrant further accrual. Generally, we place all loans 90 days or more past due on non-accrual status. However, exceptions may occur when a loan is in process of renewal, but it has not yet been completed. In addition, we may place any loan on non-accrual status if any part of it is classified as loss or if any part has been charged-off. When a loan is placed on non-accrual status, total interest accrued and unpaid to date is reversed. Subsequent payments are either applied to the outstanding principal balance or recorded as interest income, depending on the assessment of the ultimate collectability of the loan.

Year-end non-accrual loans, segregated by class, are as follows:

	At December 31,
	2015		2014
Real estate loans:
One-to-four family	$	601,833	$	589,170
Multi-family		995,659		1,340,779
Commercial		1,245,023		1,242,009
Construction and land		-		1,431,619
		2,842,515		4,603,577
Commercial business		263,233		25,095
Consumer:
Home equity		124,627		48,088
Automobile and other		8,558		-
		133,185		48,088
Total non-accrual loans	$	3,238,933	$	4,676,760

The following tables present the activity in the allowance for loan losses for the years ended December 31, 2015 and 2014. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

Year ended December 31, 2015
	Beginning Balance		Charge-offs			Recoveries		Provision			Ending Balance
Real estate loans:
One-to-four family	$	1,119,762	$	(25,258	)	$	21,576	$	23,650		$	1,139,730
Multi-family		436,833		-			11,753		25,782			474,368
Commercial		1,650,290		(79,248	)		11,923		401,123			1,984,088
Construction and land		1,194,917		-			811,350		(1,508,275	)		497,992
		4,401,802		(104,506	)		856,602		(1,057,720	)		4,096,178
Commercial business		951,215		-			73,761		409,711			1,434,687
Consumer
Home equity		198,150		-			-		81,520			279,670
Automobile and other		10,275		(1,900	)		826		66,489			75,690
		208,425		(1,900	)		826		148,009			355,360
Total	$	5,561,442	$	(106,406	)	$	931,189	$	(500,000	)	$	5,886,225

Year ended December 31, 2014
	Beginning Balance		Charge-offs			Recoveries		Provision			Ending Balance
Real estate loans:
One-to-four family	$	1,424,663	$	(263,258	)	$	466,287	$	(507,930	)	$	1,119,762
Multi-family		661,358		-			-		(224,525	)		436,833
Commercial		1,454,455		(1,876	)		-		197,711			1,650,290
Construction and land		668,085		-			230,000		296,832			1,194,917
		4,208,561		(265,134	)		696,287		(237,912	)		4,401,802
Commercial business		1,219,080		(190,255	)		13,048		(90,658	)		951,215
Consumer
Home equity		116,478		(43,519	)		9,402		115,789			198,150
Automobile and other		46,549		-			945		(37,219	)		10,275
		163,027		(43,519	)		10,347		78,570			208,425
Total	$	5,590,668	$	(498,908	)	$	719,682	$	(250,000	)	$	5,561,442

The following tables separate the allocation of the allowance for loan losses and the loan balances between loans evaluated both individually and collectively as of December 31, 2015 and 2014:

December 31, 2015
	Period-end allowance allocated to loans:						Loans evaluated for impairment:
	Individually evaluated for impairment		Collectively evaluated for impairment		Ending Balance		Individually		Collectively		Ending Balance
Real estate loans:
One-to-four family	$	116,724	$	1,023,006	$	1,139,730	$	905,974	$	109,886,736	$	110,792,710
Multi-family		-		474,368		474,368		995,659		40,186,408		41,182,067
Commercial		183,966		1,800,122		1,984,088		2,735,652		150,898,774		153,634,426
Construction and land		-		497,992		497,992		186,888		13,401,738		13,588,626
		300,690		3,795,488		4,096,178		4,824,173		314,373,656		319,197,829
Commercial business		259,787		1,174,900		1,434,687		586,103		89,157,408		89,743,511
Consumer:
Home equity		49,782		229,888		279,670		141,649		13,514,359		13,656,008
Automobile and other		-		75,690		75,690		8,558		3,515,138		3,523,696
		49,782		305,578		355,360		150,207		17,029,497		17,179,704
Total	$	610,259	$	5,275,966	$	5,886,225	$	5,560,483	$	420,560,561	$	426,121,044

December 31, 2014
	Period-end allowance allocated to loans:						Loans evaluated for impairment:
	Individually evaluated for impairment		Collectively evaluated for impairment		Ending Balance		Individually		Collectively		Ending Balance
Real estate loans:
One-to-four family	$	91,688	$	1,028,074	$	1,119,762	$	1,266,717	$	116,325,105	$	117,591,822
Multi-family		-		436,833		436,833		1,340,779		40,051,083		41,391,862
Commercial		155,863		1,494,427		1,650,290		2,267,362		127,147,952		129,415,314
Construction and land		-		1,194,917		1,194,917		1,639,030		26,951,715		28,590,745
		247,551		4,154,251		4,401,802		6,513,888		310,475,855		316,989,743
Commercial business		115,446		835,769		951,215		140,541		73,844,326		73,984,867
Consumer:
Home equity		9,902		188,248		198,150		65,452		13,458,533		13,523,985
Automobile and other		-		10,275		10,275		-		1,772,431		1,772,431
		9,902		198,523		208,425		65,452		15,230,964		15,296,416
Total	$	372,899	$	5,188,543	$	5,561,442	$	6,719,881	$	399,551,145	$	406,271,026

Credit Quality Indicators: As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt and comply with various terms of their loan agreements. The Company considers current financial information, historical payment experience, credit documentation, public information and current economic trends. Generally, all sizeable credits receive a financial review no less than annually to monitor and adjust, if necessary, the credit’s risk profile. Credits classified as watch generally receive a review more frequently than annually. The risk category of homogeneous loans such as consumer loans and smaller balance loans is evaluated when the loan becomes delinquent. For special mention, substandard, and doubtful credit classifications, the frequency of review is increased to no less than quarterly in order to determine potential impact on credit loss estimates.

The Company categorizes loans into the following risk categories based on relevant information about the ability of borrowers to service their debt:

Pass - A pass asset is well protected by the current worth and paying capacity of the obligor (or guarantors, if any) or by the fair value, less cost to acquire and sell, of any underlying collateral in a timely manner. Pass assets also include certain assets considered watch, which are still protected by the worth and paying capacity of the borrower but deserve closer attention and a higher level of credit monitoring.

Special Mention - A special mention asset has potential weaknesses that deserve management’s close attention. The asset may also be subject to a weak or speculative market or to economic conditions, which may, in the future adversely affect the obligor. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Bank’s credit position at some future date. Special mention assets are not adversely classified and do not expose the Bank to sufficient risk to warrant adverse classification.

Substandard - A substandard asset is an asset with a well-defined weakness that jeopardizes repayment, in whole or in part, of the debt. These credits are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged. These assets are characterized by the distinct possibility that the institution will sustain some loss of principal and/or interest if the deficiencies are not corrected. It is not necessary for a loan to have an identifiable loss potential in order to receive this rating.

Doubtful - An asset that has all the weaknesses inherent in the substandard classification, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable. The possibility of loss is extremely likely, but it is not identified at this point due to pending factors.

Loss - An asset, or portion thereof, classified as loss is considered uncollectible and of such little value that its continuance on the Company’s books as an asset is not warranted. This classification does not necessarily mean that an asset has no recovery or salvage value; rather, there is much doubt about whether, how much, or when the recovery would occur. As such, it is not practical or desirable to defer the write-off. Therefore, there is no balance to report at December 31, 2015 or 2014.

The following tables present our credit quality indicators, segregated by class, as of December 31, 2015 and 2014:

December 31, 2015
	Pass		Special Mention		Substandard		Doubtful		Total
Real estate loans:
One-to-four family	$	109,161,526	$	772,127	$	859,057	$	-	$	110,792,710
Multi-family		37,571,827		2,614,581		995,659		-		41,182,067
Commercial		143,837,755		5,295,878		4,500,793		-		153,634,426
Construction and land		13,143,977		-		444,649		-		13,588,626
		303,715,085		8,682,586		6,800,158		-		319,197,829
Commercial business		85,604,981		3,323,003		815,527		-		89,743,511
Consumer:
Home equity		13,504,552		-		68,241		83,215		13,656,008
Automobile and other		3,510,289		-		4,849		8,558		3,523,696
		17,014,841		-		73,090		91,773		17,179,704
Total	$	406,334,907	$	12,005,589	$	7,688,775	$	91,773	$	426,121,044

December 31, 2014
	Pass		Special Mention		Substandard		Doubtful		Total
Real estate loans:
One-to-four family	$	116,218,120	$	280,067	$	936,372	$	157,263	$	117,591,822
Multi-family		37,340,022		2,711,061		1,340,779		-		41,391,862
Commercial		113,447,231		12,016,499		3,951,584		-		129,415,314
Construction and land		26,892,171		-		1,698,574		-		28,590,745
		293,897,544		15,007,627		7,927,309		157,263		316,989,743
Commercial business		73,372,401		471,925		140,541		-		73,984,867
Consumer:
Home equity		13,444,685		-		79,300		-		13,523,985
Automobile and other		1,772,431		-		-		-		1,772,431
		15,217,116		-		79,300		-		15,296,416
Total	$	382,487,061	$	15,479,552	$	8,147,150	$	157,263	$	406,271,026

The following tables provide details of impaired loans, segregated by class, as of and for the periods indicated. The unpaid contractual balance represents the recorded balance prior to any partial charge-offs. The recorded investment represents customer balances net of any partial charge-offs recognized on the loans.

	As of December 31, 2015						As of December 31, 2014
	Unpaid Contractual Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Contractual Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no related allowance recorded:
Real estate loans:
One-to-four family	$	648,750	$	648,750	$	-	$	551,510	$	467,191	$	-
Multi-family		1,478,137		995,659		-		1,823,257		1,340,779		-
Commercial		2,246,797		2,193,291		-		768,533		768,533		-
Construction and land		186,888		186,888		-		3,412,264		1,639,030		-
		4,560,572		4,024,588		-		6,555,564		4,215,533		-
Commercial business		87,254		87,254		-		215,350		25,095		-
Consumer:
Home equity		52,242		52,242		-		55,550		55,550		-
Automobile and other		8,558		8,558		-		-		-		-
		60,800		60,800		-		55,550		55,550		-
Subtotal	$	4,708,626	$	4,172,642	$	-	$	6,826,464	$	4,296,178	$	-
With an allowance recorded:
Real estate loans:
One-to-four family	$	257,224	$	257,224	$	116,724	$	851,010	$	799,526	$	91,688
Commercial		685,759		542,361		183,966		1,691,064		1,498,829		155,863
		942,983		799,585		300,690		2,542,074		2,298,355		247,551
Commercial business		498,849		498,849		259,787		115,446		115,446		115,446
Consumer:
Home equity		89,407		89,407		49,782		9,902		9,902		9,902
Subtotal		1,531,239		1,387,841		610,259		2,667,422		2,423,703		372,899
Total	$	6,239,865	$	5,560,483	$	610,259	$	9,493,886	$	6,719,881	$	372,899

	For the year ended December 31, 2015						For the year ended December 31, 2014
	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized		Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized
With no related allowance recorded:
Real estate loans:
One-to-four family	$	710,678	$	2,200	$	-	$	633,963	$	2,306	$	-
Multi-family		1,123,043		30		-		1,309,419		30		-
Commercial		1,417,242		26,003		-		853,898		7,709		-
Construction and land		745,332		2,144		-		1,183,097		2,376		-
		3,996,295		30,377		-		3,980,377		12,421		-
Commercial business		22,470		389		-		345,137		-		-
Consumer:
Home equity		53,926		1,096		-		106,734		1,101		-
Automobile and other		1,712		-		-		-		-		-
		55,638		1,096		-		106,734		1,101		-
Subtotal	$	4,074,403	$	31,862	$	-	$	4,432,248	$	13,522	$	-
With an allowance recorded:
Real estate loans:
One-to-four family	$	481,678	$	8,968	$	-	$	667,999	$	11,874	$	-
Multi-family		-		-		-		414,443		-		-
Commercial		933,199		8,823		-		1,367,490		18,584		-
Construction and land		-		2,430		-		53,062		2,430		-
		1,414,877		20,221		-		2,502,994		32,888		-
Commercial business		305,930		11,498		-		121,785		8,577		-
Consumer:
Home equity		58,779		68		-		2,475		-		-
Automobile and other		394		-		-		-		-		-
		59,173		68		-		2,475		-		-
Subtotal		1,779,980		31,787		-		2,627,254		41,465		-
Total	$	5,854,383	$	63,649	$	-	$	7,059,502	$	54,987	$	-

Troubled Debt Restructurings:

During the years ending December 31, 2015 and 2014, the terms of certain loans were modified as troubled debt restructurings. The modification of the terms of such loans included one or a combination of the following: (1) payment and maturity changes not available in the market; and (2) a reduction of the stated interest rate of the loan.

The Company had allocations of $380,593 of specific reserves on $3,925,262 of loans to customers whose loan terms were modified in troubled debt restructurings as of December 31, 2015. The Company had allocations of $328,442 of specific reserves on $5,661,342 of loans to customers whose loan terms were modified in troubled debt restructurings as of December 31, 2014. The Company had no commitments to lend additional amounts as of December 31, 2015 to customers with outstanding loans that are classified as troubled debt restructurings. The amount the Company had committed to lend to loan customers that are classified as troubled debt restructurings was not material as of December 31, 2014.

The following tables present loans, by class, modified as troubled debt restructurings that occurred during the years ended December 31, 2015 and 2014:

Year ended December 31, 2015
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Real estate loans:
Commercial		2	$	1,000,116	$	1,000,116
Commercial business		1		162,167	$	162,167
Consumer:
Home equity		1		35,221		35,221
Total		4	$	1,197,504	$	1,197,504

The troubled debt restructurings described above resulted in a net increase in the allowance for loan losses of $27,897 but resulted in no charge offs during the year ended December 31, 2015.

Year ended December 31, 2014
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Real estate loans:
One-to-four family		2	$	504,465	$	504,465
Construction and land		1		985,787		985,787
Total		3	$	1,490,252	$	1,490,252

The troubled debt restructurings described above resulted in a net increase in the allowance for loan losses of $46,420 but resulted in no charge offs during the year ended December 31, 2014.

There were no payment defaults within twelve months following the modifications during the years ended December 31, 2015 and 2014.

A loan is considered to be in payment default once it is 60 days contractually past due under the modified terms.

Loans to Affiliates:

The Bank has had, and may be expected to have in the future, banking transactions in the ordinary course of business with directors, executive officers, their immediate families, and companies in which these individuals have a 10% or more beneficial ownership. Changes in these loans for the years ended December 31, 2015 and 2014 are summarized as follows:

	Year Ended
	December 31,
	2015			2014
Balance, beginning of year	$	11,845,673		$	7,932,877
Additions		1,219,504			7,066,199
Repayments		(1,231,984	)		(3,050,455	)
Change in status of borrower		-			(102,948	)
Balance, end of year	$	11,833,193		$	11,845,673

The change in status of borrower represents the loans that are no longer required to be reported due to an executive officer or director no longer being associated with the Company.

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PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2015

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

NOTE 4 - PROPERTY AND EQUIPMENT

The components of property and equipment are as follows:

	December 31,
	2015			2014
Land	$	1,829,738		$	1,829,738
Buildings and improvements		10,001,146			9,997,562
Furniture and equipment		2,362,143			2,296,531
		14,193,027			14,123,831
Less accumulated depreciation		(4,321,587	)		(3,743,521	)
	$	9,871,440		$	10,380,310

Depreciation expense for the years ended December 31, 2015 and 2014 amounted to $581,985 and $597,526, respectively.

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MORTGAGE SERVICING RIGHTS

12 Months Ended

Dec. 31, 2015

Transfers And Servicing [Abstract]

MORTGAGE SERVICING RIGHTS

NOTE 5 - MORTGAGE SERVICING RIGHTS

Loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of loans serviced for others were approximately $123,302,000 and $113,156,000 at December 31, 2015 and 2014, respectively.

The carrying amount of servicing rights recorded on loans serviced for others was $1,109,720 and $961,823, respectively, at December 31, 2015 and 2014, which approximated their fair value. The fair value of servicing rights at December 31, 2015 was determined using a discount rate of 9%, monthly prepayment speeds ranging from 149% to 407%, depending on the stratification of the specific right, ancillary income of $48 per loan annually, and incremental cost to service of approximately $43 per loan annually. The fair value of servicing rights at December 31, 2014 was determined using a discount rate of 9%, monthly prepayment speeds ranging from 262% to 407%, depending on the stratification of the specific right, ancillary income of $48 per loan annually, and incremental cost to service of approximately $43 per loan annually. The ancillary income and cost to service assumptions include projected loan defaults.

The following summarizes the activity pertaining to mortgage servicing rights along with the aggregate activity in related valuation allowances:

	Year Ended
	December 31,
	2015			2014
Balance, beginning	$	961,823		$	918,247
Mortgage servicing rights capitalized		230,826			150,546
Mortgage servicing rights amortized		(144,607	)		(106,970	)
Decrease in provision for loss in fair value		61,678			-
Balance, ending	$	1,109,720		$	961,823
Valuation allowances:
Balance, beginning	$	178,896		$	178,896
Decrease		(61,678	)		-
Balance, ending	$	117,218		$	178,896

Estimated future amortization expense on mortgage servicing rights is as follows:

Year Ending December 31,	Amount
2016	$	138,384
2017		133,145
2018		111,111
2019		67,291
2020		43,786
Thereafter		616,003
	$	1,109,720

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CORE DEPOSIT INTANGIBLE

12 Months Ended

Dec. 31, 2015

Intangible Assets, Net (Excluding Goodwill) [Abstract]

CORE DEPOSIT INTANGIBLE

NOTE 6 - CORE DEPOSIT INTANGIBLE

The gross carrying value and accumulated amortization of the core deposit intangible is presented below:

	December 31,
	2015			2014
Core deposit intangible	$	3,258,000		$	3,258,000
Less accumulated amortization		(3,120,000	)		(3,062,000	)
	$	138,000		$	196,000

Amortization expense on core deposit intangible for the years ended December 31, 2015 and 2014 was $58,000 and $75,000, respectively.

Estimated future amortization expense on our remaining core deposit intangible is as follows:

Year Ending December 31,	Amount
2016	$	58,000
2017		58,000
2018		22,000

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GOODWILL

12 Months Ended

Dec. 31, 2015

Goodwill Disclosure [Abstract]

GOODWILL

NOTE 7 - GOODWILL

In accordance with ASC Topic 350, Intangibles- Goodwill and Other, goodwill and intangible assets with indefinite useful lives are no longer amortized; rather they are assessed, at least annually, for impairment. The Company tests goodwill for impairment on an annual basis as of September 30, or more often if events or circumstances indicate there may be impairment. Management has determined that the Company has only one reporting unit for purposes of evaluating goodwill.

Due to the current economic environment and other uncertainties, it is possible that our estimates and assumptions may adversely change in the future, and we may be required to record additional goodwill impairment losses in future periods. It is not possible at this time to determine if any such future impairment loss would result or, it if does, whether such charge would be material. However, any such future impairment loss would be limited to the remaining goodwill balance of $11,385,323 at December 31, 2015. Subsequent reversal of goodwill impairment losses is not permitted. At our annual impairment assessment date of September 30, 2015, our analysis indicated that no impairment existed.

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DEPOSITS

12 Months Ended

Dec. 31, 2015

Deposits [Abstract]

DEPOSITS

NOTE 8 - DEPOSITS

Deposits are summarized as follows:

	At December 31,
	2015		2014
Noninterest-bearing	$	69,296,354	$	68,170,743
Interest-bearing transaction accounts		300,782,040		285,437,812
Savings		29,907,675		29,070,422
Time		133,172,224		127,627,662
	$	533,158,293	$	510,306,639

Included in time deposits were approximately $10,781,000 and $13,872,000 of brokered deposits at December 31, 2015 and 2014, respectively. Included in interest-bearing transaction accounts were approximately $59,670,000 and $83,281,000 of brokered deposits at December 31, 2015 and 2014, respectively.

Interest expense on deposits is summarized as follows:

	Year Ended
	December 31,
	2015		2014
Interest-bearing transaction accounts	$	651,465	$	738,536
Savings		50,662		50,422
Time		1,459,810		1,385,108
	$	2,161,937	$	2,174,066

Time deposits that meet or exceed the FDIC Insurance limit of $250,000 at year-end 2015 and 2014 were approximately $26,159,000 and $19,643,000.

At December 31, 2015, the scheduled maturities of time deposits were as follows:

Year Ending December 31,	Amount
2016	$	60,831,144
2017		33,735,619
2018		21,398,998
2019		4,149,552
2020		12,473,886
Thereafter		583,025
	$	133,172,224

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FEDERAL HOME LOAN BANK ADVANCES

12 Months Ended

Dec. 31, 2015

Advances from Federal Home Loan Banks [Abstract]

FEDERAL HOME LOAN BANK ADVANCES

NOTE 9 - FEDERAL HOME LOAN BANK ADVANCES

The Bank had total advances from the FHLB of $15,995,485 and $2,487,745 at December 31, 2015 and 2014, respectively. The weighted average interest rate on the advances was 1.58% and 2.89% at December 31, 2015 and 2014, respectively. The range of rates on the outstanding advances at December 31, 2015 varied from 1.30% to 4.58%.

At December 31, 2015, the contractual maturities of advances were as follows:

Year Ending December 31,	Amount
2016	$	995,485
2018		15,000,000
	$	15,995,485

At December 31, 2015, in addition to FHLB stock, eligible residential real estate loans totaling approximately $92,610,000 were pledged to the FHLB to secure advances outstanding compared to $77,790,000 at December 31, 2014.

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SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

12 Months Ended

Dec. 31, 2015

Securities Sold under Agreements to Repurchase [Abstract]

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

NOTE 10 - SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Securities sold under agreements to repurchase, which are classified as secured borrowings, generally mature daily. Securities sold under agreements to repurchase are reflected at the amount of cash received in connection with the transaction. The balance of our securities sold under agreements to repurchase fluctuates based upon our customers’ needs and activity. The Company has one significant customer whose balances fluctuate on a regular basis. Due to the nature of this customer’s business, large fluctuations in its accounts are a normal occurrence. The Company may be required to provide additional collateral based on the fair value of the underlying securities.

Securities sold under agreements to repurchase were primarily secured by U.S. government agency obligations and state and municipal securities with an approximate carrying amount of $26,458,000 and $32,639,000 at December 31, 2015 and 2014, respectively.

Information concerning securities sold under agreements to repurchase is summarized as follows:

	2015			2014
Average daily balance during the year	$	15,817,024		$	18,974,688
Average interest rate during the year		0.02	%		0.02	%
Maximum month-end balance during the year	$	20,765,781		$	23,275,868
Weighted average interest rate at year-end		0.02	%		0.02	%

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SUBORDINATED DEBENTURES

12 Months Ended

Dec. 31, 2015

Subordinated Borrowings [Abstract]

SUBORDINATED DEBENTURES

NOTE 11 - SUBORDINATED DEBENTURES

The financial statements also include the following wholly-owned entity on a deconsolidated basis, First Clover Leaf Statutory Trust I. The sole asset of this trust is junior subordinated deferrable interest debentures. The Company issued $4,000,000 in May 2005 in cumulative trust preferred securities through this newly formed special-purpose trust. The proceeds of the offering were invested by the trust in junior subordinated debentures of Trust I. Distributions are cumulative and were payable at a fixed rate of 6.08% through May 2010 and then adjusted quarterly at a variable rate of 1.85% over the three month LIBOR rate, per annum of the stated liquidation amount of $1,000 per preferred security. At December 31, 2015 the interest rate was 2.36%. The Company has the option to defer interest payments on the subordinated debentures from time to time for a period not to exceed five consecutive years. The obligations of the trust are fully and unconditionally guaranteed, on a subordinated basis, by the Company. The trust preferred securities for Trust I are mandatorily redeemable upon the maturity of the debentures in May 2025, or to the extent of any earlier redemption of any debentures by the Company, and were callable beginning in May 2010. Holders of the capital securities have no voting rights, are unsecured, and rank junior in priority of payment to all of the Company’s indebtedness and senior to the Company’s capital stock. For regulatory purposes, the trust preferred securities qualify as Tier I capital subject to certain provisions.

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INCOME TAXES

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 12 - INCOME TAXES

The Company and the Bank file consolidated federal income tax returns and Illinois state income tax returns. The Company and the Bank are no longer subject to examination by federal and state taxing authorities for years prior to 2012.

Allocation of federal and state income taxes between current and deferred portions was as follows:

	Year Ended
	December 31,
	2015			2014
Federal:
Current	$	1,411,154		$	815,120
Deferred		(202,931	)		71,545
		1,208,223			886,665
State:
Current		466,980			397,280
Deferred		266			76,653
		467,246			473,933
	$	1,675,469		$	1,360,598

The Company’s income tax expense differed from the maximum statutory federal rate of 35% as follows:

	Year Ended
	December 31,
	2015			2014
Expected income taxes	$	2,209,628		$	1,815,376
Income tax effect of:
State taxes, net of federal income tax benefit		277,177			278,391
Tax exempt interest, net		(613,220	)		(586,302	)
Income taxed at lower rates		(63,132	)		(51,868	)
Other		(134,984	)		(94,999	)
	$	1,675,469		$	1,360,598

The tax effects of principal temporary differences are shown in the following table:

	December 31,
	2015			2014
Deferred tax assets:
Allowance for loan losses	$	2,286,438		$	2,161,135
Deferred compensation		306,653			256,106
Accrued expenses		79,623			19,041
Purchase accounting adjustments for:
Loans		-			18,136
Securities		90,895			106,474
OREO writedowns and expenses		563,385			464,326
Other		107,467			367,148
		3,434,461			3,392,366
Deferred tax liabilities:
Federal Home Loan Bank stock		(177,613	)		(293,580	)
Core deposit intangible		(53,605	)		(76,164	)
Mortgage servicing rights		(431,058	)		(373,757	)
Unrealized gain on securities available for sale		(254,456	)		(115,890	)
Purchase accounting adjustments for:
Premises and equipment		(272,023	)		(278,376	)
Federal Home Loan Bank advances		(1,754	)		(4,762	)
Premises and equipment		(184,571	)		(254,555	)
		(1,375,080	)		(1,397,084	)
Net deferred taxes	$	2,059,381		$	1,995,282

Retained earnings at December 31, 2015 and 2014 include approximately $3,044,000 of the tax bad debt reserve which accumulated prior to 1988, for which no deferred income tax liability has been recognized. This amount represents an allocation of income to bad debt deductions for tax purposes only. Reduction of amounts so allocated for purposes other than tax bad debt losses or adjustments arising from carryback of net operating losses would create income for tax purposes only, which would be subject to the then current corporate income tax rate. The unrecorded deferred income tax liability on the above amount was approximately $1,157,000 at December 31, 2015 and 2014. Management has determined that the probability of recapturing the reserve is not sufficient to record a liability.

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EMPLOYEE BENEFITS

12 Months Ended

Dec. 31, 2015

Employee Benefits [Abstract]

EMPLOYEE BENEFITS

NOTE 13 - EMPLOYEE BENEFITS

The Company has adopted a 401(k) plan and defined contribution profit sharing plan covering substantially all of its employees. The contribution to the plan for the profit sharing contribution is determined by the Board of Directors. The Company contributed $176,074 and $165,227 to the plan for the profit sharing contribution for the years ended December 31, 2015 and 2014, respectively. The 401(k) component of the plan allows participants to defer up to 50% of their compensation. Such deferral accumulates on a tax deferred basis until the employee withdraws the funds. The Company matched the employee contributions for the 401(k) plan up to 3% of compensation for the years ended December 31, 2015 and 2014. Total expense recorded for the Company’s match for the 401(k) plan was $155,088 and $144,807 for the years ended December 31, 2015 and 2014, respectively.

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CAPITAL RATIOS

12 Months Ended

Dec. 31, 2015

Banking and Thrift [Abstract]

CAPITAL RATIOS

NOTE 14 - CAPITAL RATIOS

Banks and holding companies are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory—and possibly additional discretionary—actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank and the Company must meet specific capital guidelines that involve quantitative measures of the Bank’s and the Company’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s and the Company’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

In July 2013, the U.S. federal banking authorities approved the implementation of the Basel III regulatory capital reforms and issued rules effecting certain changes required by the Dodd-Frank Act (the “Basel III Rules”). The Basel III Rules are applicable to all U.S. banks that are subject to minimum capital requirements, as well as to bank and savings and loan holding companies other than “small bank holding companies” (generally non-public bank holding companies with consolidated assets of less than $1 billion). The Bank, along with other community banking organizations, and the Company became subject to the Basel III Rules effective January 1, 2015.

The Basel III Rules not only increased most of the required minimum regulatory capital ratios, but they introduced a new common equity Tier 1 capital ratio and the concept of a capital conservation buffer. The Basel III Rules also expanded the definition of capital as in effect currently by establishing criteria that instruments must meet to be considered additional Tier 1 capital (Tier 1 capital in addition to common equity) and Tier 2 capital. A number of instruments that qualified previously as Tier 1 capital no longer qualify, or their qualifications may change as the Basel III rules are fully implemented. The Basel III Rules also permit banking organizations with less than $15.0 billion in assets to retain, through a one-time election, the previous treatment for accumulated other comprehensive income. The Bank elected this one-time opt-out to exclude accumulated other comprehensive income from regulatory capital with the filing of its regulatory reports during the first quarter of 2015.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. The Basel III Rules have maintained the general structure of the current prompt corrective action framework, while incorporating the increased requirements. The prompt corrective action guidelines were also revised to add the common equity Tier 1 capital ratio.  In order to be a “well-capitalized” depository institution under the new regime, a bank and holding company must maintain a common equity Tier 1 capital ratio of 6.5% or more; a Tier 1 capital ratio of 8% or more; a total capital ratio of 10% or more; and a leverage ratio of 5% or more. 

Management will continue to assess the effect of the Basel III Rules during the phase-in period and the impact they may have on the Bank’s and the Company’s capital positions and will monitor developments in this area. As of December 31, 2015, management concluded that the Company’s and the Bank’s current capital structure and the execution of the capital plan was sufficient to meet and exceed the revised regulatory capital ratios as required by the new Basel III Rules. As of December 31, 2015, the Bank was considered well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Bank’s category. Management believes, as of December 31, 2015 and 2014, that the Bank and the Company meet all capital adequacy requirements to which they were subject.

The Company’s principal source of funds for dividend payments is dividends received from the Bank. Banking regulations limit the amount of dividends that may be paid without prior approval from the Office of the Comptroller of the Currency. Under these regulations, the amount of dividends that may be paid without prior consent in any calendar year is generally limited to the current year’s profits combined with retained net profits of the preceding two years, subject to the capital requirements described above.

The Bank’s actual capital amounts and ratios under Basel III as of December 31, 2015 are presented in the following table. The Bank’s actual capital amounts and ratios as of December 31, 2014 are presented for comparison.

	Actual					For Capital  Adequacy Purposes					To be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	2015
Common Equity Tier 1 Capital to Risk Weighted Assets	$	71,273,000		14.89	%	$	21,546,000		4.50	%	$	31,122,000		6.50	%
Tier I Capital to Adjusted Total Assets		71,273,000		11.47	%		24,855,000		4.00	%		31,069,000		5.00	%
Tier I Capital to Risk Weighted Assets		71,273,000		14.89	%		28,728,000		6.00	%		38,303,000		8.00	%
Total Capital to Risk Weighted Assets		76,195,000		15.91	%		38,303,000		8.00	%		47,879,000		10.00	%
	2014
Tier I Capital to Adjusted Total Assets	$	67,995,000		11.22	%	$	24,235,000		4.00	%	$	30,294,000		5.00	%
Tier I Capital to Risk Weighted Assets		67,995,000		16.36	%		16,623,000		4.00	%		24,935,000		6.00	%
Total Capital to Risk Weighted Assets		71,949,000		17.31	%		33,247,000		8.00	%		41,558,000		10.00	%

The Company’s actual consolidated capital amounts and ratios under Basel III as of December 31, 2015 are presented in the following table. The Company’s actual consolidated capital amounts and ratios as of December 31, 2014 are presented for comparison.

											To be Well Capitalized
						For Capital					Under Prompt Corrective
	Actual					Adequacy Purposes					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	2015
Common Equity Tier 1 Capital to Risk Weighted Assets	$	68,467,000		14.29	%	$	21,555,000		4.50	%		N/A		N/A
Tier I Capital to Adjusted Total Assets		68,467,000		10.28	%		26,651,000		4.00	%		N/A		N/A
Tier I Capital to Risk Weighted Assets		68,467,000		14.29	%		28,740,000		6.00	%		N/A		N/A
Total Capital to Risk Weighted Assets		77,389,000		16.16	%		38,321,000		8.00	%		N/A		N/A
	2014
Tier I Capital to Adjusted Total Assets	$	65,256,000		10.54	%	$	24,764,000		4.00	%		N/A		N/A
Tier I Capital to Risk Weighted Assets		65,256,000		15.70	%		16,630,000		4.00	%		N/A		N/A
Total Capital to Risk Weighted Assets		73,210,000		17.61	%		33,260,000		8.00	%		N/A		N/A

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COMMITMENTS, CONTINGENCIES AND CREDIT RISK

12 Months Ended

Dec. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS, CONTINGENCIES AND CREDIT RISK

NOTE 15 - COMMITMENTS, CONTINGENCIES AND CREDIT RISK

The Company and the Bank could be a party to legal actions in the normal course of business. In the opinion of management, the ultimate resolution of these matters is generally not expected to have a material effect on the financial position or the results of operations of the Company.

The Company is party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financial needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in addition to the amounts recognized in the consolidated balance sheets.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

A summary of the notional or contractual amounts of financial instruments, primarily variable rate, with off-balance-sheet risk follows:

							Range of Rates
	Variable Rate		Fixed Rate		Total		on Fixed Rate
	Commitments		Commitments		Commitments		Commitments
	2015
Commitments to extend credit	$	43,735,051	$	36,533,191	$	80,268,242	3.00% - 18.00%
Standby letters of credit		1,726,114		49,000		1,775,114	4.00% - 6.00%
	2014
Commitments to extend credit	$	34,570,790	$	24,254,679	$	58,825,469	3.00% - 18.00%
Standby letters of credit		1,361,322		300,765		1,662,087	3.50% - 6.00%

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount and type of collateral obtained, if deemed necessary by the Company upon extension of credit, varies and is based on management’s credit evaluation of the counterparty.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Standby letters of credit generally have fixed expiration dates or other termination clauses and may require payment of a fee. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities of customers. The Company’s policy for obtaining collateral, and the nature of such collateral, is essentially the same as that involved in making commitments to extend credit. Those guarantees are primarily issued to support public and private borrowing arrangements and, generally, have terms of one year or less. The Bank holds collateral, which may include accounts receivables, inventory, property and equipment, and income producing properties, if deemed necessary to support such commitments. In the event the customer does not perform in accordance with the terms of the agreement with the third party, the Bank would be required to fund the commitment. The maximum potential amount of future payments the Bank could be required to make is represented by the contractual amount shown in the summary above. If the commitment is funded, the Bank would be entitled to seek recovery from the customer. At December 31, 2015 and 2014, no amounts have been recorded as liabilities for the Bank’s potential obligations under these guarantees.

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FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2015

Fair Value Measurements Disclosure [Abstract]

FAIR VALUE MEASUREMENTS

NOTE 16 - FAIR VALUE MEASUREMENTS

The Company determines the fair market values of its financial instruments based on the fair value hierarchy established in ASC Topic 820, Fair Value Measurements and Disclosures, which requires an entity to maximize the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The guidance also describes three levels of inputs that may be used to measure fair value.

· Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

· Level 2 - Inputs other than quoted prices included with Level 1 that are observable for the asset or liability either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived from or corroborated by market data by correlation or other means.

· Level 3 - Unobservable inputs for determining the fair value of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

Securities: The fair value of available-for-sale securities are determined by various valuation methodologies. Where quoted market prices are available in an active market, securities are classified within Level 1. If quoted market prices are not available, then fair values are estimated by using pricing models or quoted prices of securities with similar characteristics. For these investments, the pricing applications apply available information as applicable through processes such as benchmark curves, benchmarking of like securities, sector groupings and matrix pricing to prepare evaluations. They also use model processes, such as the Option Adjusted Spread model to assess interest rate impact and develop prepayment scenarios. In the case of municipal securities, information on the Bloomberg terminal such as credit ratings, credit support, and call features are used to set the matrix values for the issues, which will be used to determine the yields from which the market values are calculated each month. Because they are not price quote valuations, the pricing methods are considered Level 2 inputs. At December 31, 2015 and 2014, all of the Company’s securities fall within the Level 2 hierarchy for pricing. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. During the years ended December 31, 2015 and 2014, there were no transfers between Level 1 and Level 2. The valuation methodology was consistent for the years ended December 31, 2015 and 2014.

Foreclosed Assets:  Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals which are updated no less frequently than annually. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.  Foreclosed assets are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Impaired Loans:  The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification.  Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Appraisals for both foreclosed assets and collateral-dependent impaired loans are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, a member of the loan department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. On an annual basis, the Company compares the actual selling price of collateral that has been sold to the most recent appraised value to determine what additional adjustment should be made to the appraisal value to arrive at fair value.

Mortgage Servicing Rights: Annually, loan servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. If the carrying amount exceeds fair value, impairment is recorded so that the servicing asset is carried at fair value. Fair value is determined based on market prices for comparable mortgage servicing contracts, when available, resulting in a Level 2 classification, or alternatively based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model utilizes assumptions that market participants would use in estimating future net servicing income and that can be validated against available market data which also results in a Level 2 classification.

Assets measured at fair value on a recurring basis segregated by fair value hierarchy level during the periods ended December 31, 2015 and 2014 are summarized below:

	Fair Value Measurements at December 31, 2015 Using:
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Assets:	(Level 1)		(Level 2)		(Level 3)		Total
Securities:
U.S. government agency obligations	$	-	$	29,048,102	$	-	$	29,048,102
State and municipal securities		-		45,734,239		-		45,734,239
Other securities		-		3,501		-		3,501
Mortgage-backed: residential		-		28,970,772		-		28,970,772
Total securities available for sale	$	-	$	103,756,614	$	-	$	103,756,614

	Fair Value Measurements at December 31, 2014 Using:
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Assets:	(Level 1)		(Level 2)		(Level 3)		Total
Securities:
U.S. government agency obligations	$	-	$	25,869,606	$	-	$	25,869,606
State and municipal securities		-		45,573,608		-		45,573,608
Other securities		-		3,501		-		3,501
Mortgage-backed: residential		-		32,778,977		-		32,778,977
Total securities available for sale	$	-	$	104,225,692	$	-	$	104,225,692

Assets measured at fair value on a nonrecurring basis by fair value hierarchy level during the periods ended December 31, 2015 and 2014 are summarized below:

	Fair Value Measurements at December 31, 2015 Using:
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Assets:	(Level 1)		(Level 2)		(Level 3)		Total
Foreclosed assets:
Real estate:
Commercial	$	-	$	-	$	19,000	$	19,000
Construction and land		-		-		604,500	$	604,500
Total foreclosed assets	$	-	$	-	$	623,500	$	623,500
Impaired loans:
Real estate loans:
One-to-four family	$	-	$	-	$	140,500	$	140,500
Commercial		-		-		358,395		358,395
		-		-		498,895		498,895
Commercial business		-		-		239,062		239,062
Consumer:
Home equity		-		-		39,625		39,625
Total impaired loans	$	-	$	-	$	777,582	$	777,582
Mortgage Servicing Rights	$	-	$	1,109,720	$	-	$	1,109,720

	Fair Value Measurements at December 31, 2014 Using:
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Assets:	(Level 1)		(Level 2)		(Level 3)		Total
Foreclosed assets:
Real estate:
Construction and land		-		-		1,042,087		1,042,087
Total foreclosed assets	$	-	$	-	$	1,042,087	$	1,042,087
Impaired loans:
Real estate loans:
One-to-four family	$	-	$	-	$	707,838	$	707,838
Commercial		-		-		1,342,966		1,342,966
		-		-		2,050,804		2,050,804
Total impaired loans	$	-	$	-	$	2,050,804	$	2,050,804

Foreclosed assets are collateral dependent and are recorded at the lesser of the recorded investment in the receivable or the appraised value less costs to sell and may be revalued on a nonrecurring basis. Foreclosed assets measured at fair value less costs to sell on a nonrecurring basis during the year ended December 31, 2015, had a net carrying amount of $623,500, which is made up of the outstanding balance of $1,337,678, net of cumulative write-downs of $714,178 which includes $355,500 that occurred during the year ended December 31, 2015. At December 31, 2014, foreclosed assets had a carrying amount of $1,042,087, which was made up of the outstanding balance of $1,754,187, net of write-downs of $712,100.

Impaired loans that are measured for impairment using the fair value of the collateral for collateral dependent loans, had a principal balance of $1,387,841, with a valuation allowance of $610,259 at December 31, 2015, resulting in a net increase in provision for loan losses of $241,673 for the year ended December 31, 2015. At December 31, 2014, impaired loans had a principal balance of $2,423,703 with a valuation allowance of $372,899, resulting in a net decrease in provision for loan losses of $43,704 for the year ended December 31, 2014.

The following table presents quantitative information about Level 3 fair value measurements for significant categories of financial instruments measured at fair value on a non-recurring basis at December 31, 2015:

	Fair Value		Valuation Techniques	Unobservable Inputs	Range	Weighted Average
Foreclosed assets:
Real estate:
Construction and land	$	604,500	Sales Comparison	Adjustment for difference between comparable sales	-29% to 5%		-8.9	%
Impaired loans:
Real estate loans:
One-to-four family	$	140,500	Sales Comparison	Adjustment for difference between comparable sales	-19% to -7%		-13.0	%
Commercial		88,000	Sales Comparison	Adjustment for difference between comparable sales	9% to 16%		12.8	%
Commercial		270,395	Income Approach	Investment Capitalization Rates	9.0%		9.0	%
Commercial business		121,094	Fair Value of Collateral	Discount for type of business assets	0% to 10%		7.0	%

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2014:

	Fair Value		Valuation Techniques	Unobservable Inputs	Range	Weighted Average
Foreclosed assets:
Real estate:
Construction and land	$	1,042,087	Sales Comparison	Adjustment for difference between comparable sales	-10% to 30%		10.3	%
Impaired loans:
Real estate loans:
One-to-four family	$	707,838	Sales Comparison	Adjustment for difference between comparable sales	-23% to 13%		-7.2	%
Commercial		1,342,966	Income Approach	Investment Capitalization Rates	3% to 27%		12.3	%

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FAIR VALUE OF FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2015

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 17 - FAIR VALUE OF FINANCIAL INSTRUMENTS

FASB ASC Topic 825, Financial Instruments, requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet. Fair value is determined under the framework established by ASC Topic 820, Fair Value Measurement and Disclosures. ASC Topic 825 excludes certain financial instruments and all non-financial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments:

Cash and Cash Equivalents: The carrying amounts of cash and cash equivalents approximate fair values given the short-term nature and active market for U.S. currency and are classified as Level 1.

Interest-Earning Time Deposits: Due to the short-term nature of these deposits, the carrying amounts of these deposits approximate fair values. However, since it is unusual to observe a quoted price in an active market during the outstanding term, these deposits are classified as Level 2.

Federal Home Loan Bank Stock: The Company is required to maintain these equity securities as a member of the FHLB and in amounts as required by this institution. These equity securities are "restricted" in that they can only be sold back to the respective institution or another member institution at par. Therefore, they are less liquid than other tradable securities and their fair value is not readily available.

Federal Reserve Bank Stock: The Company is required to maintain these equity securities as a member of the Federal Reserve Bank and in amounts as required by this institution. These equity securities are "restricted" in that they can only be sold back to the respective institution or another member institution at par. Therefore, they are less liquid than other tradable securities and their fair value is not readily available.

Loans: Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segmented by type such as real estate, commercial business, and consumer loans. Each loan segment is further segregated into fixed and adjustable rate interest terms and by performing and non-performing classifications. The fair value of fixed rate loans is estimated by either observable market prices or by discounting future cash flows using discount rates that reflect the Company’s current pricing for loans with similar characteristics, such as loan type, pricing and remaining maturity resulting in a Level 3 classification. Impaired loans that have no specific reserve are classified as Level 3. Impaired loans that have been written down to the fair value of the corresponding collateral, less estimated costs to sell, are not included in this table as those amounts were presented previously. The fair value computed is not necessarily an exit price.

Loans Held for Sale: The fair value of loans held for sale is estimated based upon binding contracts and quotes from third party investors resulting in a Level 2 classification.

Accrued Interest Receivable: The carrying amount of accrued interest receivable approximates its fair value. Accrued interest receivable related to interest-earning time deposits and securities is classified as Level 2. Accrued interest receivable related to loans is classified as Level 3.

Deposits: The fair values disclosed for demand deposits are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts) and are classified as Level 1. The carrying amounts for interest-bearing money market and savings accounts approximate their fair values at the reporting date and are classified as Level 1. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

Federal Home Loan Bank Advances: The fair value of FHLB advances, which are at a fixed rate, are estimated using discounted cash flow analyses based on current rates for similar advances resulting in a Level 2 classification.

Securities Sold Under Agreements to Repurchase: The carrying amounts of securities sold under agreements to repurchase approximate fair value resulting in a Level 2 classification.

Subordinated Debentures: This debenture is a floating rate instrument which re-prices quarterly. The fair value of variable rate trust preferred debentures approximate carrying value resulting in a Level 2 classification.

Accrued Interest Payable: The carrying amount of accrued interest payable approximates its fair value. Accrued interest payable related to interest-bearing money market and savings accounts is classified as Level 1. All other accrued interest payable is classified as Level 2.

The following information presents estimated fair values of the Company’s financial instruments as of December 31, 2015 and 2014 that have not been previously presented and the methods and assumptions used to estimate those fair values.

			Fair Value Measurements at December 31, 2015 Using:
	Carrying		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Fair
	Amount		(Level 1)		(Level 2)		(Level 3)		Value
Financial assets:
Cash and cash equivalents	$	79,232,566	$	79,232,566	$	-	$	-	$	79,232,566
Interest-earning time deposits		1,685,000		-		1,685,000		-		1,685,000
Federal Home Loan Bank stock		1,747,763		-		-		-		N/A
Federal Reserve Bank stock		1,676,700		-		-		-		N/A
Loans, net (excluding impaired loans at fair value)		419,686,001		-		-		421,795,305		421,795,305
Loans held for sale		1,078,785		-		1,078,785		-		1,078,785
Accrued interest receivable		1,620,309		-		510,231		1,110,078		1,620,309
Financial liabilities:
Non-interest bearing deposits		69,296,354		69,296,354		-		-		69,296,354
Interest-bearing deposits		463,861,939		330,689,715		133,976,643		-		464,666,358
Federal Home Loan Bank advances		15,995,485		-		16,315,262		-		16,315,262
Securities sold under agreement to repurchase		19,732,766		-		19,732,766		-		19,732,766
Subordinated debentures		4,000,000		-		4,000,000		-		4,000,000
Accrued interest payable		227,947		14,621		213,326		-		227,947

			Fair Value Measurements at December 31, 2014 Using:
	Carrying		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Fair
	Amount		(Level 1)		(Level 2)		(Level 3)		Value
Financial assets:
Cash and cash equivalents	$	49,066,462	$	49,066,462	$	-	$	-	$	49,066,462
Interest-earning time deposits		2,021,970		-		2,021,970		-		2,021,970
Federal Home Loan Bank stock		2,887,763		-		-		-		N/A
Federal Reserve Bank stock		1,676,700		-		-		-		N/A
Loans, net (excluding impaired loans at fair value)		398,853,600		-		-		402,238,073		402,238,073
Loans held for sale		100,000		-		100,000		-		100,000
Accrued interest receivable		1,762,310		-		506,888		1,255,422		1,762,310
Financial liabilities:
Non-interest bearing deposits		68,170,743		68,170,743		-		-		68,170,743
Interest-bearing deposits		442,135,896		314,508,234		128,258,671		-		442,766,905
Federal Home Loan Bank advances		2,487,745		-		2,542,945		-		2,542,945
Securities sold under agreement to repurchase		11,848,266		-		11,848,266		-		11,848,266
Subordinated debentures		4,000,000		-		4,000,000		-		4,000,000
Accrued interest payable		174,480		14,359		160,121		-		174,480

In addition, other assets and liabilities of the Company that are not defined as financial instruments are not included in the above disclosures, such as property and equipment.

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ACCUMULATED OTHER COMPREHENSIVE INCOME

12 Months Ended

Dec. 31, 2015

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

ACCUMULATED OTHER COMPREHENSIVE INCOME

NOTE 18 - ACCUMULATED OTHER COMPREHENSIVE INCOME

The following tables summarize the changes within each classification of accumulated other comprehensive income, net of tax, for the year ended December 31, 2015 and summarizes the significant amounts reclassified out of each component of accumulated other comprehensive income.

Changes in Accumulated Other Comprehensive Income by Component
For the Year Ended December 31, 2015(1)
	Unrealized Gains and Losses on Available-for-Sale Securities			Total
Accumulated Other Comprehensive Income at January 1, 2015	$	197,331		$	197,331
Other comprehensive income before reclassifications		207,264			207,264
Amount reclassified from accumulated other comprehensive income(2)		(6,601	)		(6,601	)
Net current-period other comprehensive income		200,663			200,663
Accumulated Other Comprehensive Income at December 31, 2015	$	397,994		$	397,994

⁽¹⁾ All amounts are net of tax.

⁽²⁾ See table below for details about reclassifications.

Reclassifications out of Accumulated Other Comprehensive Income
For the Year Ended December 31, 2015
Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive  Income			Affected Line Item in the Statement Where Net Income is Presented
Unrealized gains and losses on available-for-sale securities	$	10,821		Gain on sale of securities
		(4,220	)	Tax expense
Total reclassifications for the period	$	6,601		Net of tax

The following tables summarize the changes within each classification of accumulated other comprehensive income, net of tax, for the year ended December 31, 2014, and summarizes the significant amounts reclassified out of each component of accumulated other comprehensive income:

Changes in Accumulated Other Comprehensive Income by Component
For the Year Ended December 31, 2014(1)
	Unrealized Gains and Losses on Available-for-Sale Securities			Total
Accumulated Other Comprehensive Loss at January 1, 2014	$	(1,692,488	)	$	(1,692,488	)
Other comprehensive income before reclassifications		1,958,938			1,958,938
Amount reclassified from accumulated other comprehensive income(2)		(69,119	)		(69,119	)
Net current-period other comprehensive income		1,889,819			1,889,819
Accumulated Other Comprehensive Income at December 31, 2014	$	197,331		$	197,331

⁽¹⁾ All amounts are net of tax.

⁽²⁾ See table below for details about reclassifications.

Reclassifications out of Accumulated Other Comprehensive Income
For the Year Ended December 31, 2014
Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive  Income			Affected Line Item in the Statement Where Net Income is Presented
Unrealized gains and losses on available-for-sale securities	$	109,712		Gain on sale of securities
		(40,593	)	Tax expense
Total reclassifications for the period	$	69,119		Net of tax

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LIQUIDATION ACCOUNT

12 Months Ended

Dec. 31, 2015

Liquidation Account [Abstract]

LIQUIDATION ACCOUNT

NOTE 19 - LIQUIDATION ACCOUNT

As required by federal regulations, a liquidation account in the amount of $20,700,000 was established in conjunction with our 2006 conversion from a mutual savings bank to a federal savings association.

As a result, each eligible account holder or supplemental account holder at the time of conversion is entitled to a proportionate share of this account in the unlikely event of a complete liquidation of the Bank, and only in such event. This share will be reduced if the eligible account holder’s or supplemental account holder’s deposit balance falls below the amounts on the date of record and will cease to exist if the account is closed. The liquidation account will never be increased despite any increase after conversion in the related deposit balance. The Bank may not declare, pay a dividend on, or repurchase any of its capital stock of the Bank, if the effect thereof would cause retained earnings to be reduced below the liquidation account amount or regulatory capital requirements. Due to various natural events, such as death, relocation, and general attrition of accounts, the balance in the liquidation account has been reduced to $2,389,000 at December 31, 2015.

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CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY

12 Months Ended

Dec. 31, 2015

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY

NOTE 20 - CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY

Financial information pertaining only to First Clover Leaf Financial Corp. is as follows:

BALANCE SHEETS

December 31, 2015 and 2014

	2015		2014
Assets
Cash and cash equivalents	$	996,950	$	1,141,653
Investment in common stock of subsidiary		83,079,782		79,868,529
Other assets		214,079		173,079
Total assets	$	84,290,811	$	81,183,261
Liabilities and Stockholders' Equity
Subordinated debentures	$	4,000,000	$	4,000,000
Accrued interest payable		8,388		7,424
Other liabilities		8,548		45,944
Total liabilities		4,016,936		4,053,368
Stockholders' Equity
Common stock		700,588		700,728
Additional paid-in-capital		55,806,256		55,818,936
Retained earnings		23,369,037		20,412,898
Accumulated other comprehensive income		397,994		197,331
		80,273,875		77,129,893
Total liabilities and stockholders' equity	$	84,290,811	$	81,183,261

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

Years ended December 31, 2015 and 2014

	2015			2014
Dividends from subsidiary	$	2,000,000		$	2,000,000
Interest income		2,682			2,614
Interest expense		(90,174	)		(86,901	)
Other income		-			51,205
Other expenses		(534,045	)		(524,678	)
Income before income tax benefit and equity in undistributed net income of subsidiary		1,378,463			1,442,240
Income tax benefit		248,700			223,200
Income before equity in undistributed net income of subsidiary		1,627,163			1,665,440
Equity in undistributed (distributions in excess of) net income of subsidiary		3,010,591			2,160,752
Net income	$	4,637,754		$	3,826,192
Comprehensive income	$	4,838,417		$	5,716,011

CONDENSED STATEMENTS OF CASH FLOWS

Years ended December 31, 2015 and 2014

	2015			2014
Cash Flows from Operating Activities
Net income	$	4,637,754		$	3,826,192
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Distributions in excess of (equity in undistributed) net income of subsidiary		(3,010,591	)		(2,160,752	)
Decrease (increase) in other assets		(41,000	)		507,606
Increase (decrease) in accrued interest payable		964			(49	)
Decrease in other liabilities		(37,395	)		(40,722	)
Net cash provided by operating activities		1,549,732			2,132,275
Cash Flows from Investing Activities
Loan payments		-			-
Net cash provided by investing activities		-			-
Cash Flows from Financing Activities
Repurchase of common stock		(12,820	)		-
Dividends		(1,681,615	)		(1,681,748	)
Net cash used in financing activities		(1,694,435	)		(1,681,748	)
Net increase (decrease) in cash and cash equivalents		(144,703	)		450,527
Cash and cash equivalents:
Beginning of year		1,141,653			691,126
End of year	$	996,950		$	1,141,653

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation: The consolidated financial statements include the accounts of the Company and the Bank and have been prepared in conformity with U.S. generally accepted accounting principles and conform to preponderant practices in the banking industry. The financial statements also include a wholly-owned entity on a deconsolidated basis, First Clover Leaf Statutory Trust I. All material intercompany accounts and transactions have been eliminated in the consolidation.

Use of Estimates

Use of Estimates: In preparing the accompanying consolidated financial statements, the Company’s management is required to make estimates and assumptions which affect the reported amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash Equivalents

Cash Equivalents: For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks, cash items in process of clearing, and federal funds sold. Generally, federal funds are sold for one-day periods. Cash flows from loans, deposits, and securities sold under agreements to repurchase are treated as net increases or decreases in the statements of cash flows.

The Company is required to maintain reserve balances in cash or on deposit with the Federal Reserve Bank. Those reserve balances were approximately $10,438,000 and $6,575,000, respectively, at December 31, 2015 and 2014.

The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents.

Interest-Earning Time Deposits

Interest-Earning Time Deposits: Interest-earning time deposits in banks are carried at cost. At December 31, 2015 and 2014, interest-earning time deposits amounted to $1,685,000 and $2,021,970, respectively.

Securities

Securities: Securities classified as available for sale are those debt securities that the Company intends to hold for an indefinite period of time, but not necessarily to maturity. Any decision to sell a security classified as available for sale would be based on various factors, including significant movements in interest rates, changes in the maturity mix of the Company’s assets and liabilities, liquidity needs, regulatory capital considerations and other similar factors.

Securities available for sale are carried at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income, net of tax. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Gains and losses on the sale of securities are calculated on the trade date and are determined using the specific identification method.

The Company evaluates its debt securities for other-than-temporary impairment (“OTTI”) on an ongoing basis for those securities with a fair value below amortized cost. The review takes into consideration current market conditions, issuer rating changes and trends, the credit worthiness of the obligator of the security, current analysts’ evaluations, failure of the issuer to make scheduled interest or principal payments, the Company’s lack of intent to sell the security or whether it is more-likely-than-not that the Company will be required to sell the debt security before its anticipated recovery, as well as other qualitative factors. The term OTTI is not intended to indicate that the decline is permanent, but indicates that the prospects for a near-term recovery of value is not necessarily favorable, or that there is a lack of evidence to support a realizable value equal to or greater than the carrying value of the investment. Any portion of such a decline in value associated with credit loss is recognized in earnings as an impairment loss with the remaining noncredit-related component being recognized in other comprehensive income. A credit loss is determined by assessing whether the amortized cost basis of the security will be recovered, by comparing the present value of cash flows expected to be collected from the security, computed using original yield as the discount rate, to the amortized cost basis of the security. The shortfall of the present value of the cash flows expected to be collected in relation to the amortized cost basis is considered to be the "credit loss."

Federal Home Loan Bank Stock

Federal Home Loan Bank Stock: The Company held Federal Home Loan Bank of Chicago (“FHLB”) stock of $1,747,763 and $2,887,763 for the years ended December 31, 2015 and 2014, respectively. The Company is required to maintain these equity securities as a member of the FHLB and in amounts as required by this institution. These equity securities are carried at cost, classified as "restricted" in that they can only be redeemed by the respective institution at par, and periodically evaluated for impairment based on ultimate recovery of par value. Therefore, they are less liquid than other tradable equity securities and their fair value is not readily available.

Federal Reserve Bank Stock

Federal Reserve Bank Stock: Federal Reserve Bank stock totaled $1,676,700 at December 31, 2015 and 2014. The Company is required to maintain these equity securities as a member of the Federal Reserve Bank and in amounts as required by this institution. These equity securities are carried at cost, classified as "restricted" in that they can only be sold back to the respective institution or another member institution at par, and periodically evaluated for impairment based on ultimate recovery of par value. Therefore, they are less liquid than other tradable securities and their fair value is not readily available.

Loans

Loans: The Company offers real estate, commercial and consumer loans to customers. A substantial portion of the loan portfolio is represented by real estate loans throughout Edwardsville, Illinois and the surrounding area. The ability of the Company’s debtors to comply with repayment terms is dependent upon the real estate and general economic conditions in this area.

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding unpaid principal balances adjusted for charge-offs, for the allowance for loan losses, and for any deferred costs (fees) on originated loans.

Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs (fees), are deferred and recognized as an adjustment of the related loan yield using the interest method.

The accrual of interest on real estate, commercial business, and consumer loans is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Consumer loans are typically charged off no later than 180 days past due. Past due status is based on contractual terms of the loan. In all cases, loans are placed on non-accrual or charged-off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not collected for loans that are placed on non-accrual or charged-off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Loans held for sale

Loans held for sale: Loans originated and intended for sale are carried at the lower of cost or estimated fair value which is based on market pricing. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income.

Allowance for Loan Losses

Allowance for Loan Losses: The allowance for loan losses is a valuation account for probable incurred credit losses. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required using our historical loan loss experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged off.

The allowance for loan losses is evaluated on at least a quarterly basis by management. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. Management considers the allowance for loan losses at December 31, 2015 and 2014 to be at an adequate level. However, changes may be necessary if further economic and other conditions differ substantially from the current environment. To the extent actual outcomes differ from the estimates, additional provision for credit losses may be required that would reduce future earnings.

Loans identified as losses by management, internal loan review and/or bank examiners are charged-off. Furthermore, consumer loan accounts are charged-off automatically based on regulatory requirements related to delinquency.

The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired. A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings. All troubled debt restructurings are classified as impaired.

Factors considered by management in determining impairment include payment status, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

All loans classified as substandard and loans over $250,000 categorized as special mention are evaluated for impairment. If a loan is impaired, we further test to see if it is considered collateral dependent. If the loan is collateral dependent, a portion of the allowance is allocated so that the loan is reported at the fair value of the collateral. If the loan is not collateral dependent, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate.

Troubled debt restructurings are separately identified for impairment disclosures and are measured at the present value of estimated future cash flows using the loan’s effective rate at inception. If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, the Company determines the amount of reserve in accordance with the accounting policy for the allowance for loan losses.

The general component of the allowance covers non-impaired loans. Once the non-impaired loans are separated into the specified loan pools, we analyze the pools using two criteria: historical loss data, and qualitative adjustments. Historical data is based on actual loss history specific to each portfolio segment. We utilize five years of data summarized by quarter. These data are analyzed and used to arrive at a base for our reserve percentage. The qualitative adjustments are determined based on various publications, market research, economic reports and management’s expertise and knowledge of the immediate lending market and include the following:

· Changes in sector’s portfolio health

· Changes in non-impaired classified assets

· National and/or local economic conditions

· Changes in financial industry/regulation

· Changes in value of underlying collateral

· Changes in segment concentrations

· Changes in volume/nature of loan portfolio

· Changes in past dues, non-accruals/asset quality

· Changes in lending policies/underwriting practices

· Changes in loan review/oversight

· Changes in staff depth/experience

· Changes in competition/legal

The consideration of all of these factors results in a loss allocation percentage for each portfolio segment. The following portfolio segments have been identified:

Real Estate Loans:

One-to-four family (owner occupied and non-owner occupied)

Multi-family

Commercial (owner occupied, non-owner occupied, farmland, and raw land)

Construction and land

Commercial

Commercial business

Consumer:

Home equity

Automobile and other

The Company has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and presents these policies to the board of directors at least annually. A reporting system supplements the review process by providing management with reports related to loan production, loan quality, loan delinquencies and non-performing and potential problem loans.

One-to-four family real estate loans are predominately collateralized by properties located in our primary market area. Due to high customer demand in the continuing low interest rate environment, virtually all of these loans have fixed rates of interest. We generally sell most of the conforming, fixed-rate loans that we originate, but we generally retain the servicing rights on these loans. We may generally lend up to 80% of the property’s appraised value, or up to 90% of the property’s appraised value if the borrower obtains private mortgage insurance. We require title insurance on all of our one-to-four family real estate loans, and we also require that fire and extended coverage casualty insurance be maintained in an amount equal to at least the lesser of the loan balance or the replacement cost of the improvements on the property. We also require a property appraisal for all one-to-four family loans that are underwritten to comply with secondary market standards. Appraisals are conducted by independent or in-house licensed appraisers from a list approved by our board of directors.

Multi-family real estate loans are generally secured by apartment buildings and rental properties with five or more units. The majority of our multi-family real estate loans are secured by properties located within our market area. Multi-family real estate loans generally are offered with interest rates that adjust after one, three or five years. The majority of these loans either float with the prime rate or they are fixed balloon loans. When originating multi-family real estate loans we evaluate the qualifications and financial condition of the borrower, profitability and expertise, as well as the value and condition of the mortgaged property securing the loans. We also consider the financial resources of the borrower, the borrower’s experience in owning or managing a similar property, and the borrower’s payment history with us and other financial institutions. Multi-family real estate loans are generally originated in amounts up to 85% of the lower of the sale price or the appraised value of the mortgaged property securing the loans. All multi-family real estate loans over $250,000 are appraised by independent or in-house licensed appraisers approved by the board of directors.

Commercial real estate loans are secured predominately by office buildings, and to a lesser extent warehouse properties and more specialized properties such as churches and schools. We originate commercial real estate loans generally with a typical term of five years with balloon payments. These loans generally amortize over 15 to 25 years. We offer both adjustable and fixed rates of interest on commercial real estate loans, with the interest rate for adjustable rate loans tied to the prime interest rate. We may generally lend up to 85% of the properties appraised value. We require independent or in-house licensed appraisals for all commercial real estate loans in excess of $250,000. Creditworthiness is determined by considering the character, experience, management and financial strength of the borrower and the ability of the property to generate adequate funds to cover both operating expenses and debt service. We require title insurance on all of our commercial real estate loans, and we also require that fire and extended coverage casualty insurance be maintained.

Construction lending generally involves a greater degree of risk than our other real estate lending. The repayment of the construction loan is, to a great degree, dependent upon the successful and timely completion of the project. The construction phase of a loan for a one-to-four family, owner-occupied property generally lasts up to six months with loan-to- value ratios of up to 80%, (or up to 90% if the borrower obtains private mortgage insurance) of the appraised estimated value of the completed property or cost, whichever is less. The duration and loan to value ratios for non one-to-four family, owner-occupied properties vary depending on the property type. Our procedures for underwriting construction loans include an assessment of the borrower’s credit history and the borrower’s ability to meet other existing debt obligations, as well as payment of principal and interest on the proposed loan. We use the same underwriting standards and procedures for construction/permanent lending as we do for one-to-four family residential real estate lending.

Commercial business loans vary in type and may be secured or unsecured for the purpose of financing equipment acquisition, expansion, working capital and other general business purposes. The terms of these loans are generally for less than five years. The loans are either fixed-rate or carry variable interest rates indexed to the prime rate. Commercial credit decisions are based upon a complete credit review of the borrower. A determination is made as to the borrower’s ability to repay in accordance with the proposed terms as well as an overall assessment of the credit risks involved. Personal guarantees of borrowers are generally required. In evaluating a commercial business loan, we consider debt service capabilities, actual and projected cash flows, and the borrower’s inherent industry risks. Credit agency reports of an individual borrower’s or guarantor’s credit history as well as bank checks and trade investigations supplement the analysis of the borrower’s creditworthiness.

Although we originate fixed-rate and adjustable-rate loans, our ability to generate each type of loan depends upon borrower demand, market interest rates, borrower preference for fixed-versus adjustable- rate loans, and the interest rates offered on each type of loan by competing lenders in our market area. Loan originations are derived from a number of sources, including existing or prior customers and walk-in customers.

Consumer loans consist primarily of home equity lines of credit, automobile loans, loans secured by deposits and securities, and unsecured personal loans. Home equity lines of credit account for the largest segment of our consumer loans. They are generally made for owner-occupied homes and are secured by first or second mortgages on the residential properties. We generally offer home equity lines of credit with a maximum loan to appraised value ratio of 90%, including senior liens on the subject property. Our procedures for underwriting consumer loans include an assessment of the borrower’s credit history and ability to meet other existing debt obligations, as well as payments of principal and interest on the proposed loans. Although the borrower’s creditworthiness is a primary consideration, the underwriting process also includes a comparison of the value of the collateral security, if any, to the proposed loan.

Property and Equipment

Property and Equipment: Land is stated at cost. Property and equipment are stated at cost less accumulated depreciation. Depreciation is determined under the straight-line method over the balance of estimated useful lives of the assets, which are 15-50 years for buildings and improvements and 3-10 years for furniture and equipment.

Goodwill

Goodwill: Goodwill resulting from business combinations is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually or more frequently if events and circumstances exist that indicate that a goodwill impairment test should be performed. The Company has selected September 30 as the date to perform the annual impairment test. Our annual impairment assessment for 2015 and 2014 resulted in no goodwill impairment. Goodwill is the only intangible asset with an indefinite life on our balance sheet.

Bank-Owned Life Insurance

Bank-Owned Life Insurance: The Bank has purchased life insurance policies on certain key employees. Bank-owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

Core Deposit Intangible

Core Deposit Intangible: Core deposit intangible represents the value of acquired customer relationships. The balance created from our 2008 acquisition of Partners Financial Holdings, Inc. is being amortized over 9.7 years using the double declining balance method.

Foreclosed Assets

Foreclosed Assets: Real estate acquired through foreclosure or deed in lieu of foreclosure represents specific assets to which the Bank has acquired legal title in satisfaction of indebtedness. Such real estate is initially recorded at the property’s fair value at the date of foreclosure less estimated selling costs. Initial valuation adjustments, if any, are charged against the allowance for losses on loans. Property is evaluated regularly to ensure the recorded amount is supported by its current fair value. Subsequent declines in estimated fair value are charged to expense when incurred. Revenues and expenses related to holding and operating these properties are recognized or expensed as incurred.

Mortgage Servicing Rights

Mortgage Servicing Rights: Servicing assets are recognized as separate assets when rights are acquired through purchase or through sale of financial assets. For sales of one-to-four family loans, a portion of the cost of originating the loan is allocated to the servicing right based on fair value. Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, the custodial earnings rate, an inflation rate, ancillary income, prepayment speeds and default rates and losses. Servicing assets are evaluated for impairment based upon the fair value of the rights as compared to amortized cost. To determine impairment the Company applies a pooling methodology to the servicing valuation, in which loans with similar characteristics are "pooled" together for valuation purposes. Once pooled, each grouping of loans is evaluated on a discounted earnings basis to determine the present value of future earnings that a purchaser could expect to realize from the portfolio. Earnings are projected from a variety of sources including loan servicing fees, interest earned on float, net interest earned on escrows, miscellaneous income and costs to service the loans. If the Company later determines that all or a portion of the impairment no longer exists for a particular pool, a reduction of the allowance may be recorded as an increase to income. Capitalized servicing rights are amortized in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets.

Income Taxes

Income Taxes: Deferred income tax assets and liabilities are computed annually for differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to amounts which are more likely than not realizable. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Income tax expense (benefit) is the tax payable (refundable) for the period plus or minus the change during the period in deferred tax assets and liabilities.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

The Company recognizes interest and/or penalties related to income tax matters in income tax expense.

Earnings Per Common Share

Earnings Per Common Share: Basic earnings per share represents net income available to common stockholders divided by the weighted average number of common shares outstanding. Diluted earnings per share reflect additional common shares that would have been outstanding if dilutive potential common shares had been issued. No dilutive potential common shares existed at December 31, 2015 and 2014.

	Year Ended
	December 31,
	2015		2014
Net income	$	4,637,754	$	3,826,192
Basic weighted average shares outstanding		7,006,715		7,007,283
Dilutive potential common shares		-		-
Diluted weighted average shares outstanding		7,006,715		7,007,283
Basic and diluted earnings per share	$	0.66	$	0.55

Fair Value Measurements

Fair Value Measurements: Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Notes 16 and 17. Fair value estimates involve uncertainties and matters of significant judgment. Changes in assumptions or in market conditions could significantly affect the estimates.

Comprehensive Income

Comprehensive Income: Comprehensive income consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses on securities available for sale which are also recognized as separate components of equity.

Loss Contingencies

Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there are any such matters at this time that will have a material effect on the financial statements.

Operating Segments

Operating Segments: While management monitors revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Company-wide basis. Operating segments are aggregated into one as operating results for all segments are similar. Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment.

Recent Accounting Pronouncements

Recent Accounting Pronouncements: The following provides a description of recently adopted or newly issued but not yet effective accounting standards that could have a material effect on our financial statements:

In May 2014, the Financial Accounting Standard Board (the “FASB”) issued an update creating FASB Topic 606, Revenue from Contracts with Customers.  The guidance in this update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts).  The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.  The guidance provides steps to follow to achieve the core principle.  An entity should disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.  Qualitative and quantitative information is required about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract.  The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2017.  We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements.

In June 2014, the FASB amended existing guidance related to repurchase-to-maturity transactions, repurchase financings, and disclosures (ASU 2014-11, Transfers and Servicing (Topic 860) - Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures). These amendments align the accounting for repurchase-to-maturity transactions and repurchase agreements executed as a repurchase financing with the accounting for other typical repurchase agreements. Pursuant to the revised guidance, these transactions are accounted for as secured borrowings. The guidance eliminates sale accounting for repurchase-to-maturity transactions and supersedes the guidance under which a transfer of a financial asset and a contemporaneous repurchase financing could be accounted for on a combined basis as a forward agreement, which result in outcomes referred to as off-balance-sheet accounting. These amendments require a new disclosure for transactions economically similar to repurchase agreements in which the transferor retains substantially all of the exposure to the economic return on the transferred financial assets throughout the term of the transaction. These amendments also require expanded disclosures about the nature of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings. The accounting changes in this update are effective for the first interim or annual period beginning after December 15, 2014. In addition, for public companies, the disclosure for certain transactions accounted for as a sale is effective for the first interim or annual period beginning on or after December 15, 2014, and the disclosure for transactions accounted for as secured borrowings is required for annual periods beginning after December 15, 2014, and interim periods beginning after March 15, 2015. The adoption of this standard did not have a material effect on the Company’s operating results or financial condition.

In January 2016, the FASB issued an update (ASU No. 2016-01, Financial Instruments - Recognition and Measurement of Financial Assets and Liabilities). The new guidance is intended to improve the recognition and measurement of financial instruments by requiring: equity investments (other than equity method or consolidation) to be measured at fair value with changes in fair value recognized in net income; public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; separate presentation of financial assets and financial liabilities by measurement category and form of financial assets (i.e. securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are not public business entities; eliminating the requirement for non-public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is to be required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and requiring a reporting organization to present separately in other comprehensiveincome the portion of the total change in fair value of a liability resulting from the change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with thefair value option for financial instruments. The new guidance is effective for public business entities for fiscal years beginningafter December 15, 2017. We are currently evaluating the impact of adopting the new guidance on the consolidated financialstatements.

Reclassifications

Reclassifications: Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior year net income or stockholders’ equity.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Schedule of basic and diluted earnings per share

	Year Ended
	December 31,
	2015		2014
Net income	$	4,637,754	$	3,826,192
Basic weighted average shares outstanding		7,006,715		7,007,283
Dilutive potential common shares		-		-
Diluted weighted average shares outstanding		7,006,715		7,007,283
Basic and diluted earnings per share	$	0.66	$	0.55

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SECURITIES AVAILABLE FOR SALE (Tables)

12 Months Ended

Dec. 31, 2015

Investments, Debt and Equity Securities [Abstract]

Schedule of summary of amortized cost and fair values of securities with gross unrealized gains and losses

	December 31, 2015
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		(Losses)			Value
U.S. government agency obligations	$	29,183,789	$	26,006	$	(161,693	)	$	29,048,102
State and municipal securities		44,746,083		1,156,547		(168,391	)		45,734,239
Other securities		3,501		-		-			3,501
Mortgage-backed: residential		29,170,791		60,300		(260,319	)		28,970,772
	$	103,104,164	$	1,242,853	$	(590,403	)	$	103,756,614

	December 31, 2014
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		(Losses)			Value
U.S. government agency obligations	$	26,280,359	$	31,628	$	(442,381	)	$	25,869,606
State and municipal securities		44,828,579		1,025,719		(280,690	)		45,573,608
Other securities		3,501		-		-			3,501
Mortgage-backed: residential		32,800,032		176,321		(197,376	)		32,778,977
	$	103,912,471	$	1,233,668	$	(920,447	)	$	104,225,692

Schedule of unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position

	December 31, 2015
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
U.S. government agency obligations	$	15,928,702	$	(82,008	)	$	5,934,944	$	(79,685	)	$	21,863,646	$	(161,693	)
State and municipal securities		7,666,691		(66,224	)		4,927,928		(102,167	)		12,594,619		(168,391	)
Mortgage-backed: residential		18,251,546		(183,188	)		4,227,473		(77,131	)		22,479,019		(260,319	)
	$	41,846,939	$	(331,420	)	$	15,090,345	$	(258,983	)	$	56,937,284	$	(590,403	)

	December 31, 2014
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
U.S. government agency obligations	$	6,477,461	$	(26,717	)	$	12,615,391	$	(415,664	)	$	19,092,852	$	(442,381	)
State and municipal securities		7,102,666		(43,614	)		9,369,188		(237,076	)		16,471,854		(280,690	)
Mortgage-backed: residential		1,474,590		(28,841	)		15,744,126		(168,535	)		17,218,716		(197,376	)
	$	15,054,717	$	(99,172	)	$	37,728,705	$	(821,275	)	$	52,783,422	$	(920,447	)

Schedule of amortized cost and fair value by contractual maturity

	Amortized		Fair
	Cost		Value
Due in one year or less	$	6,109,210	$	6,113,631
Due after one year through five years		24,981,003		24,977,510
Due after five years through ten years		31,423,272		32,025,396
Due after ten years		11,416,387		11,665,804
Other securities - non-maturing		3,501		3,501
Mortgage-backed: residential		29,170,791		28,970,772
	$	103,104,164	$	103,756,614

XML

LOANS (Tables)

12 Months Ended

Dec. 31, 2015

Loans and Leases Receivable Disclosure [Abstract]

Schedule of components of loans

	At December 31,
	2015			2014
Real estate loans:
One-to-four family	$	110,792,710		$	117,591,822
Multi-family		41,182,067			41,391,862
Commercial		153,634,426			129,415,314
Construction and land		13,588,626			28,590,745
		319,197,829			316,989,743
Commercial business		89,743,511			73,984,867
Consumer:
Home equity		13,656,008			13,523,985
Automobile and other		3,523,696			1,772,431
		17,179,704			15,296,416
Total gross loans		426,121,044			406,271,026
Deferred loan origination costs, net		228,764			194,820
Allowance for loan losses		(5,886,225	)		(5,561,442	)
Loans, net	$	420,463,583		$	400,904,404

Schedule of past-due loans

December 31, 2015
	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Past Due Loans		Current Loans		Total		Accruing Loans 90 or More Days Past Due
Real estate loans:
One-to-four family	$	331,479	$	259,240	$	33,839	$	624,558	$	110,168,152	$	110,792,710	$	-
Multi-family		-		-		-		-		41,182,067		41,182,067		-
Commercial		-		-		111,706		111,706		153,522,720		153,634,426		-
Construction and land		-		-		-		-		13,588,626		13,588,626		-
		331,479		259,240		145,545		736,264		318,461,565		319,197,829		-
Commercial business		-		-		87,254		87,254		89,656,257		89,743,511		-
Consumer:
Home equity		57,625		-		89,407		147,032		13,508,976		13,656,008		-
Automobile and other		500		-		-		500		3,523,196		3,523,696		-
		58,125		-		89,407		147,532		17,032,172		17,179,704		-
Total	$	389,604	$	259,240	$	322,206	$	971,050	$	425,149,994	$	426,121,044	$	-

December 31, 2014
	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Past Due Loans		Current Loans		Total		Accruing Loans 90 or More Days Past Due
Real estate loans:
One-to-four family	$	843,185	$	166,965	$	408,228	$	1,418,378	$	116,173,444	$	117,591,822	$	-
Multi-family		-		-		-		-		41,391,862		41,391,862		-
Commercial		100,220		-		29,810		130,030		129,285,284		129,415,314		-
Construction and land		-		-		-		-		28,590,745		28,590,745		-
		943,405		166,965		438,038		1,548,408		315,441,335		316,989,743		-
Commercial business		-		25,095		-		25,095		73,959,772		73,984,867		-
Consumer:
Home equity		41,930		-		48,088		90,018		13,433,967		13,523,985		-
Automobile and other		-		-		-		-		1,772,431		1,772,431		-
		41,930		-		48,088		90,018		15,206,398		15,296,416		-
Total	$	985,335	$	192,060	$	486,126	$	1,663,521	$	404,607,505	$	406,271,026	$	-

Schedule of non-accrual loans

	At December 31,
	2015		2014
Real estate loans:
One-to-four family	$	601,833	$	589,170
Multi-family		995,659		1,340,779
Commercial		1,245,023		1,242,009
Construction and land		-		1,431,619
		2,842,515		4,603,577
Commercial business		263,233		25,095
Consumer:
Home equity		124,627		48,088
Automobile and other		8,558		-
		133,185		48,088
Total non-accrual loans	$	3,238,933	$	4,676,760

Schedule of activity in the allowance for loan losses

Year ended December 31, 2015
	Beginning Balance		Charge-offs			Recoveries		Provision			Ending Balance
Real estate loans:
One-to-four family	$	1,119,762	$	(25,258	)	$	21,576	$	23,650		$	1,139,730
Multi-family		436,833		-			11,753		25,782			474,368
Commercial		1,650,290		(79,248	)		11,923		401,123			1,984,088
Construction and land		1,194,917		-			811,350		(1,508,275	)		497,992
		4,401,802		(104,506	)		856,602		(1,057,720	)		4,096,178
Commercial business		951,215		-			73,761		409,711			1,434,687
Consumer
Home equity		198,150		-			-		81,520			279,670
Automobile and other		10,275		(1,900	)		826		66,489			75,690
		208,425		(1,900	)		826		148,009			355,360
Total	$	5,561,442	$	(106,406	)	$	931,189	$	(500,000	)	$	5,886,225

Year ended December 31, 2014
	Beginning Balance		Charge-offs			Recoveries		Provision			Ending Balance
Real estate loans:
One-to-four family	$	1,424,663	$	(263,258	)	$	466,287	$	(507,930	)	$	1,119,762
Multi-family		661,358		-			-		(224,525	)		436,833
Commercial		1,454,455		(1,876	)		-		197,711			1,650,290
Construction and land		668,085		-			230,000		296,832			1,194,917
		4,208,561		(265,134	)		696,287		(237,912	)		4,401,802
Commercial business		1,219,080		(190,255	)		13,048		(90,658	)		951,215
Consumer
Home equity		116,478		(43,519	)		9,402		115,789			198,150
Automobile and other		46,549		-			945		(37,219	)		10,275
		163,027		(43,519	)		10,347		78,570			208,425
Total	$	5,590,668	$	(498,908	)	$	719,682	$	(250,000	)	$	5,561,442

Schedule of allocation of the allowance for loan losses and the loan balances between loans evaluated both individually and collectively

December 31, 2015
	Period-end allowance allocated to loans:						Loans evaluated for impairment:
	Individually evaluated for impairment		Collectively evaluated for impairment		Ending Balance		Individually		Collectively		Ending Balance
Real estate loans:
One-to-four family	$	116,724	$	1,023,006	$	1,139,730	$	905,974	$	109,886,736	$	110,792,710
Multi-family		-		474,368		474,368		995,659		40,186,408		41,182,067
Commercial		183,966		1,800,122		1,984,088		2,735,652		150,898,774		153,634,426
Construction and land		-		497,992		497,992		186,888		13,401,738		13,588,626
		300,690		3,795,488		4,096,178		4,824,173		314,373,656		319,197,829
Commercial business		259,787		1,174,900		1,434,687		586,103		89,157,408		89,743,511
Consumer:
Home equity		49,782		229,888		279,670		141,649		13,514,359		13,656,008
Automobile and other		-		75,690		75,690		8,558		3,515,138		3,523,696
		49,782		305,578		355,360		150,207		17,029,497		17,179,704
Total	$	610,259	$	5,275,966	$	5,886,225	$	5,560,483	$	420,560,561	$	426,121,044

December 31, 2014
	Period-end allowance allocated to loans:						Loans evaluated for impairment:
	Individually evaluated for impairment		Collectively evaluated for impairment		Ending Balance		Individually		Collectively		Ending Balance
Real estate loans:
One-to-four family	$	91,688	$	1,028,074	$	1,119,762	$	1,266,717	$	116,325,105	$	117,591,822
Multi-family		-		436,833		436,833		1,340,779		40,051,083		41,391,862
Commercial		155,863		1,494,427		1,650,290		2,267,362		127,147,952		129,415,314
Construction and land		-		1,194,917		1,194,917		1,639,030		26,951,715		28,590,745
		247,551		4,154,251		4,401,802		6,513,888		310,475,855		316,989,743
Commercial business		115,446		835,769		951,215		140,541		73,844,326		73,984,867
Consumer:
Home equity		9,902		188,248		198,150		65,452		13,458,533		13,523,985
Automobile and other		-		10,275		10,275		-		1,772,431		1,772,431
		9,902		198,523		208,425		65,452		15,230,964		15,296,416
Total	$	372,899	$	5,188,543	$	5,561,442	$	6,719,881	$	399,551,145	$	406,271,026

Schedule of credit quality indicators

December 31, 2015
	Pass		Special Mention		Substandard		Doubtful		Total
Real estate loans:
One-to-four family	$	109,161,526	$	772,127	$	859,057	$	-	$	110,792,710
Multi-family		37,571,827		2,614,581		995,659		-		41,182,067
Commercial		143,837,755		5,295,878		4,500,793		-		153,634,426
Construction and land		13,143,977		-		444,649		-		13,588,626
		303,715,085		8,682,586		6,800,158		-		319,197,829
Commercial business		85,604,981		3,323,003		815,527		-		89,743,511
Consumer:
Home equity		13,504,552		-		68,241		83,215		13,656,008
Automobile and other		3,510,289		-		4,849		8,558		3,523,696
		17,014,841		-		73,090		91,773		17,179,704
Total	$	406,334,907	$	12,005,589	$	7,688,775	$	91,773	$	426,121,044

December 31, 2014
	Pass		Special Mention		Substandard		Doubtful		Total
Real estate loans:
One-to-four family	$	116,218,120	$	280,067	$	936,372	$	157,263	$	117,591,822
Multi-family		37,340,022		2,711,061		1,340,779		-		41,391,862
Commercial		113,447,231		12,016,499		3,951,584		-		129,415,314
Construction and land		26,892,171		-		1,698,574		-		28,590,745
		293,897,544		15,007,627		7,927,309		157,263		316,989,743
Commercial business		73,372,401		471,925		140,541		-		73,984,867
Consumer:
Home equity		13,444,685		-		79,300		-		13,523,985
Automobile and other		1,772,431		-		-		-		1,772,431
		15,217,116		-		79,300		-		15,296,416
Total	$	382,487,061	$	15,479,552	$	8,147,150	$	157,263	$	406,271,026

Schedule of impaired loans

	As of December 31, 2015						As of December 31, 2014
	Unpaid Contractual Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Contractual Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no related allowance recorded:
Real estate loans:
One-to-four family	$	648,750	$	648,750	$	-	$	551,510	$	467,191	$	-
Multi-family		1,478,137		995,659		-		1,823,257		1,340,779		-
Commercial		2,246,797		2,193,291		-		768,533		768,533		-
Construction and land		186,888		186,888		-		3,412,264		1,639,030		-
		4,560,572		4,024,588		-		6,555,564		4,215,533		-
Commercial business		87,254		87,254		-		215,350		25,095		-
Consumer:
Home equity		52,242		52,242		-		55,550		55,550		-
Automobile and other		8,558		8,558		-		-		-		-
		60,800		60,800		-		55,550		55,550		-
Subtotal	$	4,708,626	$	4,172,642	$	-	$	6,826,464	$	4,296,178	$	-
With an allowance recorded:
Real estate loans:
One-to-four family	$	257,224	$	257,224	$	116,724	$	851,010	$	799,526	$	91,688
Commercial		685,759		542,361		183,966		1,691,064		1,498,829		155,863
		942,983		799,585		300,690		2,542,074		2,298,355		247,551
Commercial business		498,849		498,849		259,787		115,446		115,446		115,446
Consumer:
Home equity		89,407		89,407		49,782		9,902		9,902		9,902
Subtotal		1,531,239		1,387,841		610,259		2,667,422		2,423,703		372,899
Total	$	6,239,865	$	5,560,483	$	610,259	$	9,493,886	$	6,719,881	$	372,899

	For the year ended December 31, 2015						For the year ended December 31, 2014
	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized		Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized
With no related allowance recorded:
Real estate loans:
One-to-four family	$	710,678	$	2,200	$	-	$	633,963	$	2,306	$	-
Multi-family		1,123,043		30		-		1,309,419		30		-
Commercial		1,417,242		26,003		-		853,898		7,709		-
Construction and land		745,332		2,144		-		1,183,097		2,376		-
		3,996,295		30,377		-		3,980,377		12,421		-
Commercial business		22,470		389		-		345,137		-		-
Consumer:
Home equity		53,926		1,096		-		106,734		1,101		-
Automobile and other		1,712		-		-		-		-		-
		55,638		1,096		-		106,734		1,101		-
Subtotal	$	4,074,403	$	31,862	$	-	$	4,432,248	$	13,522	$	-
With an allowance recorded:
Real estate loans:
One-to-four family	$	481,678	$	8,968	$	-	$	667,999	$	11,874	$	-
Multi-family		-		-		-		414,443		-		-
Commercial		933,199		8,823		-		1,367,490		18,584		-
Construction and land		-		2,430		-		53,062		2,430		-
		1,414,877		20,221		-		2,502,994		32,888		-
Commercial business		305,930		11,498		-		121,785		8,577		-
Consumer:
Home equity		58,779		68		-		2,475		-		-
Automobile and other		394		-		-		-		-		-
		59,173		68		-		2,475		-		-
Subtotal		1,779,980		31,787		-		2,627,254		41,465		-
Total	$	5,854,383	$	63,649	$	-	$	7,059,502	$	54,987	$	-

Schedule of loans by class that were modified as troubled debt restructurings

Year ended December 31, 2015
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Real estate loans:
Commercial		2	$	1,000,116	$	1,000,116
Commercial business		1		162,167	$	162,167
Consumer:
Home equity		1		35,221		35,221
Total		4	$	1,197,504	$	1,197,504

Year ended December 31, 2014
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Real estate loans:
One-to-four family		2	$	504,465	$	504,465
Construction and land		1		985,787		985,787
Total		3	$	1,490,252	$	1,490,252

Schedule of summary of changes in loans to directors, executive officers, their immediate families and companies in which these individuals have a 10% or more beneficial ownership

	Year Ended
	December 31,
	2015			2014
Balance, beginning of year	$	11,845,673		$	7,932,877
Additions		1,219,504			7,066,199
Repayments		(1,231,984	)		(3,050,455	)
Change in status of borrower		-			(102,948	)
Balance, end of year	$	11,833,193		$	11,845,673

XML

PROPERTY AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2015

Property, Plant and Equipment [Abstract]

Schedule of components of property and equipment

	December 31,
	2015			2014
Land	$	1,829,738		$	1,829,738
Buildings and improvements		10,001,146			9,997,562
Furniture and equipment		2,362,143			2,296,531
		14,193,027			14,123,831
Less accumulated depreciation		(4,321,587	)		(3,743,521	)
	$	9,871,440		$	10,380,310

XML

MORTGAGE SERVICING RIGHTS (Tables)

12 Months Ended

Dec. 31, 2015

Transfers And Servicing [Abstract]

Schedule of summary of activity pertaining to mortgage servicing rights along with the aggregate activity in related valuation allowances

	Year Ended
	December 31,
	2015			2014
Balance, beginning	$	961,823		$	918,247
Mortgage servicing rights capitalized		230,826			150,546
Mortgage servicing rights amortized		(144,607	)		(106,970	)
Decrease in provision for loss in fair value		61,678			-
Balance, ending	$	1,109,720		$	961,823
Valuation allowances:
Balance, beginning	$	178,896		$	178,896
Decrease		(61,678	)		-
Balance, ending	$	117,218		$	178,896

Schedule of estimated future amortization expense on mortgage servicing rights

Year Ending December 31,	Amount
2016	$	138,384
2017		133,145
2018		111,111
2019		67,291
2020		43,786
Thereafter		616,003
	$	1,109,720

XML

CORE DEPOSIT INTANGIBLE (Tables)

12 Months Ended

Dec. 31, 2015

Intangible Assets, Net (Excluding Goodwill) [Abstract]

Schedule of gross carrying value and accumulated amortization of the core deposit intangible

	December 31,
	2015			2014
Core deposit intangible	$	3,258,000		$	3,258,000
Less accumulated amortization		(3,120,000	)		(3,062,000	)
	$	138,000		$	196,000

Schedule of estimated future amortization expense on core deposit intangible

Year Ending December 31,	Amount
2016	$	58,000
2017		58,000
2018		22,000

XML

DEPOSITS (Tables)

12 Months Ended

Dec. 31, 2015

Deposits [Abstract]

Schedule of summary of deposits

	At December 31,
	2015		2014
Noninterest-bearing	$	69,296,354	$	68,170,743
Interest-bearing transaction accounts		300,782,040		285,437,812
Savings		29,907,675		29,070,422
Time		133,172,224		127,627,662
	$	533,158,293	$	510,306,639

Schedule of summary of interest expense on deposits

	Year Ended
	December 31,
	2015		2014
Interest-bearing transaction accounts	$	651,465	$	738,536
Savings		50,662		50,422
Time		1,459,810		1,385,108
	$	2,161,937	$	2,174,066

Schedule of maturities of time deposit

Year Ending December 31,	Amount
2016	$	60,831,144
2017		33,735,619
2018		21,398,998
2019		4,149,552
2020		12,473,886
Thereafter		583,025
	$	133,172,224

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FEDERAL HOME LOAN BANK ADVANCES (Tables)

12 Months Ended

Dec. 31, 2015

Federal Home Loan Bank Advances

Federal Home Loan Bank Advances

Schedule of contractual maturities of advances

Year Ending December 31,	Amount
2016	$	995,485
2018		15,000,000
	$	15,995,485

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SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE (Tables)

12 Months Ended

Dec. 31, 2015

Securities Sold under Agreements to Repurchase [Abstract]

Schedule of summary of information concerning securities sold under agreements to repurchase

	2015			2014
Average daily balance during the year	$	15,817,024		$	18,974,688
Average interest rate during the year		0.02	%		0.02	%
Maximum month-end balance during the year	$	20,765,781		$	23,275,868
Weighted average interest rate at year-end		0.02	%		0.02	%

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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Schedule of allocation of federal and state income taxes between current and deferred portions

	Year Ended
	December 31,
	2015			2014
Federal:
Current	$	1,411,154		$	815,120
Deferred		(202,931	)		71,545
		1,208,223			886,665
State:
Current		466,980			397,280
Deferred		266			76,653
		467,246			473,933
	$	1,675,469		$	1,360,598

Schedule of the Company's income tax expense differed from the maximum statutory federal rate

	Year Ended
	December 31,
	2015			2014
Expected income taxes	$	2,209,628		$	1,815,376
Income tax effect of:
State taxes, net of federal income tax benefit		277,177			278,391
Tax exempt interest, net		(613,220	)		(586,302	)
Income taxed at lower rates		(63,132	)		(51,868	)
Other		(134,984	)		(94,999	)
	$	1,675,469		$	1,360,598

Schedule of tax effects of principal temporary differences

	December 31,
	2015			2014
Deferred tax assets:
Allowance for loan losses	$	2,286,438		$	2,161,135
Deferred compensation		306,653			256,106
Accrued expenses		79,623			19,041
Purchase accounting adjustments for:
Loans		-			18,136
Securities		90,895			106,474
OREO writedowns and expenses		563,385			464,326
Other		107,467			367,148
		3,434,461			3,392,366
Deferred tax liabilities:
Federal Home Loan Bank stock		(177,613	)		(293,580	)
Core deposit intangible		(53,605	)		(76,164	)
Mortgage servicing rights		(431,058	)		(373,757	)
Unrealized gain on securities available for sale		(254,456	)		(115,890	)
Purchase accounting adjustments for:
Premises and equipment		(272,023	)		(278,376	)
Federal Home Loan Bank advances		(1,754	)		(4,762	)
Premises and equipment		(184,571	)		(254,555	)
		(1,375,080	)		(1,397,084	)
Net deferred taxes	$	2,059,381		$	1,995,282

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CAPITAL RATIOS (Tables)

12 Months Ended

Dec. 31, 2015

Capital Ratios

Schedule of actual capital amounts and ratios

											To be Well Capitalized
						For Capital					Under Prompt Corrective
	Actual					Adequacy Purposes					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	2015
Common Equity Tier 1 Capital to Risk Weighted Assets	$	68,467,000		14.29	%	$	21,555,000		4.50	%		N/A		N/A
Tier I Capital to Adjusted Total Assets		68,467,000		10.28	%		26,651,000		4.00	%		N/A		N/A
Tier I Capital to Risk Weighted Assets		68,467,000		14.29	%		28,740,000		6.00	%		N/A		N/A
Total Capital to Risk Weighted Assets		77,389,000		16.16	%		38,321,000		8.00	%		N/A		N/A
	2014
Tier I Capital to Adjusted Total Assets	$	65,256,000		10.54	%	$	24,764,000		4.00	%		N/A		N/A
Tier I Capital to Risk Weighted Assets		65,256,000		15.70	%		16,630,000		4.00	%		N/A		N/A
Total Capital to Risk Weighted Assets		73,210,000		17.61	%		33,260,000		8.00	%		N/A		N/A

Bank

Capital Ratios

Schedule of actual capital amounts and ratios

	Actual					For Capital  Adequacy Purposes					To be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	2015
Common Equity Tier 1 Capital to Risk Weighted Assets	$	71,273,000		14.89	%	$	21,546,000		4.50	%	$	31,122,000		6.50	%
Tier I Capital to Adjusted Total Assets		71,273,000		11.47	%		24,855,000		4.00	%		31,069,000		5.00	%
Tier I Capital to Risk Weighted Assets		71,273,000		14.89	%		28,728,000		6.00	%		38,303,000		8.00	%
Total Capital to Risk Weighted Assets		76,195,000		15.91	%		38,303,000		8.00	%		47,879,000		10.00	%
	2014
Tier I Capital to Adjusted Total Assets	$	67,995,000		11.22	%	$	24,235,000		4.00	%	$	30,294,000		5.00	%
Tier I Capital to Risk Weighted Assets		67,995,000		16.36	%		16,623,000		4.00	%		24,935,000		6.00	%
Total Capital to Risk Weighted Assets		71,949,000		17.31	%		33,247,000		8.00	%		41,558,000		10.00	%

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COMMITMENTS, CONTINGENCIES AND CREDIT RISK (Tables)

12 Months Ended

Dec. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Schedule of summary of the notional or contractual amounts of financial instruments, primarily variable rate, with off-balance-sheet risk

							Range of Rates
	Variable Rate		Fixed Rate		Total		on Fixed Rate
	Commitments		Commitments		Commitments		Commitments
	2015
Commitments to extend credit	$	43,735,051	$	36,533,191	$	80,268,242	3.00% - 18.00%
Standby letters of credit		1,726,114		49,000		1,775,114	4.00% - 6.00%
	2014
Commitments to extend credit	$	34,570,790	$	24,254,679	$	58,825,469	3.00% - 18.00%
Standby letters of credit		1,361,322		300,765		1,662,087	3.50% - 6.00%

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FAIR VALUE MEASUREMENTS (Tables)

12 Months Ended

Dec. 31, 2015

Fair Value Measurements Disclosure [Abstract]

Schedule of assets measured at fair value on a recurring basis segregated by fair value hierarchy level

	Fair Value Measurements at December 31, 2015 Using:
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Assets:	(Level 1)		(Level 2)		(Level 3)		Total
Securities:
U.S. government agency obligations	$	-	$	29,048,102	$	-	$	29,048,102
State and municipal securities		-		45,734,239		-		45,734,239
Other securities		-		3,501		-		3,501
Mortgage-backed: residential		-		28,970,772		-		28,970,772
Total securities available for sale	$	-	$	103,756,614	$	-	$	103,756,614

	Fair Value Measurements at December 31, 2014 Using:
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Assets:	(Level 1)		(Level 2)		(Level 3)		Total
Securities:
U.S. government agency obligations	$	-	$	25,869,606	$	-	$	25,869,606
State and municipal securities		-		45,573,608		-		45,573,608
Other securities		-		3,501		-		3,501
Mortgage-backed: residential		-		32,778,977		-		32,778,977
Total securities available for sale	$	-	$	104,225,692	$	-	$	104,225,692

Schedule of assets measured at fair value on a nonrecurring basis by fair value hierarchy level

	Fair Value Measurements at December 31, 2015 Using:
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Assets:	(Level 1)		(Level 2)		(Level 3)		Total
Foreclosed assets:
Real estate:
Commercial	$	-	$	-	$	19,000	$	19,000
Construction and land		-		-		604,500	$	604,500
Total foreclosed assets	$	-	$	-	$	623,500	$	623,500
Impaired loans:
Real estate loans:
One-to-four family	$	-	$	-	$	140,500	$	140,500
Commercial		-		-		358,395		358,395
		-		-		498,895		498,895
Commercial business		-		-		239,062		239,062
Consumer:
Home equity		-		-		39,625		39,625
Total impaired loans	$	-	$	-	$	777,582	$	777,582
Mortgage Servicing Rights	$	-	$	1,109,720	$	-	$	1,109,720

	Fair Value Measurements at December 31, 2014 Using:
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Assets:	(Level 1)		(Level 2)		(Level 3)		Total
Foreclosed assets:
Real estate:
Construction and land		-		-		1,042,087		1,042,087
Total foreclosed assets	$	-	$	-	$	1,042,087	$	1,042,087
Impaired loans:
Real estate loans:
One-to-four family	$	-	$	-	$	707,838	$	707,838
Commercial		-		-		1,342,966		1,342,966
		-		-		2,050,804		2,050,804
Total impaired loans	$	-	$	-	$	2,050,804	$	2,050,804

Schedule of quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis

The following table presents quantitative information about Level 3 fair value measurements for significant categories of financial instruments measured at fair value on a non-recurring basis at December 31, 2015:

	Fair Value		Valuation Techniques	Unobservable Inputs	Range	Weighted Average
Foreclosed assets:
Real estate:
Construction and land	$	604,500	Sales Comparison	Adjustment for difference between comparable sales	-29% to 5%		-8.9	%
Impaired loans:
Real estate loans:
One-to-four family	$	140,500	Sales Comparison	Adjustment for difference between comparable sales	-19% to -7%		-13.0	%
Commercial		88,000	Sales Comparison	Adjustment for difference between comparable sales	9% to 16%		12.8	%
Commercial		270,395	Income Approach	Investment Capitalization Rates	9.0%		9.0	%
Commercial business		121,094	Fair Value of Collateral	Discount for type of business assets	0% to 10%		7.0	%

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2014:

	Fair Value		Valuation Techniques	Unobservable Inputs	Range	Weighted Average
Foreclosed assets:
Real estate:
Construction and land	$	1,042,087	Sales Comparison	Adjustment for difference between comparable sales	-10% to 30%		10.3	%
Impaired loans:
Real estate loans:
One-to-four family	$	707,838	Sales Comparison	Adjustment for difference between comparable sales	-23% to 13%		-7.2	%
Commercial		1,342,966	Income Approach	Investment Capitalization Rates	3% to 27%		12.3	%

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2015

Fair Value Disclosures [Abstract]

Schedule of estimated fair values of the company's financial instruments

			Fair Value Measurements at December 31, 2015 Using:
	Carrying		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Fair
	Amount		(Level 1)		(Level 2)		(Level 3)		Value
Financial assets:
Cash and cash equivalents	$	79,232,566	$	79,232,566	$	-	$	-	$	79,232,566
Interest-earning time deposits		1,685,000		-		1,685,000		-		1,685,000
Federal Home Loan Bank stock		1,747,763		-		-		-		N/A
Federal Reserve Bank stock		1,676,700		-		-		-		N/A
Loans, net (excluding impaired loans at fair value)		419,686,001		-		-		421,795,305		421,795,305
Loans held for sale		1,078,785		-		1,078,785		-		1,078,785
Accrued interest receivable		1,620,309		-		510,231		1,110,078		1,620,309
Financial liabilities:
Non-interest bearing deposits		69,296,354		69,296,354		-		-		69,296,354
Interest-bearing deposits		463,861,939		330,689,715		133,976,643		-		464,666,358
Federal Home Loan Bank advances		15,995,485		-		16,315,262		-		16,315,262
Securities sold under agreement to repurchase		19,732,766		-		19,732,766		-		19,732,766
Subordinated debentures		4,000,000		-		4,000,000		-		4,000,000
Accrued interest payable		227,947		14,621		213,326		-		227,947

			Fair Value Measurements at December 31, 2014 Using:
	Carrying		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Fair
	Amount		(Level 1)		(Level 2)		(Level 3)		Value
Financial assets:
Cash and cash equivalents	$	49,066,462	$	49,066,462	$	-	$	-	$	49,066,462
Interest-earning time deposits		2,021,970		-		2,021,970		-		2,021,970
Federal Home Loan Bank stock		2,887,763		-		-		-		N/A
Federal Reserve Bank stock		1,676,700		-		-		-		N/A
Loans, net (excluding impaired loans at fair value)		398,853,600		-		-		402,238,073		402,238,073
Loans held for sale		100,000		-		100,000		-		100,000
Accrued interest receivable		1,762,310		-		506,888		1,255,422		1,762,310
Financial liabilities:
Non-interest bearing deposits		68,170,743		68,170,743		-		-		68,170,743
Interest-bearing deposits		442,135,896		314,508,234		128,258,671		-		442,766,905
Federal Home Loan Bank advances		2,487,745		-		2,542,945		-		2,542,945
Securities sold under agreement to repurchase		11,848,266		-		11,848,266		-		11,848,266
Subordinated debentures		4,000,000		-		4,000,000		-		4,000,000
Accrued interest payable		174,480		14,359		160,121		-		174,480

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ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables)

12 Months Ended

Dec. 31, 2015

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of summary of the changes within each classification of accumulated other comprehensive income, net of tax

Changes in Accumulated Other Comprehensive Income by Component
For the Year Ended December 31, 2015(1)
	Unrealized Gains and Losses on Available-for-Sale Securities			Total
Accumulated Other Comprehensive Income at January 1, 2015	$	197,331		$	197,331
Other comprehensive income before reclassifications		207,264			207,264
Amount reclassified from accumulated other comprehensive income(2)		(6,601	)		(6,601	)
Net current-period other comprehensive income		200,663			200,663
Accumulated Other Comprehensive Income at December 31, 2015	$	397,994		$	397,994

⁽¹⁾ All amounts are net of tax.

⁽²⁾ See table below for details about reclassifications.

Changes in Accumulated Other Comprehensive Income by Component
For the Year Ended December 31, 2014(1)
	Unrealized Gains and Losses on Available-for-Sale Securities			Total
Accumulated Other Comprehensive Loss at January 1, 2014	$	(1,692,488	)	$	(1,692,488	)
Other comprehensive income before reclassifications		1,958,938			1,958,938
Amount reclassified from accumulated other comprehensive income(2)		(69,119	)		(69,119	)
Net current-period other comprehensive income		1,889,819			1,889,819
Accumulated Other Comprehensive Income at December 31, 2014	$	197,331		$	197,331

⁽¹⁾ All amounts are net of tax.

⁽²⁾ See table below for details about reclassifications.

Schedule of summary of the significant amounts reclassified out of each component of accumulated other comprehensive income

Reclassifications out of Accumulated Other Comprehensive Income
For the Year Ended December 31, 2015
Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive  Income			Affected Line Item in the Statement Where Net Income is Presented
Unrealized gains and losses on available-for-sale securities	$	10,821		Gain on sale of securities
		(4,220	)	Tax expense
Total reclassifications for the period	$	6,601		Net of tax

Reclassifications out of Accumulated Other Comprehensive Income
For the Year Ended December 31, 2014
Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive  Income			Affected Line Item in the Statement Where Net Income is Presented
Unrealized gains and losses on available-for-sale securities	$	109,712		Gain on sale of securities
		(40,593	)	Tax expense
Total reclassifications for the period	$	69,119		Net of tax

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CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY (Tables)

12 Months Ended

Dec. 31, 2015

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Schedule of balance sheets

BALANCE SHEETS

December 31, 2015 and 2014

	2015		2014
Assets
Cash and cash equivalents	$	996,950	$	1,141,653
Investment in common stock of subsidiary		83,079,782		79,868,529
Other assets		214,079		173,079
Total assets	$	84,290,811	$	81,183,261
Liabilities and Stockholders' Equity
Subordinated debentures	$	4,000,000	$	4,000,000
Accrued interest payable		8,388		7,424
Other liabilities		8,548		45,944
Total liabilities		4,016,936		4,053,368
Stockholders' Equity
Common stock		700,588		700,728
Additional paid-in-capital		55,806,256		55,818,936
Retained earnings		23,369,037		20,412,898
Accumulated other comprehensive income		397,994		197,331
		80,273,875		77,129,893
Total liabilities and stockholders' equity	$	84,290,811	$	81,183,261

Schedule of condensed statements of operations and comprehensive income

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

Years ended December 31, 2015 and 2014

	2015			2014
Dividends from subsidiary	$	2,000,000		$	2,000,000
Interest income		2,682			2,614
Interest expense		(90,174	)		(86,901	)
Other income		-			51,205
Other expenses		(534,045	)		(524,678	)
Income before income tax benefit and equity in undistributed net income of subsidiary		1,378,463			1,442,240
Income tax benefit		248,700			223,200
Income before equity in undistributed net income of subsidiary		1,627,163			1,665,440
Equity in undistributed (distributions in excess of) net income of subsidiary		3,010,591			2,160,752
Net income	$	4,637,754		$	3,826,192
Comprehensive income	$	4,838,417		$	5,716,011

Schedule of condensed statements of cash flows

CONDENSED STATEMENTS OF CASH FLOWS

Years ended December 31, 2015 and 2014

	2015			2014
Cash Flows from Operating Activities
Net income	$	4,637,754		$	3,826,192
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Distributions in excess of (equity in undistributed) net income of subsidiary		(3,010,591	)		(2,160,752	)
Decrease (increase) in other assets		(41,000	)		507,606
Increase (decrease) in accrued interest payable		964			(49	)
Decrease in other liabilities		(37,395	)		(40,722	)
Net cash provided by operating activities		1,549,732			2,132,275
Cash Flows from Investing Activities
Loan payments		-			-
Net cash provided by investing activities		-			-
Cash Flows from Financing Activities
Repurchase of common stock		(12,820	)		-
Dividends		(1,681,615	)		(1,681,748	)
Net cash used in financing activities		(1,694,435	)		(1,681,748	)
Net increase (decrease) in cash and cash equivalents		(144,703	)		450,527
Cash and cash equivalents:
Beginning of year		1,141,653			691,126
End of year	$	996,950		$	1,141,653

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Accounting Policies [Abstract]
Net income	$ 4,637,754	$ 3,826,192
Basic weighted average shares outstanding	7,006,715	7,007,283
Dilutive potential common shares
Diluted weighted average shares outstanding	7,006,715	7,007,283
Basic and diluted earnings per share (in dollars per share)	$ 0.66	$ 0.55

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals)	12 Months Ended
	Dec. 31, 2015 USD ($) OperatingSegment ReportingSegment	Dec. 31, 2014 USD ($)
Accounting Policies [Abstract]
Interest-earning time deposits	$ 1,685,000	$ 2,021,970
Federal Home Loan Bank of Chicago (FHLB) stock	1,747,763	2,887,763
Federal Reserve Bank stock	$ 1,676,700	1,676,700
Number of operating segments | OperatingSegment	1
Number of reportable segments | ReportingSegment	1
Federal Reserve Bank
Summary Of Significant Accounting Policies [Line Items]
Reserve balances in cash or on deposit	$ 10,438,000	$ 6,575,000

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals 1)	12 Months Ended
	Dec. 31, 2015 USD ($) Unit
Accounts, Notes, Loans and Financing Receivable [Line Items]
Past due period, after which loan is classified as nonaccrual	90 days
Threshold amount of loans categorized as special mention evaluated for impairment	$ 250,000
Period of summarized data utilized in analysis of historical loss data	5 years
Real estate loans | One-to-four family | Maximum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of the property's appraised value up to which the entity may lend	80.00%
Percentage of the property's appraised value up to which the entity may lend if borrower obtains private mortgage insurance	90.00%
Real estate loans | Multi-family
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of units of apartment buildings and rental properties by which loans are secured | Unit	5
Period one after which interest rate is adjustable	1 year
Period two after which interest rate is adjustable	3 years
Period three after which interest rate is adjustable	5 years
Loan amount threshold for independent appraisal	$ 250,000
Real estate loans | Multi-family | Maximum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of the property's appraised value up to which the entity may lend	85.00%
Real estate loans | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan amount threshold for independent appraisal	$ 250,000
Balloon term	5 years
Real estate loans | Commercial | Minimum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Amortization period	15 years
Real estate loans | Commercial | Maximum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of the property's appraised value up to which the entity may lend	85.00%
Amortization period	25 years
Real estate loans | Construction | Maximum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of the property's appraised value up to which the entity may lend	80.00%
Percentage of the property's appraised value up to which the entity may lend if borrower obtains private mortgage insurance	90.00%
Construction phase period	6 months
Commercial business | Maximum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balloon term	5 years
Consumer | Home equity | Maximum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of the property's appraised value up to which the entity may lend	90.00%

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals 2)	12 Months Ended
	Dec. 31, 2015
Property and Equipment:
Depreciation method	Straight-line method
Buildings and improvements | Minimum
Property and Equipment:
Estimated useful lives	15 years
Buildings and improvements | Maximum
Property and Equipment:
Estimated useful lives	50 years
Furniture and equipment | Minimum
Property and Equipment:
Estimated useful lives	3 years
Furniture and equipment | Maximum
Property and Equipment:
Estimated useful lives	10 years

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals 3)	12 Months Ended
	Dec. 31, 2015
Core deposit intangible | 2008 acquisition
Finite-Lived Intangible Assets [Line Items]
Amortization period	9 years 8 months 12 days

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SECURITIES AVAILABLE FOR SALE (Details) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 103,104,164	$ 103,912,471
Gross Unrealized Gains	1,242,853	1,233,668
Gross Unrealized (Losses)	(590,403)	(920,447)
Fair Value	103,756,614	104,225,692
U.S. government agency obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	29,183,789	26,280,359
Gross Unrealized Gains	26,006	31,628
Gross Unrealized (Losses)	(161,693)	(442,381)
Fair Value	29,048,102	25,869,606
State and municipal securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	44,746,083	44,828,579
Gross Unrealized Gains	1,156,547	1,025,719
Gross Unrealized (Losses)	(168,391)	(280,690)
Fair Value	45,734,239	45,573,608
Other securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 3,501	$ 3,501
Gross Unrealized Gains
Gross Unrealized (Losses)
Fair Value	$ 3,501	$ 3,501
Mortgage-backed: residential
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	29,170,791	32,800,032
Gross Unrealized Gains	60,300	176,321
Gross Unrealized (Losses)	(260,319)	(197,376)
Fair Value	$ 28,970,772	$ 32,778,977

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SECURITIES AVAILABLE FOR SALE (Details 1) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	$ 41,846,939	$ 15,054,717
Less than 12 Months, Unrealized Losses	(331,420)	(99,172)
12 Months or More, Fair Value	15,090,345	37,728,705
12 Months or More, Unrealized Losses	(258,983)	(821,275)
Total Fair Value	56,937,284	52,783,422
Total Unrealized Losses	(590,403)	(920,447)
U.S. government agency obligations
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	15,928,702	6,477,461
Less than 12 Months, Unrealized Losses	(82,008)	(26,717)
12 Months or More, Fair Value	5,934,944	12,615,391
12 Months or More, Unrealized Losses	(79,685)	(415,664)
Total Fair Value	21,863,646	19,092,852
Total Unrealized Losses	(161,693)	(442,381)
State and municipal securities
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	7,666,691	7,102,666
Less than 12 Months, Unrealized Losses	(66,224)	(43,614)
12 Months or More, Fair Value	4,927,928	9,369,188
12 Months or More, Unrealized Losses	(102,167)	(237,076)
Total Fair Value	12,594,619	16,471,854
Total Unrealized Losses	(168,391)	(280,690)
Mortgage-backed: residential
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	18,251,546	1,474,590
Less than 12 Months, Unrealized Losses	(183,188)	(28,841)
12 Months or More, Fair Value	4,227,473	15,744,126
12 Months or More, Unrealized Losses	(77,131)	(168,535)
Total Fair Value	22,479,019	17,218,716
Total Unrealized Losses	$ (260,319)	$ (197,376)

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SECURITIES AVAILABLE FOR SALE (Details 2)	Dec. 31, 2015 USD ($)
Amortized Cost
Due in one year or less	$ 6,109,210
Due after one year through five years	24,981,003
Due after five years through ten years	31,423,272
Due after ten years	11,416,387
Amortized Cost	103,104,164
Fair Value
Due in one year or less	6,113,631
Due after one year through five years	24,977,510
Due after five years through ten years	32,025,396
Due after ten years	11,665,804
Fair Value	103,756,614
Other securities - non-maturing
Amortized Cost
Securities without a single maturity date	3,501
Fair Value
Securities without a single maturity date	3,501
Mortgage-backed: residential
Amortized Cost
Securities without a single maturity date	29,170,791
Fair Value
Securities without a single maturity date	$ 28,970,772

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SECURITIES AVAILABLE FOR SALE (Detail Textuals)	12 Months Ended
	Dec. 31, 2015 USD ($) Security	Dec. 31, 2014 USD ($) Security
Schedule of Available-for-sale Securities [Line Items]
Number of securities in an unrealized loss position | Security	67	72
Percentage of aggregate valuation adjustment of securities in an unrealized loss position	1.02%
Number of securities in an unrealized loss position for more than twelve months | Security	20
Percentage of unrealized loss position	1.68%
Carrying amount of securities pledged to secure deposits | $	$ 66,882,000	$ 66,600,000
Maximum percentage of holdings of securities of any one issuer, other than the U.S. Government and its agencies	10.00%
Proceeds from sale of securities | $	$ 1,630,421	5,259,541
Gross realized gains | $	30,860	131,586
Gross realized losses | $	20,039	21,874
Tax related to net realized gains and losses | $	$ 4,220	$ 40,593
U.S. government agency obligations
Schedule of Available-for-sale Securities [Line Items]
Number of securities in an unrealized loss position | Security	15
State and municipal securities
Schedule of Available-for-sale Securities [Line Items]
Number of securities in an unrealized loss position | Security	27
Mortgage-backed: residential
Schedule of Available-for-sale Securities [Line Items]
Number of securities in an unrealized loss position | Security	25

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LOANS (Details) - USD ($)	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	$ (5,886,225)	$ (5,561,442)
Loans, net	420,463,583	400,904,404
Loans Receivable
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	426,121,044	406,271,026
Deferred loan origination costs, net	228,764	194,820
Allowance for loan losses	(5,886,225)	(5,561,442)	$ (5,590,668)
Loans, net	420,463,583	400,904,404
Loans Receivable | Real estate loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	319,197,829	316,989,743
Allowance for loan losses	(4,096,178)	(4,401,802)	(4,208,561)
Loans Receivable | Real estate loans | One-to-four family
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	110,792,710	117,591,822
Allowance for loan losses	(1,139,730)	(1,119,762)	(1,424,663)
Loans Receivable | Real estate loans | Multi-family
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	41,182,067	41,391,862
Allowance for loan losses	(474,368)	(436,833)	(661,358)
Loans Receivable | Real estate loans | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	153,634,426	129,415,314
Allowance for loan losses	(1,984,088)	(1,650,290)	(1,454,455)
Loans Receivable | Real estate loans | Construction and land
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	13,588,626	28,590,745
Allowance for loan losses	(497,992)	(1,194,917)	(668,085)
Loans Receivable | Commercial business
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	89,743,511	73,984,867
Allowance for loan losses	(1,434,687)	(951,215)	(1,219,080)
Loans Receivable | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	17,179,704	15,296,416
Allowance for loan losses	(355,360)	(208,425)	(163,027)
Loans Receivable | Consumer | Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	13,656,008	13,523,985
Allowance for loan losses	(279,670)	(198,150)	(116,478)
Loans Receivable | Consumer | Automobile and other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	3,523,696	1,772,431
Allowance for loan losses	$ (75,690)	$ (10,275)	$ (46,549)

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LOANS (Details 1) - Loans Receivable - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans	$ 971,050	$ 1,663,521
Current Loans	425,149,994	404,607,505
Total	$ 426,121,044	$ 406,271,026
Accruing Loans 90 or More Days Past Due
Real estate loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans	$ 736,264	$ 1,548,408
Current Loans	318,461,565	315,441,335
Total	$ 319,197,829	$ 316,989,743
Accruing Loans 90 or More Days Past Due
Real estate loans | One-to-four family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans	$ 624,558	$ 1,418,378
Current Loans	110,168,152	116,173,444
Total	$ 110,792,710	$ 117,591,822
Accruing Loans 90 or More Days Past Due
Real estate loans | Multi-family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans
Current Loans	$ 41,182,067	$ 41,391,862
Total	$ 41,182,067	$ 41,391,862
Accruing Loans 90 or More Days Past Due
Real estate loans | Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans	$ 111,706	$ 130,030
Current Loans	153,522,720	129,285,284
Total	$ 153,634,426	$ 129,415,314
Accruing Loans 90 or More Days Past Due
Real estate loans | Construction and land
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans
Current Loans	$ 13,588,626	$ 28,590,745
Total	$ 13,588,626	$ 28,590,745
Accruing Loans 90 or More Days Past Due
Commercial business
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans	$ 87,254	$ 25,095
Current Loans	89,656,257	73,959,772
Total	$ 89,743,511	$ 73,984,867
Accruing Loans 90 or More Days Past Due
Consumer
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans	$ 147,532	$ 90,018
Current Loans	17,032,172	15,206,398
Total	$ 17,179,704	$ 15,296,416
Accruing Loans 90 or More Days Past Due
Consumer | Home equity
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans	$ 147,032	$ 90,018
Current Loans	13,508,976	13,433,967
Total	$ 13,656,008	$ 13,523,985
Accruing Loans 90 or More Days Past Due
Consumer | Automobile and other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans	$ 500
Current Loans	3,523,196	$ 1,772,431
Total	$ 3,523,696	$ 1,772,431
Accruing Loans 90 or More Days Past Due
Loans 30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans	$ 389,604	$ 985,335
Loans 30-59 Days Past Due | Real estate loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans	331,479	943,405
Loans 30-59 Days Past Due | Real estate loans | One-to-four family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans	$ 331,479	$ 843,185
Loans 30-59 Days Past Due | Real estate loans | Multi-family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans
Loans 30-59 Days Past Due | Real estate loans | Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans		$ 100,220
Loans 30-59 Days Past Due | Real estate loans | Construction and land
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans
Loans 30-59 Days Past Due | Commercial business
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans
Loans 30-59 Days Past Due | Consumer
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans	$ 58,125	$ 41,930
Loans 30-59 Days Past Due | Consumer | Home equity
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans	57,625	$ 41,930
Loans 30-59 Days Past Due | Consumer | Automobile and other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans	500
Loans 60-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans	259,240	$ 192,060
Loans 60-89 Days Past Due | Real estate loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans	259,240	166,965
Loans 60-89 Days Past Due | Real estate loans | One-to-four family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans	$ 259,240	$ 166,965
Loans 60-89 Days Past Due | Real estate loans | Multi-family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans
Loans 60-89 Days Past Due | Real estate loans | Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans
Loans 60-89 Days Past Due | Real estate loans | Construction and land
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans
Loans 60-89 Days Past Due | Commercial business
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans		$ 25,095
Loans 60-89 Days Past Due | Consumer
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans
Loans 60-89 Days Past Due | Consumer | Home equity
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans
Loans 60-89 Days Past Due | Consumer | Automobile and other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans
Loans 90 or More Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans	$ 322,206	$ 486,126
Loans 90 or More Days Past Due | Real estate loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans	145,545	438,038
Loans 90 or More Days Past Due | Real estate loans | One-to-four family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans	$ 33,839	$ 408,228
Loans 90 or More Days Past Due | Real estate loans | Multi-family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans
Loans 90 or More Days Past Due | Real estate loans | Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans	$ 111,706	$ 29,810
Loans 90 or More Days Past Due | Real estate loans | Construction and land
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans
Loans 90 or More Days Past Due | Commercial business
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans	$ 87,254
Loans 90 or More Days Past Due | Consumer
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans	89,407	$ 48,088
Loans 90 or More Days Past Due | Consumer | Home equity
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans	$ 89,407	$ 48,088
Loans 90 or More Days Past Due | Consumer | Automobile and other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due Loans

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LOANS (Details 2) - Loans Receivable - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-accrual loans	$ 3,238,933	$ 4,676,760
Real estate loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-accrual loans	2,842,515	4,603,577
Real estate loans | One-to-four family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-accrual loans	601,833	589,170
Real estate loans | Multi-family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-accrual loans	995,659	1,340,779
Real estate loans | Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-accrual loans	$ 1,245,023	1,242,009
Real estate loans | Construction and land
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-accrual loans		1,431,619
Commercial business
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-accrual loans	$ 263,233	25,095
Consumer
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-accrual loans	133,185	48,088
Consumer | Home equity
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-accrual loans	124,627	$ 48,088
Consumer | Automobile and other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-accrual loans	$ 8,558

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LOANS (Details 3) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Changes in allowance for loan losses
Beginning Balance	$ 5,561,442
Provision	(500,000)	$ (250,000)
Ending Balance	5,886,225	5,561,442
Loans Receivable
Changes in allowance for loan losses
Beginning Balance	5,561,442	5,590,668
Charge-offs	(106,406)	(498,908)
Recoveries	931,189	719,682
Provision	(500,000)	(250,000)
Ending Balance	5,886,225	5,561,442
Loans Receivable | Real estate loans
Changes in allowance for loan losses
Beginning Balance	4,401,802	4,208,561
Charge-offs	(104,506)	(265,134)
Recoveries	856,602	696,287
Provision	(1,057,720)	(237,912)
Ending Balance	4,096,178	4,401,802
Loans Receivable | Real estate loans | One-to-four family
Changes in allowance for loan losses
Beginning Balance	1,119,762	1,424,663
Charge-offs	(25,258)	(263,258)
Recoveries	21,576	466,287
Provision	23,650	(507,930)
Ending Balance	1,139,730	1,119,762
Loans Receivable | Real estate loans | Multi-family
Changes in allowance for loan losses
Beginning Balance	$ 436,833	$ 661,358
Charge-offs
Recoveries	$ 11,753
Provision	25,782	$ (224,525)
Ending Balance	474,368	436,833
Loans Receivable | Real estate loans | Commercial
Changes in allowance for loan losses
Beginning Balance	1,650,290	1,454,455
Charge-offs	(79,248)	$ (1,876)
Recoveries	11,923
Provision	401,123	$ 197,711
Ending Balance	1,984,088	1,650,290
Loans Receivable | Real estate loans | Construction and land
Changes in allowance for loan losses
Beginning Balance	$ 1,194,917	$ 668,085
Charge-offs
Recoveries	$ 811,350	$ 230,000
Provision	(1,508,275)	296,832
Ending Balance	497,992	1,194,917
Loans Receivable | Commercial business
Changes in allowance for loan losses
Beginning Balance	$ 951,215	1,219,080
Charge-offs		(190,255)
Recoveries	$ 73,761	13,048
Provision	409,711	(90,658)
Ending Balance	1,434,687	951,215
Loans Receivable | Consumer
Changes in allowance for loan losses
Beginning Balance	208,425	163,027
Charge-offs	(1,900)	(43,519)
Recoveries	826	10,347
Provision	148,009	78,570
Ending Balance	355,360	208,425
Loans Receivable | Consumer | Home equity
Changes in allowance for loan losses
Beginning Balance	$ 198,150	116,478
Charge-offs		(43,519)
Recoveries		9,402
Provision	$ 81,520	115,789
Ending Balance	279,670	198,150
Loans Receivable | Consumer | Automobile and other
Changes in allowance for loan losses
Beginning Balance	10,275	$ 46,549
Charge-offs	(1,900)
Recoveries	826	$ 945
Provision	66,489	(37,219)
Ending Balance	$ 75,690	$ 10,275

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LOANS (Details 4) - USD ($)	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Period-end allowance allocated to loans:
Ending Balance	$ 5,886,225	$ 5,561,442
Loans Receivable
Period-end allowance allocated to loans:
Individually evaluated for impairment	610,259	372,899
Collectively evaluated for impairment	5,275,966	5,188,543
Ending Balance	5,886,225	5,561,442	$ 5,590,668
Loans evaluated for impairment:
Individually	5,560,483	6,719,881
Collectively	420,560,561	399,551,145
Ending Balance	426,121,044	406,271,026
Loans Receivable | Real estate loans
Period-end allowance allocated to loans:
Individually evaluated for impairment	300,690	247,551
Collectively evaluated for impairment	3,795,488	4,154,251
Ending Balance	4,096,178	4,401,802	4,208,561
Loans evaluated for impairment:
Individually	4,824,173	6,513,888
Collectively	314,373,656	310,475,855
Ending Balance	319,197,829	316,989,743
Loans Receivable | Real estate loans | One-to-four family
Period-end allowance allocated to loans:
Individually evaluated for impairment	116,724	91,688
Collectively evaluated for impairment	1,023,006	1,028,074
Ending Balance	1,139,730	1,119,762	1,424,663
Loans evaluated for impairment:
Individually	905,974	1,266,717
Collectively	109,886,736	116,325,105
Ending Balance	$ 110,792,710	$ 117,591,822
Loans Receivable | Real estate loans | Multi-family
Period-end allowance allocated to loans:
Individually evaluated for impairment
Collectively evaluated for impairment	$ 474,368	$ 436,833
Ending Balance	474,368	436,833	661,358
Loans evaluated for impairment:
Individually	995,659	1,340,779
Collectively	40,186,408	40,051,083
Ending Balance	41,182,067	41,391,862
Loans Receivable | Real estate loans | Commercial
Period-end allowance allocated to loans:
Individually evaluated for impairment	183,966	155,863
Collectively evaluated for impairment	1,800,122	1,494,427
Ending Balance	1,984,088	1,650,290	1,454,455
Loans evaluated for impairment:
Individually	2,735,652	2,267,362
Collectively	150,898,774	127,147,952
Ending Balance	$ 153,634,426	$ 129,415,314
Loans Receivable | Real estate loans | Construction and land
Period-end allowance allocated to loans:
Individually evaluated for impairment
Collectively evaluated for impairment	$ 497,992	$ 1,194,917
Ending Balance	497,992	1,194,917	668,085
Loans evaluated for impairment:
Individually	186,888	1,639,030
Collectively	13,401,738	26,951,715
Ending Balance	13,588,626	28,590,745
Loans Receivable | Commercial business
Period-end allowance allocated to loans:
Individually evaluated for impairment	259,787	115,446
Collectively evaluated for impairment	1,174,900	835,769
Ending Balance	1,434,687	951,215	1,219,080
Loans evaluated for impairment:
Individually	586,103	140,541
Collectively	89,157,408	73,844,326
Ending Balance	89,743,511	73,984,867
Loans Receivable | Consumer
Period-end allowance allocated to loans:
Individually evaluated for impairment	49,782	9,902
Collectively evaluated for impairment	305,578	198,523
Ending Balance	355,360	208,425	163,027
Loans evaluated for impairment:
Individually	150,207	65,452
Collectively	17,029,497	15,230,964
Ending Balance	17,179,704	15,296,416
Loans Receivable | Consumer | Home equity
Period-end allowance allocated to loans:
Individually evaluated for impairment	49,782	9,902
Collectively evaluated for impairment	229,888	188,248
Ending Balance	279,670	198,150	116,478
Loans evaluated for impairment:
Individually	141,649	65,452
Collectively	13,514,359	13,458,533
Ending Balance	$ 13,656,008	$ 13,523,985
Loans Receivable | Consumer | Automobile and other
Period-end allowance allocated to loans:
Individually evaluated for impairment
Collectively evaluated for impairment	$ 75,690	$ 10,275
Ending Balance	75,690	$ 10,275	$ 46,549
Loans evaluated for impairment:
Individually	8,558
Collectively	3,515,138	$ 1,772,431
Ending Balance	$ 3,523,696	$ 1,772,431

XML

LOANS (Details 5) - Loans Receivable - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Credit quality indicators
Total gross loans	$ 426,121,044	$ 406,271,026
Real estate loans
Credit quality indicators
Total gross loans	319,197,829	316,989,743
Real estate loans | One-to-four family
Credit quality indicators
Total gross loans	110,792,710	117,591,822
Real estate loans | Multi-family
Credit quality indicators
Total gross loans	41,182,067	41,391,862
Real estate loans | Commercial
Credit quality indicators
Total gross loans	153,634,426	129,415,314
Real estate loans | Construction and land
Credit quality indicators
Total gross loans	13,588,626	28,590,745
Commercial business
Credit quality indicators
Total gross loans	89,743,511	73,984,867
Consumer
Credit quality indicators
Total gross loans	17,179,704	15,296,416
Consumer | Home equity
Credit quality indicators
Total gross loans	13,656,008	13,523,985
Consumer | Automobile and other
Credit quality indicators
Total gross loans	3,523,696	1,772,431
Pass
Credit quality indicators
Total gross loans	406,334,907	382,487,061
Pass | Real estate loans
Credit quality indicators
Total gross loans	303,715,085	293,897,544
Pass | Real estate loans | One-to-four family
Credit quality indicators
Total gross loans	109,161,526	116,218,120
Pass | Real estate loans | Multi-family
Credit quality indicators
Total gross loans	37,571,827	37,340,022
Pass | Real estate loans | Commercial
Credit quality indicators
Total gross loans	143,837,755	113,447,231
Pass | Real estate loans | Construction and land
Credit quality indicators
Total gross loans	13,143,977	26,892,171
Pass | Commercial business
Credit quality indicators
Total gross loans	85,604,981	73,372,401
Pass | Consumer
Credit quality indicators
Total gross loans	17,014,841	15,217,116
Pass | Consumer | Home equity
Credit quality indicators
Total gross loans	13,504,552	13,444,685
Pass | Consumer | Automobile and other
Credit quality indicators
Total gross loans	3,510,289	1,772,431
Special Mention
Credit quality indicators
Total gross loans	12,005,589	15,479,552
Special Mention | Real estate loans
Credit quality indicators
Total gross loans	8,682,586	15,007,627
Special Mention | Real estate loans | One-to-four family
Credit quality indicators
Total gross loans	772,127	280,067
Special Mention | Real estate loans | Multi-family
Credit quality indicators
Total gross loans	2,614,581	2,711,061
Special Mention | Real estate loans | Commercial
Credit quality indicators
Total gross loans	$ 5,295,878	$ 12,016,499
Special Mention | Real estate loans | Construction and land
Credit quality indicators
Total gross loans
Special Mention | Commercial business
Credit quality indicators
Total gross loans	$ 3,323,003	$ 471,925
Special Mention | Consumer
Credit quality indicators
Total gross loans
Special Mention | Consumer | Home equity
Credit quality indicators
Total gross loans
Special Mention | Consumer | Automobile and other
Credit quality indicators
Total gross loans
Substandard
Credit quality indicators
Total gross loans	$ 7,688,775	$ 8,147,150
Substandard | Real estate loans
Credit quality indicators
Total gross loans	6,800,158	7,927,309
Substandard | Real estate loans | One-to-four family
Credit quality indicators
Total gross loans	859,057	936,372
Substandard | Real estate loans | Multi-family
Credit quality indicators
Total gross loans	995,659	1,340,779
Substandard | Real estate loans | Commercial
Credit quality indicators
Total gross loans	4,500,793	3,951,584
Substandard | Real estate loans | Construction and land
Credit quality indicators
Total gross loans	444,649	1,698,574
Substandard | Commercial business
Credit quality indicators
Total gross loans	815,527	140,541
Substandard | Consumer
Credit quality indicators
Total gross loans	73,090	79,300
Substandard | Consumer | Home equity
Credit quality indicators
Total gross loans	68,241	$ 79,300
Substandard | Consumer | Automobile and other
Credit quality indicators
Total gross loans	4,849
Doubtful
Credit quality indicators
Total gross loans	$ 91,773	$ 157,263
Doubtful | Real estate loans
Credit quality indicators
Total gross loans		157,263
Doubtful | Real estate loans | One-to-four family
Credit quality indicators
Total gross loans		$ 157,263
Doubtful | Real estate loans | Multi-family
Credit quality indicators
Total gross loans
Doubtful | Real estate loans | Commercial
Credit quality indicators
Total gross loans
Doubtful | Real estate loans | Construction and land
Credit quality indicators
Total gross loans
Doubtful | Commercial business
Credit quality indicators
Total gross loans
Doubtful | Consumer
Credit quality indicators
Total gross loans	$ 91,773
Doubtful | Consumer | Home equity
Credit quality indicators
Total gross loans	83,215
Doubtful | Consumer | Automobile and other
Credit quality indicators
Total gross loans	$ 8,558

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LOANS (Details 6) - Loans Receivable - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Unpaid Contractual Principal Balance
With no related allowance recorded	$ 4,708,626	$ 6,826,464
With an allowance recorded	1,531,239	2,667,422
Total	6,239,865	9,493,886
Recorded Investment
With no related allowance recorded	4,172,642	4,296,178
With an allowance recorded	1,387,841	2,423,703
Total	5,560,483	6,719,881
Allowance for Loan Losses Allocated
With an allowance recorded	610,259	372,899
Total	610,259	372,899
Real estate loans
Unpaid Contractual Principal Balance
With no related allowance recorded	4,560,572	6,555,564
With an allowance recorded	942,983	2,542,074
Recorded Investment
With no related allowance recorded	4,024,588	4,215,533
With an allowance recorded	799,585	2,298,355
Allowance for Loan Losses Allocated
With an allowance recorded	300,690	247,551
Real estate loans | One-to-four family
Unpaid Contractual Principal Balance
With no related allowance recorded	648,750	551,510
With an allowance recorded	257,224	851,010
Recorded Investment
With no related allowance recorded	648,750	467,191
With an allowance recorded	257,224	799,526
Allowance for Loan Losses Allocated
With an allowance recorded	116,724	91,688
Real estate loans | Multi-family
Unpaid Contractual Principal Balance
With no related allowance recorded	1,478,137	1,823,257
Recorded Investment
With no related allowance recorded	$ 995,659	1,340,779
Allowance for Loan Losses Allocated
With an allowance recorded
Real estate loans | Commercial
Unpaid Contractual Principal Balance
With no related allowance recorded	$ 2,246,797	768,533
With an allowance recorded	685,759	1,691,064
Recorded Investment
With no related allowance recorded	2,193,291	768,533
With an allowance recorded	542,361	1,498,829
Allowance for Loan Losses Allocated
With an allowance recorded	183,966	155,863
Real estate loans | Construction and land
Unpaid Contractual Principal Balance
With no related allowance recorded	186,888	3,412,264
Recorded Investment
With no related allowance recorded	$ 186,888	1,639,030
Allowance for Loan Losses Allocated
With an allowance recorded
Commercial business
Unpaid Contractual Principal Balance
With no related allowance recorded	$ 87,254	215,350
With an allowance recorded	498,849	115,446
Recorded Investment
With no related allowance recorded	87,254	25,095
With an allowance recorded	498,849	115,446
Allowance for Loan Losses Allocated
With an allowance recorded	259,787	115,446
Consumer | Home equity
Unpaid Contractual Principal Balance
With no related allowance recorded	52,242	55,550
With an allowance recorded	89,407	9,902
Recorded Investment
With no related allowance recorded	52,242	55,550
With an allowance recorded	89,407	9,902
Allowance for Loan Losses Allocated
With an allowance recorded	49,782	$ 9,902
Consumer | Automobile and other
Unpaid Contractual Principal Balance
With no related allowance recorded	8,558
Recorded Investment
With no related allowance recorded	$ 8,558

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LOANS (Details 7) - Loans Receivable - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Average Recorded Investment
With no related allowance recorded	$ 4,074,403	$ 4,432,248
With an allowance recorded	1,779,980	2,627,254
Total	5,854,383	7,059,502
Interest Income Recognized
With no related allowance recorded	31,862	13,522
With an allowance recorded	31,787	41,465
Total	$ 63,649	$ 54,987
Cash Basis Interest Recognized
Real estate loans
Average Recorded Investment
With no related allowance recorded	$ 3,996,295	$ 3,980,377
With an allowance recorded	1,414,877	2,502,994
Interest Income Recognized
With no related allowance recorded	30,377	12,421
With an allowance recorded	$ 20,221	$ 32,888
Cash Basis Interest Recognized
Real estate loans | One-to-four family
Average Recorded Investment
With no related allowance recorded	$ 710,678	$ 633,963
With an allowance recorded	481,678	667,999
Interest Income Recognized
With no related allowance recorded	2,200	2,306
With an allowance recorded	$ 8,968	$ 11,874
Cash Basis Interest Recognized
Real estate loans | Multi-family
Average Recorded Investment
With no related allowance recorded	$ 1,123,043	$ 1,309,419
With an allowance recorded		414,443
Interest Income Recognized
With no related allowance recorded	$ 30	$ 30
With an allowance recorded
Cash Basis Interest Recognized
Real estate loans | Commercial
Average Recorded Investment
With no related allowance recorded	$ 1,417,242	$ 853,898
With an allowance recorded	933,199	1,367,490
Interest Income Recognized
With no related allowance recorded	26,003	7,709
With an allowance recorded	$ 8,823	$ 18,584
Cash Basis Interest Recognized
Real estate loans | Construction and land
Average Recorded Investment
With no related allowance recorded	$ 745,332	$ 1,183,097
With an allowance recorded		53,062
Interest Income Recognized
With no related allowance recorded	$ 2,144	2,376
With an allowance recorded	$ 2,430	$ 2,430
Cash Basis Interest Recognized
Commercial business
Average Recorded Investment
With no related allowance recorded	$ 22,470	$ 345,137
With an allowance recorded	305,930	$ 121,785
Interest Income Recognized
With no related allowance recorded	389
With an allowance recorded	$ 11,498	$ 8,577
Cash Basis Interest Recognized
Consumer
Average Recorded Investment
With no related allowance recorded	$ 55,638	$ 106,734
With an allowance recorded	59,173	2,475
Interest Income Recognized
With no related allowance recorded	1,096	$ 1,101
With an allowance recorded	$ 68
Cash Basis Interest Recognized
Consumer | Home equity
Average Recorded Investment
With no related allowance recorded	$ 53,926	$ 106,734
With an allowance recorded	58,779	2,475
Interest Income Recognized
With no related allowance recorded	1,096	$ 1,101
With an allowance recorded	$ 68
Cash Basis Interest Recognized
Consumer | Automobile and other
Average Recorded Investment
With no related allowance recorded	$ 1,712
With an allowance recorded	$ 394
Interest Income Recognized
With no related allowance recorded
With an allowance recorded
Cash Basis Interest Recognized

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LOANS (Details 8) - Loans Receivable	12 Months Ended
	Dec. 31, 2015 USD ($) Contract	Dec. 31, 2014 USD ($) Contract
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract	4	3
Pre-Modification Outstanding Recorded Investment	$ 1,197,504	$ 1,490,252
Post-Modification Outstanding Recorded Investment	$ 1,197,504	$ 1,490,252
Real estate loans | One-to-four family
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract		2
Pre-Modification Outstanding Recorded Investment		$ 504,465
Post-Modification Outstanding Recorded Investment		$ 504,465
Real estate loans | Commercial
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract	2
Pre-Modification Outstanding Recorded Investment	$ 1,000,116
Post-Modification Outstanding Recorded Investment	$ 1,000,116
Real estate loans | Construction and land
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract		1
Pre-Modification Outstanding Recorded Investment		$ 985,787
Post-Modification Outstanding Recorded Investment		$ 985,787
Commercial business
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract	1
Pre-Modification Outstanding Recorded Investment	$ 162,167
Post-Modification Outstanding Recorded Investment	$ 162,167
Consumer | Home equity
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract	1
Pre-Modification Outstanding Recorded Investment	$ 35,221
Post-Modification Outstanding Recorded Investment	$ 35,221

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LOANS (Details 9) - Loans Receivable - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Loans and Leases Receivable, Related Parties [Roll Forward]
Balance, beginning of year	$ 11,845,673	$ 7,932,877
Additions	1,219,504	7,066,199
Repayments	$ (1,231,984)	(3,050,455)
Change in status of borrower		(102,948)
Balance, end of year	$ 11,833,193	$ 11,845,673

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LOANS (Detail Textuals) - Loans Receivable - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan to value ratio occasionally exceeded for loans secured by single-family dwellings (as a percent)	90.00%
Loans secured by single-family dwellings with loan to value ratios exceeding 90% expressed as a percentage of combined one-to-four family and home equity portfolios	2.07%	2.17%
Amount of allocations of specific reserves	$ 380,593	$ 328,442
Amount of loans to customers whose loan terms have been modified	3,925,262	5,661,342
Net increase in the allowance for loan losses	$ 27,897	$ 46,420
Number of days past due to indicate payment default on troubled debt restructurings	60 days

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PROPERTY AND EQUIPMENT (Details) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Property And Equipments
Property and equipment, gross	$ 14,193,027	$ 14,123,831
Less accumulated depreciation	(4,321,587)	(3,743,521)
Property and equipment, net	9,871,440	10,380,310
Land
Property And Equipments
Property and equipment, gross	1,829,738	1,829,738
Buildings and improvements
Property And Equipments
Property and equipment, gross	10,001,146	9,997,562
Furniture and equipment
Property And Equipments
Property and equipment, gross	$ 2,362,143	$ 2,296,531

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PROPERTY AND EQUIPMENT (Detail Textuals) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 581,985	$ 597,526

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MORTGAGE SERVICING RIGHTS (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Servicing Asset at Fair Value, Amount [Roll Forward]
Balance, beginning	$ 961,823
Balance, ending	1,109,720	$ 961,823
Mortgage servicing rights
Servicing Asset at Fair Value, Amount [Roll Forward]
Balance, beginning	961,823	918,247
Mortgage servicing rights capitalized	230,826	150,546
Mortgage servicing rights amortized	(144,607)	$ (106,970)
Decrease in provision for loss in fair value	61,678
Balance, ending	1,109,720	$ 961,823
Valuation allowances:
Balance, beginning	178,896	$ 178,896
Decrease	(61,678)
Balance, ending	$ 117,218	$ 178,896

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MORTGAGE SERVICING RIGHTS (Details 1) - USD ($)	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Servicing Assets at Fair Value [Line Items]
Total	$ 1,109,720	$ 961,823
Mortgage servicing rights
Servicing Assets at Fair Value [Line Items]
2016	138,384
2017	133,145
2018	111,111
2019	67,291
2020	43,786
Thereafter	616,003
Total	$ 1,109,720	$ 961,823	$ 918,247

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MORTGAGE SERVICING RIGHTS (Detail Textuals) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Servicing Assets at Fair Value [Line Items]
Carrying amount of servicing rights recorded in loans serviced for others	$ 1,109,720	$ 961,823
Mortgage servicing rights
Servicing Assets at Fair Value [Line Items]
Unpaid principal balances of mortgage and other loans serviced for others	123,302,000	113,156,000
Carrying amount of servicing rights recorded in loans serviced for others	$ 1,109,720	$ 961,823	$ 918,247
Discount rate (as a percent)	9.00%	9.00%
Ancillary income per loan annually	$ 48	$ 48
Incremental cost to service per loan annually	$ 43	$ 43
Mortgage servicing rights | Minimum
Servicing Assets at Fair Value [Line Items]
Monthly prepayment speeds (as a percent)	149.00%	262.00%
Mortgage servicing rights | Maximum
Servicing Assets at Fair Value [Line Items]
Monthly prepayment speeds (as a percent)	407.00%	407.00%

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CORE DEPOSIT INTANGIBLE (Details) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Core Deposit Intangible
Net carrying value	$ 138,000	$ 196,000
Core deposit intangible
Core Deposit Intangible
Gross carrying value	3,258,000	3,258,000
Less accumulated amortization	(3,120,000)	(3,062,000)
Net carrying value	$ 138,000	$ 196,000

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CORE DEPOSIT INTANGIBLE (Details 1)	Dec. 31, 2015 USD ($)
Intangible Assets, Net (Excluding Goodwill) [Abstract]
2016	$ 58,000
2017	58,000
2018	$ 22,000

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CORE DEPOSIT INTANGIBLE (Detail Textuals) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Intangible Assets, Net (Excluding Goodwill) [Abstract]
Amortization expense on core deposit intangible	$ 58,000	$ 75,000

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GOODWILL (Detail Textuals)	12 Months Ended
	Dec. 31, 2015 USD ($) OperatingSegment	Dec. 31, 2014 USD ($)
Goodwill Disclosure [Abstract]
Number of reporting units for purposes of evaluating goodwill | OperatingSegment	1
Goodwill | $	$ 11,385,323	$ 11,385,323

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DEPOSITS (Details) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Deposits [Abstract]
Noninterest-bearing	$ 69,296,354	$ 68,170,743
Interest-bearing transaction accounts	300,782,040	285,437,812
Savings	29,907,675	29,070,422
Time	133,172,224	127,627,662
Total deposits	$ 533,158,293	$ 510,306,639

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DEPOSITS (Details 1) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Deposits [Abstract]
Interest-bearing transaction accounts	$ 651,465	$ 738,536
Savings	50,662	50,422
Time	1,459,810	1,385,108
Interest expense on deposits	$ 2,161,937	$ 2,174,066

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DEPOSITS (Details 2) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Deposits [Abstract]
2016	$ 60,831,144
2017	33,735,619
2018	21,398,998
2019	4,149,552
2020	12,473,886
Thereafter	583,025
Time deposits	$ 133,172,224	$ 127,627,662

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DEPOSITS (Detail Textuals) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Deposits [Abstract]
Brokered deposits included in time deposits	$ 10,781,000	$ 13,872,000
Brokered deposits included in interest bearing transaction accounts	59,670,000	83,281,000
Aggregate amount of certificates of deposit with a minimum denomination of $250,000	$ 26,159,000	$ 19,643,000

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FEDERAL HOME LOAN BANK ADVANCES (Details) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Advances from Federal Home Loan Banks [Abstract]
2016	$ 995,485
2018	15,000,000
Total	$ 15,995,485	$ 2,487,745

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FEDERAL HOME LOAN BANK ADVANCES (Detail Textuals) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Advances from Federal Home Loan Banks [Abstract]
Federal Home Loan Bank advances	$ 15,995,485	$ 2,487,745
Weighted average interest rate on the advances (as a percent)	1.58%	2.89%
Minimum interest rate (as a percent)	1.30%
Maximum interest rate (as a percent)	4.58%
Loans pledged as collateral for FHLB advances	$ 92,610,000	$ 77,790,000

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SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE (Details) - Securities sold under agreements to repurchase - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Short-term Debt [Line Items]
Average daily balance during the year	$ 15,817,024	$ 18,974,688
Average interest rate during the year (as a percent)	0.02%	0.02%
Maximum month-end balance during the year	$ 20,765,781	$ 23,275,868
Weighted average interest rate at year-end (as a percent)	0.02%	0.02%

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SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE (Detail Textuals)	12 Months Ended
	Dec. 31, 2015 USD ($) Customer	Dec. 31, 2014 USD ($)
Short-term Debt [Line Items]
Number of significant customers whose balances fluctuate on a regular basis | Customer	1
Securities sold under agreements to repurchase
Short-term Debt [Line Items]
Carrying amount of securities pledged | $	$ 26,458,000	$ 32,639,000

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SUBORDINATED DEBENTURES (Detail Textuals) - First Clover Leaf Statutory Trust I - USD ($)	1 Months Ended	12 Months Ended	61 Months Ended
	May. 31, 2005	Dec. 31, 2015	May. 31, 2010
Debt Instrument [Line Items]
Debt issued	$ 4,000,000
Fixed distribution rate (as a percent)			6.08%
Basis spread added to the reference rate (as a percent)		1.85%
Description of annual interest distribution basis		three month LIBOR
Liquidation amount per preferred security (in dollars per share)		$ 1,000
Interest rate (as a percent)		2.36%
Junior subordinated debentures
Debt Instrument [Line Items]
Maximum consecutive period available for deferral of interest payments on the securities		5 years

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INCOME TAXES (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Federal:
Current	$ 1,411,154	$ 815,120
Deferred	(202,931)	71,545
Total Federal	1,208,223	886,665
State:
Current	466,980	397,280
Deferred	266	76,653
Total State	467,246	473,933
Income tax expense	$ 1,675,469	$ 1,360,598

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INCOME TAXES (Details 1) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Income Tax Disclosure [Abstract]
Expected income taxes	$ 2,209,628	$ 1,815,376
Income tax effect of:
State taxes, net of federal income tax benefit	277,177	278,391
Tax exempt interest, net	(613,220)	(586,302)
Income taxed at lower rates	(63,132)	(51,868)
Other	(134,984)	(94,999)
Income tax expense	$ 1,675,469	$ 1,360,598

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INCOME TAXES (Details 2) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Deferred tax assets:
Allowance for loan losses	$ 2,286,438	$ 2,161,135
Deferred compensation	306,653	256,106
Accrued expenses	79,623	19,041
Purchase accounting adjustments for:
Loans		18,136
Securities	90,895	106,474
OREO writedowns and expenses	563,385	464,326
Other	107,467	367,148
Deferred tax assets	3,434,461	3,392,366
Deferred tax liabilities:
Federal Home Loan Bank stock	(177,613)	(293,580)
Core deposit intangible	(53,605)	(76,164)
Mortgage servicing rights	(431,058)	(373,757)
Unrealized gain on securities available for sale	(254,456)	(115,890)
Purchase accounting adjustments for:
Premises and equipment	(272,023)	(278,376)
Federal Home Loan Bank advances	(1,754)	(4,762)
Premises and equipment	(184,571)	(254,555)
Deferred tax liabilities	(1,375,080)	(1,397,084)
Net deferred taxes	$ 2,059,381	$ 1,995,282

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INCOME TAXES (Detail Textuals) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Income Tax Disclosure [Abstract]
Maximum statutory federal rate (as a percent)	35.00%
Tax bad debt reserve for which no deferred income tax liability has been recognized	$ 3,044,000	$ 3,044,000
Unrecorded deferred income tax liability	$ 1,157,000	$ 1,157,000

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EMPLOYEE BENEFITS (Detail Textuals) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Profit sharing defined contribution plan
Defined Contribution Plan [Line Items]
Contribution to the plan	$ 176,074	$ 165,227
401k plan
Defined Contribution Plan [Line Items]
Contribution to the plan	$ 155,088	$ 144,807
401k plan | Maximum
Defined Contribution Plan [Line Items]
Deferred compensation by the participants (as a percent)	50.00%
Matching contribution (as a percent)	3.00%	3.00%

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CAPITAL RATIOS (Details) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Common Equity Tier 1 Capital to Risk Weighted Assets, Actual Amount	$ 68,467,000
Common Equity Tier 1 Capital to Risk Weighted Assets, Actual Ratio (as a percent)	14.29%
Common Equity Tier 1 Capital to Risk Weighted Assets, For Capital Adequacy Purposes, Amount	$ 21,555,000
Common Equity Tier 1 Capital to Risk Weighted Assets, For Capital Adequacy Purposes, Ratio (as a percent)	4.50%
Common Equity Tier 1 Capital to Risk Weighted Assets, To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount
Common Equity Tier 1 Capital to Risk Weighted Assets To be Well Capitalized Under Prompt Corrective Action Provisions, Ratio
Tier I Capital to Adjusted Total Assets, Actual Amount	$ 68,467,000	$ 65,256,000
Tier I Capital to Adjusted Total Assets, Actual Ratio (as a percent)	10.28%	10.54%
Tier I Capital to Adjusted Total Assets, For Capital Adequacy Purposes, Amount	$ 26,651,000	$ 24,764,000
Tier I Capital to Adjusted Total Assets, For Capital Adequacy Purposes, Ratio (as a percent)	4.00%	4.00%
Tier I Capital to Adjusted Total Assets, To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount
Tier I Capital to Adjusted Total Assets,To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio (as a percent)
Tier 1 Capital to Risk Weighted Assets, Actual Amount	$ 68,467,000	$ 65,256,000
Tier 1 Capital to Risk Weighted Assets, Actual Ratio (as a percent)	14.29%	15.70%
Tier 1 Capital to Risk Weighted Assets, For Capital Adequacy Purposes, Amount	$ 28,740,000	$ 16,630,000
Tier 1 Capital to Risk Weighted Assets, For Capital Adequacy Purposes, Ratio (as a percent)	6.00%	4.00%
Tier 1 Capital to Risk Weighted Assets, To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount
Tier 1 Capital to Risk Weighted Assets, To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio (as a percent)
Total Capital to Risk Weighted Assets, Actual Amount	$ 77,389,000	$ 73,210,000
Total Capital to Risk Weighted Assets, Actual Ratio (as a percent)	16.16%	17.61%
Total Capital to Risk Weighted Assets, For Capital Adequacy Purposes, Amount	$ 38,321,000	$ 33,260,000
Total Capital to Risk Weighted Assets, For Capital Adequacy Purposes, Ratio (as a percent)	8.00%	8.00%
Total Capital to Risk Weighted Assets, To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount
Total Capital to Risk Weighted Assets,To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio (as a percent)
Bank
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Common Equity Tier 1 Capital to Risk Weighted Assets, Actual Amount	$ 71,273,000
Common Equity Tier 1 Capital to Risk Weighted Assets, Actual Ratio (as a percent)	14.89%
Common Equity Tier 1 Capital to Risk Weighted Assets, For Capital Adequacy Purposes, Amount	$ 21,546,000
Common Equity Tier 1 Capital to Risk Weighted Assets, For Capital Adequacy Purposes, Ratio (as a percent)	4.50%
Common Equity Tier 1 Capital to Risk Weighted Assets, To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 31,122,000
Common Equity Tier 1 Capital to Risk Weighted Assets To be Well Capitalized Under Prompt Corrective Action Provisions, Ratio	6.50%
Tier I Capital to Adjusted Total Assets, Actual Amount	$ 71,273,000	$ 67,995,000
Tier I Capital to Adjusted Total Assets, Actual Ratio (as a percent)	11.47%	11.22%
Tier I Capital to Adjusted Total Assets, For Capital Adequacy Purposes, Amount	$ 24,855,000	$ 24,235,000
Tier I Capital to Adjusted Total Assets, For Capital Adequacy Purposes, Ratio (as a percent)	4.00%	4.00%
Tier I Capital to Adjusted Total Assets, To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 31,069,000	$ 30,294,000
Tier I Capital to Adjusted Total Assets,To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio (as a percent)	5.00%	5.00%
Tier 1 Capital to Risk Weighted Assets, Actual Amount	$ 71,273,000	$ 67,995,000
Tier 1 Capital to Risk Weighted Assets, Actual Ratio (as a percent)	14.89%	16.36%
Tier 1 Capital to Risk Weighted Assets, For Capital Adequacy Purposes, Amount	$ 28,728,000	$ 16,623,000
Tier 1 Capital to Risk Weighted Assets, For Capital Adequacy Purposes, Ratio (as a percent)	6.00%	4.00%
Tier 1 Capital to Risk Weighted Assets, To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 38,303,000	$ 24,935,000
Tier 1 Capital to Risk Weighted Assets, To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio (as a percent)	8.00%	6.00%
Total Capital to Risk Weighted Assets, Actual Amount	$ 76,195,000	$ 71,949,000
Total Capital to Risk Weighted Assets, Actual Ratio (as a percent)	15.91%	17.31%
Total Capital to Risk Weighted Assets, For Capital Adequacy Purposes, Amount	$ 38,303,000	$ 33,247,000
Total Capital to Risk Weighted Assets, For Capital Adequacy Purposes, Ratio (as a percent)	8.00%	8.00%
Total Capital to Risk Weighted Assets, To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 47,879,000	$ 41,558,000
Total Capital to Risk Weighted Assets,To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio (as a percent)	10.00%	10.00%

XML

CAPITAL RATIOS (Detail Textuals)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Maximum threshold to permit the election of excluding accumulated other comprehensive income from the regulatory capital calculation	less than $15.0 billion
Common Equity Tier 1 Capital to Risk Weighted Assets To be Well Capitalized Under Prompt Corrective Action Provisions, Ratio
Tier 1 Capital to Risk Weighted Assets, To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio (as a percent)
Total Capital to Risk Weighted Assets,To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio (as a percent)
Tier I Capital to Adjusted Total Assets,To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio (as a percent)
Bank
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Common Equity Tier 1 Capital to Risk Weighted Assets To be Well Capitalized Under Prompt Corrective Action Provisions, Ratio	6.50%
Tier 1 Capital to Risk Weighted Assets, To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio (as a percent)	8.00%	6.00%
Total Capital to Risk Weighted Assets,To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio (as a percent)	10.00%	10.00%
Tier I Capital to Adjusted Total Assets,To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio (as a percent)	5.00%	5.00%

XML

COMMITMENTS, CONTINGENCIES AND CREDIT RISK (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Commitments to extend credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Variable Rate Commitments	$ 43,735,051	$ 34,570,790
Fixed Rate Commitments	36,533,191	24,254,679
Total Commitments	$ 80,268,242	$ 58,825,469
Commitments to extend credit | Minimum
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Rates on Fixed Rate Commitments (as a percent)	3.00%	3.00%
Commitments to extend credit | Maximum
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Rates on Fixed Rate Commitments (as a percent)	18.00%	18.00%
Standby letters of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Variable Rate Commitments	$ 1,726,114	$ 1,361,322
Fixed Rate Commitments	49,000	300,765
Total Commitments	$ 1,775,114	$ 1,662,087
Standby letters of credit | Minimum
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Rates on Fixed Rate Commitments (as a percent)	4.00%	3.50%
Standby letters of credit | Maximum
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Rates on Fixed Rate Commitments (as a percent)	6.00%	6.00%

XML

FAIR VALUE MEASUREMENTS (Details) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Assets, Fair Value Disclosure [Abstract]
Total securities available for sale	$ 103,756,614	$ 104,225,692
U.S. government agency obligations
Assets, Fair Value Disclosure [Abstract]
Total securities available for sale	29,048,102	25,869,606
State and municipal securities
Assets, Fair Value Disclosure [Abstract]
Total securities available for sale	45,734,239	45,573,608
Other securities
Assets, Fair Value Disclosure [Abstract]
Total securities available for sale	3,501	3,501
Mortgage-backed: residential
Assets, Fair Value Disclosure [Abstract]
Total securities available for sale	$ 28,970,772	$ 32,778,977
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets, Fair Value Disclosure [Abstract]
Total securities available for sale
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. government agency obligations
Assets, Fair Value Disclosure [Abstract]
Total securities available for sale
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | State and municipal securities
Assets, Fair Value Disclosure [Abstract]
Total securities available for sale
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Other securities
Assets, Fair Value Disclosure [Abstract]
Total securities available for sale
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Mortgage-backed: residential
Assets, Fair Value Disclosure [Abstract]
Total securities available for sale
Recurring basis | Significant Other Observable Inputs (Level 2)
Assets, Fair Value Disclosure [Abstract]
Total securities available for sale	$ 103,756,614	$ 104,225,692
Recurring basis | Significant Other Observable Inputs (Level 2) | U.S. government agency obligations
Assets, Fair Value Disclosure [Abstract]
Total securities available for sale	29,048,102	25,869,606
Recurring basis | Significant Other Observable Inputs (Level 2) | State and municipal securities
Assets, Fair Value Disclosure [Abstract]
Total securities available for sale	45,734,239	45,573,608
Recurring basis | Significant Other Observable Inputs (Level 2) | Other securities
Assets, Fair Value Disclosure [Abstract]
Total securities available for sale	3,501	3,501
Recurring basis | Significant Other Observable Inputs (Level 2) | Mortgage-backed: residential
Assets, Fair Value Disclosure [Abstract]
Total securities available for sale	$ 28,970,772	$ 32,778,977
Recurring basis | Significant Unobservable Inputs (Level 3)
Assets, Fair Value Disclosure [Abstract]
Total securities available for sale
Recurring basis | Significant Unobservable Inputs (Level 3) | U.S. government agency obligations
Assets, Fair Value Disclosure [Abstract]
Total securities available for sale
Recurring basis | Significant Unobservable Inputs (Level 3) | State and municipal securities
Assets, Fair Value Disclosure [Abstract]
Total securities available for sale
Recurring basis | Significant Unobservable Inputs (Level 3) | Other securities
Assets, Fair Value Disclosure [Abstract]
Total securities available for sale
Recurring basis | Significant Unobservable Inputs (Level 3) | Mortgage-backed: residential
Assets, Fair Value Disclosure [Abstract]
Total securities available for sale
Recurring basis | Total
Assets, Fair Value Disclosure [Abstract]
Total securities available for sale	$ 103,756,614	$ 104,225,692
Recurring basis | Total | U.S. government agency obligations
Assets, Fair Value Disclosure [Abstract]
Total securities available for sale	29,048,102	25,869,606
Recurring basis | Total | State and municipal securities
Assets, Fair Value Disclosure [Abstract]
Total securities available for sale	45,734,239	45,573,608
Recurring basis | Total | Other securities
Assets, Fair Value Disclosure [Abstract]
Total securities available for sale	3,501	3,501
Recurring basis | Total | Mortgage-backed: residential
Assets, Fair Value Disclosure [Abstract]
Total securities available for sale	$ 28,970,772	$ 32,778,977

XML

FAIR VALUE MEASUREMENTS (Details 1) - Non-recurring basis - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Foreclosed assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 623,500	$ 1,042,087
Quoted Prices in Active Markets for Identical Assets (Level 1) | Mortgage servicing rights
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Quoted Prices in Active Markets for Identical Assets (Level 1) | Foreclosed assets | Real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Quoted Prices in Active Markets for Identical Assets (Level 1) | Foreclosed assets | Real estate | Commercial
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Quoted Prices in Active Markets for Identical Assets (Level 1) | Foreclosed assets | Real estate | Construction and land
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Quoted Prices in Active Markets for Identical Assets (Level 1) | Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Quoted Prices in Active Markets for Identical Assets (Level 1) | Impaired loans | Real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Quoted Prices in Active Markets for Identical Assets (Level 1) | Impaired loans | Real estate | One-to-four family
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Quoted Prices in Active Markets for Identical Assets (Level 1) | Impaired loans | Real estate | Commercial
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Quoted Prices in Active Markets for Identical Assets (Level 1) | Impaired loans | Commercial business
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Quoted Prices in Active Markets for Identical Assets (Level 1) | Impaired loans | Consumer | Home Equity
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Significant Other Observable Inputs (Level 2) | Mortgage servicing rights
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 1,109,720
Significant Other Observable Inputs (Level 2) | Foreclosed assets | Real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Significant Other Observable Inputs (Level 2) | Foreclosed assets | Real estate | Commercial
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Significant Other Observable Inputs (Level 2) | Foreclosed assets | Real estate | Construction and land
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Significant Other Observable Inputs (Level 2) | Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Significant Other Observable Inputs (Level 2) | Impaired loans | Real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Significant Other Observable Inputs (Level 2) | Impaired loans | Real estate | One-to-four family
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Significant Other Observable Inputs (Level 2) | Impaired loans | Real estate | Commercial
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Significant Other Observable Inputs (Level 2) | Impaired loans | Commercial business
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Significant Other Observable Inputs (Level 2) | Impaired loans | Consumer | Home Equity
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Significant Unobservable Inputs (Level 3) | Mortgage servicing rights
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Significant Unobservable Inputs (Level 3) | Foreclosed assets | Real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 623,500	$ 1,042,087
Significant Unobservable Inputs (Level 3) | Foreclosed assets | Real estate | Commercial
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	19,000
Significant Unobservable Inputs (Level 3) | Foreclosed assets | Real estate | Construction and land
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	604,500	1,042,087
Significant Unobservable Inputs (Level 3) | Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	777,582	2,050,804
Significant Unobservable Inputs (Level 3) | Impaired loans | Real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	498,895	2,050,804
Significant Unobservable Inputs (Level 3) | Impaired loans | Real estate | One-to-four family
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	140,500	707,838
Significant Unobservable Inputs (Level 3) | Impaired loans | Real estate | Commercial
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	358,395	1,342,966
Significant Unobservable Inputs (Level 3) | Impaired loans | Commercial business
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	239,062
Significant Unobservable Inputs (Level 3) | Impaired loans | Consumer | Home Equity
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	39,625
Total | Mortgage servicing rights
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	1,109,720
Total | Foreclosed assets | Real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	623,500	1,042,087
Total | Foreclosed assets | Real estate | Commercial
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	19,000
Total | Foreclosed assets | Real estate | Construction and land
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	604,500	1,042,087
Total | Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	777,582	2,050,804
Total | Impaired loans | Real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	498,895	2,050,804
Total | Impaired loans | Real estate | One-to-four family
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	140,500	707,838
Total | Impaired loans | Real estate | Commercial
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	358,395	$ 1,342,966
Total | Impaired loans | Commercial business
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	239,062
Total | Impaired loans | Consumer | Home Equity
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 39,625

XML

FAIR VALUE MEASUREMENTS (Details 2) - Non-recurring basis - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Foreclosed assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 623,500	$ 1,042,087
Unobservable Inputs | Foreclosed assets | Real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	623,500	1,042,087
Unobservable Inputs | Foreclosed assets | Real estate | Commercial
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	19,000
Unobservable Inputs | Foreclosed assets | Real estate | Construction and land
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 604,500	$ 1,042,087
Unobservable Inputs | Foreclosed assets | Real estate | Construction and land | Sales Comparison | Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Adjustment for difference between comparable sales	(29.00%)	(10.00%)
Unobservable Inputs | Foreclosed assets | Real estate | Construction and land | Sales Comparison | Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Adjustment for difference between comparable sales	5.00%	30.00%
Unobservable Inputs | Foreclosed assets | Real estate | Construction and land | Sales Comparison | Weighted Average
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Adjustment for difference between comparable sales	(8.90%)	10.30%
Unobservable Inputs | Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 777,582	$ 2,050,804
Unobservable Inputs | Impaired loans | Real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	498,895	2,050,804
Unobservable Inputs | Impaired loans | Real estate | One-to-four family
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 140,500	$ 707,838
Unobservable Inputs | Impaired loans | Real estate | One-to-four family | Sales Comparison | Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Adjustment for difference between comparable sales	(19.00%)	(23.00%)
Unobservable Inputs | Impaired loans | Real estate | One-to-four family | Sales Comparison | Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Adjustment for difference between comparable sales	(7.00%)	13.00%
Unobservable Inputs | Impaired loans | Real estate | One-to-four family | Sales Comparison | Weighted Average
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Adjustment for difference between comparable sales	(13.00%)	(7.20%)
Unobservable Inputs | Impaired loans | Real estate | Commercial
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 358,395	$ 1,342,966
Unobservable Inputs | Impaired loans | Real estate | Commercial | Sales Comparison
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 88,000
Unobservable Inputs | Impaired loans | Real estate | Commercial | Sales Comparison | Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Adjustment for difference between comparable sales	9.00%
Unobservable Inputs | Impaired loans | Real estate | Commercial | Sales Comparison | Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Adjustment for difference between comparable sales	16.00%
Unobservable Inputs | Impaired loans | Real estate | Commercial | Sales Comparison | Weighted Average
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Adjustment for difference between comparable sales	12.80%
Unobservable Inputs | Impaired loans | Real estate | Commercial | Income Approach
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 270,395
Investment Capitalization Rates	9.00%
Unobservable Inputs | Impaired loans | Real estate | Commercial | Income Approach | Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment Capitalization Rates		3.00%
Unobservable Inputs | Impaired loans | Real estate | Commercial | Income Approach | Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment Capitalization Rates		27.00%
Unobservable Inputs | Impaired loans | Real estate | Commercial | Income Approach | Weighted Average
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment Capitalization Rates	9.00%	12.30%
Unobservable Inputs | Impaired loans | Commercial business
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 239,062
Unobservable Inputs | Impaired loans | Commercial business | Fair Value of Collateral
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 121,094
Unobservable Inputs | Impaired loans | Commercial business | Fair Value of Collateral | Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount for type of business assets	0.00%
Unobservable Inputs | Impaired loans | Commercial business | Fair Value of Collateral | Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount for type of business assets	10.00%
Unobservable Inputs | Impaired loans | Commercial business | Fair Value of Collateral | Weighted Average
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount for type of business assets	7.00%

XML

FAIR VALUE MEASUREMENTS (Detail Textuals) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Write-downs	$ 355,500	$ 202,694
Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Principal balance	1,387,841	2,423,703
Valuation allowance	610,259	372,899
Increase or decrease in provision for loan losses	241,673	(43,704)
Non-recurring basis | Foreclosed assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying value	623,500	1,042,087
Outstanding balance	1,337,678	1,754,187
Cumulative write-downs	714,178	$ 712,100
Write-downs	$ 355,500

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Financial assets:
Federal Reserve Bank stock	$ 1,676,700	$ 1,676,700
Accrued interest receivable	1,620,309	1,762,310
Financial liabilities:
Non-interest bearing deposits	69,296,354	68,170,743
Interest-bearing deposits	463,861,939	442,135,896
Accrued interest payable	227,947	174,480
Quoted Prices in Active Markets for Identical Assets (Level 1)
Financial assets:
Cash and cash equivalents	$ 79,232,566	$ 49,066,462
Interest-earning time deposits
Federal Home Loan Bank stock
Federal Reserve Bank stock
Loans, net (excluding impaired loans at fair value)
Loans held for sale
Accrued interest receivable
Financial liabilities:
Non-interest bearing deposits	$ 69,296,354	$ 68,170,743
Interest-bearing deposits	$ 330,689,715	$ 314,508,234
Federal Home Loan Bank advances
Securities sold under agreement to repurchase
Subordinated debentures
Accrued interest payable	$ 14,621	$ 14,359
Significant Other Observable Inputs (Level 2)
Financial assets:
Cash and cash equivalents
Interest-earning time deposits	$ 1,685,000	$ 2,021,970
Federal Home Loan Bank stock
Federal Reserve Bank stock
Loans, net (excluding impaired loans at fair value)
Loans held for sale	$ 1,078,785	$ 100,000
Accrued interest receivable	$ 510,231	$ 506,888
Financial liabilities:
Non-interest bearing deposits
Interest-bearing deposits	$ 133,976,643	$ 128,258,671
Federal Home Loan Bank advances	16,315,262	2,542,945
Securities sold under agreement to repurchase	19,732,766	11,848,266
Subordinated debentures	4,000,000	4,000,000
Accrued interest payable	$ 213,326	$ 160,121
Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and cash equivalents
Interest-earning time deposits
Federal Home Loan Bank stock
Federal Reserve Bank stock
Loans, net (excluding impaired loans at fair value)	$ 421,795,305	$ 402,238,073
Loans held for sale
Accrued interest receivable	$ 1,110,078	$ 1,255,422
Financial liabilities:
Non-interest bearing deposits
Interest-bearing deposits
Federal Home Loan Bank advances
Securities sold under agreement to repurchase
Subordinated debentures
Accrued interest payable
Carrying Amount
Financial assets:
Cash and cash equivalents	$ 79,232,566	$ 49,066,462
Interest-earning time deposits	1,685,000	2,021,970
Federal Home Loan Bank stock	1,747,763	2,887,763
Federal Reserve Bank stock	1,676,700	1,676,700
Loans, net (excluding impaired loans at fair value)	419,686,001	398,853,600
Loans held for sale	1,078,785	100,000
Accrued interest receivable	1,620,309	1,762,310
Financial liabilities:
Non-interest bearing deposits	69,296,354	68,170,743
Interest-bearing deposits	463,861,939	442,135,896
Federal Home Loan Bank advances	15,995,485	2,487,745
Securities sold under agreement to repurchase	19,732,766	11,848,266
Subordinated debentures	4,000,000	4,000,000
Accrued interest payable	227,947	174,480
Fair Value
Financial assets:
Cash and cash equivalents	79,232,566	49,066,462
Interest-earning time deposits	1,685,000	2,021,970
Loans, net (excluding impaired loans at fair value)	421,795,305	402,238,073
Loans held for sale	1,078,785	100,000
Accrued interest receivable	1,620,309	1,762,310
Financial liabilities:
Non-interest bearing deposits	69,296,354	68,170,743
Interest-bearing deposits	464,666,358	442,766,905
Federal Home Loan Bank advances	16,315,262	2,542,945
Securities sold under agreement to repurchase	19,732,766	11,848,266
Subordinated debentures	4,000,000	4,000,000
Accrued interest payable	$ 227,947	$ 174,480

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ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) - USD ($)		12 Months Ended
		Dec. 31, 2015	Dec. 31, 2014
Changes in Accumulated Other Comprehensive Income (Loss) by Component
Accumulated Other Comprehensive Income (Loss) at the beginning of the period	[1]	$ 197,331	$ (1,692,488)
Other comprehensive income (loss) before reclassifications	[1]	207,264	1,958,938
Amount reclassified from accumulated other comprehensive income (Loss)	[1],[2]	(6,601)	(69,119)
Total other comprehensive income	[1]	200,663	1,889,819
Accumulated Other Comprehensive Income (loss) at the end of the period	[1]	397,994	197,331
Unrealized Gains and Losses on Available-for-Sale Securities
Changes in Accumulated Other Comprehensive Income (Loss) by Component
Accumulated Other Comprehensive Income (Loss) at the beginning of the period	[1]	197,331	(1,692,488)
Other comprehensive income (loss) before reclassifications	[1]	207,264	1,958,938
Amount reclassified from accumulated other comprehensive income (Loss)	[1],[2]	(6,601)	(69,119)
Total other comprehensive income	[1]	200,663	1,889,819
Accumulated Other Comprehensive Income (loss) at the end of the period	[1]	$ 397,994	$ 197,331

[1] All amounts are net of tax.

[2] See table below for details about reclassifications.

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ACCUMULATED OTHER COMPREHENSIVE INCOME (Details 1) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Reclassifications out of Accumulated Other Comprehensive Income (Loss)
Gain on sale of securities	$ 10,821	$ 109,712
Tax expense	(1,675,469)	(1,360,598)
Net of tax	4,637,754	3,826,192
Reclassifications out of Accumulated Other Comprehensive Income (Loss) | Unrealized Gains and Losses on Available-for-Sale Securities
Reclassifications out of Accumulated Other Comprehensive Income (Loss)
Gain on sale of securities	10,821	109,712
Tax expense	(4,220)	(40,593)
Net of tax	$ 6,601	$ 69,119

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LIQUIDATION ACCOUNT (Detail Textuals) - USD ($)	Dec. 31, 2015	Dec. 31, 2006
Liquidation Account [Abstract]
Balance in liquidation account	$ 2,389,000	$ 20,700,000

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CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY (Details) - USD ($)		Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Assets
Cash and cash equivalents		$ 79,232,566	$ 49,066,462	$ 84,693,825
Other assets		2,712,911	3,281,496
Total assets		654,874,257	607,614,800
Liabilities and Stockholders' Equity
Subordinated debentures		4,000,000	4,000,000
Accrued interest payable		227,947	174,480
Other liabilities		1,485,891	1,667,777
Total liabilities		574,600,382	530,484,907
Stockholders' Equity
Common stock		700,588	700,728
Additional paid-in-capital		55,806,256	55,818,936
Retained earnings		23,369,037	20,412,898
Accumulated other comprehensive income (loss)	[1]	397,994	197,331	(1,692,488)
Total stockholders' equity		80,273,875	77,129,893	73,095,630
Total liabilities and stockholders' equity		654,874,257	607,614,800
First Clover Leaf Financial Corp.
Assets
Cash and cash equivalents		996,950	1,141,653	$ 691,126
Investment in common stock of subsidiary		83,079,782	79,868,529
Other assets		214,079	173,079
Total assets		84,290,811	81,183,261
Liabilities and Stockholders' Equity
Subordinated debentures		4,000,000	4,000,000
Accrued interest payable		8,388	7,424
Other liabilities		8,548	45,944
Total liabilities		4,016,936	4,053,368
Stockholders' Equity
Common stock		700,588	700,728
Additional paid-in-capital		55,806,256	55,818,936
Retained earnings		23,369,037	20,412,898
Accumulated other comprehensive income (loss)		397,994	197,331
Total stockholders' equity		80,273,875	77,129,893
Total liabilities and stockholders' equity		$ 84,290,811	$ 81,183,261

[1] All amounts are net of tax.

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CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY (Details 1) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Condensed financial statement of parent company
Interest income	$ 19,709,479	$ 19,317,728
Interest expense	(2,427,582)	(2,516,422)
Income tax benefit	(1,675,469)	(1,360,598)
Net income	4,637,754	3,826,192
Comprehensive income	4,838,417	5,716,011
First Clover Leaf Financial Corp.
Condensed financial statement of parent company
Dividends from subsidiary	2,000,000	2,000,000
Interest income	2,682	2,614
Interest expense	(90,174)	(86,901)
Other income		51,205
Other expenses	(534,045)	(524,678)
Income before income tax benefit and equity in undistributed net income of subsidiary	1,378,463	1,442,240
Income tax benefit	248,700	223,200
Income before equity in undistributed net income of subsidiary	1,627,163	1,665,440
Equity in undistributed (distributions in excess of) net income of subsidiary	3,010,591	2,160,752
Net income	4,637,754	3,826,192
Comprehensive income	$ 4,838,417	$ 5,716,011

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CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY (Details 2) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Cash Flows from Operating Activities
Net income	$ 4,637,754	$ 3,826,192
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Decrease (increase) in other assets	774,685	(474,625)
Increase (decrease) in accrued interest payable	53,467	(25,284)
Decrease in other liabilities	(181,886)	204,595
Net cash provided by operating activities	4,505,216	4,729,941
Cash Flows from Investing Activities
Loan payments	(18,719,080)	(27,895,667)
Net cash used in investing activities	(16,880,831)	(20,024,600)
Cash Flows from Financing Activities
Repurchase of common stock	(12,820)
Dividends	(1,681,615)	(1,681,748)
Net cash provided by (used in) financing activities	42,541,719	(20,332,704)
Net increase (decrease) in cash and cash equivalents	30,166,104	(35,627,363)
Cash and cash equivalents:
Beginning	49,066,462	84,693,825
Ending	79,232,566	49,066,462
First Clover Leaf Financial Corp.
Cash Flows from Operating Activities
Net income	4,637,754	3,826,192
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Distributions in excess of (equity in undistributed) net income of subsidiary	(3,010,591)	(2,160,752)
Decrease (increase) in other assets	(41,000)	507,606
Increase (decrease) in accrued interest payable	964	(49)
Decrease in other liabilities	(37,395)	(40,722)
Net cash provided by operating activities	$ 1,549,732	$ 2,132,275
Cash Flows from Investing Activities
Loan payments
Net cash used in investing activities
Cash Flows from Financing Activities
Repurchase of common stock	$ (12,820)
Dividends	(1,681,615)	$ (1,681,748)
Net cash provided by (used in) financing activities	(1,694,435)	(1,681,748)
Net increase (decrease) in cash and cash equivalents	(144,703)	450,527
Cash and cash equivalents:
Beginning	1,141,653	691,126
Ending	$ 996,950	$ 1,141,653