Securities

6 Months Ended

Jun. 30, 2012

Securities [Abstract]

Securities

NOTE 5. SECURITIES

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

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
June 30, 2012
U.S. Government sponsored enterprises (GSEs)	$	2,000,000	$	—	$	(5,690	)	$	1,994,310
State, county and municipals		10,143,066		90,186		(33,240	)		10,200,012
Mortgage-backed securities GSE residential		30,669,797		206,142		(77,275	)		30,798,664
Trust preferred securities		365,438		—		—			365,438
Total debt securities		43,178,301		296,328		(116,205	)		43,358,424
Equity securities		50,000		—		—			50,000
Total securities	$	43,228,301	$	296,328	$	(116,205	)	$	43,408,424

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
December 31, 2011
State, county and municipals	$	16,076,970	$	73,281	$	(186,020	)	$	15,964,231
Mortgage-backed securities GSE residential		25,738,730		201,977		(16,236	)		25,924,471
Trust preferred securities		627,875		—		—			627,875
Total debt securities		42,443,575		275,258		(202,256	)		42,516,577
Equity securities		50,000		—		—			50,000
Total securities	$	42,493,575	$	275,258	$	(202,256	)	$	42,566,577

The amortized cost and fair value of debt securities as of June 30, 2012 by contractual maturity are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Fair Value
Due from one to five years	$	3,522,484	$	3,529,612
Due from five to ten years		3,324,419		3,324,649
Due after ten years		5,661,601		5,705,499
Mortgage-backed securities		30,669,797		30,798,664
	$	43,178,301	$	43,358,424

Securities with a carrying value of $18,655,945 and $17,070,932 at June 30, 2012 and December 31, 2011, respectively, were pledged to secure public deposits and for other purposes required or permitted by law.

Temporarily Impaired Securities

The following table shows the gross unrealized losses and fair value of securities with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that securities have been in a continuous unrealized loss position at June 30, 2012 and December 31, 2011.

	Less Than Twelve Months					Twelve Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Total Unrealized Losses
June 30, 2012
U.S. Government sponsored enterprises (GSEs)	$	1,994,310	$	(5,690	)	$	—	$	—	$	(5,690	)
State, county and municipals		7,040,707		(33,240	)		—		—		(33,240	)
Mortgage-backed securities GSE residential		13,889,362		(77,275	)		—		—		(77,275	)
Total securities	$	22,924,379	$	(116,205	)	$	—	$	—	$	(116,205	)
December 31, 2011
State, county and municipals	$	9,161,795	$	(186,020	)	$	—	$	—	$	(186,020	)
Mortgage-backed securities GSE residential		2,464,959		(16,236	)		—		—		(16,236	)
Total securities	$	11,626,754	$	(202,256	)	$	—	$	—	$	(202,256	)

U.S. Government sponsored enterprises securities. There were unrealized losses on two U.S. Government sponsored enterprises securities resulting from temporary changes in the interest rate market. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of its amortized cost bases, which may be maturity, the Company does not consider the investments to be other-than-temporarily impaired at June 30, 2012.

State, county and municipal securities. There were unrealized losses on seven state and municipal securities resulting from temporary changes in the interest rate market. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of its amortized cost bases, which may be maturity, the Company does not consider the investments to be other-than-temporarily impaired at June 30, 2012.

GSE residential mortgage-backed securities. There were unrealized losses on seven GSE mortgage-backed securities resulting from interest rate increases. The Company purchased those investments at a discount relative to their face amount, and the contractual cash flows of those investments are guaranteed by an agency of the U.S. Government. Accordingly, it is expected that the securities would not settled at a price less than the amortized cost bases of the Company’s investments. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of its amortized cost bases, which may be maturity, the Company does not consider the investments to be other-than-temporarily impaired at June 30, 2012.

Other-Than-Temporary Impairment

The Company conducts periodic reviews to identify and evaluate each investment security to determine whether an other-than-temporary impairment has occurred. While all securities are considered, the securities primarily impacted by other-than-temporary impairment considerations have been trust preferred. For each security in the investment portfolio, a regular review is conducted to determine if an other-than-temporary impairment has occurred. Various factors are considered to determine if an other-than-temporary impairment has occurred. However, the most significant factors are default rates or interest deferral rates and the creditworthiness of the issuer. Other factors may include geographic concentrations, credit ratings, and other performance indicators of the underlying asset.

During the first and third quarters of 2010, the Company recorded an other than temporary impairment charge of $97,500 and $27,625, respectively, on one of its investments in a trust preferred security. During the first quarter of 2012, the Company recognized an additional other than temporary impairment on the same investment of $262,437. As of December 31, 2009, the value of that particular trust preferred security for which other than temporary impairment was recognized was $650,000. Management determined the value of this security declined significantly due to the deteriorating capital levels of the subsidiary banks owned by the owner of the trust preferred security, deteriorating asset quality at the subsidiary institutions, and the subordinated nature of the debt the Company held. The owner of the trust preferred security guarantees the securities; however, its primary assets are its subsidiary institutions. The security has the same cost basis of $262,438 as of June 30, 2012.