Note 2.

Securities

The amortized cost and fair value of securities available for sale, with unrealized gains and losses follows:

	March 31, 2012
			Gross Unrealized		Gross Unrealized
	Amortized Cost		Gains		(Losses)			Fair Value
Obligations of U.S. Government corporations and agencies	$	47,735,941	$	851,915	$	(50,492	)		48,537,364
Obligations of states and political subdivisions		6,789,999		557,393		-			7,347,392
Corporate bonds		3,815,864		-		(3,539,396	)		276,468
Mutual funds		339,430		11,339		-			350,769
	$	58,681,234	$	1,420,647	$	(3,589,888	)	$	56,511,993

	December 31, 2011
			Gross Unrealized		Gross Unrealized
	Amortized Cost		Gains		(Losses)			Fair Value
Obligations of U.S. Government corporations and agencies	$	38,811,926	$	761,577	$	(1,672	)		39,571,831
Obligations of states and political subdivisions		6,791,235		604,331		(1,930	)		7,393,636
Corporate bonds		3,793,807		-		(3,458,833	)		334,974
Mutual funds		337,060		11,978		-			349,038
	$	49,734,028	$	1,377,886	$	(3,462,435	)	$	47,649,479

The amortized cost and fair value of securities available for sale, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without penalties.

	March 31, 2012
	Amortized Cost		Fair Value
Due in one year or less	$	1,016,394	$	1,018,407
Due after one year through five years		14,997,818		15,029,029
Due after five years through ten years		11,018,650		11,562,585
Due after ten years		31,308,942		28,551,203
Equity securities		339,430		350,769
		58,681,234		56,511,993

There were no impairment losses on securities during the quarter ended March 31, 2012 and $189,000 during the quarter ended March 31, 2011.

During the quarter ended March 31, 2012, two securities were called totaling a fair value of $2.0 million, resulting in a gain of $401.

The following table shows the Company securities with gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2012 and December 31, 2011, respectively.

	Less than 12 Months					12 Months or More					Total
March 31, 2012	Fair Value		Unrealized (Losses)			Fair Value		Unrealized (Losses)			Fair Value		Unrealized (Losses)

Obligations of U.S. Government, corporations and agencies	$	7,948,340	$	(50,492	)	$	-	$	-		$	7,948,340	$	(50,492	)
Obligations of states and political subdivisions		-		-			-		-			-		-
Corporate bonds		-		-			276,468		(3,539,396	)		276,468		(3,539,396	)
Total temporary impaired securities	$	7,948,340	$	(50,492	)	$	276,468	$	(3,539,396	)	$	8,224,808	$	(3,589,888	)

	Less than 12 Months					12 Months or More					Total
December 31, 2011	Fair Value		Unrealized (Losses)			Fair Value		Unrealized (Losses)			Fair Value		Unrealized (Losses)

Obligations of U.S. Government, corporations and agencies	$	1,997,300	$	(1,672	)	$	-	$	-		$	1,997,300	$	(1,672	)
Obligations of states and political subdivisions		514,895		(1,930	)		-		-			514,895		(1,930	)
Corporate bonds							334,974		(3,458,833	)		334,974		(3,458,833	)
Total temporary impaired securities	$	2,512,195	$	(3,602	)	$	334,974	$	(3,458,833	)	$	2,847,169	$	(3,462,435	)

The nature of securities which were temporarily impaired for a continuous 12 month period or more at March 31, 2012 consisted of four corporate bonds with a cost basis net of other-than-temporary impairment ("OTTI") totaling $3.8 million and a temporary loss of approximately $3.5 million. The method for valuing these four corporate bonds came from Moody's Analytics. Moody's Analytics employs a two-step discounted cash-flow valuation process. The first step is to evaluate the financial condition of the individual creditors in order to estimate the credit quality of the collateral pool and the structural supports. Step two is to apply a discount rate to the cash flows to calculate a value. These four corporate bonds are the "Class B" or subordinated "mezzanine" tranche of pooled trust preferred securities. The trust preferred securities are collateralized by the interest and principal payments made on trust preferred capital offerings by a geographically diversified pool of approximately 60 different financial institutions per bond. They have an estimated maturity of 25 years. These bonds could have been called at par on the five year anniversary date of issuance, which has already passed for all four bonds. The bonds reprice every three months at a fixed rate index above the three-month London Interbank Offered Rate ("LIBOR"). These bonds have sufficient collateralization and cash flow projections to satisfy their valuation based on the cash flow portion of the OTTI test under authoritative accounting guidance as of March 31, 2012. All four bonds totaling $276,000 at fair value, are greater than 90 days past due, and are classified as nonperforming corporate bond investments in the nonperforming asset table in Note 3.

Additional information regarding each of the pooled trust preferred securities as of March 31, 2012 follows:

Cost, net of OTTI loss		Fair Value		Percent of Underlying Collateral Performing	Percent of Underlying Collateral in Deferral	Percent of Underlying Collateral in Default	Estimated incremental defaults required to break yield (1)	Current Moody's Rating	Cumulative Amount of OTTI Loss		Cumulative Other Comprehensive Loss, net of tax benefit
$	374,426	$	5,994	50.0 %	25.7 %	24.3 %	broken	C	$	625,574	$	243,165
	1,624,770		226,845	67.7 %	17.1 %	15.2 %	broken	Ca		375,230		922,630
	1,271,911		29,507	61.5 %	30.9 %	7.6 %	broken	Ca		728,089		819,987
	544,757		14,122	64.0 %	22.3 %	13.7 %	broken	C		455,243		350,219
$	3,815,864	$	276,468						$	2,184,136	$	2,336,001

(1)

A break in yield for a given tranche investment means that defaults and/or deferrals have reached such a level that the specific tranche would not receive all of the contractual principal and interest cash flow by its maturity, resulting in not a temporary shortfall, but an actual loss. This column represents the percentage of additional defaults among the currently performing collateral that would result in other-than-temporary loss.

The Company monitors these pooled trust preferred securities in its portfolio as to additional collateral issuer defaults and deferrals, which as a general rule, indicate that additional impairment may have occurred. Due to the continued stress on banks in general, and the issuer banks in particular, as a result of overall economic conditions, the Company anticipates having to recognize additional impairment in future periods; however the extent, timing, and probability of any additional impairment cannot be reasonably estimated at this time.

The following roll forward reflects the amount related to credit losses recognized in earnings (in accordance with FASB Accounting Standards Codification ("ASC") 320-10-35-34D:

Beginning balance as of December 31, 2011	$	2,206,193
Add: Amount related to the credit loss for which an other-than- temporary impairment was not previously recognized		-
Add: Increases to the amount related to the credit loss for which an other-than temporary impairment was previously recognized		-
Less: Realized losses for securities sold		-
Less: Securities for which the amount previously recognized in other comprehensive income was recognized in earnings because the Company intends to sell the security or more likely than not will be required to to sell the security before recovery of its amortized cost basis.		-
Less: Increases in cash flows expected to be collected that are recognized over the remaining life of the security (See FASB ASC 320-10-35-35)		22,057
Ending balance as of March 31, 2012	$	2,184,136

The carrying value of securities pledged to secure deposits and for other purposes amounted to $41.0 million and $37.3 million at March 31, 2012 and December 31, 2011, respectively.

The Company's restricted investments include an equity investment in the Federal Home Loan Bank of Atlanta ("FHLB"). FHLB stock is generally viewed as a long-term investment and as a restricted investment which is carried at cost because there is no market for the stock other than the FHLB or member institutions. Therefore, when evaluating FHLB stock for impairment, its value is based on ultimate recoverability of the par value rather than recognizing temporary declines in value. The Company does not consider this investment to be other-than-temporarily impaired at March 31, 2012, and no impairment has been recognized.