NOTE D - INVESTMENT SECURITIES

The following is a summary of the securities portfolio by major classification. All mortgage-backed securities and collateralized mortgage obligations represent securities issued by a government sponsored enterprise (i.e. Government National Mortgage Association, Federal Home Loan Mortgage Corporation or Federal National Mortgage Association) where the underlying collateral consists of conforming residential home mortgage loans.

	September 30, 2011
			Gross		Gross
	Amortized		unrealized		unrealized		Fair
	cost		gains		losses		value
Securities available for sale:
U.S. government securities and obligations of U.S. government agencies	$	11,562,986	$	653,507	$	-	$	12,216,493
Mortgage-backed securities		32,813,746		1,511,518		-		34,325,264
Collateralized mortgage obligations		124,711,210		2,135,302		348,070		126,498,442
Municipals, non-taxable		35,894,018		1,846,939		-		37,740,957
Municipals, taxable		2,031,085		194,275		-		2,225,360
Corporate bonds		3,809,041		-		328,161		3,480,880
Marketable equity		425,941		19,854		998		444,797
	$	211,248,027	$	6,361,395	$	677,229	$	216,932,193

	December 31, 2010
			Gross		Gross
	Amortized		unrealized		unrealized		Fair
	cost		gains		losses		value
Securities available for sale:
U.S. government securities and obligations of U.S. government agencies	$	9,346,395	$	492,005	$	-	$	9,838,400
Mortgage-backed securities		38,079,632		1,667,631		22,418		39,724,845
Collateralized mortgage obligations		76,553,621		2,022,287		126,224		78,449,684
Municipals, non-taxable		51,067,962		442,604		892,203		50,618,363
Municipals, taxable		-		-		-		-
Corporate bonds		2,777,457		15,665		24,322		2,768,800
Marketable equity		440,757		121,082		45,702		516,137
	$	178,265,824	$	4,761,274	$	1,110,869	$	181,916,229

The following tables show investments’ gross unrealized losses and fair values, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, at September 30, 2011 and December 31, 2010. The September 30, 2011 unrealized losses on investment securities relate to twenty one collateralized mortgage obligations, one marketable equity security, and four corporate bonds. The December 31, 2010 unrealized losses on investment securities relate to seven collateralized mortgage obligations, one mortgage-backed security, thirty-six municipal securities, two corporate bonds and one marketable equity security. The unrealized losses relate to debt securities that have incurred fair value reductions due to higher market interest rates since the securities were purchased and the unrealized losses will reverse at maturity or prior to maturity if market interest rates decline to levels that existed when the securities were purchased. At both September 30, 2011 and December 31, 2010, 100% of the collateralized mortgage obligations and mortgage-backed securities held by the Company were issued by U.S. government-sponsored entities and agencies, primarily Fannie Mae, Freddie Mac, and Ginnie Mae, institutions which the government has affirmed its commitment to support. Since the Company has the intent and ability to hold the investments until the recovery of amortized cost (which may be maturity) and none of the unrealized losses relate to the marketability of the securities or the issuer’s ability to honor redemption obligations, none of the securities are deemed to be other than temporarily impaired.

	September 30, 2011
	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
Securities available for sale:
US Government securities	$	-	$	-	$	-	$	-	$	-	$	-
Mortgage-backed		-		-		-		-		-		-
Collateralized mortgage obligations		37,758,245		348,070		-		-		37,748,245		348,070
Municipals, non-taxable		-		-		-		-		-		-
Corporate Bond		3,480,880		328,161		-		-		3,480,880		328,161
Marketable equity		-		-		32,929		998		32,929		998
Total temporarily impaired securities	$	41,239,125	$	676,231	$	32,929	$	998	$	41,262,054	$	677,229

	December 31, 2010
	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
Securities available for sale:
Mortgage-backed	$	984,306	$	22,418	$	-	$	-	$	984,306	$	22,418
Collateralized mortgage obligations		7,274,222		126,224		-		-		7,274,222		126,224
Municipals, non taxable		27,738,632		823,580		1,006,202		68,623		28,744,834		892,203
Corporate bonds		1,831,230		24,322		-		-		1,831,230		24,322
Marketable equity		-		-		36,122		45,702		36,122		45,702
Total temporarily impaired securities	$	37,828,390	$	996,544	$	1,042,324	$	114,325	$	38,870,714	$	1,110,869

At September 30, 2011 and December 31, 2010, investment securities with a carrying value of $65,270,618 and $94,085,409 respectively, were pledged to secure public deposits, borrowings and for other purposes required or permitted by law.

The amortized cost and fair values of securities available for sale at September 30, 2011 are shown below by expected maturity. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized		Fair
	cost		value
Due within one year	$	40,992,565	$	41,742,665
Due after one year through five years		117,079,702		119,655,537
Due after five years through ten years		31,491,508		32,813,267
Due after ten years		21,258,311		22,275,927
Other equity securities		425,941		444,797
	$	211,248,027	$	216,932,193

At September 30, 2011, the balance of Federal Home Loan Bank (“FHLB”) of Atlanta stock held by the Company is $9,156,100. The change in balance from $10,521,700 at December 31, 2010 is related to stock repurchases made by FHLB.