INVESTMENT SECURITIES

3 Months Ended

Mar. 31, 2012

INVESTMENT SECURITIES

INVESTMENT SECURITIES

NOTE 6 - INVESTMENT SECURITIES

The amortized cost and estimated fair values of securities available-for-sale were:

	Amortized		Gross Unrealized				Estimated
	Cost		Gains		Losses		Fair Value
March 31, 2012
Government-sponsored enterprises	$	43,957,295	$	54	$	442,159	$	43,515,190
Mortgage-backed securities	44,867,360		128,136		375,631		44,619,865
Total	$	88,824,655	$	128,190	$	817,790	$	88,135,055
December 31, 2011
Government-sponsored enterprises	$	—	$	—	$	—	$	—
Mortgage-backed securities	57,168,084		276,760		298,935		57,145,909
Total	$	57,168,084	$	276,760	$	298,935	$	57,145,909

The amortized cost and estimated fair values of investment securities at March 31, 2012, by contractual maturity dates, are shown in the following chart.  Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalty.  Mortgage-backed securities are presented as a separate line item since pay downs are expected before contractual maturity dates.

	Amortized Cost		Fair Value
Due within one year	$	—	$	—
Due after one year through five years	—		—
Due after five years through ten years	—		—
Due after ten years	43,957,295		43,515,190
Subtotal	43,957,295		43,515,190
Mortgage-backed securities	44,867,360		44,619,865
Total Securities	$	88,824,655	$	88,135,055

At March 31, 2012 and December 31, 2011, investment securities with book values of $31,909,459 and $31,807,296 and market values of $31,854,924 and $31,796,498, respectively, were pledged as collateral for securities sold under agreements to repurchase and a fed funds line. Gross proceeds from the sale of investment securities totaled $14,477,309 for the three months ended March 31, 2012. The gross realized gain on the sale of investment securities totaled $89,501 with no gross realized losses resulting in a net realized gain of $89,501 for the three months ending March 31, 2012. There were no sales of investment securities for the three months ending March 31, 2011.  The cost of investments sold is determined using the specific identification method.

The following table shows gross unrealized losses and fair value, for securities available-for-sale, and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2012 and December 31, 2011.

	Less than Twelve months				Twelve months or more				Total
	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
March 31, 2012
Government-sponsored enterprises	$	37,992,690	$	442,159	$	—	$	—	$	37,992,690	$	442,159
Mortgage-backed securities	28,178,540		375,631		—		—		28,178,540		375,631
	$	66,171,230	$	817,790	$	—	$	—	$	66,171,230	$	817,790

	Less than Twelve months				Twelve months or more				Total
	Fair value		Unrealized  losses		Fair value		Unrealized losses		Fair value		Unrealized losses
December 31, 2011
Government-sponsored enterprises	$	—	$	—	$	—	$	—	$	—	$	—
Mortgage-backed securities	27,319,899		298,935		—		—		27,319,899		298,935
	$	27,319,899	$	298,935	$	—	$	—	$	27,319,899	$	298,935

Securities classified as available-for-sale are recorded at fair market value.  Of the securities in an unrealized loss position, there were no securities in a continuous loss position for 12 months or more at March 31, 2012 and December 31, 2011. The Company does not intend to sell these securities and it is more likely than not that the Company will not be required to sell these securities before recovery of their amortized cost.  The Company believes, based on industry analyst reports and credit ratings, that the deterioration in value is attributable to changes in market interest rates and not in the credit quality of the issuer and therefore, these losses are not considered other-than-temporary.

Nonmarketable equity securities include the cost of the Company’s investment in the stock of the Federal Home Loan Bank and $55,250 of stock in community bank holding companies as of March 31, 2012 and December 31, 2011. The Federal Home Loan Bank stock has no quoted market value and no ready market exists.  Investment in the Federal Home Loan Bank is a condition of borrowing from the Federal Home Loan Bank, and the stock is pledged to collateralize such borrowings.  At March 31, 2012 and December 31, 2011, the Company’s investment in Federal Home Loan Bank stock was $3,262,200 and $5,239,000, respectively.

The Company reviews its investment securities portfolio at least quarterly and more frequently when economic conditions warrant, assessing whether there is any indication of other-than-temporary impairment (“OTTI”). Factors considered in the review include estimated future cash flows, length of time and extent to which market value has been less than cost, the financial condition and near term prospects of the issuer, and our intent and ability to retain the security to allow for an anticipated recovery in market value.  If the review determines that there is OTTI, then an impairment loss is recognized in earnings equal to the difference between the investment’s cost and its fair value at the balance sheet date of the reporting period for which the assessment is made, or a portion may be recognized in other comprehensive income. The fair value of investments on which OTTI is recognized then becomes the new cost basis of the investment.