SECURITIES AVAILABLE FOR SALE

12 Months Ended

Dec. 31, 2012

SECURITIES AVAILABLE FOR SALE

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, 2012
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		(Losses)			Value
U.S. government agency obligations	$	19,596,009	$	212,845	$	(15,352	)	$	19,793,502
State and municipal securities	35,068,040		1,375,995		(40,112		)	36,403,923
Other securities(1)	248,501		—		—			248,501
Mortgage-backed: residential	31,468,831		427,194		(61,871		)	31,834,154
	$	86,381,381	$	2,016,034	$	(117,335	)	$	88,280,080

	December 31, 2011
U.S. government agency obligations	$	31,226,753	$	517,236	$	—		$	31,743,989
Corporate bonds	1,949,836		12,444		(123,956		)	1,838,324
State and municipal securities	25,063,842		1,329,567		(17,291		)	26,376,118
Other securities	3,501		—		—			3,501
Mortgage-backed: residential	25,280,227		425,272		(92,080		)	25,613,419
	$	83,524,159	$	2,284,519	$	(233,327	)	$	85,575,351

(1)  Includes a Certificate of Deposit in the amount of $245,000

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, 2012 and 2011, are summarized as follows:

	December 31, 2012
	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	$	1,490,123	$	(15,352	)	$	—	$	—		$	1,490,123	$	(15,352	)
State and municipal securities	6,952,889		(40,112		)	—		—			6,952,889		(40,112		)
Mortgage-backed: residential	13,828,613		(57,637		)	329,715		(4,234		)	14,158,328		(61,871		)
	$	22,271,625	$	(113,101	)	$	329,715	$	(4,234	)	$	22,601,340	$	(117,335	)

	December 31, 2011
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
Corporate bonds	$	—	$	—		$	576,044	$	(123,956	)	$	576,044	$	(123,956	)
State and municipal securities	1,448,738		(17,291		)	—		—			1,448,738		(17,291		)
Mortgage-backed: residential	9,805,765		(92,080		)	—		—			9,805,765		(92,080		)
	$	11,254,503	$	(109,371	)	$	576,044	$	(123,956	)	$	11,830,547	$	(233,327	)

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 equity securities.

At December 31, 2012, the Company had 23 securities in an unrealized loss position which included: one agency security, 12 state and municipal securities, and 10 mortgage-backed securities.  These securities had an aggregate depreciation of 0.52% from the Company’s amortized cost basis.  The unrealized losses resulted from changes in market interest rates and liquidity, not from changes in the probability of contractual cash flows.  While one of our mortgage-backed securities has been in an unrealized loss position for more than 12 months and is currently at a 1% unrealized loss position, which we believe is interest rate driven, there have been no defaults to date, and the security remains 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 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, 2012.

The amortized cost and fair value at December 31, 2012, 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	$	13,358,995	$	13,468,827
Due after one year through five years	11,438,149		11,728,731
Due after five years through ten years	10,640,111		11,126,670
Due after ten years	19,226,794		19,873,196
Other securities	248,501		248,501
Mortgage-backed: residential	31,468,831		31,834,155
	$	86,381,381	$	88,280,080

Securities with a carrying amount of approximately $77,431,000 and $78,425,000 were pledged to secure deposits as required or permitted by law at December 31, 2012 and 2011, respectively.

At year-end 2012 and 2011, 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 sold $5,283,819 of securities during 2012 resulting in gross realized gains of $167,978.  The Company sold $7,816,152 of securities during 2011 resulting in gross realized gains of $455,048 and gross realized losses of $128. The tax related to these net realized gains and losses was $56,273 and $161,497 for 2012 and 2011, respectively.