3. MORTGAGE-BACKED SECURITIES

Mortgage-backed securities consisted of the following:

	December 31, 2012
				Gross		Gross		Estimated
	Amortized			Unrealized		Unrealized		Fair
	Cost			Gains		Losses		Value

AVAILABLE FOR SALE:
FHLMC pass-through certificates	3,220,880			141,916		—		3,362,796
FNMA pass-through certificates	8,667,364			467,908		—		9,135,272
Other pass-through certificates	11,536,733			774,564		—		12,311,297

	$	23,424,977		$	1,384,388	$	—	$	24,809,365

Weighted average interest rate	3.58		%

	December 31, 2011
				Gross		Gross		Estimated
	Amortized			Unrealized		Unrealized		Fair
	Cost			Gains		Losses		Value

AVAILABLE FOR SALE:
GNMA certificates	$	7,126,518		$	226,129	$	—	$	7,352,647
Private label collaterized mortgage obligations	17,026,220			17,241		684,135		16,359,326
FHLMC pass-through certificates	4,904,114			181,994		—		5,086,108
FNMA pass-through certificates	20,036,967			443,052		—		20,480,019
Freddie Mac pass-through certificates	23,024,218			348,993				23,373,211
Other pass-through certificates	7,634,231			522,715		—		8,156,946

	$	79,752,268		$	1,740,124	$	684,135	$	80,808,257

Weighted average interest rate	4.08		%

The portfolio classified as “Available for Sale” is consistent with management’s assessment and intention as to the portfolio. While we have the intent to hold and do not expect to be required to sell the securities until maturity, from time to time or with changing conditions, it may be advantageous to sell certain securities either to take advantage of favorable interest rate changes or to increase liquidity. Securities classified as “Held to Maturity” are not subject to fair value adjustment due to temporary changes in value due to interest rate; while securities classified as “Available for Sale” are subject to adjustment in carrying value through the accumulated comprehensive income line item in stockholders’ equity section of the statement of financial condition.

Gross unrealized losses and fair value by length of time that the individual available-for-sale MBS have been in a continuous unrealized loss position is as follows:

	December 31, 2012				December 31, 2011
			Continuous				Continuous
	Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses

Less than 12 months	$	—	$	—	$	—	$	—

More than 12 months	—		—		16,055,478		684,135

Total	$	—	$	—	$	16,055,478	$	684,135

At December 31, 2012, we had no securities in an unrealized loss position. At December 31, 2011, there were four securities that were in an unrealized loss related to our private labeled mortgage backed securities portfolio. These securities were sold during the year ending December 31, 2012.

At December 31, 2012 and December 31, 2011, we had no other-than-temporary impairment losses recognized in net earnings, related to available-for-sale investments.

In evaluating whether a security was other than temporarily impaired, we considered the severity and length of time impaired for each security in a loss position. Other qualitative data was also considered including recent developments specific to the organization issuing the security, market liquidity, extension risk, credit rating downgrades as well as analysis of performance of the underlying collateral.

Prior to the sale of our non-agency MBSs, the valuation process and OTTI determination, assumptions related to prepayment, default and severity on the collateral supporting the non-agency MBSs were input into an industry standard valuation model. The valuation is “Level Three” pursuant to FASB ASC — Topic 820- Fair Value Measurements and Disclosures. As of December 31, 2012, we currently have no non-agency private-labeled MBS. At December 31, 2012, we had no securities classified as held-to-maturity.

We recognized a gain of $189,264 on the sale of mortgage-backed securities during year ending December 31, 2012 compared to a gain of $401,052 for the previous fiscal year. Proceeds from sale of mortgage-backed securities were as follows as of December 31, 2012 and 2011:

	December 31, 2012
					Gross Realized
	Carrying				Gain
	Value		Proceeds		on sales

MBS - available-for-sale	$	53,618,467	$	53,807,731	$	189,264
	$	53,618,467	$	53,807,731	$	189,264

	December 31, 2011
					Gross Realized
	Carrying				Gain
	Value		Proceeds		on sales

MBS - available-for-sale	$	10,972,982	$	11,374,034	$	401,052
	$	10,972,982	$	11,374,034	$	401,052