Securities

6 Months Ended

Jun. 30, 2011

Note 2.

Securities

The amortized cost and estimated fair value of securities classified as available for sale and held to maturity at June 30, 2011 and December 31, 2010 are as follows:


	June 30, 2011
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value

Securities Available for Sale:

Securities of U.S. Government agencies and corporations	$	27,739,277	$	343,339	$	(17,167	)	$	28,065,449

Mortgage-backed and related securities (1)		7,956,440		433,401		(167	)		8,389,674

State and municipal securities		5,372,747		119,647		(26,592	)		5,465,802


	$	41,068,464	$	896,387	$	(43,926	)	$	41,920,925


Securities Held to Maturity:

Mortgage-backed and related securities (1)	$	6	$	—	$	—		$	6


	December 31, 2010
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value

Securities Available for Sale:

Securities of U.S. Government agencies and corporations	$	29,389,077	$	206,789	$	(257,160	)	$	29,338,706

Mortgage-backed and related securities (1)		6,269,479		402,284		(624	)		6,671,139

State and municipal securities		5,674,233		443		(146,935	)		5,527,741


	$	41,332,789	$	609,516	$	(404,719	)	$	41,537,586


Securities Held to Maturity:

Mortgage-backed and related securities (1)	$	25	$	1	$	—		$	26


(1)		Collateralized by residential mortgages and guaranteed by U.S. Government sponsored entities.

The amortized cost and estimated market value of securities at June 30, 2011 and December 31, 2010, by contractual maturity, are shown below. 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.


	June 30, 2011
	Securities Available for Sale				Securities Held to Maturity
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value

Due in one year or less	$	7,064,344	$	7,173,624	$	—	$	—
Due after one year through five years		21,136,330		21,357,345		—
Due five years to ten years		1,493,631		1,515,680		—		—
Due after ten years		3,417,719		3,484,602		—		—
Mortgage-backed securities		7,956,440		8,389,674		6		6


Total	$	41,068,464	$	41,920,925	$	6	$	6


	December 31, 2010
	Securities Available for Sale				Securities Held to Maturity
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value

Due in one year or less	$	7,376,700	$	7,356,405	$	—	$	—
Due after one year through five years		20,774,132		20,715,338		—		—
Due five years to ten years		3,217,241		3,179,863		—		—
Due after ten years		3,695,237		3,614,841		—		—
Mortgage-backed securities		6,269,479		6,671,139		25		26


Total	$	41,332,789	$	41,537,586	$	25	$	26

No realized gains or losses were recognized for the six-month period ended June 30, 2011, or for the year ended December 31, 2010.

The Company has pledged securities with carrying values of approximately $13,412,000 and $18,177,000 (which approximates fair values) to secure deposits of public and private funds as of June 30, 2011 and December 31, 2010, respectively.

Securities with gross unrealized losses at June 30, 2011 and December 31, 2010, aggregated by investment category and length of time that individual securities have been in a continuous loss position, are as follows:


	June 30, 2011
	Less than 12 Months					12 Months or Greater					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	(dollars in thousands)

Securities Available for Sale:

Securities of U.S. Government agencies and corporations	$	5,981	$	(17	)	$	—	$	—		$	5,981	$	(17	)

Mortgage-backed and related securities		23		—			18		—			41		—

State and municipal securities		578		(2	)		351		(25	)		929		(27	)


	$	6,582	$	(19	)	$	369	$	(25	)	$	6,951	$	(44	)


	December 31, 2010
	Less than 12 Months					12 Months or Greater					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	(dollars in thousands)

Securities Available for Sale:

Securities of U.S. Government agencies and corporations	$	12,803	$	(257	)	$	—	$	—		$	12,803	$	(257	)

Mortgage-backed and related securities		46		(1	)		53		—			99		(1	)

State and municipal securities		4,896		(102	)		332		(45	)		5,228		(147	)


	$	17,745	$	(360	)	$	385	$	(45	)	$	18,130	$	(405	)

Management performs periodic reviews for impairment in accordance with ASC Topic 320, Investment — Debt and Equity Securities.

At June 30, 2011, the 7 securities with unrealized losses have depreciated 0.62 percent from the Company’s amortized cost basis. At December 31, 2010, the 19 securities with unrealized losses have depreciated 2.19 percent from the Company’s amortized cost basis. Most of these securities are guaranteed by either U.S. government corporations or agencies or had investment grade ratings upon purchase. Further, the issuers of these securities have not established any cause for default. The unrealized losses associated with these investment securities are primarily driven by changes in interest rates and are not due to the credit quality of the securities. These securities will continue to be monitored as a part of the Company’s ongoing impairment analysis, but are expected to perform even if the rating agencies reduce the credit rating of the bond insurers. Management evaluates the financial performance of each issuer on a quarterly basis to determine if it is probable that the issuers can make all contractual principal and interest payments.

ASC Topic 320 requires an entity to assess whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. Management does not intend to sell these securities and it is not more likely than not that management will be required to sell the securities before the recovery of its amortized cost basis. In making this determination, management has considered the Company’s cash flow and liquidity requirements, capital requirements, economic factors, and contractual and regulatory obligations for indication that these securities will be required to be sold before a forecasted recovery occurs. Therefore, in management’s opinion, all securities that have been in a continuous unrealized loss position for the past 12 months or longer as of June 30, 2011 are not other-than-temporarily impaired, and therefore, no impairment charges as of June 30, 2011 are warranted.

- Definition

This item represents the entire disclosure related to Investments in Certain Debt and Equity Securities (and certain other trading assets) which include all debt and equity securities (other than those equity securities accounted for under the equity or cost methods of accounting) with readily determinable fair values. Other trading assets include assets that are carried on the balance sheet at fair value and held for trading purposes. A debt security represents a creditor relationship with an enterprise that is in the form of a security. Debt securities include, among other items, US Treasury securities, US government securities, municipal securities, corporate bonds, convertible debt, commercial paper, and all securitized debt instruments. An equity security represents an ownership interest in an enterprise or the right to acquire or dispose of an ownership interest in an enterprise at fixed or determinable prices. Equity securities include, among other things, common stock, certain preferred stock, warrant rights, call options, and put options, but do not include convertible debt. An entity may opt to provide the reader with additional narrative text to better understand the nature of investments in debt and equity securities (and other trading assets).

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