Note 2. Securities

The amortized cost and estimated fair value of securities classified as available for sale and held to maturity at March 31, 2013 and December 31, 2012 are as follows:


	March 31, 2013

	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair Value

Securities Available for Sale:
Securities of U.S. Government agencies and corporations	$ 9,134,849	$ 94,195	$ (833)	$ 9,228,211
Mortgage-backed and related securities (1)	11,772,896	364,009	(2)	12,136,903
State and municipal securities	6,241,371	345,976	(13,596)	6,573,751

	$ 27,149,116	$ 804,180	$ (14,431)	$ 27,938,865


	December 31, 2012

	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair Value

Securities Available for Sale:
Securities of U.S. Government agencies and corporations	$ 13,233,968	$ 117,177	$ -	$ 13,351,145
Mortgage-backed and related securities (1)	12,605,316	371,395	(6 )	12,976,705
State and municipal securities	5,436,337	394,395	(8,474 )	5,822,258

	$ 31,275,621	$ 882,967	$ (8,480 )	$ 32,150,108

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

As of March 31, 2013 and December 31, 2012, the Company did not have any securities classified as held-to-maturity.

The amortized cost and estimated market value of securities at March 31, 2013, 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.


	March 31, 2013

	Securities Available for Sale

	Amortized		Fair
	Cost		Value

Due in one year or less	$ 3,662,442	$ 3,688,812
Due after one year through five years	5,434,865	5,526,705
Due five years to ten years	3,158,374	3,279,623
Due after ten years	3,120,539	3,306,822
Mortgage-backed securities	11,772,896	12,136,903

Total	$ 27,149,116	$ 27,938,865

The Company had no realized gains or losses for the three-month period ended March 31, 2013 and had no realized gains or losses for the three-month period ended March 31, 2012.

The Company has pledged securities with carrying values of approximately $20,203,000 and $20,281,000 (which approximates fair values) to secure deposits of public and private funds as of March 31, 2013 and December 31, 2012, respectively.

Securities with gross unrealized losses at March 31, 2013 and December 31, 2012, aggregated by investment category and length of time that individual securities have been in a continuous loss position, are as follows:


	March 31, 2013

	Less than 12 Months		12 Months or Greater		Total

	Fair Value	Gross Unrealized Losses	Fair Value	Gross Unrealized Losses	Fair Value			Gross Unrealized Losses

	(dollars in thousands)
Securities Available for Sale:
Securities of U.S. Government agencies and corporations	$ 1,000	$ (1)	$ -	$ -		$ 1,000	$ (1)
State and municipal securities	443	(14)	-	-		443	(14)
Mortgage-backed and related securities	1	-	-	-		1	-

	$ 1,444	$ (15)	$ -	$ -		$ 1,444	$ (15)


	December 31, 2012

	Less than 12 Months		12 Months or Greater			Total

	Fair Value	Gross Unrealized Losses		Fair Value	Gross Unrealized Losses		Fair Value	Gross Unrealized Losses

	(dollars in thousands)
Securities Available for Sale:
State and municipal securities	436	$ (8 )		$ -	$ -		$ 436	$ (8 )
Mortgage-backed and related securities	1	-		-	-		1	-

	$ 437	$ (8 )		$ 0	$ -		$ 437	$ (8 )

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

At March 31, 2013, the four securities with unrealized losses had depreciated 1.00 percent from the Company’s amortized cost basis. At December 31, 2012, the two securities with unrealized losses had depreciated 1.90 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.

Upon acquisition of a security, the Company determines the appropriate impairment model that is applicable. If the security is a beneficial interest in securitized financial assets, the Company uses the beneficial interests in securitized financial assets impairment model. If the security is not a beneficial interest in securitized financial assets, the Company uses the debt and equity securities impairment model. The Company conducts periodic reviews to evaluate each security to determine whether an other-than-temporary impairment has occurred. The Company does not have any securities that have been classified as other-than-temporarily-impaired at March 31, 2013.