INVESTMENTS

9 Months Ended

Sep. 30, 2013

Investments, Debt and Equity Securities [Abstract]

INVESTMENTS

6. INVESTMENTS

The amortized cost and approximate fair value of securities, all of which are classified as available-for-sale, are as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
September 30, 2013:
U.S. government and agencies	$	11,749,908	$	134,053	$	(367,564	)	$	11,516,397
Mortgage-backed securities (government-
sponsored enterprises - residential)		52,122,279		512,933		(886,094	)		51,749,118
Municipal bonds		50,471,758		1,216,267		(1,522,802	)		50,165,223
	$	114,343,945	$	1,863,253	$	(2,776,460	)	$	113,430,738
December 31, 2012:
U.S. government and agencies	$	10,090,835	$	248,601	$	(10,556	)	$	10,328,880
Mortgage-backed securities (government-
sponsored enterprises - residential)		50,917,555		1,134,245		(95,319	)		51,956,481
Municipal bonds		49,990,655		3,264,169		(152,362	)		53,102,462
	$	110,999,045	$	4,647,015	$	(258,237	)	$	115,387,823

The amortized cost and fair value of available-for-sale securities at September 30, 2013, by contractual maturity, are shown below.  Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized		Fair
	Cost		Value
Within one year	$	100,325	$	100,568
One to five years		9,966,022		10,320,843
Five to ten years		21,418,179		21,453,903
After ten years		30,737,140		29,806,306
		62,221,666		61,681,620
Mortgage-backed securities (government-
sponsored enterprises - residential)		52,122,279		51,749,118
	$	114,343,945	$	113,430,738

The carrying value of securities pledged as collateral, to secure public deposits and for other purposes, was $20,806,000 at September 30, 2013 and $24,371,000 at December 31, 2012.

The book value of securities sold under agreement to repurchase amounted to $9,565,000 at September 30, 2013 and $13,706,000 at December 31, 2012.

Gross gains of $860,000 and $926,000 and gross losses of $0 resulting from sales of available-for-sale securities were realized during the nine months ended September 30, 2013 and 2012, respectively.

Certain investments in debt securities are reported in the financial statements at an amount less than their historical cost.  Total fair value of these investments at September 30, 2013 and December 31, 2012 were $59,133,000 and $23,956,000, respectively, which is approximately 52.1% and 20.8% of the Company’s available-for-sale investment portfolio.

Management believes the declines in fair value for these securities are temporary.  Should the impairment of any of these securities become other than temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified.

The following table shows the gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous loss position, at September 30, 2013 and December 31, 2012.

	Less Than Twelve Months					Twelve Months or More					Total
	Gross					Gross					Gross
	Unrealized			Fair		Unrealized			Fair		Unrealized			Fair
	Losses			Value		Losses			Value		Losses			Value
September 30, 2013:
Municipal bonds	$	(1,506,532	)	$	23,374,901	$	(16,270	)	$	448,178	$	(1,522,802	)	$	23,823,079
U.S. government and agencies		(367,564	)		6,369,839		-			-		(367,564	)		6,369,839
Subtotal		(1,874,096	)		29,744,740		(16,270	)		448,178		(1,890,366	)		30,192,918
Mortgage-backed securities
(government sponsored
enterprises - residential)		(886,094	)		28,939,697		-			-		(886,094	)		28,939,697
Total	$	(2,760,190	)	$	58,684,437	$	(16,270	)	$	448,178	$	(2,776,460	)	$	59,132,615
December 31, 2012:
Municipal bonds	$	(152,362	)	$	7,237,453	$	-		$	-	$	(152,362	)	$	7,237,453
U.S. government and agencies		(10,556	)		545,291		-			-		(10,556	)		545,291
Subtotal		(162,918	)		7,782,744		-			-		(162,918	)		7,782,744
Mortgage-backed securities
(government sponsored
enterprises - residential)		(95,319	)		16,172,999		-			-		(95,319	)		16,172,999
Total	$	(258,237	)	$	23,955,743	$	-		$	-	$	(258,237	)	$	23,955,743

The unrealized losses on the Company’s investments in municipal bonds, U.S. government and agencies, and mortgage-backed securities were caused by interest rate increases.  The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments.  Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at September 30, 2013 and December 31, 2012.