INVESTMENTS

6 Months Ended

Jun. 30, 2014

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
June 30, 2014:
U.S. government and agencies	$	10,630,874	$	103,887	$	(195,812	)	$	10,538,949
Mortgage-backed securities (government- sponsored enterprises - residential)		48,365,899		416,864		(426,560	)		48,356,203
Municipal bonds		47,998,513		1,598,673		(680,891	)		48,916,295
	$	106,995,286	$	2,119,424	$	(1,303,263	)	$	107,811,447
December 31, 2013:
U.S. government and agencies	$	10,710,675	$	114,936	$	(405,535	)	$	10,420,076
Mortgage-backed securities (government- sponsored enterprises - residential)		49,486,337		219,222		(1,359,904	)		48,345,655
Municipal bonds		50,889,046		1,053,134		(1,723,314	)		50,218,866
	$	111,086,058	$	1,387,292	$	(3,488,753	)	$	108,984,597

The amortized cost and fair value of available-for-sale securities at June 30, 2014, 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	$	95,658	$	96,307
One to five years		7,785,004		8,081,775
Five to ten years		25,427,676		25,880,922
After ten years		25,321,049		25,396,240
		58,629,387		59,455,244
Mortgage-backed securities (government- sponsored enterprises - residential)		48,365,899		48,356,203
	$	106,995,286	$	107,811,447

The carrying value of securities pledged as collateral, to secure public deposits and for other purposes, was $20,838,000 at June 30, 2014 and $20,420,000 at December 31, 2013.

The carrying value of securities sold under agreement to repurchase amounted to $8,700,000 at June 30, 2014 and $9,541,000 at December 31, 2013.

Gross gains of $62,000 and $105,000 and gross losses of $0 resulting from sales of available-for-sale securities were realized during the three months ended June 30, 2014 and 2013, respectively. Gross gains of $182,000 and $689,000 and gross losses of $20,000 and $0 resulting from sales of available-for-sale securities were realized during the six months ended June 30, 2014 and 2013, 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 June 30, 2014 and December 31, 2013 were $46,770,000, and $71,198,000, respectively, which were approximately 43% and 65% 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 June 30, 2014 and December 31, 2013.

	Less Than Twelve Months					Twelve Months or More					Total
	Gross					Gross					Gross
	Unrealized			Fair		Unrealized			Fair		Unrealized			Fair
	Losses			Value		Losses			Value		Losses			Value
June 30, 2014:
Municipal bonds	$	(17,144	)	$	1,926,262	$	(663,747	)	$	17,230,583	$	(680,891	)	$	19,156,845
U.S. government agencies		-			-		(195,812	)		4,948,380		(195,812	)		4,948,380
Mortgage-backed securities (government sponsored
enterprises - residential)		(5,089	)		1,833,883		(421,471	)		20,831,355	$	(426,560	)	$	22,665,238
Total	$	(22,233	)	$	3,760,145	$	(1,281,030	)	$	43,010,318	$	(1,303,263	)	$	46,770,463
December 31, 2013:
Municipal bonds	$	(1,462,733	)	$	22,534,325	$	(260,581	)	$	2,759,523	$	(1,723,314	)	$	25,293,848
U.S. government agencies		(367,005	)		5,824,808		(38,530	)		470,324		(405,535	)		6,295,132
Mortgage-backed securities (government sponsored
enterprises - residential)		(1,065,542	)		33,521,545		(294,362	)		6,087,526		(1,359,904	)		39,609,071
Total	$	(2,895,280	)	$	61,880,678	$	(593,473	)	$	9,317,373	$	(3,488,753	)	$	71,198,051

The unrealized losses on the Company’s investments in municipal bonds, U.S. government 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 June 30, 2014 and December 31, 2013.