Investment Securities

12 Months Ended

Dec. 31, 2015

Schedule of Investments [Abstract]

Investment Securities

2. INVESTMENT SECURITIES

Debt and equity securities have been classified in the consolidated balance sheets according to management’s intent. The amortized costs of securities as shown in the consolidated balance sheets and their estimated fair values at December 31 were as follows:

Securities Available For Sale:

December 31, 2015	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
U.S. government agency securities	$	42,074,712	$	782,567	$	214,957	$	42,642,322
State and municipal securities		2,573,844		33,840		0		2,607,684
Residential mortgage-backed securities		3,601,949		140,934		1,438		3,741,445
Corporate notes		2,496,320		0		23,360		2,472,960
Total debt securities AFS		50,746,825		957,341		239,755		51,464,411
Equity securities		12,000		0		0		12,000
Total securities AFS	$	50,758,825	$	957,341	$	239,755	$	51,476,411

December 31, 2014	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
U.S. government agency securities	$	45,121,060	$	758,874	$	387,009	$	45,492,925
State and municipal securities		880,580		0		5,913		874,667
Residential mortgage-backed securities		4,757,738		215,276		1,370		4,971,644
Corporate notes		2,495,765		4,255		1,300		2,498,720
Total securities AFS	$	53,255,143	$	978,405	$	395,592	$	53,837,956

Securities Held to Maturity:

December 31, 2015	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
State and municipal securities	$	54,775,093	$	1,124,007	$	41,153	$	55,857,947
Residential mortgage-backed securities		6,113,711		227,041		0		6,340,752
Total securities HTM	$	60,888,804	$	1,351,048	$	41,153	$	62,198,699

December 31, 2014	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
State and municipal securities	$	53,058,749	$	958,434	$	87,772	$	53,929,411
Residential mortgage-backed securities		8,529,070		382,923		0		8,911,993
Total securities HTM	$	61,587,819	$	1,341,357	$	87,772	$	62,841,404

At December 31, 2015, securities with a carrying value of $74,772,674 and a market value of $75,959,402 were pledged as collateral for public deposits and other purposes as required by law. Of these amounts, approximately $26,000,000 was over pledged and could be released if necessary for liquidity needs. At December 31, 2014, securities with a carrying value of $64,233,906 and a market value of $65,166,684 were pledged as collateral for public deposits and other purposes as required by law. At December 31, 2015 we had both 1 – 4 family and multifamily mortgage loans and at December 31, 2014, we had only 1-4 family mortgage loans pledged to secure Federal Home Loan Bank (“FHLB”) advances. The FHLB requires the Bank to hold a minimum investment of stock, based on membership and the level of activity. As of December 31, 2015, this stock investment was $1,869,200.

There were no investments in obligations of any state or municipal subdivisions which exceeded 10% of the Corporation’s stockholders’ equity at December 31, 2015.

The amortized cost and estimated fair value of securities at December 31, 2015 and 2014, 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 penalties.

December 31, 2015

Available for Sale:	Amortized Cost		Estimated Fair Value
Amounts maturing in:
One year or less	$	0	$	0
After one through five years		22,374,572		22,310,228
After five through ten years		22,553,504		23,222,962
After ten years		5,818,749		5,931,221
Total debt securities AFS		50,746,825		51,464,411
Equity securities		12,000		12,000
Total securities AFS	$	50,758,825	$	51,476,411

Held to Maturity:	Amortized Cost		Estimated Fair Value
Amounts maturing in:
One year or less	$	3,956,629	$	3,968,196
After one through five years		27,302,169		27,617,796
After five through ten years		21,412,080		22,253,863
After ten years		8,217,926		8,358,844
Total securities HTM	$	60,888,804	$	62,198,699

December 31, 2014

Available for Sale:	Amortized Cost		Estimated Fair Value
Amounts maturing in:
One year or less	$	0	$	0
After one through five years		18,453,816		18,260,779
After five through ten years		29,521,793		30,216,568
After ten years		5,279,534		5,360,609
Total securities AFS	$	53,255,143	$	53,837,956

Held to Maturity:	Amortized Cost		Estimated Fair Value
Amounts maturing in:
One year or less	$	3,160,887	$	3,196,256
After one through five years		28,494,335		28,780,760
After five through ten years		22,246,060		23,036,240
After ten years		7,686,537		7,828,148
Total securities HTM	$	61,587,819	$	62,841,404

For the years ended December 31, 2015, 2014, and 2013, proceeds from sales of securities available for sale amounted to $4,044,500, $2,208,318, and $442,600, respectively. In 2015, $516,746 of securities held to maturity were sold. Reported net realized gains amounted to $3,587, $293,508, and $311,800, respectively. The net gain in 2015 was due to selling $4,044,500 in short-term U. S. government agency securities and $516,746 in mortgage-backed securities in order to provide liquidity and remove small lots of mortgage-backed securities. These small lots of held to maturity mortgage-backed securities sold were paid down by over 85% of face value. The net gain in 2014 was due to the sale of $2,208,318 of small lots of mortgage-backed securities and the remaining government sponsored entity preferred stock. The net gain in 2013 was due to the sale of $442,600 of a government sponsored entity preferred stock.

Information pertaining to securities with gross unrealized losses aggregated by investment category and length of time that individual securities have been in continuous loss position, follows:

December 31, 2015	Less Than Twelve Months				Twelve Months or More
	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
Securities Available for Sale
Temporarily impaired debt securities:
U.S. government agency securities	$	73,907	$	11,885,323	$	141,050	$	5,858,950
State and municipal securities		0		0		0		0
Residential mortgage-backed securities		1,438		441,997		0		0
Corporate notes		22,360		1,973,960		1,000		499,000
Total debt securities available for sale	$	97,705	$	14,301,280	$	142,050	$	6,357,950
Securities Held to Maturity
Temporarily impaired debt securities:
State and municipal securities	$	26,435	$	7,250,634	$	14,718	$	994,476
Residential mortgage-backed securities		0		0		0		0
Total securities held to maturity	$	26,435	$	7,250,634	$	14,718	$	994,476

December 31, 2014	Less Than Twelve Months				Twelve Months or More
	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
Securities Available for Sale
Temporarily impaired debt securities:
U.S. government agency securities	$	17,172	$	2,630,919	$	369,837	$	19,667,408
State and municipal securities		0		0		5,913		874,667
Residential mortgage-backed securities		1,300		498,700		0		0
Corporate notes		0		0		1,370		594,923
Total securities available for sale	$	18,472	$	3,129,619	$	377,120	$	21,136,998
Securities Held to Maturity
Temporarily impaired debt securities:
State and municipal securities	$	34,956	$	9,199,455	$	52,816	$	4,130,041
Residential mortgage-backed securities		0		0		0		0
Total securities held to maturity	$	34,956	$	9,199,455	$	52,816	$	4,130,041

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Corporation to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

At December 31, 2015, thirty seven debt securities had unrealized losses with aggregate depreciation of .96% from the Corporation’s amortized cost basis. At December 31, 2014, fifty four debt securities had unrealized losses with aggregate depreciation of 1.27%. These unrealized losses relate principally to current interest rates for similar types of securities. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government, its agencies, or other governments, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition. Management has the ability to hold debt securities until maturity, or for the foreseeable future if classified as available for sale. Also, no declines in debt securities are deemed to be other-than-temporary.