Investment Securities

9 Months Ended

Sep. 30, 2016

Schedule of Investments [Abstract]

Investment Securities

NOTE 3

Investment Securities

Debt and equity securities have been classified in the consolidated balance sheets according to management’s intent. The amortized cost of securities as shown in the consolidated balance sheets and their estimated fair values at September 30, 2016, and December 31, 2015, were as follows:

Securities Available For Sale:

September 30, 2016	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
U.S. government agency securities	$	34,154,554	$	1,629,122	$	3,426	$	35,780,250
State and municipal securities		4,068,726		81,252		1,089		4,148,889
Residential mortgage-backed securities		2,650,448		129,020		0		2,779,468
Corporate notes		2,496,725		21,375		945		2,517,155
Total debt securities AFS		43,370,453		1,860,769		5,460		45,225,762
Equity securities		112,380		0		0		112,380
Total securities AFS	$	43,482,833	$	1,860,769	$	5,460	$	45,338,142

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

Securities Held to Maturity:

September 30, 2016	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
State and municipal securities	$	51,882,323	$	1,412,588	$	7,739	$	53,287,172
Residential mortgage-backed securities		4,506,380		206,096		0		4,712,476
Total securities HTM	$	56,388,703	$	1,618,684	$	7,739	$	57,999,648

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

The amortized cost and estimated fair value of securities at September 30, 2016, and December 31, 2015, 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.

September 30, 2016
Available for Sale:	Amortized Cost		Estimated Fair Value
Amounts maturing in:
One year or less	$	0	$	0
After one through five years		6,934,107		7,127,904
After five through ten years		32,668,949		34,209,965
After ten years		3,767,397		3,887,893
Total debt securities AFS		43,370,453		45,225,762
Equity securities		112,380		112,380
Total securities AFS	$	43,482,833	$	45,338,142
Held to Maturity:		Amortized Cost		Estimated Fair Value
Amounts maturing in:
One year or less	$	6,367,329	$	6,375,231
After one through five years		26,020,754		26,516,943
After five through ten years		17,351,665		18,169,853
After ten years		6,648,955		6,937,621
Total securities HTM	$	56,388,703	$	57,999,648

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

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:

September 30, 2016	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	$	3,426	$	994,080	$	0	$	0
State and municipal securities		1,089		704,371		0		0
Residential mortgage-backed securities		0		0		0		0
Corporate notes		0		0		945		499,055
Total debt securities available for sale	$	4,515	$	1,698,451	$	945	$	499,055
Securities Held to Maturity
Temporarily impaired debt securities:
State and municipal securities	$	7,739	$	5,888,665	$	0	$	0
Residential mortgage-backed securities		0		0		0		0
Total securities held to maturity	$	7,739	$	5,888,665	$	0	$	0

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

During the three months ended September 30, 2016, we sold one available for sale U.S. Government Agency security in the amount of $1,549,453, resulting in a gain of $57,052. In the first half of 2016, we sold available for sale U.S. Government Agency securities in the amount of $10,036,609 resulting in a net realized gain of $76,524. Also, available for sale mortgage-backed securities in the amount of $347,572 and held to maturity mortgage-backed securities in the amount of $576,834 were sold in the first half of 2016 for net gains of $10,458 and $24,885, respectively. These transactions occurred 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 to over 85% of face value.

During the third quarter of 2015, no investment securities were sold. In the first half of 2015, a $3,587 gain on the sale of securities was recognized as a result of selling $4,044,500 million 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 to over 85% of face value.

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 September 30, 2016, nineteen debt securities with unrealized losses have depreciated 0.2% from the Corporation’s amortized cost basis. 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.