Note 3 - Investment Securities

9 Months Ended

Sep. 30, 2015

Notes

Note 3 - Investment Securities

Note 3 – Investment Securities

Debt securities available-for-sale are carried at estimated fair value. Debt securities designated as "Held to Maturity" are carried at amortized cost based on Management's intent and ability to hold such securities to maturity.  The amortized cost and estimated fair values of these debt securities were as follows:

	As of September 30, 2015		As of December 31, 2014
	Amortized Cost	Estimated Fair Value	Amortized Cost	Estimated Fair Value
Available-for-Sale:
Obligations of states and political subdivisions	$131,733,740	$135,285,287	$127,901,002	$132,428,086
Corporate securities	130,316	339,755	130,316	418,987
	$131,864,056	$135,625,042	$128,031,318	$132,847,073
Held to Maturity:
Obligations of states and political subdivisions	$17,111,821	$17,349,581	$22,762,252	$23,129,621

Gross unrealized losses on investment securities totaled $597,104 and $480,517 at September 30, 2015 and December 31, 2014, respectively.  The following table provides an analysis of investment securities in an unrealized loss position for which other-than-temporary impairments have not been recognized as of September 30, 2015 and December 31, 2014:

	Less than 12 Months		12 Months or Longer		Total
September 30, 2015	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
Available for Sale:
Obligations of states and political subdivisions	$21,466,766	$300,876	$4,595,417	$210,993	$26,062,183	$511,869
Held to Maturity:
Obligations of states and political subdivisions	2,474,816	29,007	1,423,703	56,228	3,898,519	85,235
Overall Total	$23,941,582	$329,883	$6,019,120	$267,221	$29,960,702	$597,104

	Less than 12 Months		12 Months or Longer		Total
December 31, 2014	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
Available for Sale:
Obligations of states and political subdivisions	$ 6,047,595	$ 115,227	$ 12,257,317	$ 242,701	$ 18,304,912	$ 357,928
Held to Maturity:
Obligations of states and political subdivisions	1,970,828	45,586	1,387,733	77,003	3,358,561	122,589
Overall Total	$ 8,018,423	$ 160,813	$ 13,645,050	$ 319,704	$ 21,663,473	$ 480,517

The previous two tables represent 39 and 32 investments held by the Company at September 30, 2015 and December 31, 2014, respectively, the majority of which are rated “A” or higher by Standard & Poor’s.  The unrealized losses on the Company’s investments listed in the above table were primarily the result of interest rate and market fluctuations.  Based on the credit ratings of these investments, along with the consideration of whether the Company has the intent to sell or will be more likely than not required to sell the applicable investment before recovery of amortized cost basis, the Company does not consider the impairment of any of these investments to be other-than-temporary at September 30, 2015 or December 31, 2014.

The Company’s insurance subsidiaries internally designate certain investments as restricted to cover their policy reserves and loss reserves.  Funds are held in separate trusts for the benefit of each insurance subsidiary at U.S. Bank National Association ("US Bank").  US Bank serves as trustee under a trust agreement with the Company's property and casualty insurance company subsidiary ("Frandisco P&C"), as grantor, and American Bankers Insurance Company of Florida, as beneficiary.  At September 30, 2015, this trust held $22.3 million in available-for-sale investment securities at market value and $5.9 million in held-to-maturity investment securities at amortized cost.  US Bank also serves as trustee under a trust agreement with the Company's life insurance subsidiary (“Frandisco Life”), as grantor, and American Bankers Life Assurance Company, as beneficiary.  At September 30, 2015, the trust for Frandisco Life held $2.9 million in available-for-sale investment securities at market value and $1.0 million in held-to-maturity investment securities at amortized cost.  The amounts required to be in each Trust change as required reserves change.  All earnings on assets in the trusts are remitted to Frandisco P&C and Frandisco Life, respectively.  Any charges associated with the trust are paid by the beneficiaries of each trust.