INVESTMENT SECURITIES

12 Months Ended

Dec. 31, 2011

INVESTMENT SECURITIES [Abstract]

INVESTMENT SECURITIES

NOTE B.  INVESTMENT SECURITIES

The amortized cost and approximate fair value of investment securities classified as held-to-maturity at December 31, 2011, are summarized as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Obligations of State and Political Subdivisions	$	20,831,257	$	1,441,679	$	(19,585	)	$	22,253,351
Mortgage-Backed Securities		4,998,020		395,449		-			5,393,469
Total	$	25,829,277	$	1,837,128	$	(19,585	)	$	27,646,820

The amortized cost and approximate fair value of investment securities classified as available-for-sale at December 31, 2011, are summarized as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Obligations of State and Political Subdivisions	$	8,624,776	$	756,454	$	-		$	9,381,230
Mortgage-Backed Securities		68,483,213		1,581,303		(58,006	)		70,006,510
Obligations of Other U.S.Government Sponsored Agencies		12,000,000		140,120		-			12,140,120
Total	$	89,107,989	$	2,477,877	$	(58,006	)	$	91,527,860

The amortized cost and approximate fair value of investment securities classified as held-to-maturity at December 31, 2010, are summarized as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Obligations of State and Political Subdivisions	$	31,747,346	$	558,246	$	(200,170	)	$	32,105,422
Mortgage-Backed Securities		8,013,410		490,931		-			8,504,341
Total	$	39,760,756	$	1,049,177	$	(200,170	)	$	40,609,763

The amortized cost and approximate fair value of investment securities classified as available-for-sale at December 31, 2010, are summarized as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Obligations of State and Political Subdivisions	$	7,366,392	$	95,289	$	(289,191	)	$	7,172,490
Mortgage-Backed Securities		62,346,074		3,421,198		(60,622	)		65,706,650
Obligations of Other U.S.Government Sponsored Agencies		24,538,510		42,797		(152,037	)		24,429,270
Total	$	94,250,976	$	3,559,284	$	(501,850	)	$	97,308,410

The aggregate fair value and aggregate unrealized losses on securities whose fair values were below book values as of December 31, 2011, are summarized below.  Due to the nature of the investment and current market prices, these unrealized losses are considered a temporary impairment of the securities.

As of December 31, 2011, there was one security included in held-to-maturity and two securities included in available-for-sale.

	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loss
Held-to-Maturity:
Obligations of State and Political Subdivisions (1)	$	-	$	-		$	470,415	$	(19,585	)	$	470,415	$	(19,585	)
Total	$	-	$	-		$	470,415	$	(19,585	)	$	470,415	$	(19,585	)
Available for Sale:
Mortgaged-backed Securities (2)	$	7,509,212	$	(58,006	)	$	-	$	-		$	7,509,212	$	(58,006	)
Total	$	7,509,212	$	(58,006	)	$	-	$	-		$	7,509,212	$	(58,006	)

The aggregate fair value and aggregate unrealized losses on securities whose fair values were below book values as of December 31, 2010, are summarized below.  Due to the nature of the investment and current market prices, these unrealized losses are considered a temporary impairment of the securities.

As of December 31, 2010, there were twenty-one securities included in held-to-maturity and twenty-three securities included in available-for-sale.

	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loss
Held-to-Maturity:
Obligations of State and Political Subdivisions (21)	$	8,828,777	$	(168,632	)	$	468,462	$	(31,538	)	$	9,297,239	$	(200,170	)
Total	$	8,828,777	$	(168,632	)	$	468,462	$	(31,538	)	$	9,297,239	$	(200,170	)
Available for Sale:
Obligations of State and Political Subdivisions (12)	$	1,038,994	$	(19,365	)	$	2,637,651	$	(269,826	)	$	3,676,645	$	(289,191	)
Mortgaged-backed Securities (4)		9,440,517		(60,622	)		-		-			9,440,517		(60,622	)
Obligations of Other U.S. Government Sponsored Agencies (7)		17,857,740		(152,037	)		-		-			17,857,740		(152,037	)
Total	$	28,337,251	$	(232,024	)	$	2,637,651	$	(269,826	)	$	30,974,902	$	(501,850	)

The unrealized losses in the Company's investment portfolio, caused by interest rate increases, are not credit issues and are deemed to be temporary.  Cash flows from mortgage-backed securities and other U.S. government sponsored agencies are guaranteed by the full faith and credit of the United States or by an agency of the United States government.   The Company does not have the intent to sell and, more likely than not, will not be required to sell, these securities prior to maturity.  Thus the Company is not required to record any loss on the securities.  However, asset/liability strategies may occasionally result in the Company adjusting the available-for-sale portfolio duration through sales of a portion of the portfolio.

The amortized cost and approximate fair value of investment debt securities at December 31, 2011, by contractual maturity are shown below.  Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.  Yields on tax-exempt municipal securities have been computed on a tax equivalent basis which takes into account the coupon rate paid by the issuer adjusted by any premium paid or discount received on the security at settlement date.

	Mortgage Backed Securities
	Held-to-Maturity							Available-for-Sale
	Weighted Average Yield			Amortized Cost		Fair Value		Weighted Average Yield			Amortized Cost		Fair Value
Due after 5 years through 10		5.360	%	$	499,252	$	537,318		4.750	%	$	1,452,382	$	1,547,523
Due after 10 years		5.300	%		4,498,768		4,856,151		2.830	%		67,030,831		68,458,987
Total		5.306	%	$	4,998,020	$	5,393,469		2.871	%	$	68,483,213	$	70,006,510

	Obligations of Other U.S. Government Sponsored Entities
	Held-to-Maturity						Available-for-Sale
	Weighted Average Yield		Amortized Cost		Fair Value		Weighted Average Yield			Amortized Cost		Fair Value
Due after 1 year through 5		-	$	-	$	-		1.080	%	$	12,000,000	$	12,140,120
Total		-	$	-	$	-		1.080	%	$	12,000,000	$	12,140,120

	Obligations of State and Political Subdivisions
	Held-to-Maturity							Available-for-Sale
	Weighted Average Yield			Amortized Cost		Fair Value		Weighted Average Yield			Amortized Cost		Fair Value
Due in 1 year or less		9.860	%	$	1,085,000	$	1,085,000		-		$	-	$	-
Due after 1 year through 5		6.500	%		4,164,421		4,454,831		2.660	%		386,714		391,083
Due after 5 years through 10		5.954	%		2,039,079		2,227,297		5.150	%		954,169		1,053,931
Due after ten years		6.280	%		13,542,757		14,486,223		6.650	%		7,283,893		7,936,216
Total		6.478	%	$	20,831,257	$	22,253,351		6.305	%	$	8,624,776	$	9,381,230

Equity securities at December 31, 2011 and 2010, include the following: FHLB stock of $812,700 and $1,010,700 for 2011 and 2010, respectively; Federal Reserve Bank stock of $521,700 for 2011 and 2010; First National Bankers Bank stock in the amount of $47,800 for 2011 and 2010; an investment in Enterprise Corporation of the Delta Investments, LLC of $100,000 in 2011 and 2010 and a $155,000 investment in B&K Statutory Trust for both years. Redemptions of stock in the FHLB during 2011 and 2010 amounted to $375,700 and $2,094,000, respectively, due to the declining borrowed funds level.  The FHLB, Federal Reserve Bank and First National Bankers Bank stocks are considered restricted stock as only banks, which are members of these organizations, may acquire or redeem them.  The stock is redeemable at its face value; therefore, there are no gross unrealized gains or losses associated with these investments.

Investment securities with an amortized cost of approximately $96,034,000 (approximate fair value $100,117,000) at December 31, 2011, and approximately $107,399,000 (approximate fair value $111,333,000) at December 31, 2010, were pledged to collateralize public deposits and for other purposes as required or permitted by law or agreement.