4. Investment Securities

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements

4. Investment Securities

Note 4.  Investment Securities

Securities available-for-sale (AFS) and held-to-maturity (HTM) as of the balance sheet dates consisted of the following:

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Securities AFS	Cost		Gains		Losses		Value
June 30, 2012
U.S. Government sponsored enterprise (GSE) debt securities	$	52,544,543	$	390,057	$	4,979	$	52,929,621
U.S. Government securities		7,030,128		30,232		1,451		7,058,909
U.S. GSE preferred stock		42,360		70,965		0		113,325
	$	59,617,031	$	491,254	$	6,430	$	60,101,855
December 31, 2011
U.S. GSE debt securities	$	60,846,954	$	215,595	$	99,310	$	60,963,239
U.S. Government securities		5,006,979		37,424		848		5,043,555
U.S. GSE preferred stock		42,360		49,763		0		92,123
	$	65,896,293	$	302,782	$	100,158	$	66,098,917
June 30, 2011
U.S. GSE debt securities	$	22,191,612	$	129,836	$	0	$	22,321,448
U.S. Government securities		5,018,844		38,868		0		5,057,712
U.S. GSE preferred stock		42,360		148,808		0		191,168
	$	27,252,816	$	317,512	$	0	$	27,570,328

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Securities HTM	Cost		Gains		Losses		Value*
June 30, 2012
States and political subdivisions	$	24,026,422	$	598,578	$	0	$	24,625,000
December 31, 2011
States and political subdivisions	$	29,702,159	$	586,841	$	0	$	30,289,000
June 30, 2011
States and political subdivisions	$	21,939,781	$	684,219	$	0	$	22,624,000

The scheduled maturities of debt securities AFS were as follows:

	Amortized		Fair
	Cost		Value
June 30, 2012
Due in one year or less	$	3,007,965	$	3,015,864
Due from one to five years		56,566,706		56,972,666
	$	59,574,671	$	59,988,530
December 31, 2011
Due in one year or less	$	5,018,549	$	5,035,711
Due from one to five years		58,835,384		58,970,925
Due from five to ten years		2,000,000		2,000,158
	$	65,853,933	$	66,006,794
June 30, 2011
Due in one year or less	$	10,075,075	$	10,117,753
Due from one to five years		17,135,381		17,261,407
	$	27,210,456	$	27,379,160

The scheduled maturities of debt securities HTM were as follows:

	Amortized		Fair
	Cost		Value*
June 30, 2012
Due in one year or less	$	14,724,739	$	14,725,000
Due from one to five years		4,082,893		4,232,000
Due from five to ten years		2,016,088		2,166,000
Due after ten years		3,202,702		3,502,000
	$	24,026,422	$	24,625,000
December 31, 2011
Due in one year or less	$	20,589,247	$	20,589,000
Due from one to five years		4,534,944		4,682,000
Due from five to ten years		822,735		969,000
Due after ten years		3,755,233		4,049,000
	$	29,702,159	$	30,289,000
June 30, 2011
Due in one year or less	$	12,747,547	$	12,747,000
Due from one to five years		3,955,564		4,127,000
Due from five to ten years		1,375,793		1,547,000
Due after ten years		3,860,877		4,203,000
	$	21,939,781	$	22,624,000

*Method used to determine fair value on HTM securities rounds values to nearest thousand. 

Debt securities with unrealized losses are presented in the table below.  At June 30, 2011 the Company had no debt securities with an unrealized loss.  There were no debt securities in an unrealized loss position of 12 months or more as of the dates presented.

	Less than 12 months
	Fair		Unrealized
	Value		Loss
June 30, 2012
U.S. GSE debt securities	$	3,533,963	$	4,979
U.S. Government securities		2,010,281		1,451
	$	5,544,244	$	6,430
December 31, 2011
U.S. GSE debt securities	$	29,940,644	$	99,310
U.S. Government securities		999,766		848
	$	30,940,410	$	100,158

Debt securities represented consisted of three U.S. GSE debt securities and two U.S. Government securities at June 30, 2012 and 21 U.S. GSE debt securities and one U.S. Government security at December 31, 2011 in an unrealized loss position.  These unrealized losses were principally attributable to changes in prevailing interest rates for similar types of securities and not deterioration in the creditworthiness of the issuer.

At June 30, 2012 and 2011 and December 31, 2011, the Company’s AFS portfolio included two classes of Fannie Mae preferred stock with an aggregate cost basis of $42,360, which reflects cumulative other-than-temporary impairment write downs in prior periods of $833,778.

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market conditions, or adverse developments relating to the issuer, warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than the carrying value, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment for a period of time sufficient to allow for any anticipated recovery in fair value.  In analyzing an issuer's financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies or other adverse developments in the status of the securities have occurred, and the results of reviews of the issuer's financial condition.