4. Investment Securities

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

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
September 30, 2012
U.S. Government sponsored enterprise (GSE) debt securities	$	39,423,142	$	419,253	$	2,610	$	39,839,785
U.S. Government securities		7,082,906		35,050		300		7,117,656
U.S. GSE preferred stock		42,360		9,017		0		51,377
	$	46,548,408	$	463,320	$	2,910	$	47,008,818
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
September 30, 2011
U.S. GSE debt securities	$	26,224,330	$	187,825	$	52,705	$	26,359,450
U.S. Government securities		5,010,100		35,350		0		5,045,450
U.S. GSE preferred stock		42,360		86,015		0		128,375
	$	31,276,790	$	309,190	$	52,705	$	31,533,275

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Securities HTM	Cost		Gains		Losses		Value*
September 30, 2012
States and political subdivisions	$	50,065,653	$	565,347	$	0	$	50,631,000
December 31, 2011
States and political subdivisions	$	29,702,159	$	586,841	$	0	$	30,289,000
September 30, 2011
States and political subdivisions	$	36,898,097	$	498,903	$	0	$	37,397,000

The scheduled maturities of debt securities AFS were as follows:

	Amortized		Fair
	Cost		Value
September 30, 2012
Due in one year or less	$	3,003,306	$	3,013,511
Due from one to five years		43,502,742		43,943,930
	$	46,506,048	$	46,957,441
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
September 30, 2011
Due in one year or less	$	8,031,513	$	8,060,834
Due from one to five years		22,202,917		22,352,436
Due from five to ten years		1,000,000		991,630
	$	31,234,430	$	31,404,900

The scheduled maturities of debt securities HTM were as follows:

	Amortized		Fair
	Cost		Value*
September 30, 2012
Due in one year or less	$	40,302,625	$	40,303,000
Due from one to five years		4,041,285		4,183,000
Due from five to ten years		2,286,741		2,428,000
Due after ten years		3,435,002		3,717,000
	$	50,065,653	$	50,631,000
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
September 30, 2011
Due in one year or less	$	27,402,959	$	27,403,000
Due from one to five years		4,902,641		5,027,000
Due from five to ten years		749,063		874,000
Due after ten years		3,843,434		4,093,000
	$	36,898,097	$	37,397,000

_______

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

There were no debt securities HTM in an unrealized loss position as of the balance sheet date.  Debt securities AFS with unrealized losses as of the balance sheet dates are presented in the table below.

	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
September 30, 2012
U.S. GSE debt securities	$	0	$	0	$	1,512,667	$	2,610	$	1,512,667	$	2,610
U.S. Government securities		1,057,928		300		0		0		1,057,928		300
	$	1,057,928	$	300	$	1,512,667	$	2,610	$	2,570,595	$	2,910
December 31, 2011
U.S. GSE debt securities	$	29,940,644	$	99,310	$	0	$	0	$	29,940,644	$	99,310
U.S. Government securities		999,766		848		0		0		999,766		848
	$	30,940,410	$	100,158	$	0	$	0	$	30,940,410	$	100,158
September 30, 2011
U.S. GSE debt securities	$	7,046,617	$	52,705	$	0	$	0	$	7,046,617	$	52,705
U.S. Government securities		0		0		0		0		0		0
	$	7,046,617	$	52,705	$	0	$	0	$	7,046,617	$	52,705

Debt securities in the table above consisted of one U.S. GSE debt securities and one U.S. Government securities at September 30, 2012, 21 U.S. GSE debt securities and one U.S. Government security at December 31, 2011, and four U.S. GSE debt securities at September 30, 2011.  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 September 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.