4. Investment Securities

9 Months Ended

Sep. 30, 2013

Notes to Financial Statements

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
September 30, 2013
U.S. Government sponsored enterprise (GSE) debt securities	$	28,400,765	$	137,888	$	149,042	$	28,389,611
U.S. Government securities		7,048,987		14,875		1,402		7,062,460
	$	35,449,752	$	152,763	$	150,444	$	35,452,071
December 31, 2012
U.S. GSE debt securities	$	33,552,376	$	247,029	$	13,936	$	33,785,469
U.S. Government securities		7,073,445		28,217		1,072		7,100,590
	$	40,625,821	$	275,246	$	15,008	$	40,886,059
September 30, 2012
U.S. 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

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Securities HTM	Cost		Gains		Losses		Value*
September 30, 2013
States and political subdivisions	$	39,218,785	$	391,215	$	0	$	39,610,000
December 31, 2012
States and political subdivisions	$	41,865,555	$	425,445	$	0	$	42,291,000
September 30, 2012
States and political subdivisions	$	50,065,653	$	565,347	$	0	$	50,631,000

The scheduled maturities of debt securities AFS were as follows:

	Amortized		Fair
	Cost		Value
September 30, 2013
Due in one year or less	$	6,611,216	$	6,621,105
Due from one to five years		28,838,536		28,830,966
	$	35,449,752	$	35,452,071
December 31, 2012
Due in one year or less	$	4,088,947	$	4,104,324
Due from one to five years		36,536,874		36,781,735
	$	40,625,821	$	40,886,059
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

The scheduled maturities of debt securities HTM were as follows:

	Amortized		Fair
	Cost		Value*
September 30, 2013
Due in one year or less	$	29,860,867	$	29,861,000
Due from one to five years		3,649,393		3,747,000
Due from five to ten years		2,441,097		2,539,000
Due after ten years		3,267,428		3,463,000
	$	39,218,785	$	39,610,000
December 31, 2012
Due in one year or less	$	32,741,241	$	32,741,000
Due from one to five years		3,849,709		3,956,000
Due from five to ten years		1,916,266		2,023,000
Due after ten years		3,358,339		3,571,000
	$	41,865,555	$	42,291,000
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

*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, 2013
U.S. GSE debt securities	$	9,167,719	$	149,042	$	0	$	0	$	9,167,719	$	149,042
U.S. Government securities		1,038,906		1,402		0		0		1,038,906		1,402
	$	10,206,625	$	150,444	$	0	$	0	$	10,206,625	$	150,444
December 31, 2012
U.S. GSE debt securities	$	8,715,492	$	13,936	$	0	$	0	$	8,715,492	$	13,936
U.S. Government securities		1,052,639		1,072		0		0		1,052,639		1,072
	$	9,768,131	$	15,008	$	0	$	0	$	9,768,131	$	15,008
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

Debt securities in the table above consisted of nine U.S. GSE debt securities and one U.S. Government security at September 30, 2013, eight U.S. GSE debt securities and one U.S. Government security at December 31, 2012, and one U.S. GSE debt security and one U.S. Government security at September 30, 2012.  The unrealized losses for all periods presented were principally attributable to changes in prevailing interest rates for similar types of securities and not deterioration in the creditworthiness of the issuer.

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.  As of September 30, 2013, there were no declines in the fair value of any of the securities reflected in the table above that were deemed by management to be other than temporary.