NOTE 4 – SECURITIES

	December 31, 2011
	Amortized		Gross Unrealized		Gross Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
Securities available for sale (AFS)
Asset-backed securities issued by GSEs
Residential MBS	$	2,412,959	$	235,084	$	-	$	2,648,043
Residentail CMOs		34,848,180		248,508		34,616		35,062,072
Corporate equity securities		37,310		241		289		37,262
Bond mutual funds		3,840,473		239,762		-		4,080,235
Total securities available for sale	$	41,138,922	$	723,595	$	34,905	$	41,827,612

Securities held to maturity (HTM)
Asset-backed securities issued by GSEs
Residential MBS	$	35,929,199	$	854,497	$	10,960	$	36,772,736
Residential CMOs		106,998,467		1,104,141		27,411		108,075,197
Asset-backed securities issued by Others
Residential CMOs		9,839,222		15,364		1,421,477		8,433,109
Total debt securities held to maturity		152,766,888		1,974,002		1,459,848		153,281,042

U.S. government obligations		749,951		-		-		749,951
Total securities held to maturity	$	153,516,839	$	1,974,002	$	1,459,848	$	154,030,993

	December 31, 2010
	Amortized		Gross Unrealized		Gross Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
Securities available for sale (AFS)
Asset-backed securities issued by GSEs
Residential MBS	$	3,246,588	$	257,627	$	-	$	3,504,215
Residential CMOs		27,081,220		503,511		-		27,584,731
Corporate equity securities		37,310		80		-		37,390
Bond mutual funds		3,697,208		122,681		-		3,819,889
Total securities available for sale	$	34,062,326	$	883,899	$	-	$	34,946,225

Securities held to maturity (HTM)
Asset-backed securities issued by GSEs
Residential MBS	$	33,252,667	$	453,900	$	518,124	$	33,188,443
Residential CMOs		80,519,344		1,307,909		264,146		81,563,107
Asset-backed securities issued by Others
Residential CMOs		12,463,500		132,928		1,709,386		10,887,042
Total debt securities held to maturity		126,235,511		1,894,737		2,491,656		125,638,592

U.S. government obligations		752,805		-		-		752,805
Total securities held to maturity	$	126,988,316	$	1,894,737	$	2,491,656	$	126,391,397

At December 31, 2011, certain asset-backed securities with a carrying value of $26.4 million were pledged to secure certain deposits. At December 31, 2011, asset-backed securities with a carrying value of $14.0 million were pledged as collateral for advances from the Federal Home Loan Bank of Atlanta.

At December 31, 2011, the AFS and HTM asset-backed securities investment portfolio was $190,477,003, or 98%, of the Company’s total AFS and HTM portfolios. Ninety-six percent of the asset-backed securities portfolio was rated AAA by Standard & Poor’s or equivalent credit rating from other major rating agency. AFS asset-backed securities issued by GSEs had an average life of 1.65 years and average duration of 1.61 years and are guaranteed by their issuer as to credit risk. HTM asset-backed securities issued by GSEs had an average life of 2.72 years and average duration of 2.57 years and are guaranteed by their issuer as to credit risk.

At December 31, 2011, the AFS investment portfolio had a fair value of $41,827,612 with unrealized losses from their amortized cost of $34,905 on asset-backed securities and corporate securities with a fair value of $18,170,977. All unrealized losses were for less than twelve months. At December 31, 2010, the AFS investment portfolio had a fair value of $34,946,225 with no unrealized losses from their amortized cost.

Gross unrealized losses and estimated fair value by length of time that the individual HTM securities have been in a continuous unrealized loss position at December 31, 2011 and 2010, are as follows:

December 31, 2011	Less Than 12				More Than 12
	Months				Months				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Losses
Asset-backed securities issued by GSEs	$	30,220,777	$	33,796	$	2,847,703	$	4,575	$	33,068,480	$	38,371
Asset-backed securities issued by other		131,301		11,507		6,632,200		1,409,970		6,763,501		1,421,477
	$	30,352,078	$	45,303	$	9,479,903	$	1,414,545	$	39,831,981	$	1,459,848

December 31, 2010	Less Than 12				More Than 12
	Months				Months				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Losses
Asset-backed securities issued by GSEs	$	37,344,330	$	782,192	$	200,072	$	78	$	37,544,402	$	782,270
Asset-backed securities issued by other		-		-		8,573,411		1,709,386		8,573,411		1,709,386
	$	37,344,330	$	782,192	$	8,773,483	$	1,709,464	$	46,117,813	$	2,491,656

The HTM investment portfolio has an estimated fair value of $154,030,993, of which $39,831,981, or 26% of the securities, had some unrealized losses from their amortized cost. Of these securities, $33,068,480, or 83%, are mortgage-backed securities issued by GSEs and the remaining $6,763,501, or 17%, were asset-backed securities issued by others.

HTM securities issued by GSEs are guaranteed by the issuer. Total unrealized losses on the asset-backed securities issued by GSEs were $38,371, or 0.03%, of the amortized cost of $142,927,666. HTM asset-backed securities issued by GSEs with unrealized losses have an average life of 2.06 years and an average duration of 1.96 years. We believe that the securities will either recover in market value or be paid off as agreed. The Company intends to, and has the ability to, hold these securities to maturity.

HTM asset-backed securities issued by others are mortgage-backed securities. All of the securities have credit support tranches that absorb losses prior to the tranches which the Company owns. The Company reviews credit support positions on its securities regularly. Total unrealized losses on the asset-backed securities issued by others were $1,421,477, or 14.45%, of the amortized cost of $9,839,222. HTM asset-backed securities issued by others with unrealized losses have an average life of 2.35 years and an average duration of 1.61 years. We believe that the securities will either recover in market value or be paid off as agreed. The Company intends to, and has the ability to, hold these securities to maturity. We believe that the losses are the result of general perceptions of safety and creditworthiness of the entire sector and a general disruption of orderly markets in the asset class.

No charges related to other-than-temporary impairment were made during the years ended December 31, 2011 and 2010. During the year ended December 31, 2009, the Company recorded a charge of $148,000 related to other-than-temporary impairment on a single CMO issue. At December 31, 2011, the CMO issue has a par value of $1,036,000, a market fair value of $642,000 and a carrying value of $638,000.

Management has the ability and intent to hold the securities with unrealized losses classified as held to maturity until they mature, at which time the Company will receive full value for the securities. Because our intention is not to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, management considers the unrealized losses in the held-to-maturity portfolio to be temporary, except for the single CMO issue noted above, for which an other-than-temporary charge was recorded in 2009 in the amount of $148,000.

The amortized cost and estimated fair value of debt securities at December 31, 2011, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.

	Available for Sale				Held to Maturity
			Estimated				Estimated
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Within one year	$	3,840,473	$	4,080,235	$	749,951	$	749,951
Over one year through five years		-		-		-		-

Asset-backed securites
Within one year		21,565,658		21,825,513		65,535,589		65,756,156
Over one year through five years		13,021,759		13,178,664		60,924,975		61,130,025
Over five years through ten years		2,371,454		2,400,028		19,802,567		19,869,215
After ten years		302,268		305,910		6,503,757		6,525,646
Total asset-backed securities		37,261,139		37,710,115		152,766,888		153,281,042

	$	41,101,612	$	41,790,350	$	153,516,839	$	154,030,993

During 2011 and 2010, there were no sales of available for sale securities or held to maturity securities.

The table below presents the Standard & Poor’s or equivalent credit rating from other major rating agencies for AFS and HTM asset-backed securities issued by GSEs and others at December 31, 2011 by carrying value. GSE asset-backed securities that were downgraded by Standard and Poor’s during 2011 were treated as AAA based on regulatory guidance.

Credit Rating	Amount
AAA	$	181,958,323
A+		142,808
BBB		1,258,268
BBB-		1,061,017
BB+		1,240,901
BB		337,998
BB-		615,716
B+		246,345
CCC+		3,615,627
Total	$	190,477,003