XML 56 R15.htm IDEA: XBRL DOCUMENT v2.4.0.6
SECURITIES
 3 Months Ended
Mar. 31, 2013
Investments, Debt and Equity Securities [Abstract]  
Investment [Text Block]
10.SECURITIES

 

  March 31, 2013 
  Amortized  Gross Unrealized  Gross Unrealized  Estimated 
  Cost  Gains  Losses  Fair Value 
Securities available for sale (AFS)                
Asset-backed securities issued by GSEs                
Residential MBS $193,394  $32,136  $-  $225,530 
Residential CMOs  39,954,131   241,340   179,770   40,015,701 
Corporate equity securities  37,310   613   259   37,664 
Bond mutual funds  4,034,867   238,438   -   4,273,305 
Total securities available for sale $44,219,702  $512,527  $180,029  $44,552,200 
                 
Securities held to maturity (HTM)                
Asset-backed securities issued by GSEs:                
Residential MBS $27,511,471  $1,074,600  $21,887  $28,564,184 
Residential CMOs  78,229,508   616,529   109,075   78,736,962 
Asset-backed securities issued by Others:                
Residential CMOs  4,160,465   246,082   465,312   3,941,235 
Total debt securities held to maturity  109,901,444   1,937,211   596,274   111,242,381 
                 
U.S. government obligations  849,786   -   -   849,786 
Total securities held to maturity $110,751,230  $1,937,211  $596,274  $112,092,167 

 

  December 31, 2012 
  Amortized  Gross Unrealized  Gross Unrealized  Estimated 
  Cost  Gains  Losses  Fair Value 
Securities available for sale (AFS)                
Asset-backed securities issued by GSEs                
Residential MBS $198,400  $32,986  $-  $231,386 
Residential CMOs  42,507,542   266,775   118,518   42,655,799 
Corporate equity securities  37,310   306   284   37,332 
Bond mutual funds  4,012,609   268,537   -   4,281,146 
Total securities available for sale $46,755,861  $568,604  $118,802  $47,205,663 
                 
Securities held to maturity (HTM)                
Asset-backed securities issued by GSEs:                
Residential MBS $31,239,176  $1,237,277  $-  $32,476,453 
Residential CMOs  76,191,199   715,620   97,998   76,808,821 
Asset-backed securities issued by Others:              - 
Residential CMOs  4,439,118   196,976   484,343   4,151,751 
Total debt securities held to maturity  111,869,493   2,149,873   582,341   113,437,025 
                 
U.S. government obligations  749,941   52   -   749,993 
Total securities held to maturity $112,619,434  $2,149,925  $582,341  $114,187,018 

 

At March 31, 2013 certain asset-backed securities with a carrying value of $8.6 million were pledged to secure certain deposits. At March 31, 2013, asset-backed securities with a carrying value of $4.0 million were pledged as collateral for advances from the Federal Home Loan Bank of Atlanta.

 

At March 31, 2013, 97% of the asset-backed securities portfolio was rated AAA by Standard & Poor’s or the equivalent credit rating from another major rating agency. AFS asset-backed securities issued by GSEs had an average life of 3.38 years and average duration of 3.20 years and are guaranteed by their issuer as to credit risk. HTM asset-backed securities issued by GSEs had an average life of 3.45 years and average duration of 3.26 years and are guaranteed by their issuer as to credit risk.

 

At December 31, 2012, 97% of the asset-backed securities portfolio was rated AAA by Standard & Poor’s or the equivalent credit rating from another major rating agency. AFS asset-backed securities issued by GSEs had an average life of 3.43 years and average duration of 3.26 years and are guaranteed by their issuer as to credit risk. HTM asset-backed securities issued by GSEs had an average life of 3.43 years and average duration of 3.24 years and are guaranteed by their issuer as to credit risk.

 

We believe that AFS securities with unrealized losses 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.

 

Management has the ability and intent to hold the HTM securities with unrealized losses 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.

 

No charges related to other-than-temporary impairment were made during the three months ended March 31, 2013 and for the year ended December 31, 2012. During the year ended December 31, 2009, the Company recorded a charge of $148,000 related to other-than-temporary impairment on a single HTM CMO issue. At March 31, 2013, the CMO issue has a par value of $951,000, a market fair value of $806,000 and a carrying value of $567,000.

 

During the three months ended December 31, 2012, the Company recognized net losses on the sale of securities of $3,736. The Company sold one AFS security with a carrying value of $1,469,911 and three HTM securities with carrying values of $3,796,011, recognizing a gain of $153,417 and losses of $157,153, respectively. The sale of HTM securities was permitted under ASC 320 “Investments - Debt and Equity Securities.” ASC 320-10-25-6 permits the sale of HTM securities for certain changes in circumstances. The Company sold the HTM positions due to a significant deterioration in the issues’ creditworthiness and the increase in regulatory risk weights mandated for risk-based capital purposes. There were no sales of AFS and HTM securities during the three months ended March 31, 2013 and 2012, respectively.

 

AFS Securities

At March 31, 2013, the AFS investment portfolio had a fair value of $44,552,200 with unrealized losses from their amortized cost of $180,029. Asset-backed securities and corporate securities with unrealized losses had a fair value of $15,926,620 and all unrealized losses were for less than twelve months.

 

At December 31, 2012, the AFS investment portfolio had a fair value of $47,205,663 with unrealized losses from their amortized cost of $118,802. Asset-backed securities and corporate securities with unrealized losses had a fair value of $11,956,208 and all unrealized losses were for less than twelve months.

 

HTM Securities

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 March 31, 2013 are as follows:

 

March 31, 2013 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 $23,163,119  $124,566  $4,021,863  $6,396  $27,184,982  $130,962 
Asset-backed securities issued by other  -   -   2,826,858   465,312   2,826,858   465,312 
  $23,163,119  $124,566  $6,848,721  $471,708  $30,011,840  $596,274 

 

At March 31, 2013, the HTM investment portfolio had an estimated fair value of $112,092,167, of which $30,011,840 or 27% of the securities had some unrealized losses from their amortized cost. Of these securities, $27,184,982 or 91% are mortgage-backed securities issued by GSEs and the remaining $2,826,858 or 9%, 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 $130,962 or 0.12% of the portfolio amortized cost of $105,740,979. HTM asset-backed securities issued by GSEs with unrealized losses have an average life of 3.02 years and an average duration of 2.82 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 collateralized mortgage obligation securities. All of the securities have credit support tranches that absorb losses prior to the tranches that 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 $465,312, or 11.18% of the portfolio amortized cost of $4,160,465. HTM asset-backed securities issued by others with unrealized losses have an average life of 3.21 years and an average duration of 2.44 years.

 

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, 2012 are as follows:

 

December 31, 2012 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 $14,253,558  $89,638  $6,132,036  $8,360  $20,385,594  $97,998 
Asset-backed securities issued by other  -   -   3,057,666   484,343   3,057,666   484,343 
  $14,253,558  $89,638  $9,189,702  $492,703  $23,443,260  $582,341 

 

At December 31, 2012, the HTM investment portfolio had an estimated fair value of $114,187,018, of which $23,443,260, or 21% of the securities, had some unrealized losses from their amortized cost. Of these securities, $20,385,594, or 87%, are mortgage-backed securities issued by GSEs and the remaining $3,057,666, or 13%, 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 $97,998 or 0.09% of the portfolio amortized cost of $107,430,375. HTM asset-backed securities issued by GSEs with unrealized losses have an average life of 1.85 years and an average duration of 1.72 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 collateralized mortgage obligation securities. All of the securities have credit support tranches that absorb losses prior to the tranches that 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 $484,343, or 10.91% of the portfolio amortized cost of $4,439,118. HTM asset-backed securities issued by others with unrealized losses have an average life of 3.17 years and an average duration of 2.40 years.

 

Credit Quality of Asset-Backed Securities

The tables below present 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 March 31, 2013 and December 31, 2012 by carrying value. The Company considers noninvestment grade securities rated BB+ or lower as classified assets for regulatory and financial reporting. GSE asset-backed security downgrades by Standard and Poor’s were treated as AAA based on regulatory guidance.

 

March 31, 2013 December 31, 2012
Credit Rating Amount  Credit Rating Amount 
AAA $145,982,211  AAA $150,317,560 
A+  -  A+  - 
A  -  A  110,780 
BBB  909,839  BBB  978,043 
BBB-  301,014  BBB-  322,329 
BB+  -  BB+  - 
BB  1,042,904  BB  1,069,517 
BB-  -  BB-  68,604 
B+  1,040,161  B+  1,008,126 
CCC+  -  CCC+    
CCC  866,546  CCC  881,719 
Total $150,142,675  Total $154,756,678