FAIR VALUE OF FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2013

Investments, All Other Investments [Abstract]

Financial Instruments Disclosure [Text Block]

13. FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Therefore, any aggregate unrealized gains or losses should not be interpreted as a forecast of future earnings or cash flows. Furthermore, the fair values disclosed should not be interpreted as the aggregate current value of the Company.

At March 31, 2013					Fair Value Measurements
Description of Asset	Carrying Amount		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Investment securities - AFS	$	44,552,200	$	44,552,200	$	-	$	44,552,200	$	-
Investment securities - HTM		110,751,230		112,092,167		849,786		111,242,381		-
Federal Home Loan Bank and Federal Reserve Stock		5,629,150		6,411,000		-		6,411,000		-
Loans		734,918,520		743,314,000		-		743,314,000		-
Other real estate owned		6,951,653		6,951,653		-		6,951,653		-
Liabilities
Savings, NOW and money market accounts	$	396,391,598	$	396,391,598	$	-	$	396,391,598	$	-
Time deposits		402,461,827		406,585,000		-		406,585,000		-
Long-term debt		70,514,549		72,859,000		-		72,859,000		-
Guaranteed preferred beneficial interest in junior subordinated debentures		12,000,000		2,400,000		-		2,400,000		-

At December 31, 2012					Fair Value Measurements
Description of Asset	Carrying Amount		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Investment securities - AFS	$	47,205,663	$	47,205,663	$	-	$	47,205,663	$	-
Investment securities - HTM		112,619,434		114,187,018		749,941		113,437,077		-
Federal Home Loan Bank and Federal Reserve Stock		5,476,050		5,469,000		-		5,469,000		-
Loans		747,640,752		757,387,000		-		757,387,000		-
Other real estate owned		6,891,353		6,891,353		-		6,891,353		-
Liabilities
Savings, NOW and money market accounts	$	414,776,285	$	414,776,285	$	-	$	414,776,285	$	-
Time deposits		405,454,003		410,257,000		-		410,257,000		-
Long-term debt		60,527,208		64,252,000		-		64,252,000		-
Short term borrowings		1,000,000		1,000,000		-		1,000,000		-
Guaranteed preferred beneficial interest in junior subordinated debentures		12,000,000		2,400,000		-		2,400,000		-

At March 31, 2013, the Company had outstanding loan commitments and standby letters of credit of $24.5 million and $21.2 million, respectively. Based on the short-term lives of these instruments, the Company does not believe that the fair value of these instruments differs significantly from their carrying values.

Valuation Methodology

Investment securities and FHLB and FRB stock - Fair values are based on quoted market prices or dealer quotes. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.

Loans receivable - For conforming residential first-mortgage loans, the market price for loans with similar coupons and maturities was used. For nonconforming loans with maturities similar to conforming loans, the coupon was adjusted for credit risk. Loans that did not have quoted market prices were priced using the discounted cash flow method. The discount rate used was the rate currently offered on similar products. Loans priced using the discounted cash flow method included residential construction loans, commercial real estate loans and consumer loans. The estimated fair value of loans held for sale is based on the terms of the related sale commitments.

Other real estate owned - Fair value is based upon independent market prices, appraised value of the collateral or management’s estimation of the value of the collateral.

Deposits - The fair value of checking accounts, saving accounts and money market accounts were the amount payable on demand at the reporting date.

Time certificates - The fair value was determined using the discounted cash flow method. The discount rate was equal to the rate currently offered on similar products.

Long-term debt and other borrowed funds - These were valued using the discounted cash flow method. The discount rate was equal to the rate currently offered on similar borrowings.

Guaranteed preferred beneficial interest in junior subordinated securities - These were valued using discounted cash flows. The discount rate was equal to the rate currently offered on similar borrowings.

Off-balance sheet instruments - The Company charges fees for commitments to extend credit. Interest rates on loans for which these commitments are extended are normally committed for periods of less than one month. Fees charged on standby letters of credit and other financial guarantees are deemed to be immaterial and these guarantees are expected to be settled at face amount or expire unused. It is impractical to assign any fair value to these commitments.

The fair value estimates presented herein are based on pertinent information available to management as of March 31, 2013 and December 31, 2012, respectively. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date and, therefore, current estimates of fair value may differ significantly from the amount presented herein.