Note 3. Securities

The amortized cost and fair value of securities available-for-sale and held-to-maturity at September 30, 2011 and December 31, 2010 are summarized as follows:

	September 30, 2011
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Debt securities available-for-sale:
U.S. Government agencies	$	4,249,722	$	14,336	$	-		$	4,264,058

State and municipal securities		20,877,531		1,387,658		-			22,265,189

Mortgage-backed securities:
Residential mortgage guaranteed by GNMA		12,185,652		192,754		-			12,378,406

Collateralized mortgage obligations issued or guaranteed by U.S. Government agencies or sponsored agencies		54,599,710		168,517		(9,727	)		54,758,500

	$	91,912,615	$	1,763,265	$	(9,727	)	$	93,666,153

Debt securities held to maturity:
Mortgage-backed securities:
Residential mortgage guaranteed by GNMA	$	75,810	$	2,243	$	-		$	78,053

	December 31, 2010
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Debt securities available-for-sale:
U.S. Government agencies	$	4,571,444	$	15,635	$	-		$	4,587,079

State and municipal securities		20,868,771		191,429		(323,988	)		20,736,212

Mortgage-backed securities:
Residential mortgage guaranteed by GNMA		18,747,272		130,609		(24,856	)		18,853,025

Collateralized mortgage obligations issued or guaranteed by U.S. Government agencies or sponsored agencies		64,575,092		135,479		(636,453	)		64,074,118

	$	108,762,579	$	473,152	$	(985,297	)	$	108,250,434

Debt securities held to maturity:
Mortgage-backed securities:
Residential mortgage guaranteed by GNMA	$	95,702	$	2,686	$	-		$	98,388

At September 30, 2011, securities with a fair value totaling approximately $91 million were pledged to secure public funds, securities sold under agreements to repurchase, the Federal Home Loan Bank (sometimes referred to herein as “FHLB”) as collateral for the Bank’s borrowings, as collateral for federal funds purchased from other financial institutions and serve as collateral at the Federal Reserve Discount Window.

The amortized cost and estimated market value of securities at September 30, 2011, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Securities Available-for-Sale				Securities Held to Maturity
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Due in one year or less	$	299,926	$	300,794	$	-	$	-
Due from one year to five years		1,174,796		1,272,488		-		-
Due from five years to ten years		4,405,250		4,787,848		-		-
Due after ten years		19,247,281		20,168,117		-		-
	$	25,127,253	$	26,529,247	$	-	$	-


Mortgage-backed securities		66,785,362		67,136,906		75,810		78,053

	$	91,912,615	$	93,666,153	$	75,810	$	78,053

The following tables present the gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities available for sale have been in a continuous unrealized loss position, as of September 30, 2011 and as of December 31, 2010:

	As of September 30, 2011
	Less than 12 Months					12 Months or Greater				Total
			Gross					Gross				Gross
	Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
	Value		Losses			Value		Losses		Value		Losses
Collateralized mortgage obligations issued or guaranteed by U.S. Government agencies or sponsored agencies	$	9,797,761	$	(9,727	)	$	-	$	-	$	9,797,761	$	(9,727	)
	$	9,797,761	$	(9,727	)	$	-	$	-	$	9,797,761	$	(9,727	)

	As of December 31, 2010
	Less than 12 Months					12 Months or Greater					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
Debt securities available for sale:
State and municipal securities	$	6,110,458	$	(154,802	)	$	6,440,892	$	(169,186	)	$	12,551,350	$	(323,988	)

Mortgage-backed securities:
Residential mortgage guaranteed by GNMA		5,647,347		(24,856	)		-		-			5,647,347		(24,856	)

Collateralized mortgage obligations issued or guaranteed by U.S. Government agencies or sponsored agencies		34,694,782		(636,453	)		-		-			34,694,782		(636,453	)
	$	46,452,587	$	(816,111	)	$	6,440,892	$	(169,186	)	$	52,893,479	$	(985,297	)

Upon acquisition of a security, the Bank determines the appropriate impairment model that is applicable. If the security is a beneficial interest in securitized financial assets, the Bank uses the beneficial interests in securitized financial assets impairment model. If the security is not a beneficial interest in securitized financial assets, the Bank uses the debt and equity securities impairment model. The Bank conducts periodic reviews to evaluate each security to determine whether an other-than-temporary impairment has occurred. The Bank does not have any securities that have been classified as other-than-temporarily-impaired at September 30, 2011 or December 31, 2010.

At September 30, 2011 and December 31, 2010, the significant categories of temporarily impaired securities, and management’s evaluation of those securities are as follows:

Mortgage-backed securities: At September 30, 2011, 4 investments in residential mortgage-backed securities had unrealized losses. This impairment is believed to be caused by the current interest rate environment. The contractual cash flows of those investments are guaranteed or issued by an agency of the U.S. Government. Because the decline in market value is attributable to the current interest rate environment and not credit quality, and because the Bank does not intend to sell the investments and it is not more likely than not that the Bank will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Bank does not deem those investments to be other-than-temporarily impaired at September 30, 2011.