Securities

12 Months Ended

Dec. 31, 2011

Investments, Debt and Equity Securities [Abstract]

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

Note 4. Securities

Securities have been classified in the balance sheet according to management’s intent as either securities held to maturity or securities available for sale. The amortized cost and approximate fair value of securities at December 31, 2011 and 2010 are as follows:

	December 31, 2011
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Debt securities available for sale:
U.S. Government agencies	$	4,176,301	$	13,978	$	-		$	4,190,279
State and municipal securities		22,902,892		1,584,284		(50,919	)		24,436,257
Mortgage-backed securities:
Residential mortgage guaranteed by GNMA		11,723,499		150,767		(3,096	)		11,871,170
Collateralized mortgage obligations issued or guaranteed by U.S. Government agencies or sponsored agencies		45,431,456		131,215		(2,940	)		45,559,731
	$	84,234,148	$	1,880,244	$	(56,955	)	$	86,057,437
Debt securities held to maturity:
Mortgage-backed securities:
Residential mortgage guaranteed by GNMA	$	68,643	$	1,841	$	-		$	70,484

	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

U.S. Government sponsored agencies include entities such as Federal National Mortgage Association and Federal Home Loan Mortgage Corporation.

At December 31, 2011 and 2010, securities with a carrying value of approximately $18,182,000 and $17,262,000, respectively, were pledged to secure public deposits and for other purposes required or permitted by law.

At December 31, 2011 and 2010, the carrying amount of securities pledged to secure repurchase agreements was approximately $28,409,000 and $28,067,000, respectively.

At December 31, 2011 and 2010, securities with a carrying value of approximately $27,897,000 and $50,317,000, respectively, were pledged to the Federal Home Loan Bank as collateral for the Bank’s borrowings.

At December 31, 2011 and 2010, the Bank had pledged securities with a carrying amount of approximately $9,048,000 and $4,191,000, respectively, to other financial institutions as collateral for federal funds purchased.

The amortized cost and fair value of securities at December 31, 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	$	299,927	$	300,795	$	-	$	-
Due from one year to five years		1,174,270		1,280,710		-		-
Due from five years to ten years		4,403,089		4,821,488		-		-
Due after ten years		21,201,907		22,223,543		-		-
		27,079,193		28,626,536		-		-
Mortgage-backed securities		57,154,955		57,430,901		68,643		70,484
	$	84,234,148	$	86,057,437	$	68,643	$	70,484

For the year ended December 31, 2011, there were available for sale securities sold with proceeds totaling $18,954,410 which resulted in gross gains realized of $107,413. For the year ended December 31, 2010, there were available for sale securities sold with proceeds totaling $85,186,273 which resulted in gross gains and losses realized of $1,699,276 and $1,140, respectively. For the year ended December 31, 2009, there were available for sale securities sold with proceeds totaling $18,951,608 which resulted in gross gains and losses realized of $414,193 and $14,439, respectively.

The following tables present 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, at December 31, 2011 and 2010:

	As of December 31, 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
Debt securities available for sale:
State and municipal securities	$	1,735,771	$	(50,919	)	$	-	$	-		$	1,735,771	$	(50,919	)
Mortgage-backed securities:
Residential mortgage guaranteed by GNMA		-		-			3,133,826		(3,096	)		3,133,826		(3,096	)
Collateralized mortgage obligations issued or guaranteed by U.S. Government agencies or sponsored agencies		-		-			6,954,999		(2,940	)		6,954,999		(2,940	)
	$	1,735,771	$	(50,919	)	$	10,088,825	$	(6,036	)	$	11,824,596	$	(56,955	)

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

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

State and municipal securities: At December 31, 2011, three investments in obligations of state and municipal securities had unrealized losses. Cornerstone believes the unrealized losses on those investments were caused by the interest rate environment and does not relate to the underlying credit quality of the issuers. Because the Company has the intent and ability to hold those investments for a time necessary to recover their amortized cost bases, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at December 31, 2011.

Mortgage-backed securities: At December 31, 2011, five 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 Cornerstone does not intend to sell the investments and it is not more likely than not that Cornerstone will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, Cornerstone does not deem those investments to be other-than-temporarily impaired at December 31, 2011.