Securities

12 Months Ended

Dec. 31, 2012

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, 2012 and 2011 are as follows:

	December 31, 2012
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Debt securities available for sale:
U.S. Government agencies	$	3,961,956	$	56,195	$	-		$	4,018,151
State and municipal securities		21,531,727		2,101,590		-			23,633,317
Mortgage-backed securities:
Residential mortgage guaranteed by GNMA or FNMA		9,092,205		132,038		(1,824	)		9,222,419
Collateralized mortgage obligations issued or guaranteed by U.S. Government agencies or sponsored agencies		39,151,568		86,099		(14,908	)		39,222,759
	$	73,737,456	$	2,375,922	$	(16,732	)	$	76,096,646
Debt securities held to maturity:
Mortgage-backed securities:
Residential mortgage guaranteed by GNMA or FNMA	$	45,086	$	1,134	$	(8	)	$	46,212

	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 or FNMA		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 or FNMA	$	68,643	$	1,841	$	-		$	70,484

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

At December 31, 2012 and 2011, securities with a carrying value of approximately $14,817,000 and $18,182,000, respectively, were pledged to secure public deposits and for other purposes required or permitted by law.

At December 31, 2012 and 2011, the carrying amount of securities pledged to secure repurchase agreements was approximately $25,130,000 and $28,409,000, respectively.

At December 31, 2012, the Bank did not pledge any securities to the Federal Home Loan Bank as collateral for the Bank’s borrowings. At December 31, 2011, securities with a carrying value of approximately $27,897,000 were pledged to the Federal Home Loan Bank as collateral for the Bank’s borrowings.

At December 31, 2012 and 2011, the Bank had pledged securities with a carrying amount of approximately $3,428,000 and $9,048,000, respectively, to other financial institutions as collateral for federal funds purchased.

The amortized cost and fair value of securities at December 31, 2012, 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	$	-	$	-	$	-	$	-
Due from one year to five years		1,092,445		1,169,616		-		-
Due from five years to ten years		5,502,258		6,111,659		-		-
Due after ten years		18,898,980		20,370,193		-		-
		25,493,683		27,651,468		-		-
Mortgage-backed securities		48,243,773		48,445,178		45,086		46,212
	$	73,737,456	$	76,096,646	$	45,086	$	46,212

For the year ended December 31, 2012, there were no securities sold. 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.

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, 2012 and 2011:

	As of December 31, 2012
	Less than 12 Months					12 Months or Greater				Total
			Gross					Gross				Gross
	Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
	Value		Losses			Value		Losses		Value		Losses
Mortgage-backed securities:
Residential mortgage guaranteed by GNMA and FNMA	$	667,325	$	(1,824	)	$	-	$	-	$	667,325	$	(1,824	)
Collateralized mortgage obligations issued or guaranteed by U.S. Government agencies or sponsored agencies		22,514,641		(14,908	)		-		-		22,514,641		(14,908	)
	$	23,181,966	$	(16,732	)	$	-	$	-	$	23,181,966	$	(16,732	)

	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 or FNMA		-		-			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	)

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, 2012.

At December 31, 2012, the significant categories of temporarily impaired securities, and management’s evaluation of those securities are as follows:

Mortgage-backed securities: At December 31, 2012, eight 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, 2012.