Note 2 - Securities Available For Sale

6 Months Ended

Jun. 30, 2011

Marketable Securities [Text Block]

2.          SECURITIES AVAILABLE FOR SALE:

The following tables represent the securities held in the Company’s portfolio at June 30, 2011 and at December 31, 2010:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
June 30, 2011	Cost		Gains		Losses			Value
US Treasury	$	4,029,433	$	20,801	$	0		$	4,050,234
US Government and federal agency		14,300,418		219,762		(25,082	)		14,495,098
Municipals		2,771,059		101,440		0			2,872,499
Mortgage-backed and collateralized mortgage obligations– residential		13,516,190		300,552		(9,190	)		13,807,552
	$	34,617,100	$	642,555	$	(34,272	)	$	35,225,383

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
December 31, 2010	Cost		Gains		Losses			Value
US Treasury	$	1,004,240	$	6,854	$	0		$	1,011,094
US Government and federal agency		16,696,952		222,261		(10,497	)		16,908,716
Municipals		3,179,898		62,864		(4,468	)		3,238,294
Mortgage-backed and collateralized mortgage obligations– residential		15,239,466		236,840		(130,507	)		15,345,799
	$	36,120,556	$	528,819	$	(145,472	)	$	36,503,903

The amortized cost and fair value of the securities portfolio are shown by expected maturity.  Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment fees.  Below is the schedule of contractual maturities for securities held at June 30, 2011:

	Amortized		Fair
	Cost		Value
Due in one year or less	$	2,508,407	$	2,520,392
Due from one to five years		16,837,218		17,072,355
Due from five to ten years		1,755,285		1,825,084
Due in more than ten years		0		0
Mortgage-backed and collateralized mortgage obligations – residential		13,516,190		13,807,552
	$	34,617,100	$	35,225,383

Below is the table of securities with unrealized losses, aggregated by investment category and length of time such securities were in an unrealized loss position at June 30, 2011 and December 31, 2010:

	Less than 12 Months					12 Months or Longer				Total
	Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
June 30, 2011	Value		Losses			Value		Losses		Value		Losses
US Government and federal agency	$	4,120,102	$	(25,082	)	$	0	$	0	$	4,120,102	$	(25,082	)
Mortgage-backed and collateralized mortgage obligations - residential		3,177,071		(9,190	)						3,177,071		(9,190	)
	$	7,297,173	$	(34,272	)	$	0	$	0	$	7,297,173	$	(34,272	)
	Less than 12 Months					12 Months or Longer				Total
	Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
December 31, 2010	Value		Losses			Value		Losses		Value		Losses
US Government and federal agency	$	2,489,266	$	(10,497	)	$	0	$	0	$	2,489,266	$	(10,497	)
Municipals		350,532		(4,468	)		0		0		350,532		(4,468	)
Mortgage-backed and collateralized mortgage obligations - residential		7,887,368		(130,507	)		0		0		7,887,368		(130,507	)
	$	10,727,166	$	(145,472	)	$	0	$	0	$	10,727,166	$	(145,472	)

Periodically the Company will implement a strategy to realize market value gains within its securities portfolio to supplement earnings and capital. In 2011’s first half, the Company had no security sales. For the six months ended June 30, 2010 the company sold securities and realized a net gain of $79,814. Proceeds from the sales were $3,751,027. There were no gross losses realized on the sale. There were no security sales for the three months ended June 30, 2010.

Other-Than-Temporary-Impairment

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. The investment securities portfolio is evaluated for OTTI following guidance issued by FASB.

In determining OTTI under the FASB model, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

When OTTI occurs, the amount of the OTTI recognized in earnings depends on whether an entity intends to sell the security or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis, less any current-period credit loss. If an entity intends to sell or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis, less any current-period credit loss, the OTTI will be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. If an entity does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis less any current-period loss, the OTTI will be separated into the amount representing the credit loss and the amount related to all other factors. The amount of the total OTTI related to the credit loss is determined based on the present value of cash flows expected to be collected and is recognized in earnings. The amount of the total OTTI related to other factors is recognized in other comprehensive income, net of applicable taxes. The previous amortized cost basis less the OTTI recognized in earnings becomes the new amortized cost basis of the investment.

At June 30, 2011, thirteen debt securities had unrealized losses with aggregate depreciation of 0.47% from the Company’s amortized cost basis, all of which had been in a continuous loss for less than twelve months. Most of the securities are issued by government or government sponsored agencies and to a lesser extent municipal securities.

Mortgage-backed and Collateralized Mortgage Obligation Securities

At June 30, 2011, 100% of the mortgage-backed and collateralized mortgage obligation securities held by the Company were issued by U.S. government-sponsored entities and agencies, primarily Fannie Mae, Freddie Mac and Ginnie Mae, institutions which the government has affirmed its commitment to support. The unrealized loss associated with these securities was 0.29% at June 30, 2011. Because the decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at June 30, 2011.