Note 3 - Investment Securities

9 Months Ended

Sep. 30, 2012

Notes

Note 3 - Investment Securities

Note 3 – Investment Securities

Debt securities available-for-sale are carried at estimated fair value. Debt securities designated as "Held to Maturity" are carried at amortized cost based on Management's intent and ability to hold such securities to maturity.  The amortized cost and estimated fair values of these debt securities were as follows:

	As of September 30, 2012		As of December 31, 2011
	Amortized Cost	Estimated Fair Value	Amortized Cost	Estimated Fair Value
Available-for-Sale:
Obligations of states and political subdivisions	$84,395,989	$87,505,210	$67,983,813	$70,649,246
Corporate securities	130,316	264,254	130,316	233,088
	$84,526,305	$87,769,464	$68,114,129	$70,882,334
Held to Maturity:
Obligations of states and political subdivisions	$34,076,801	$35,415,779	$36,780,206	$38,089,720

Gross unrealized losses on investment securities totaled $29,058 and $16,547 at September 30, 2012 and December 31, 2011, respectively.  The following table provides an analysis of investment securities in an unrealized loss position for which other-than-temporary impairments have not been recognized as of September 30, 2012 and December 31, 2011:

	Less than 12 Months		12 Months or Longer		Total
September 30, 2012	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
Available for Sale:
Obligations of states and political subdivisions	$2,575,750	$12,871	$-	$-	$2,575,750	$12,871
Held to Maturity:
Obligations of states and political subdivisions	3,355,453	16,187	-	-	3,355,453	16,187
Overall Total	$5,931,203	$29,058	$-	$-	$5,931,203	$29,058

	Less than 12 Months		12 Months or Longer		Total
December 31, 2011	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
Available for Sale:
Obligations of states and political subdivisions	$1,953,623	$8,060	$1,485,943	$5,664	$3,439,566	$13,724
Held to Maturity:
Obligations of states and political subdivisions	809,137	2,379	753,517	444	1,562,654	2,823
Overall Total	$2,762,760	$10,439	$2,239,460	$6,108	$5,002,220	$16,547

The previous two tables each consists of 8 investments held by the Company, the majority of which are rated “A” or higher by Standard & Poor’s.  The unrealized losses on the Company’s investments listed in the above table were primarily the result of interest rate and market fluctuations.  The total impairment was less than approximately .49% and .34% of the fair value of the affected investments at September 30, 2012 and December 31, 2011, respectively.  Based on the credit ratings of these investments, along with the consideration of whether the Company has the intent to sell or will be more likely than not required to sell the applicable investment before recovery of amortized cost basis, the Company does not consider the impairment of any of these investments to be other-than-temporary at September 30, 2012 and December 31, 2011.

The Company’s insurance subsidiaries internally designate certain investments as restricted to cover their policy reserves and loss reserves.  On June 19, 2008, the Company’s property and casualty insurance subsidiary (“Frandisco P&C”) entered into a trust agreement with Synovus Trust Company, N.A. and Voyager Indemnity Insurance Company (“Voyager”).  The trust was created to hold deposits to cover policy reserves and loss reserves of Frandisco P&C.  In July 2008, Frandisco P&C funded the trust with approximately $20.0 million of investment securities.  This amount changes as required reserves change.  All earnings on assets in the trust are remitted to Frandisco P&C.  Any charges associated with the trust are paid by Voyager.