Note 6 - Federal Reserve Bank And Federal Home Loan Bank Stock

3 Months Ended

Jun. 30, 2011

Investment in Federal Home Loan Bank Stock, Fair Value Disclosure, Methodology

NOTE 6 -- FEDERAL RESERVE BANK AND FEDERAL HOME LOAN BANK STOCK

The subsidiary bank held $2,373,000 in Federal Home Loan Bank stock at June 30, 2011 and December 31, 2010 and $2,127,000 and $2,125,000 in Federal Reserve Bank stock at June 30, 2011 and December 31, 2010. During the third quarter of 2007, the Federal Home Loan Bank of Chicago received a Cease and Desist Order from their regulator, the Federal Housing Finance Board.  The Federal Home Loan Bank will continue to provide liquidity and funding through advances; however, the order prohibits capital stock repurchases until a time to be determined by the Federal Housing Finance Board and requires their approval for dividends.  With regard to dividends, the Federal Home Loan Bank of Chicago continues to assess its dividend capacity each quarter and make appropriate request for approval.  While there were no dividends paid during 2010, dividends were declared and paid in February and May of 2011. Management performed an analysis and deemed the cost-method investment in Federal Home Loan Bank stock was ultimately recoverable.