Investment and Mortgage-Backed Securities, Available for Sale

12 Months Ended

Mar. 31, 2012

Investment and Mortgage-Backed Securities, Available for Sale:

Investment and Mortgage-Backed Securities, Available for Sale

(2) Investment and Mortgage-Backed Securities, Available for Sale

The amortized cost, gross unrealized gains, gross unrealized losses, and fair values of investment and mortgage-backed securities available for sale are as follows:

		March 31, 2012
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair value
FHLB Securities	$	2,634,234	$	64,660	$	-	$	2,698,894
Federal National Mortgage       Association (“FNMA”) and       Federal Home Loan Mortgage       Corporation (“FHLMC”) Bonds		2,926,566		560		5,275		2,921,851
Small Business Administration    (“SBA”) Bonds		85,064,224		1,357,490		142,912		86,278,802
Tax Exempt Municipal Bonds		23,231,375		971,739		77,389		24,125,725
Mortgage-Backed Securities		229,462,521		8,486,387		95,073		237,853,835
Equity Securities		102,938		-		27,188		75,750
	$	343,421,858	$	10,880,836	$	347,837	$	353,954,857
		March 31, 2011
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair value
FHLB Securities	$	14,428,778	$	125,259	$	344,705	$	14,209,332
Federal Farm Credit (“FFCB”) Securities		1,997,097		9,503		-		2,006,600
FNMA and FHLMC Bonds		11,959,119		-		298,129		11,660,990
SBA Bonds		64,382,588		599,679		272,435		64,709,832
Taxable Municipal Bond		4,556,812		12,039		97,201		4,471,650
Tax Exempt Municipal Bonds		2,027,172		7,771		-		2,034,943
Mortgage-Backed Securities		233,933,275		6,681,694		534,276		240,080,693
Equity Securities		102,938		-		24,188		78,750
	$	333,387,779	$	7,435,945	$	1,570,934	$	339,252,790

FHLB securities, FFCB securities, FNMA and FHLMC bonds, and FNMA and FHLMC mortgage-backed securities are issued by government-sponsored enterprises (“GSEs”).  GSEs are not backed by the full faith and credit of the United States government.  SBA bonds are backed by the full faith and credit of the United States government. Included in the tables above and below in mortgage-backed securities are GNMA mortgage-backed securities, which are also backed by the full faith and credit of the United States government.  At March 31, 2012 and 2011, the Bank held an amortized cost and fair value of $143.8 million and $149.3 million, respectively, and $145.1 million and $148.5 million, respectively, in GNMA mortgage-backed securities included in mortgage-backed securities listed above. All mortgage-backed securities above are either GSEs or GNMA mortgage-backed securities. The balance does not include any private label mortgage-backed securities.

The amortized cost and fair value of investment and mortgage-backed securities available for sale at March 31, 2012 are shown below by contractual maturity.  Expected maturities will differ from contractual maturities because borrowers have the right to prepay obligations with or without call or prepayment penalties.

		Amortized Cost		Fair Value
Less Than One Year	$	-	$	-
One – Five Years		7,626,608		7,676,812
Five – Ten Years		51,416,058		52,193,297
After Ten Years		54,916,671		56,230,913
Mortgage-Backed Securities		229,462,521		237,853,835
	$	343,421,858	$	353,954,857

At March 31, 2012 and 2011, the amortized cost and fair value of investment and mortgage-backed securities available for sale pledged as collateral for certain deposit accounts, FHLB advances and other borrowings were $130.6 million and $137.1 million, respectively, and $131.4 million and $138.0 million, respectively.

The Bank received approximately $78.3 million, $65.0 million and $58.2 million, respectively, in proceeds from sales of available for sale securities during the years ended March 31, 2012, 2011, and 2010. As a result, the Bank recognized $2.3 million in gross gains and no gross losses for the year ended March 31, 2012, $1.5 million in gross gains and no gross losses for the year ended March 31, 2011, and $1.2 million in gross gains and no gross losses for the year ended March 31, 2010.

The following tables show gross unrealized losses and fair value, aggregated by investment category, and length of time that individual available for sale securities have been in a continuous unrealized loss position for the periods indicated.

		March 31, 2012
		Less than 12 Months				12 Months or More				Total
		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
FNMA And FHLMC Bonds	$	1,921,291	$	5,275	$	-	$	-	$	1,921,291	$	5,275
SBA Bonds		12,508,821		142,912		-		-		12,508,821		142,912
Tax Exempt Municipal Bond		3,390,580		77,389		-		-		3,390,580		77,389
Mortgage-Backed Securities		23,053,784		95,073		-		-		23,053,784		95,073
Equity Securities		-		-		75,750		27,188		75,750		27,188
	$	40,874,476	$	320,649	$	75,750	$	27,188	$	40,950,226	$	347,837

		March 31, 2011
		Less than 12 Months				12 Months or More				Total
		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
FHLB Securities	$	11,316,397	$	344,705	$	-	$	-	$	11,316,397	$	344,705
FNMA And FHLMC Bonds		11,660,990		298,129		-		-		11,660,990		298,129
SBA Bonds		22,878,098		272,435		-		-		22,878,098		272,435
Taxable Municipal Bond		2,452,620		97,201						2,452,620		97,201
Mortgage-Backed Securities		49,991,656		534,276		-		-		49,991,656		534,276
Equity Securities		-		-		78,750		24,188		78,750		24,188
	$	98,299,761	$	1,546,746	$	78,750	$	24,188	$	98,378,511	$	1,570,934

Securities classified as available-for-sale are recorded at fair market value.  At March 31, 2012, 7.8% of the unrealized losses, or one individual security, consisted of securities in a continuous loss position for 12 months or more.  At March 31, 2011, 1.5% of the unrealized losses, or one individual security, consisted of securities in a continuous loss position for 12 months or more. The Company has the ability and intent to hold these securities until such time as the value recovers or the securities mature.  The Company believes, based on industry analyst reports and credit ratings, that the deterioration in value is attributable to changes in market interest rates and is not in the credit quality of the issuer and therefore, these losses are not considered other-than-temporary. The Company reviews its investment securities portfolio at least quarterly and more frequently when economic conditions warrant, assessing whether there is any indication of other-than-temporary impairment (“OTTI”). Factors considered in the review include estimated future cash flows, length of time and extent to which market value has been less than cost, the financial condition and near term prospects of the issuer, and our intent and ability to retain the security to allow for an anticipated recovery in market value.

If the review determines that there is OTTI, then an impairment loss is recognized in earnings equal to the entire difference between the investment’s cost and its fair value at the balance sheet date of the reporting period for which the assessment is made, or may recognize a portion in other comprehensive income. The fair value of investments on which OTTI is recognized then becomes the new cost basis of the investment.