Disclosure About Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Disclosure About Fair Value of Financial Instruments

NOTE Y   DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practiced to estimate the value:

CASH AND SHORT-TERM INVESTMENTS

For cash, the carrying amount approximates fair value. For short-term investments, fair values are calculated based upon general investment market interest rates for similar maturity investments.

INVESTMENT SECURITIES

For securities and marketable equity securities held-for-investment purposes, fair values are based on quoted market prices.

LOAN RECEIVABLES

For certain homogeneous categories of loans, such as residential mortgages, credit card receivables and other consumer loans, fair value is estimated using the current U.S. treasury interest rate curve, a factor for cost of processing and a factor for historical credit risk to determine the discount rate.

DEPOSIT LIABILITIES

The fair value of demand deposits, savings deposits and certain money market deposits are calculated based upon general investment market interest rates for investments with similar maturities. The value of fixed maturity certificates of deposit is estimated using the U.S. treasury interest rate curve currently offered for deposits of similar remaining maturities.

COMMITMENTS TO EXTEND CREDIT

The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present credit-worthiness of the counterparties.

The estimated fair values of the Company’s financial instruments are as follows:

	December 31, 2011
	Carrying			Fair
	Amount			Value
Financial Assets:
Cash and Short-Term Investments	$	3,505,465		$	3,505,465
Certificates of Deposit		5,458,007			5,458,007
Investment Securities		1,037,475			1,037,475
Loans		56,220,645			56,071,449
Less:  Allowance for Loan Losses		(1,800,000	)		N/A
	$	64,421,592		$	66,072,396
Financial Liabilities:
Deposits	$	77,680,242		$	77,726,063
Unrecognized Financial Instruments:
Commitments to Extend Credit	$	2,079,480		$	2,079,480
Credit Card Arrangements		12,373,012			12,373,012
	$	14,452,492		$	14,452,492

	December 31, 2010
	Carrying			Fair
	Amount			Value
Financial Assets:
Cash and Short-Term Investments	$	3,833,920		$	3,833,920
Certificates of Deposit		4,203,006			4,203,006
Investment Securities		878,100			878,100
Loans		62,036,121			62,053,562
Less:  Allowance for Loan Losses		(1,800,000	)		N/A
	$	69,151,147		$	70,968,588
Financial Liabilities:
Deposits	$	80,576,743		$	80,674,660
Unrecognized Financial Instruments:
Commitments to Extend Credit	$	1,762,870		$	1,762,870
Credit Card Arrangements		14,625,844			14,625,844
	$	16,388,714		$	16,388,714