NOTE G - SECURITIES

The amortized cost and approximate fair value of securities were as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Approximate
	Cost		Gains		Losses			Fair Value
Available-for-Sale Securities:
June 30, 2011:
U.S. Treasury and
Government agencies	$	31,375,763	$	158,210	$	(87,613	)	$	31,446,360
Mortgage-backed securities		54,962,142		236,463		(268,637	)		54,929,968
State and political subdivisions		16,783,482		492,618		(10,028	)		17,266,072
Money Market Mutual Fund		1,104,178		-		-			1,104,178
Equity securities		23,000		-		-			23,000

	$	104,248,565	$	887,291	$	(366,278	)	$	104,769,578

			Gross		Gross
	Amortized		Unrealized		Unrealized			Approximate
	Cost		Gains		Losses			Fair Value
December 31, 2010:
U.S. Treasury and
Government agencies	$	43,572,741	$	298,653	$	(220,262	)	$	43,651,132
Mortgage-backed securities		53,652,288		1,395,036		(419,232	)		54,628,092
State and political subdivisions		31,552,709		895,794		(150,724	)		32,297,779
Money Market Mutual Fund		2,162,055		-		-			2,162,055
Equity securities		23,000		-		-			23,000

	$	130,962,793	$	2,589,483	$	(790,218	)	$	132,762,058

During the second quarter of 2011, the Company realized gains from the sale of securities totaling $1,871,387. These gains were part of a balance sheet restructuring. The executions of these trades were made with the assistance of an independent broker and were executed with market pricing. The broker utilized for the trades was approved by the Company’s Board of Directors.

The amortized cost and fair value of securities available for sale at June 30, 2011, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Available for Sale
	Amortized		Fair
	Cost		Value

Within one year	$	1,039,689	$	1,050,347
Due after one year through five years		4,054,653		4,158,855
Due after five years through ten years		16,654,759		16,762,746
Due after ten years		26,410,144		26,740,484
		48,159,245		48,712,432

Mortgage-backed securities, equity securities and money market mutual funds		56,089,320		56,057,146

Totals	$	104,248,565	$	104,769,578

The carrying value of securities pledged as collateral, to secure public deposits and for other purposes, was $53,424,306 at June 30, 2011 and $30,412,621 at December 31, 2010. The securities delivered for repurchase agreements were $23,198,900 at June 30, 2011 and $58,621,708 at December 31, 2010.

Certain investments in debt securities are reported in the financial statements at an amount less than their historical cost. Total fair value of these investments was $42,717,595 at June 30, 2011 and $40,399,444 at December 31, 2010, which was approximately 41 and 30 percent, respectively, of the Company’s available-for-sale investment portfolio at such dates. Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information and information obtained from regulatory filings, management believes the declines in fair value for these securities are temporary. Should the impairment of any of these securities become other than temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified.

Securities with unrealized losses at June 30, 2011 and December 31, 2010 were as follows:

June 30, 2011	Less than 12 Months					12 Months or Longer					Total
			Unrealized					Unrealized					Unrealized
	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses
Available-for-Sale
Securities:
U.S. Treasury and
Government agencies	$	5,460,835	$	(87,613	)	$	-	$	-		$	5,460,835	$	(87,613	)
Mortgage-backed
securities		35,086,546		(245,680	)		1,011,071		(22,957	)		36,097,617		(268,637	)
State and political
subdivisions		1,159,143		(10,028	)		-		-			1,159,143		(10,028	)
	$	41,706,524	$	(343,321	)	$	1,011,071	$	(22,957	)	$	42,717,595	$	(366,278	)

December 31, 2010	Less than 12 Months					12 Months or Longer					Total
			Unrealized					Unrealized					Unrealized
	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses
Available-for-Sale
Securities:
U.S. Treasury and
Government agencies	$	11,483,130	$	(220,262	)	$	-	$	-		$	11,483,130	$	(220,262	)
Mortgage-backed
securities		20,281,713		(319,935	)		1,164,431		(99,297	)		21,446,144		(419,232	)
State and political
subdivisions		7,120,710		(126,113	)		349,460		(24,611	)		7,470,170		(150,724	)
	$	38,885,553	$	(666,310	)	$	1,513,891	$	(123,908	)	$	40,399,444	$	(790,218	)

The total unrealized losses on the mortgage-backed securities portfolio, all of which are residential mortgage-backed securities, is derived mainly from three private label senior tranche CMO securities. Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concern warrants such evaluation. Consideration is given to (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, and (3) the intent of the Company to not sell the investment and whether it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost. Management has determined there is no other-than-temporary-impairment on these CMO securities.

The total unrealized loss on the municipal security portfolio is due to the holding of several municipal securities, all with individually insignificant losses. During the quarter ended June 30, 2011, the number of municipal securities held by the Company was reduced significantly.