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Derivative Instruments; Fair Value

9 Months Ended

Sep. 30, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Note 9 - Derivative Instruments; Fair Value

The following table represents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2012, and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value:

	Amount as of
Description	9/30/2012		Level 1		Level 2		Level 3

Interest Rate Swap	$	142,000	$	-	$	142,000	$	-

	$	142,000	$	-	$	142,000	$	-

	Amount as of
Description	9/30/2011		Level 1		Level 2		Level 3

Interest Rate Swap	$	158,000	$	-	$	158,000	$	-

	$	158,000	$	-	$	158,000	$	-

The Company is exposed to certain market risks including the effect of changes in interest rates. The Company uses derivative instruments to manage financial exposures that occur in the normal course of business. It does not hold or issue derivatives for speculative trading purposes. The Company is exposed to non-performance risk from the counterparties in its derivative instruments. This risk would be limited to any unrealized gains on current positions. To help mitigate this risk, the Company transacts only with counterparties that are rated as investment grade or higher and all counterparties are monitored on a continuous basis. The fair value of the Company’s derivatives reflects this credit risk.

On July 1, 2011, we entered into a swap agreement with BMO Capital Markets with respect to $6,780,000 of our loan balances with Harris. This swap agreement limits the Company’s exposure to interest rate fluctuations on the Company’s floating rate loans. The swap agreement has the effect of fixing the interest rate on the loan balances covered by the swap at 4.65% per annum. The swap agreement is a derivative financial instrument and we determine and record the fair market value of the swap agreement each quarter. The value is recorded on the balance sheet of the Company and the amount of the unrealized gain or loss for each period is recorded as interest income or expense.

Fair Values of Derivative Instruments in the Statement of Financial Position

Liability Derivatives

As of

September 30

2012

2011

Derivatives not designated as hedging instruments under Statement 133

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Interest Rate Contracts

Accrued Liabilities

142,000

Accrued Liabilities

158,000

The Effect of Derivative Instruments on the Statement of Financial Performance

for the 3 month
period ending	September 30	2012				2011

	Derivatives not Designated as Hedging Instruments under Statement 133	Location of Gain (Loss) Recognized in Income on Derivative	Amount of Gain (Loss) Recognized in Income on Derivative			Location of Gain (Loss) Recognized in Income on Derivative	Amount of Gain (Loss) Recognized in Income on Derivative
	Interest Rate Contracts	Interest Expense	$	*(10,000	)	Interest Expense	$	(179,000	)
*Interest on fixed/variable rate variances			$	20,000

for the 9 months
period ending	September 30	2012				2011

	Derivatives not Designated as Hedging Instruments under Statement 133	Location of Gain (Loss) Recognized in Income on Derivative	Amount of Gain (Loss) Recognized in Income on Derivative			Location of Gain (Loss) Recognized in Income on Derivative	Amount of Gain (Loss) Recognized in Income on Derivative
	Interest Rate Contracts	Interest Income/ (Expense)	$	*(61,000	)	Interest Income/ (Expense)	$	(179,000	)
*Interest on fixed/variable rate variances			$	59,000