Note 3. Investment Securities

Investment securities are summarized as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
December 31, 2015	Cost		Gains		Losses		Value

Available for sale:
U.S. Treasury	$	2,995,525	$	122	$	4,162	$	2,991,485
State and municipal		29,635,572		397,568		37,041		29,996,099
Mortgage-backed		66,659,924		21,182		878,680		65,802,426

	$	99,291,021	$	418,872	$	919,883	$	98,790,010

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
December 31, 2014	Cost		Gains		Losses		Value

Available for sale:
U.S. Treasury	$	7,946,530	$	5,843	$	23,883	$	7,928,490
U.S. Government agencies		28,360		295,584		-		323,944
State and municipal		32,771,006		813,974		75,534		33,509,446
Corporate trust preferred		247,150		-		83,695		163,455
Mortgage-backed		46,831,094		95,832		859,116		46,067,810

	$	87,824,140	$	1,211,233	$	1,042,228	$	87,993,145

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
December 31, 2013	Cost		Gains		Losses		Value

Available for sale:
U.S. Government agencies	$	28,360	$	575,000	$	-	$	603,360
State and municipal		32,395,630		360,384		1,746,943		31,009,071
Corporate trust preferred		333,395		-		109,403		223,992
Mortgage-backed		43,512,419		688,095		1,723,255		42,477,259

	$	76,269,804	$	1,623,479	$	3,579,601	$	74,313,682

The gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2015 are as follows:

Securities available for sale:

	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
U.S. Treasury	$	2,492,190	$	4,162	$	-	$	-	$	2,492,190	$	4,162
State and Municipal		3,616,349		25,197		810,953		11,844		4,427,302		37,041
Mortgaged-backed		39,761,158		376,176		16,961,097		502,504		56,722,255		878,680

	$	45,869,697	$	405,535	$	17,772,050	$	514,348	$	63,641,747	$	919,883

At December 31, 2015, the Company did not have any securities that had impairment charges. During the year ending December 31, 2015, the Company sold the Regional Diversified Funding, Senior notes and the FNMA/FHLMC Preferred stocks, which had previous impairment charges. As a result of this testing, no write-downs were required in 2015 and 2014. A write-down of $15,581 was taken on this security during 2013.

The market values for these securities (and any securities other than those issued or guaranteed by the U.S. Treasury) are very depressed relative to historical levels. Therefore, a low market price for a particular security may only provide evidence of stress in the credit markets overall rather than being an indicator of credit problems with a particular issuer.

Declines in the fair value of held to maturity and available for sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, management considers, among other things, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

As of December 31, 2015, management had the ability and intent to hold the securities classified as available for sale for a period of time sufficient for a recovery of cost. On December 31, 2015, the Bank held 27 investment securities having continuous unrealized loss positions for more than 12 months. Except as noted above, management has determined that all unrealized losses are either due to increases in market interest rates over the yields available at the time the underlying securities were purchased, current call features that are nearing, and the effect the sub-prime market has had on all mortgaged-backed securities. The Bank has no mortgaged-backed securities collateralized by sub-prime mortgages. The fair value is expected to recover as the bonds approach their maturity date or repricing date or if market yields for such investments decline. Management does not believe any of the remaining securities are impaired due to reasons of credit quality. Accordingly, as of December 31, 2015, management believes the impairments detailed in the table above are temporary and no additional impairment loss is required to be realized in the Company’s consolidated income statement.

A rollforward of the cumulative other-than-temporary credit losses recognized in earnings for all debt and equity securities for which a portion of an other-then-temporary loss is recognized in accumulated other comprehensive loss is as follows:

	2015			2014		2013

Estimated credit losses, beginning of year	$	3,262,496		$	3,262,496	$	3,246,915
Sales of securities with previous OTTI recognized		(3,262,496	)		-		-
Credit losses - no previous OTTI recognized		-			-		-
Credit losses - previous OTTI recognized		-			-		15,581

Estimated credit losses, end of year	$	-		$	3,262,496	$	3,262,496

Contractual maturities of investment securities at December 31, 2015, 2014, and 2013 are shown below. Actual maturities may differ from contractual maturities because debtors may have the right to call or prepay obligations with or without call or prepayment penalties. Mortgage-backed securities have no stated maturity and primarily reflect investments in various Pass-through and Participation Certificates issued by the Federal National Mortgage Association and the Government National Mortgage Association. Repayment of mortgage-backed securities is affected by the contractual repayment terms of the underlying mortgages collateralizing these obligations and the current level of interest rates.

	Available for Sale
	Amortized		Fair
December 31, 2015	Cost		Value

Due within one year	$	-	$	-
Due over one to five years		2,995,525		2,991,485
Due over five to ten years		-		-
Due over ten years		29,635,572		29,996,099
Mortgage-backed, due in monthly installments		66,659,924		65,802,426

	$	99,291,021	$	98,790,010

	Available for Sale
	Amortized		Fair
December 31, 2014	Cost		Value

Due within one year	$	61,064	$	61,780
Due over one to five years		5,938,706		5,923,560
Due over five to ten years		2,007,824		2,004,890
Due over ten years		32,957,092		33,611,161
Mortgage-backed, due in monthly installments		46,859,454		46,391,754

	$	87,824,140	$	87,993,145

	Available for Sale
	Amortized		Fair
December 31, 2013	Cost		Value

Due within one year	$	-	$	-
Due over one to five years		-		-
Due over five to ten years		-		-
Due over ten years		32,729,025		31,233,063
Mortgage-backed, due in monthly installments		43,540,779		43,080,619

	$	76,269,804	$	74,313,682

Proceeds from sales of available for sale securities prior to maturity totaled $27,030,183, $30,269,965, and $25,626,845 for the years ended December 31, 2015, 2014, and 2013, respectively. The Bank realized gains of $1,038,084 and losses of $421 on those sales for 2015. The Bank realized gains of $1,210,332 and losses of $54,354 on those sales for 2014. The Bank realized gains of $664,269 and losses of $318,938 on those sales for 2013. Realized gains and losses were calculated based on the amortized cost of the securities at the date of trade. Income tax expense relating to net gains on sales of investment securities totaled $409,306, $455,976, and $136,216 for the years ended December 31, 2015, 2014, and 2013, respectively.

The Bank has no derivative financial instruments required to be disclosed under ASC Topic 815, Disclosure about Derivative Financial Instruments and Fair Value of Financial Instruments.