The following table shows fair values and the related carrying values of financial instruments as of the dates indi- cated. Items that are not financial instruments are not included. Reconciliation of available for sale securities, which require significant adjustment based on unobservable data, are presented below: (Dollars in thousands) Estimated Fair Value Measurements Using Significant  Unobservable Inputs (Level 3) ____________________ Available-for-sale securities Total realized/unrealized losses, January 1, 2009....... $ 1,003. Included in earnings ................................................ (136) Included in other comprehensive income................. 33 Transfers in and/or out of Level 3 ........................... 450 ____________________ Ending balance - December 31, 2009........................ 1,350 Total realized/unrealized losses Included in earnings ................................................ (128). Included in other comprehensive income................. 157 Transfers in and/or out of Level 3 ........................... – ____________________ Ending balance - December 31, 2010........................ $ 1,379 ____________________ (Dollars in thousands) Estimated Fair Value Measurements at December 31, 2009 Using _____________________________________________ Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable December 31, Identical Assets Inputs Inputs 2009 (Level 1) (Level 2) (Level 3)  __________ __________ __________ __________ Assets: Impaired loans .............. $ 11,933 $ – . $ – . $ 11,933 Foreclosed real estate..... 3,738 – . – . 3,738 (Dollars in thousands) Estimated Fair Value Measurements at December 31, 2010 Using _____________________________________________ Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable December 31, Identical Assets Inputs Inputs 2010 (Level 1) (Level 2) (Level 3)  __________ __________ __________ __________ Assets: Impaired loans .............. $ 22,419 $ – . $ – . $ 22,419 Foreclosed real estate..... 2,920 – . – . 2,920 (Dollars in thousands) December 31, 2009 _________________________________ Carrying Estimated Value Fair Value _______________ _______________ Financial assets Cash and cash equivalents............. $ 13,222 $ 13,222 Securities available-for-sale............ 124,776 124,776 Securities held-to-maturity............ 19,557 20,303 Loans held-for-sale........................ 1,025 . 1,025 . Loans receivable, net..................... 452,131 498,005 Federal Home Loan Bank stock.... 3,650 3,650 Accrued interest receivable............ 2,878 2,878 Financial liabilities Demand and savings deposits ....... 313,669 313,669 Certificates of deposit ................... 226,858 227,672 Repurchase agreements ................. 15,893 15,525 Borrowed funds ............................ 47,129 38,932 Accrued interest payable ............... 150 150 (Dollars in thousands) December 31, 2010 _________________________________ Carrying Estimated Value Fair Value _______________ _______________ Financial assets Cash and cash equivalents............. $ 10,938 $ 10,938 Securities available-for-sale............ 142,055 142,055 Securities held-to-maturity............ 18,397 19,038 Loans held-for-sale........................ 422 428 Loans receivable, net..................... 409,112 472,307 Federal Home Loan Bank stock.... 3,381 3,381 Accrued interest receivable............ 2,591 2,591 Financial liabilities Demand and savings deposits ....... 321,825 321,825 Certificates of deposit ................... 198,446 198,799 Repurchase agreements ................. 16,074 14,544 Borrowed funds ............................ 32,544 32,983 Accrued interest payable ............... 81 81 Assets and liabilities measured at fair value on a non- recurring basis are summarized below: Assets and Liabilities Measured on a Non-Recurring Basis For purposes of the above disclosures of estimated fair value, the following assumptions were used as of December 31, 2010 and December 31, 2009. The estimated fair value for cash and cash equivalents, Federal Home Loan Bank stock, demand and savings deposits, and accrued interest receivable and payable are considered to approximate carrying book value. The estimated fair value for loans is based on estimates of the rate the Bancorp would charge for similar such loans at December 31, 2010 and 2009, applied for the time period until estimated repayment. For commer- cial loans, the fair value includes a liquidity adjustment to reflect current market conditions. The estimated fair value  for certificates of deposits are based on estimates of the rate the Bancorp would pay on such deposits at December 31, 2010 and 2009, applied for the time period until maturity. The estimated fair value for borrowed funds is based on current rates for similar financings. The estimated fair value of other financial instruments, and off-balance sheet loan commitments approximate cost and are not considered significant to this presentation. The fair value of impaired loans with specific allocations of the allowance for loan losses or loans on which charge-offs have been taken is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including compa- rable sales and the income approach. Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a fair value  of $19,100,000, with a valuation allowance of $2,794,000, resulting in additional provision for the year of $2,400,000. Fair value is determined, where possible, using market  prices derived from an appraisal or evaluation, which are considered to be Level 2. However, certain assumptions and unobservable inputs are used many times by the appraiser, therefore, qualifying the assets as Level 3 in the fair value hierarchy. The fair value of foreclosed real estate is similarly determined by using the results of recent real estate appraisals. 41