Critical Accounting Policies $4 thousand (1.0%), compared to $407 thousand for 2009. For 2010, foreclosed real estate losses totaled $381 thousand an increase of $220 thousand (136.6%) from losses of $161 thousand for 2009. During 2010, other noninterest income totaled $17 thousand, a decrease of $6 thousand (26.1%) from $23 thousand for 2009. Noninterest expense for 2010 was $19.3 million,  up $606 thousand (3.2%) from $18.7 million for 2009. During 2010, compensation and benefits totaled $9.6 million, an increase of $253 thousand (2.7%) from $9.3 million for 2009. The change in compensation and benefits is related to the increase in additional personnel for retail banking activities related to the newly opened St. John and Valparaiso, Indiana banking centers, and annual compensa- tion increases for bank personnel. Occupancy  and equipment expense totaled $3.0 million for 2010, an increase of $117 thousand (4.0%) compared to $2.9 million for 2009. The increase is related to the operations of the new banking centers in St. John and Valparaiso. Federal deposit insurance premiums totaled $950 thousand for 2010, a decrease of $277 thousand (22.6%) from $1.2 million  for 2009. The decrease is a result of a one-time special  assessment that occurred during 2009 that was not repeated in 2010. Data processing expense totaled $941 thousand for 2010, an increase of $70 thousand (8.0%) from $871 thou- sand for 2009. The change is a result of increased utilization of internal systems. Marketing expense related to banking products totaled $485 thousand for the year, an increase of $16 thousand (3.4%) from $469 thousand for 2009. The increase is related to increased marketing of the Bank’s brand. Statement and check processing expense totaled $307 thousand for the year, a decrease of $18 thousand (5.5%) from $325 thousand for 2009. The decrease is a result of greater use of electronic statements and transactions. Professional service expense totaled $336 thousand for  the year, an increase of $75 thousand (28.7%) from $261 thousand for 2009. The increase is related to the use of an independent valuation specialist to value the Bancorp’s trust preferred securities. Other expenses related to banking  operations totaled $3.7 million for 2010, an increase of $370 thousand (11.1%) from $3.3 million for 2009. The change in other expenses is a result of a $190 thousand impairment  charge related to property held for future banking center expansion and increased expense associated with foreclosed real estate. The Bancorp’s efficiency ratio for 2010 was 62.62% compared to 64.72% for 2009. The ratio is  determined by dividing total noninterest expense by the  sum of net interest income and total noninterest income  for the period. The Bancorp had an income tax expense for 2010 of $797 thousand compared to an income tax benefit of $813 thousand for 2009, an increase to expense of $1.6 million (198.0%). The combined effective federal and state tax rates for the Bancorp were 13.3% for 2010 and (48.6%) for 2009. The Bancorp’s current effective tax rate is a result of continued tax strategies associated with the Bancorp’s  tax-exempt investments and loans, bank owned life  insurance, and real estate investment trust, all of which reduce the effective tax rate. Critical accounting policies are those accounting policies that management believes are most important to the portrayal of the Bancorp’s financial condition and that require management’s most difficult, subjective or complex judgments. The Bancorp’s most critical accounting policies are summarized below. Other accounting policies, including those related to the fair values of financial instuments and the status of contingencies, are summarized in Note 1 to the Bancorp’s consolidated financial statements. Valuation of Investment Securities - The fair values of securities available for sale are determined on a recurring basis by obtaining quoted prices on nationally recognized securities exchanges or pricing models utilizing significant observable inputs such as matrix pricing, which is a mathe- matical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ rela- tionship to other benchmark quoted securities. Different judgments and assumptions used in pricing could result in different estimates of value. In certain cases where market data is not readily available because of lack of market activity or little public disclosure, values may be based on unobserv- able inputs and classified in Level 3 of the fair value hierarchy. At the end of each reporting period securities held in the investment portfolio are evaluated on an individual security level for other-than-temporary impairment in accordance with the Investments – Debt and Equity Securities Topic  of the Accounting Standards Codification. Significant  judgments are required in determining impairment, which include making assumptions regarding the estimated prepay- ments, loss assumptions and the change in interest rates. We consider the following factors when determining an other-than-temporary impairment for a security: The length of time and the extent to which the market value has been less than amortized cost; the financial condition and near- term prospects of the issuer; the underlying fundamentals  of the relevant market and the outlook for such market for the near future; and an assessment of whether the Bancorp has (1) the intent to sell the debt securities or (2) more  likely than not will be required to sell the debt securities  before their anticipated market recovery. If either of these  conditions is met, management will recognize other-than- temporary impairment. If, in management’s judgment, an other-than-temporary impairment exists, the cost basis of  the security will be written down for the credit loss, and the unrealized loss will be transferred from accumulated other comprehensive loss as an immediate reduction of current earnings. Management will utilize an independent valuation specialist to value securities for other-than-temporary  impairment.  Allowance for Loan Losses – The Bancorp maintains  an Allowance for Loan Losses (ALL) to absorb probable incurred credit losses that arise from the loan portfolio.  The ALL is increased by the provision for loan losses, and decreased by charge-offs net of recoveries. The determination of the amounts of the ALL and provisions for loan losses is 17