California Bank of Commerce NOTES TO FINANCIAL STATEMENTS 2.  FAIR VALUE MEASUREMENTS  (Continued) Fair values for available-for-sale investment securities are based on quoted market prices for exact  or similar securities. During the year ended December 31, 2011, there were no significant transfers  in or out of Levels 1 and 2. Fair values for debt securities of U.S. Governmental Agencies and residential mortgage-backed  securities are based on quoted market prices for similar securities. Fair values for money market  mutual funds are based on quoted market prices for exact securities. There were no changes in the valuation techniques used during the years ended December 31, 2011  or 2010. Fair Value Hierarchy (Continued) Management evaluates the significance of transfers between levels based upon the nature of the  financial instrument and size of the transfer relative to total assets, total liabilities or total earnings. The following table’s present information about the Bank’s assets and liabilities measured at fair value  on a recurring and nonrecurring basis: Assets Recorded at Fair Value Recurring Basis The Bank is required or permitted to record the following assets at fair value on a recurring basis. Description Fair Value Level 1  Level 2  Level 3  December 31, 2011 Available-for-sale investment securities  Debt securities: Mortgage-backed securities - residential  $ 36,349,666 $   - $ 36,349,666 $   -  Total assets measured at fair value on a recurring basis  $ 36,349,666 $   - $ 36,349,666 $   -  December 31, 2010 Available-for-sale investment securities  Debt securities: U.S. Government agencies $ 2,001,638 $ - $ 2,001,638 $ - Mortgage-backed securities - residential 20,857,980 20,857,980 Money Market mutual funds  27,500,000 27,500,000 - - Total assets measured at fair value on a recurring basis  $ 50,359,618 $ 27,500,000 $ 22,859,618 $ - 28