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Corporate Governance

Corporate Governance Guidelines

The Board of Directors of Pinnacle Bancshares, Inc. (the “Company”) represents the shareholders’ interests in achieving a successful business and increasing shareholder value.  The Board is the ultimate decision-making body of the Company, except for those matters reserved to the shareholders. The Board has a responsibility to the Company’s shareholders, employees, and customers, and to the communities in which the Company operates, to ensure that the Company operates with the highest professional, ethical, legal and socially responsible standards.

BOARD COMPOSITION
1. It is the policy of the Company that all major decisions be considered by the Board as a whole.  To further a director’s ability to make the best decisions as a Board member, the Company will conduct an orientation process for new Board members that includes presentation of corporate materials and meetings with senior management.
2. The Board will be comprised of individuals with diverse backgrounds and experience to effectively contribute to the success of the Company.  A director will be free of interests or affiliations that could give rise to a biased approach to directorship responsibilities and/or a conflict of interest.
3. The Board will be comprised of a majority of  “independent” directors as defined by law and American Stock Exchange listing standards.  The (1) Audit Committee, (2) Compensation Committee and (3) Nominating and Corporate Governance Committee will be comprised entirely of independent directors. 
4. The number of directors will not exceed a number that can function efficiently as a body.
5. The Board will plan for succession to the position of Chairman of the Board and Chief Executive Officer as well as certain other senior management positions.  The Board will be free to decide whether the same person or two separate officers should hold these positions.

FUNCTIONS OF THE BOARD
1. Information that is important to the Board's or a Committee's understanding of the business to be conducted at a meeting is to be distributed to the members in advance of each meeting to allow sufficient time for review to prepare for discussion of the items at the meeting.  Management will attempt to make this material concise, while still providing necessary information.
2. The Chairman of the Board will establish the agenda for each Board meeting.  Directors may suggest additional agenda items and may raise, at any meeting, subjects that are not on the agenda. 
3. Directors are expected to attend and participate, either in person or by telephone, in all Board and Committee meetings.
4. The Chief Executive Officer is encouraged to invite key members of management to attend Board meetings and present portions of the meetings.  The Board expects that management will use this process to give exposure to executive officers with significant operational duties.
5. Board members will have free access to all other employees of the Company and, as appropriate, to independent advisors.
6. Independent directors will meet in executive session at frequent intervals, but not less often than twice each year.
7. The Nominating and Corporate Governance Committee will review each director's continuation on the Board at least every three years.
8. The Chief Executive Officer will report periodically to the Board of Directors on succession planning.

COMMITTEES OF THE BOARD
1. The Board will have the following standing committees: (a) Executive, (b) Compensation, (c) Audit, and (d) Nominating and Corporate Governance.  The Board may at any time create a new committee or disband an existing committee.  The Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee will each have a charter and will publish its charter as required by applicable rules and regulations.
2. The Executive Committee, in general, will be authorized to exercise the powers of the Board of Directors in the management of all of the affairs of the Company during the intervals between Board of Directors meetings and may, if so authorized by the full Board and by law, make specified decisions in the name of the full Board.
3. The Compensation Committee will be responsible for (a) approving the compensation of the Chief Executive Officer and other executive officers, (a) incentive compensation awards for executive officers, (c) establishing and approving compensation policies, (d) administration of management incentive compensation plans and other material benefit plans, and (e) reviewing director compensation.
4. Management will report to the Compensation Committee the status of the Company's Board compensation in relation to peer companies.  Changes in Board compensation will be reviewed from time to time by the Compensation Committee, and are subject to discussion and concurrence by the Board.
5. The Audit Committee will be responsible for (a) the engagement or discharge of independent auditors, (b) reviewing with independent auditors the scope, plan for and results of the audit engagement, (c) reviewing the scope and results of the Company's internal audit department, and (d) reviewing the adequacy of the Company’s system of internal accounting controls.
6. The Nominating and Corporate Governance Committee will be responsible for (a) identifying corporate governance issues, (b) creating corporate governance policies, and (c) identifying and recommending potential candidates for election to the Board.
7. The Nominating and Corporate Governance Committee will recommend to the Board, and the Board will designate the members and the chairmen of the committees, taking into account the experience of individual directors and after consultation with the Chairman.  The Board will review committee membership annually and will consider whether membership of any committee should be changed.  There are no fixed terms for committee membership.
8. The Nominating and Corporate Governance Committee will perform an annual assessment of the performance of the Board as a whole, and will report thereon to the Board.  The assessment is to be based on criteria that the Committee considers relevant and shall relate it to the Board's overall performance as well as specific areas in which an enhanced contribution could be made.
9. The Nominating and Corporate Governance Committee will consider and recommend candidates to fill new positions created by expansion and vacancies that occur by resignation, retirement or for any other reason.
10. The Nominating and Corporate Governance Committee and the Board will perform an annual evaluation of the Chief Executive Officer.  The evaluation is to be based on broad, objective criteria such as the Company's overall performance, accomplishment of long-term strategic objectives, leadership development, etc.  The results of the evaluation will be communicated to the Chief Executive Officer.  The evaluation is used by the Compensation Committee in its annual review of the compensation of the Chief Executive Officer.
11. Committee meetings are generally scheduled to coincide with regular Board meetings. The chairman of any committee may call additional meetings, as necessary.  Each committee chair determine the frequency and length of the meetings of each committee.

CORPORATE GUIDELINES
1. The Board of Directors will maintain a Code of Ethics for directors, officers and other employees and will publish this document as required by applicable rules and regulations.
2. These Corporate Governance Guidelines will be reviewed and may be amended by the Board from time to time and will be published as required by applicable rules and regulations.
 


Compensation Committee Charter

PURPOSE
The purpose of the Compensation Committee (the “Committee”) of the Board of Directors of Pinnacle Bancshares, Inc. (the “Company”) and Pinnacle Bank (the “Bank”) is to:

  • discharge the Board’s responsibilities relating to compensation of directors and executive officers of the Company and the Bank;
  • review and recommend compensation plans, policies and benefit programs; and
  • prepare the report on executive compensation required to be included in the Company’s annual proxy statement.

MEMBERSHIP & ORGANIZATION

  • The Committee will consist of not fewer than three members each of whom shall be independent directors as defined in Section 121A of the American Stock Exchange Company Guide and shall also be “outside directors” for purposes of Section 162(m) of the Internal Revenue Code of 1986.
  • One member shall serve as Chairman of the Committee. The members of the Committee shall serve one-year terms, and shall be appointed by the Board of the Company annually. Members of the Committee may be removed or replaced at the discretion of the Board of the Company.

MEETINGS

  • The Committee shall meet with such frequency and at such intervals as it shall deem necessary to carry out its duties and responsibilities.
  • Meetings of the Committee may be called as needed by the Committee Chairman or the Chief Executive Officer.
  • The Chairman will preside, when present, at all meetings of the Committee. The Committee may meet by telephone and may take action by written consent.
  • The Committee shall have the right to retain independent compensation consultants, counsel, accountants, and other advisors at the expense of the Company or the Bank, as applicable, and shall have the sole authority to approve the form and other retention terms in connection therewith.
  • The Committee shall have the authority to obtain advice and assistance from any employee of the Company or the Bank.
  • The Committee may request that members of management be present to assist the Committee in performing its duties. The Chief Executive Officer may not be present during deliberations or voting by the Committee regarding the compensation of the Chief Executive Officer.
  • The Committee may form, and where legally permissible may delegate authority to subcommittees when appropriate. Where legally permissible, the Committee may delegate authority to committees consisting of employees when appropriate or desirable for the efficient administration of employee compensation plans.

RESPONSIBILITIES & DUTIES
In carrying out its responsibilities, the Committee’s policies and procedures should remain flexible, in order to react to changing conditions and to ensure the effective oversight of compensation programs.  Specific responsibilities and duties of the Committee include:

Compensation

  • Annually review and approve corporate goals and objectives relevant to Chief Executive Officer compensation, evaluate the Chief Executive Officer’s performance relative to those goals and objectives, and recommend to the Boards of the Company and the Bank the Chief Executive Officer’s compensation levels based on this evaluation, including cash bonuses and awards.
  • Annually review and make recommendations to the Boards of the Company and the Bank with respect to the compensation of all executive officers (i.e., the officers elected by the Boards), including awards pursuant to incentive compensation plans and equity-based plans.
  • Annually review and approve, for the Chief Executive Officer and other executive and corporate officers, annual base salary, annual incentive opportunity, long-term incentive opportunity, employment and severance arrangements, change in control arrangements and provisions, and any special or supplemental benefits, in each case when and as appropriate.
  • Annually review and make recommendations to the Boards of the Company and the Bank with respect to the compensation of all non-management directors, including the Chairman, including cash compensation, per-meeting fees, expense reimbursement policies, and awards pursuant to incentive and equity-based compensation plans. A majority of the independent directors of the Company’s Board must approve the recommendation. Consulting or similar fees paid by the Company or the Bank to directors require the approval of the Committee.
  • Review and approve other management participants in stock-based compensation programs and the awards to each of them.

Stock-Based Compensation Plans

  • Recommend the terms of, and any amendments to, any stock-based compensation program, including the number of shares reserved for issuance under the plan(s).

Other Benefit Programs

  • Periodically review other major benefit plans offered to all employees, such as medical coverage and retirement plans

General

  • Make regular reports to the Board.
  • Attempt to ensure that compensation policies comply with section 162(m) of the Internal Revenue Code, permitting deductibility of compensation to any individual in excess of $1,000,000.
  • Annually review and reassess the adequacy of this Charter and recommend any proposed changes to the Board for approval.
  • Annually review, edit, and approve the “Report of the Compensation Committee” for the Proxy Statement.
  • Perform any other activities consistent with this Charter, the articles of incorporation and bylaws of the Company and the Bank and governing law, as the Committee or the Board of the Company or the Bank deems necessary or appropriate.

Nominating and Corporate Governance Committee Charter

PURPOSE
The purpose of the Nominating and Corporate Governance Committee of the Board of Directors (the “Board”) of Pinnacle Bancshares, Inc. (the “Company”) is to:

  • Identify individuals qualified to become Board members;
  • Recommend to the Board the persons to be nominated by the Board for election as directors at the annual meeting of shareholders; and
  • Develop and recommend to the Board a set of corporate governance principles applicable to the Company.

STRUCTURE AND MEMBERSHIP

  • Number. The Nominating and Corporate Governance Committee shall consist of such number of directors as the Board shall from time to time determine.
  • Independence. Each member of the Nominating and Corporate Governance Committee shall be “independent” as determined in accordance with the rules of the American Stock Exchange.
  • Chair. Unless the Board elects a Chair of the Nominating and Corporate Governance Committee, the Committee shall elect a Chair by majority vote.
  • Compensation. The compensation of Nominating and Corporate Governance Committee members shall be as determined by the Board.
  • Selection and Removal. Members of the Nominating and Corporate Governance Committee shall be appointed by the Board. The Board may remove members of the Nominating and Corporate Governance Committee from such Committee, with or without cause.

AUTHORITY AND RESPONSIBILITIES
Board and Committee Membership
Selection of Director Nominees.  Except where the Company is legally required by contract or otherwise to provide third parties with the ability to nominate directors, the Nominating and Corporate Governance Committee shall be responsible for (i) identifying individuals qualified to become Board members and (ii) recommending to the Board the persons to be nominated by the Board for election as directors at the annual meeting of shareholders and the persons to be elected by the Board to fill any vacancies on the Board.  In making such recommendations, the Committee shall consider candidates proposed by the shareholders in accordance with the Bylaws.  The Committee shall review and evaluate information available to it regarding candidates proposed by shareholders and shall apply the same criteria, and shall follow substantially the same process in considering them, as it does in considering other candidates.

Criteria for Selecting Directors.
  The Board’s criteria for selecting directors are as set forth in the Company’s Corporate Governance Guidelines.  The Nominating and Corporate Governance Committee shall use such criteria to guide its director selection process.  The Committee shall be responsible for reviewing with the Board, on an annual basis, the requisite skills and criteria for new Board members as well as the composition of the Board as a whole.

Search Firms.  The Nominating and Corporate Governance Committee shall have the sole authority to retain and terminate any search firm to be used to identify director nominees, including sole authority to approve the search firm’s fees and other retention terms.  The Committee is empowered, without further action by Board, to cause the Company to pay the compensation of any search firm engaged by the Committee.

Section of Committee Members.
  The Nominating and Corporate Governance Committee shall be responsible for recommending to the Board the directors to be appointed to each committee of the Board.

Corporate Governance
Corporate Governance Guidelines.  The Nominating and Corporate Governance Committee shall develop and recommend to the Board a set of Corporate Governance Guidelines applicable to the Company.  The Committee shall, from time to tome as it deems appropriate, review and reassess the adequacy of such Corporate Governance Guidelines and recommend any proposed changes to the Board for approval.

PROCEDURES AND ADMINISTRATION
Meetings.  The Nominating and Corporate Governance Committee shall meet as often as it deems necessary in order to perform its responsibilities.  The Committee shall keep such records of its meetings, as it shall deem appropriate.

Subcommittee.  The Nominating and Corporate Governance Committee may form and delegate authority to one or more subcommittee (including a subcommittee consisting of a single member), as it deems appropriate from time to time under the circumstances.

Reports to the Board. The Nominating and Corporate Governance Committee shall report regularly to the Board.

Charter.  The Nominating and Corporate Governance Committee shall, from time to time as it deems appropriate, review and reassess the adequacy of this Charter and recommend any proposed changes to the Board for approval.

Independent Advisors.  The Nominating and Corporate Governance Committee shall have the authority to engage such independent legal and other advisors as it deems necessary or appropriate to carry out its responsibilities.  Such independent advisors may be the regular advisors to the Company.  The Committee is empowered, without further action by the Board, to cause the Company to pay the compensation of such advisors as established by the Committee.

Investigations.  The Nominating and Corporate Governance Committee shall have the authority to conduct or authorize investigations into nay matters within the scope of its responsibilities as it shall deem appropriate, including the authority to request any officer, employee or advisor of the Company to meet with the Committee or any advisor engaged by the Committee.
 


Audit Committee Charter

PURPOSE
To assist the Board of Directors of Pinnacle Bancshares, Inc. (the "Company") and Pinnacle Bank (the "Bank") in fulfilling its oversight responsibilities for the financial reporting process, the system of internal control, the audit process, and the Company's process for monitoring compliance with laws and regulations.

AUTHORITY
The Audit Committee has authority to conduct or authorize investigations into any matters within its scope of responsibility. It is empowered to:

  • Select, appoint, compensate, oversee and, if necessary, discharge any registered public accounting firm employed by the organization.
  • Resolve any disagreements between management and the auditor regarding financial reporting.
  • Pre-approve all auditing and related services.
  • Retain independent counsel, accountants, or others to advise the Committee or assist in the conduct of an investigation.
  • Seek any information it requires from employees or external parties.
  • Meet with Company officers, external auditors, and internal auditors or outsidecounsel, as necessary.

COMPOSITION
The Audit Committee will consist of at least two members of the Board of Directors. The Board of Directors of the Company will appoint Committee members and the Committee Chairman. It is the Chairman's responsibility to schedule all meetings of the Committee and provide the Committee with a written agenda for all meetings.

Each Committee member will be both independent, as defined by applicable legislation and regulation, and financially literate. If a member of the Committee is an "audit committee financial expert," as defined by applicable legislation and regulation, then that fact must be determined by the Committee and reported to the Board.

MEETINGS
The Committee will meet at least four times a year, with authority to convene additional meetings, as circumstances require. Committee members are expected to attend meetings in person or via tele- or video-conference. The Committee will invite members of management, auditors or others to attend meetings and provide pertinent information, as necessary. It will hold private meetings with auditors (see below) and executive sessions. Meeting agendas will be prepared and provided in advance to members, along with appropriate briefing materials. Meeting minutes will be prepared by an individual appointed by the Committee.

RESPONSIBILITIES

Financial Statements

  • Through discussions with management and the external auditors, review significant accounting and reporting issues, including complex or unusual transactions and highly judgmental areas, and recent professional and regulatory pronouncements, and understand their impact on the financial statements.
  • Review with management and the external auditors the results of the audit, including any difficulties encountered.
  • Review the annual financial statements, and consider whether they are complete, consistent with information known to Committee members, and reflect appropriate accounting principles.
  • The Chairman of the Audit Committee shall review other sections of the annual report and related regulatory filings before release and consider the accuracy and completeness of the information.
  • Review with management and the external auditors all matters required to be communicated to the Committee under generally accepted auditing standards.
  • Understand how management develops interim financial information, and the nature and extent of internal and external auditor involvement.
  • The Chairman of the Audit Committee shall review interim financial reports with management and the external auditors before filing with regulators, and consider whether they are complete and consistent with the information known to Committee members.

Internal Control

  • Consider the effectiveness of the Company's internal control system through review of internal audit reports and discussions with management and the external auditors.
  • Understand the scope of internal and external auditors' review of internal control over financial reporting, and obtain reports on significant findings and recommendations, together with management's responses.

Internal Audit

  • Review with management the plans, activities and organizational structure of the internal audit function.
  • Continually review the effectiveness of the internal audit function.

External Audit

  • Select, appoint and, if necessary, discharge the external auditors, and pre-approve any non-audit services to be rendered to the Company by that firm.
  • Review the external auditors' proposed audit scope and approach, including coordination of audit effort with internal audit.
  • Review the performance of the external auditors, and exercise final approval on the selection, appointment or discharge of the auditors.
  • Review and confirm the independence of the external auditors by obtaining statements from the auditors on relationships between the auditors, and the Company that may impact the objectivity and independence of the auditors, including non-audit services, and discussing the relationships with the auditors.
  • Meet separately with the external auditors at least semi-annually to discuss any matters that the Committee or auditors believe should be discussed privately.
  • Receive from the external auditors a formal written statement delineating all relationships between the auditors and the Company, consistent with Independence Standards Board Standard 1.

Compliance

  • Review the effectiveness of the system for monitoring compliance with laws and regulations and the results of management's investigation and follow-up (including disciplinary action) of any instances of noncompliance.
  • Review the findings of any examinations by regulatory agencies, and any auditor observations.
  • Obtain regular updates from management and Company legal counsel regarding compliance matters.
  • Review with the Company's counsel and others any legal, tax or regulatory matters which may have a material impact on operations and the financial statements, policies and procedures at the Company and the Bank, or on reports received from or furnished to the regulators.

Reporting Responsibilities

  • Regularly report to the Board of Directors about Committee activities, issues, and related recommendations.
  • Report annually to the stockholders in the Company's proxy statement, describing the Committee's composition, responsibilities and how they were discharged, and any other information required by rule, including approval of non-audit services.
  • Review any other reports the Company issues that relate to Committee responsibilities.

Other Responsibilities

  • Establish procedures for the receipt, retention, and treatment of complaints received by the Company or the Bank regarding accounting, internal accounting controls, or auditing matters.
  • Establish procedures for the confidential, anonymous submission by Company and Bank employees of concerns regarding questionable accounting or auditing matters.
  • Institute and oversee special investigations as needed.
  • Review and assess the adequacy of this Charter annually, requesting Board approval for proposed changes, and ensure appropriate disclosure as may be required by law or regulation.
  • Annually confirm that all responsibilities outlined in this Charter have been carried out.
  • Evaluate the Committee's and individual members' performance regularly.
  • Perform other activities related to this Charter as requested by the Board of Directors of the Company.
  • Conduct an appropriate review of all related party transactions (i.e., transactions required to be disclosed pursuant to Securities and Exchange Commission Regulation S-K, Item 404) for potential conflict of interest situations prior to approval of such transactions.

Funding
The Company shall provide for appropriate funding of the Committee, as determined by the Committee, for payment of:

  • Compensation to any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company.
  • Compensation to any advisers employed by the Committee as authorized under this Charter.
  • Ordinary administrative expenses of the Committee that are necessary or appropriate to carry out its duties.

Code of Ethics

Each director, officer and other employee of Pinnacle Bancshares, Inc. and Pinnacle Bank is expected to monitor his or her personal conduct in such a way that it does not bring discredit to the Company or the Bank.  Officers and other employees are expressly prohibited from discriminating against any person on the basis of age, ethnic heritage, family status, gender, physical abilities and characteristics, race, religion and sexual orientation while acting in the capacity of an employee of the Company or the Bank.

The Company and the Bank will report to the appropriate authority any known or suspected violation of securities law or dishonest or fraudulent act by an officer or other employee while at work. If one employee suspects dishonest acts, this should be reported immediately. Failure to report such activity could subject an employee to fines and/or imprisonment if he or she is deemed an accessory after the fact. Additionally, the employee could be held personally liable for any damages resulting to the Company or the Bank.

No employee may be terminated, demoted, suspended, harassed or otherwise retaliated against by any officer, manager, supervisor, contractor or subcontractor of the Company or the Bank because he or she discloses or assists in the investigation of violations of securities laws, breaches of this Code of Ethics or conduct that the employee reasonably believed constituted violations or breaches of such laws or policy.

ADMINISTRATION
Each director and employee will review this Code of Ethics. A copy of this Code of Ethics and any updates or revisions will be available for review by all employees.  Each director and officer will read this Code of Ethics and will sign an annual certification agreeing to comply with its provisions at all times. Additionally, each officer will annually certify that he or she is aware of no potential or actual conflict of interest or violation of any standards and will identify any potential or actual conflict or violation.

This Code of Ethics does not attempt to set forth all prohibited actions but supplements other policies of the Company and the Bank. Situations that are not clearly addressed should be directed to the Chief Executive Officer or his designee for review and resolution.

The Board of Directors of the Bank has ultimate responsibility for establishing and maintaining policies in accordance with this Code of Ethics.

BUSINESS RECORDS
Officers and other employees of the Company and the Bank shall endeavor at all times to maintain accurate business records.  All transactions must be in accordance with policies of the Company and the Bank. Books, records and accounts must reflect all transactions that are the subject of specific regulatory record-keeping requirements.
 
Officers and other employees of the Company and the Bank shall ensure that financial records are full, fair, accurate, timely and understandable.  Company and Bank funds or assets shall only be used for purposes that can be disclosed and recorded promptly and accurately. False entries will not be made for any reason.  Financial books, records, and statements will properly document all assets and liabilities, accurately reflect all transactions of the Company and the Bank, and be retained in accordance with record retention policies and all relevant laws and regulations. Directors, officers and other employees shall prevent unrecorded or "off the books" assets or transactions from being recorded unless permitted by applicable law and regulation. In maintaining financial records, officers and other employees shall comply with all applicable governmental rules and regulations. The Company follows Generally Accepted Accounting Principles and complies with Financial Accounting Standards Board Regulations to provide a uniform basis for measuring, managing, and reporting Company and Bank operations.
 
Any director, officer or other employee having knowledge of any unrecorded fund or asset, of any false or artificial entry in the books and records of the Company and the Bank, or of any other inappropriate entry shall promptly report the matter to the Chief Executive Officer or his designee.

CONFLICTS OF INTEREST

General
Each director, officer or other employee of the Company or the Bank should manage his or her personal and business activities in a manner that avoids situations which may lead to an actual or potential conflict between the director's or employee's interests and his or her duty to the Company and the Bank and their customers. An actual or potential conflict of interest can occur when a director, officer or other employee, or a member of his or her immediate family (e.g., spouse, parent, child, brother, sister, in-law, or any relative living in the same household), has a financial interest, direct or indirect, in a customer, supplier, competitor, or other principal dealing with the Company or the Bank, and that financial interest might influence a decision made by the director, officer or other employee on behalf of the Company or the Bank.
 
It is impractical to define all situations that may create actual or potential conflicts of interest. An interest technically in conflict may not cause concern because the amount involved is minimal, the relationship is insignificant, or the contingency is not probable, and temptations for wrongdoing are light.

Processing Transactions
No officer or other employee may process transactions for his or her personal account, an account on which he or she signs with another person, and accounts belonging to members of his or her family.  Employees must also avoid participating in transactions in which the intention is one of circumventing established policies. Further, any transaction which gives the appearance of circumventing established policies may be considered a violation of this Code of Ethics.

Self-Dealing
Employees and their immediate families, acting either individually or in a fiduciary capacity, may not sell or purchase assets or services from the Company or the Bank unless the purchase or sale is at fair market value, full documentation is maintained and written approval is obtained from the Chief Executive Officer or his designee. Such purchases are prohibited if the property was acquired through repossession or foreclosure, unless the Bank offers the property for sale to the general public. Employees and their immediate families may not extend credit on a personal basis to any person (other than a family member) who has applied for and was denied credit by the Bank.

Gifts or Fees
The Bank Bribery Act prohibits a Bank official (i.e., director, officer, employee, agent or attorney of the financial institution) from soliciting, demanding, accepting or agreeing to accept for his or her benefit or for the benefit of another person, anything of value from anyone in return for any business, service, or confidential information of the Bank and is prohibited from accepting anything of value (other than bona fide salary, wages and fees) from anyone in connection with the business of the Bank, either before or after a transaction is discussed or completed. All transactions with the Bank are covered. The Bank Bribery Act extends liability to the person who gives, offers, or promises anything of value to any person with the intent to influence or reward a Bank official in connection with any business or transaction of the Bank. Violations of the Bank Bribery Act can result in monetary fines, imprisonment, or both.

Under some circumstances, however, a Bank official may accept something of value from a person doing business with or seeking to do business with the Bank.  Generally, there is no risk to the Bank if the item is offered based on a family or personal relationship, independent of any business of the Bank, or the benefit is available to the general public under the same conditions, or the item would be paid for by the Bank as a reasonable business expense if it were not paid for by another party. The following are exceptions to the rule against accepting something of value:

  • Accepting meals, gratuities, amenities, or favors based on obvious family or personal relationships. The circumstances should make it clear that the relationship rather than the business of the Bank is the motivating factor.
  • Accepting meals, refreshments, or entertainment of reasonable value (not in excess of $100.00) in the course of a meeting or other occasion that is for a bona fide business discussion or part of an effort to foster better business relations. The expense involved should be one that the Bank would pay as a reasonable business expense if it were not being paid by another party.
  • Accepting loans from other banks or financial institutions when made on customary terms for the purpose of financing proper and usual activities of Bank officials.
  • Accepting advertising or promotional materials of reasonable value including pens, pencils, key chains, note pads, calendars and other such items.
  • Accepting discounts or rebates on merchandise or services that are available to other similar customers.
  • Accepting gifts of reasonable value (not in excess of $250.00) that are related to commonly recognized events or occasions such as a wedding, retirement, promotion, new job, Christmas, or bar or bat mitzvah.
  • Accepting civic, charitable, educational or religious organizational awards of a reasonable value for recognition of service and accomplishment.

Acceptance of any other benefits or items of value such as travel arrangements and accommodations by directors, officers or other employees that are not described above or that exceed the limits established above must be pre-approved, if possible, by the Chief Executive Officer or his designee. If pre-approval is not possible, the individual must make complete disclosure as soon as possible following the acceptance of such benefits or items of value. Approval may be given only on the basis of a full written disclosure of all facts submitted by the director, officer or other employee and only if acceptance is deemed consistent with the Bank Bribery Act. A director, officer or other employee and members of his or her family must decline any gift or favor offered under circumstances that indicate, or appear to indicate, that its purpose is to influence the director, officer or other employee in the performance of his or her job.

Disclosure
If a director, officer or other employee is offered or receives something of value from a customer, prospective customer, competitor, supplier, or any other person beyond that authorized in this Code of Ethics, the director, officer or other employee will disclose that fact in writing to the Chief Executive Officer or his designee. A report must be made even if the gift is offered and refused.  Disclosure of the acceptance of gifts evidences good faith in acceptance.

The Chief Executive Officer or his designee will maintain a file of all disclosures of gifts for a period of five years from the date of receipt and will review the disclosures to determine that what has been accepted is reasonable. Additionally, the Audit Committee may periodically review the file of disclosure to determine that what has been accepted is reasonable and does not threaten the integrity of the Bank.  Should questions arise as to the legality of a gift, benefit or favor, directors, officers and employees should seek the advice of the Chief Executive Officer or his designee.

Giving Gifts
Direct or indirect gifts, offers, or promises of any gift, bribe, kickback, favor, loan, service, or anything else of value to any individual, business entity, organization, governmental unit, public official, political party or other person by an employee on behalf of the Company or the Bank or its subsidiaries in connection with any transaction or business for the purpose of influencing the action of the recipient is expressly prohibited. This standard of conduct is not meant to prohibit normal business practices such as providing entertainment, meals, favors, discounts, tickets to cultural and sporting events, gifts given as a token of friendship or for special occasions as long as the gift is of a nominal and reasonable value under the circumstances and promotes legitimate business development.




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