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ABOUT SSL CERTIFICATES
Code Of Ethics

I. INTRODUCTION

It is the policy of American Bank, Inc. and American Bank (collectively "the Bank") and each of its subsidiaries that, at all times, directors, officers and employees shall strictly adhere to and obey all laws, rules, and regulations of local, state, and Federal authorities, as from time to time amended, in connection with the business of the Bank and its subsidiaries.

It is the Bank's belief that there is no greater selling point for a business corporation than quality service, high corporate and individual conduct, and sound judgment. Personal honesty and corporate integrity are high priorities of the Bank. Whether a director, advisory board member, officer or employee, it is each person's responsibility to maintain the highest standards of professional and ethical conduct which is essential in preserving the Bank's integrity in the community. Each person has a fundamental duty to avoid placing himself/herself in a position which creates, or which leads to or could lead to a conflict of interest or appearance of a conflict of interest having such adverse effects.

Directors, advisory board members, officers and employees have an affirmative duty to promote and advance the interests of the Bank. Each individual should be concerned with the welfare of customers as well as stockholders.

II. CONFLICTS OF INTEREST

A. General Policy

Banking is a public trust. In all respects, the Bank must have the confidence of its customers and the public. Directors, advisory board members, officers and employees must avoid any action or relationship that conflicts or appears to conflict (to a reasonable, disinterested observer), with this principle and with the interests of the Bank. Ordinarily, a conflict exists when an outside interest could actually or potentially influence the judgment or actions of an individual in the conduct of the Bank's business.

B. Directors, Officers, and Persons in Control (avoidance of usurpation of corporate responsibility)

Directors, Officers, and persons having the power to direct the management of the Bank stand in a fiduciary relationship to the Bank, its account holders and shareholders. Out of this relationship arises, among other things, the duty of protecting the interests of the Bank. It is a breach of this duty for any such person to take advantage of a business opportunity for his or her own or another person's personal profit or benefit when the opportunity is within the corporate powers of the Bank and when the opportunity is of present or potential practical advantage to the Bank. If such a person so appropriates such an opportunity, the Bank may claim the benefit of the transaction or business and such person exposes himself or herself to liability in this regard.

C. Loans

Except for immediate family members, officers and employees generally are prohibited from borrowing any money from customers or suppliers of the Bank. Any borrowing by officers and employees, under any other circumstances which appears inappropriate or potentially embarrassing, also is prohibited.

D. Serving as a Director or Officer (of a non-Bank business)

Serving as a director, partner, owner or officer of any business by a Bank officer or employee requires written approval of the Chief Executive Officer. Any officer or employee acting in this dual capacity must inform the Board of Directors of any matter effecting this dual responsibility and, if warranted, abstain from any discussion or vote arising from this situation.

E. Political Activities

No officer or employee of the Bank acting on its behalf may contribute, loan money or items of value to any foreign, federal, state or local political candidates or parties. This prohibition includes the use of the Bank facilities, equipment, supplies, personnel or name. This prohibition is to avoid any impression of sponsorship or endorsement of a political candidate or party by the Bank.

This policy should not deter officers or employees from participating or contributing to the political process as concerned individuals.

This policy does not prohibit consideration for leaves of absence by the Bank officers or employees to pursue elected or appointed governmental positions.

F. Recommendations of Firms to Customers

During the course of routine business, officers and employees of the Bank are asked to recommend real estate or insurance agents, stock brokers, attorneys or accountants. Specific recommendations of this type should be avoided. Several names or agencies may be given as alternatives for the customer to consider.

G. Referrals of Customers to the Bank by Insiders

From time to time potential borrowers may be referred to the Bank by various individuals who are deemed to be insiders. Under no circumstance is the potential borrower to be given preferential treatment of any kind with regard to rates or customer service or any other favored attention that is beyond that given to any other customer.

H. Relationships with Examiners

All officers and employees should promptly and honestly respond to inquiries by Bank examiners, auditors, and security personnel. The concealment of pertinent information by officers and employees is prohibited.

I. Membership in Civic, Trade and Community Associations

Volunteering in civic and charitable organizations is encouraged for officers and employees. Written approval to serve as a director or officer of a charitable or civic organization must be obtained from the Chief Executive Officer if the individual's volunteer capacity could interfere with his/her job responsibilities and duties or if company time is needed. Participation in such activities shall not be deemed to be within an individual's scope of employment or authority as an officer or employee and the Bank assumes no liability therefore.

J. Accuracy of Records

Officers and employees shall always adhere to established accounting rules and audit controls. All records shall accurately reflect transactions in a timely manner. Incorrect or misleading entries shall be corrected immediately.

K. Relations with Competitors

  1. Except in situations where the Bank is participating in a credit transaction with another institution, no director, advisory board member, officer or employee shall have any agreement, understanding or arrangement with any competitor with respect to pricing of services, interest rates or marketing policies. Providing the best possible service to our customers is the most effective means of competing. The Bank will refrain from inaccurately representing the products and services of its competitors.
  2. No director, advisory board member, officer or employee shall engage in any activity that in any way competes with the Bank.
  3. No director, advisory board member, officer or employee shall reveal any trade secrets that are unique to the Bank.
  4. Each director, advisory board member, officer and employee has a fiduciary responsibility to take care that no information that is deemed as confidential be passed to competitors which could cause an opportunity for the Bank to be usurped.
L. Relations with Customers
  1. Officers and employees shall act in a professional manner at all times when representing the Bank. In dealing with the Bank's customers, officers and employees shall use prudent judgment and exercise good faith. Officers and employees shall avoid situations which would generate a conflict of interest as previously defined. Transactions with customers shall always be conducted at "arms length".
  2. No employee shall misrepresent, circumvent or conceal the nature of any material particular of any transaction when dealing with a customer.
  3. No employee or officer shall participate or invest in a business of a customer, or participate in a joint venture with a customer unless that investment/participation existed prior to employment and is disclosed at time of employment. Officers and employees shall not take advantage of their position with the Bank to attain investment or participation in a customer's business.
  4. If a relationship between an employee or officer with a customer or a potential customer exists which potentially creates a conflict of interest, that employee or officer shall remove himself/herself from all dealings with that customer.
  5. No officer or employee should knowingly allow or encourage a customer to state false information on a loan application or other bank form.
  6. Officers' and employees' relationships with loan applicants are more fully set forth in Section III.C of this Code of Ethics.
M. Advertising and Marketing

The Bank will adhere to the highest standards of financial advertising in compliance with all applicable laws and regulations. Advertising shall be truthful and will contain enough information about products or services that the intended audience can be expected to make an intelligent purchase based upon the advertisement. it is understood that advertising cannot contain all features of a product, but no features will be omitted if they could reasonably be expected to influence a decision of the purchaser.

All press releases to the news media will be made through the President/CEO.

N. Sale of American Bank Properties

Directors, advisory board members, officers and employees shall enjoy no advantage over the general public in the purchase of bank properties whether those properties include real estate, automobiles, securities or any other real or personal properties. The terms and conditions of any transactions with directors, advisory board members, officers and employees shall not be less favorable to the Bank than those offered to others. Properties shall be sold in accordance with normal business practices.

O. Selling assets or services to American Bank

Directors, advisory board members, officers and employees shall enjoy no advantage over the general public in the sale of assets or services to the Bank. The terms and conditions of any transactions with directors, advisory board members, officers and employees shall not be less favorable to the Bank than those offered by others. Services and assets shall be purchased in accordance with normal business practices.

P. Legal and Tax Advice

Officers and bank employees may be requested to advise a customer as to the legality of a transaction. Any discussion which could be interpreted as the giving of legal advice must be avoided. Officers and employees shall not give tax advice.

Q. Outside Employment

No outside employment of officers or employees which may constitute a conflict of interest is permitted. Outside employment which may be conflicts of interest would include employment with a competitor, employment as an auditor or accountant, investment advisor, insurance broker or agent or acting as a real estate broker or agent. Additionally, in the event outside employment bears adversely on the reputation or interests of the Bank or adversely affects the employee's job performance, he/she may be asked to adjust or resign from outside employment.

R. Kickbacks

Kickbacks are improper payments to any party for the referral of business and are strictly prohibited.

S. Loan and Deposit Transactions

Officers and employees of the Bank are prohibited from performing transactions or file maintenance involving their own deposit or loan accounts or any deposit or loan accounts involving their immediate family or any affiliated business relationships.

III. BANK LOANS

A. Directors and Officers

Directors, Directors Emeriti, Advisory Board Members and those designated as executive officers of the Bank are not eligible for special rates that are not available to the general public on any loans. Loans to these individuals are subject to the provisions of Regulation O, 12 C.F.R. §563.43 (which specifies restrictions on loans, other investments and real and personal property transactions involving affiliated persons), Section IV Transactions With Affiliates of this Code of Ethics and the provisions of the Employee Loan Policy, as applicable and incorporated herein by reference.

B. Employees

All other employees are subject to the provisions of the Bank's Employee Loan Policy.

C. Bank loans to customers

  1. At no time shall any officer or employee represent that he/she has the authority to approve any application or commit or bind the Bank in any manner unless specific lending authority has been conferred by the Board of Directors of the Bank.
  2. No officer or employee shall, in connection with or incidental to the making of a mortgage loan, require or permit the mortgage instrument or bond or note to be signed by a party to the transaction if the instrument contains any blank spaces to be filled in after it has been signed, except blank spaces relating to recording. Permitting a loan applicant(s) to sign any document before it is properly completed is strictly prohibited.
  3. Credit will not be withheld from a loan applicant on the basis of race, color, sex, religion marital status, national origin or applicant's age as more fully set forth in the Bank's Nondiscrimination in Lending Policy.
  4. In underwriting loans, employees and officers should use integrity in evaluating the completeness and accuracy of the loan files to determine that the borrower is able to repay the mortgage debt and the collateral property is of sufficient value to justify the loan amount.
  5. No officer or employee shall bring pressure on appraisers to reach values necessary to qualify the property/borrower.
  6. Loans ready to close during the commitment period must close at the terms agreed upon by the parties. An officer or employee shall not seek to delay a loan closing in anticipation of the expiration of stated rates and other terms.
  7. No officer or employee shall quote unavailable interest rates or unavailable loan terms to prospective loan applicants.
  8. An officer or employee shall make full disclosure of any personal interest they may have in a loan, project, or property that is the subject of a loan application.
  9. The Bank's policy is to faithfully honor an agreement or commitment made to an applicant.
IV. TRANSACTIONS WITH AFFILIATED PERSONS

A. The Bank will make loans to affiliated persons (defined as: directors, directors emeriti, advisory board members and those designated as executive officers of the Bank), unless specifically prohibited by regulation, or this Code of Ethics. For the purposes of this section, a loan to an affiliated person as defined above excludes loans to a company ("Affiliated Company") in which an affiliated person is a shareholder or owner. Loans to an Affiliated Company may be made if the Affiliated Company is in compliance with the Bank's Policies and the terms of the loan are no more favorable than those terms available to the general public. A loan to an affiliated person must:
  1. Be approved in advance by resolution by a majority of the Board of Directors of the Bank, with the affected person abstaining, and be made a part of the minutes of the meeting.
  2. Be made at rates available to the general public, with the exception of a loan secured by a savings account wherein the rate shall be at least one percent above the return on the savings account.
  3. Be documented to the same standards as any loan made to the general public.
  4. Not be contingent upon the use of the services of an affiliated person.
B. Pursuant to the examination by the Bank of any regulatory agency, all loans to affiliated persons shall be disclosed.

C. The Bank will not invest, either directly or indirectly, in the stock, bonds, notes or other securities of any affiliated person or purchase securities under a repurchase agreement from any affiliated person.

D. Fees assessed for late payment or for overdrawn demand deposit accounts will be the same as those charged to the general public and will not be waived. Overdrawn demand deposit accounts will be brought to the attention of the Chief Operating Officer and President/CEO.

E. Interest paid on deposit accounts of any kind shall be at a rate available to the general public.

F. There will be no loan transactions with third parties which include affiliated persons wherein the affiliated person benefits.

G. Any purchase from or sale to an affiliated person of any property real or personal shall be conditioned upon determining the value from an independent outside appraiser. The transaction will be voted upon by the Board of Directors of the Bank or its appropriate subsidiary with the affiliated person abstaining.

H. Sale by the Bank of any real estate that is under development to an affiliated person requires prior approval as provided in Section IV, G of the Code of Ethics.

I. The sale and leaseback of a model home between a joint venture project of the Bank and an affiliated person is strictly prohibited.

V. BANK PROPERTY

A. Officers and employees of the Bank are to take care and responsibility to safeguard the property of the Bank within reason, but at no time is an employee or officer to put his/her person at risk to safeguard bank property.

B. Bank property consists of:

  1. All physical property of the Bank whether leased or owned by the Bank and includes all fixtures.
  2. All records of the accounts of customers, and any other records and books relating in any manner whatsoever to the customers of the bank, in possession of the Bank.
  3. All marketing studies, advertising or promotional materials, customer lists, logs or reports or any other forms or surveys that are in the Bank's possession.
  4. Proprietary software.
VI. ABUSE OF CONFIDENTIAL INFORMATION OR RELATIONSHIP

A. The confidential relationship between the Bank and its customers is a fundamental principle of the banking business which has long been recognized by the statutes and court decisions. It is essential that this relationship be maintained by every director, advisory board member, officer and employee at all times.

B. The Bank is entrusted with important information about individuals and businesses. A violation of this trust is a serious matter. It is the policy of the Bank to treat all information regarding its customers and employees in the strictest confidence. Failure by present or past employees to maintain the confidentiality of this information will result in corrective action, up to and including immediate dismissal and/or civil or criminal legal action. Therefore, it is imperative never to discuss such information with anyone outside of the Bank or with other bank employees who have no direct association with a particular transaction or situation. Confidential information should not be obtained merely for the purpose of knowing such information, rather only when it pertains directly to a particular transaction or situation.

Examples of information that should be kept confidential are listed below:

  1. Customer Account Information (i.e. account balances, information on a loan application, paycheck amounts, overdrafts, deposits, withdrawals, names and addresses of the Banks' customers .... such information should only be discussed with the signer(s) on the account or the loan applicant(s).)
  2. Personal Matters (regarding co-workers as well as customers) (i.e. divorce, disagreements, personality conflicts or embarrassing behavior)
  3. Bank Security (i.e. opening/closing procedures, alarm/camera systems, cash drawer limits)
The exchange of credit information with other banks is permissible in accordance with the Robert Morris Associates' Code of Ethics which is incorporated herein by reference.

C. Deriving monetary gains for confidential information that could be obtained only by reason of employment or as a director with the Bank, whether such information relates to the Bank, its customers, or anyone with whom it has business relations is strictly prohibited.

VII. ACCEPTING THINGS OF VALUE

A. Federal Law:

The solicitation of and acceptance of things of value is generally prohibited by the Bank Bribery Amendments Act of 1985 as interpreted by the Federal Home Loan Bank Board, Policy Statement Resolution No. 88-209. It is applicable to all directors, officers, employees, agents or attorneys of the Bank.

B. Soliciting and Accepting Things of Value:

  1. You may not solicit or accept for yourself or for a third party anything of value from anyone in return for any business, service or confidential information of the Bank. "Things of Value" are defined as items having a market value exceeding $100.
  2. Unless permitted by Section C below, acceptance of Things of Value requires the prior approval of your immediate supervisor and bank president as evidenced by the completion of a Request for Acceptance of Things of Value Form ("Exhibit A").
  3. If you receive Things of Value that you didn't expect you must fully disclose that fact by completing and submitting Exhibit A to your immediate supervisor and the president of the bank.
  4. You may not accept Things of Value from anyone in connection with the business of the Bank other than bona fide salary, wages, fees or other compensation paid in the usual course of business.
C. Permitted Transactions:

The following transactions are permitted and shall be considered an exception to the general prohibition against acceptance of Things of Value:

  1. Acceptance of gifts, gratuities, amenities or favors based on obvious family or personal relationships (such as those with parents, children or spouse) when the circumstances make it clear that it is those relationships, rather than the business of the Bank concerned that are the motivating factors;
  2. Acceptance of meals, refreshments, travel arrangements, accommodations or entertainment, in the course of a meeting or other occasion, the purpose of which is to hold bona fide business discussions or to foster better business relations,, provided that the expense would be paid for by the Bank as a reasonable business expense if not paid for by another party. Confirmation of the receipt of such gift shall be disclosed through an e-mail to your immediate supervisor and the president of the bank;
  3. Acceptance of loans from other financial institutions on customary terms to finance proper and usual activities, such as home mortgage loans, except where prohibited by law;
  4. Acceptance of advertising or promotional material of reasonable value such as pens, pencils, note pads, key chains, calendars and similar items;
  5. Acceptance of discounts or rebates on merchandise or services that do not exceed those available to other customers;
  6. Acceptance of gifts of reasonable value, $200 or less, related to commonly recognized events or occasions, such as a promotion, new job, wedding, or retirement. Confirmation of the receipt of such gift shall be disclosed through an e-mail to your immediate supervisor and the president of the bank;
  7. The receipt of a Christmas gift basket or similar holiday item shall be shared with all team members and confirmation of the receipt of such gift shall be disclosed through an e-mail to your immediate supervisor and the president of the bank; or
  8. Acceptance of civic, charitable, education, or religious organizational awards for recognition of service and accomplishment.
D. Common Sense:

The purpose of this Policy is to avoid violations of law and to insure that the Bank's business is safeguarded from undue influence of bribery and personal favors. Whenever you have dealings with persons who have business with the Bank, the requirements of the law must be kept in mind. Necessarily, the application of the Policy stated herein will require good judgment and common sense. If you encounter situations in which you are not sure of your obligations, you should consult your supervisor.

E. Disposition:

If it is determined that something of value has been received in violation of this Policy, it will be returned to the donor. If return is not possible, depending on the circumstances, any such items of value will be turned over to a charitable institution. If possible, the donor will be informed of this disposition.

F. Violations:

Acceptance of Things of Value which are not otherwise permitted herein is a violation of federal criminal law (18 U.S.C. Section 215) and such violation is punishable by fines and imprisonment and may result in immediate termination.

G. Unrelated Business Relationships:

It is inevitable and desirable that you will have individual business and personal relationships with the Bank's customers, vendors and others who do business with the Bank even though such individual business and personal relationship is not connected with the Bank's business. This Policy is not intended to discourage such relationships. Any such business relationship should be on customary terms and for proper and usual purposes. However, you should not solicit any special favors in recognition of your relationship with the Bank.

VIII. POLICIES AND PROCEDURES REGARDING INSIDER TRADING IN AMERICAN BANK, INC. STOCK AND THE CONFIDENTIALITY OF INFORMATION

The anti-fraud provisions of the federal securities laws, particularly Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder, in effect, make it unlawful for a person to trade securities on the basis of material, inside (non-public) information. The Bank's policies and procedures regarding insider trading and the confidentiality of information:

  1. Prohibit trading in the Bank's stock by anyone in possession of material, non-public information;
  2. Identify a trading window after release of quarterly financial information during which directors and designated officers and employees can trade if they are not otherwise in the possession of material non-public information; and
  3. Establish a general policy that internal information regarding the Bank should be kept confidential.
The Bank's Directors, officers and employees, and anyone who receives confidential information from such persons ("tippees"), have a responsibility not to participate in the market for the Bank's Common Stock while in possession of "material information" about the Bank that has not been publicly disclosed. In addition to the liability that can be imposed under the Exchange Act on persons who violate the prohibition on trading based on material non-public information, under the Insider Trading and Securities Enforcement Act of 1988, the Bank can also be held liable for employee violations of the insider trading laws, unless it has adopted policies and procedures to prevent insider trading. Recent efforts by the SEC to police insider trading laws have highlighted the need for awareness of the responsibilities and potential liability in this area.

Persons violating insider trading or tipping rules may be required to disgorge the profit made or the loss avoided by the trading, pay the loss suffered by the person who purchased securities from or sold securities to the insider tippee, pay civil penalties up to three times the profit made or loss avoided, pay a criminal penalty of up to $1 million, and serve a jail term of up to ten years.

If it comes to management's attention that insider trading on material non public information has occurred, you should contact legal counsel immediately. If possible, the information being illegally traded on should be disclosed immediately and the Bank should begin an investigation to establish the facts.

The following policy and procedures apply with respect to insider trading and the confidentiality of information for the employees, officers and Directors of the Bank.

A. Prohibition against trading while in possession of undisclosed material information

If a director, officer or employee (or other person) is aware of material information relating to the Bank that has not been publicly disseminated (for at least two full business days), that person is prohibited from purchasing or selling the Bank's common stock, directly or indirectly, and is prohibited from disclosing such information to any other person so that such other person may trade in the stock.

  1. It is difficult to describe exhaustively what is "material" information, but it should be assumed that any information, positive or negative, that may be significant to an investor in determining whether to buy, sell or hold the Bank's stock would be material. Information may be significant for this purpose even if it alone would not determine an investor's decision.
  2. Examples of material information include a potential business acquisition, internal financial information that departs in any way from recent data or trends, an important financing transaction, a change in control or a significant change in management, major litigation, a significant new product or line of business, the acquisition or loss of a significant contract or a stock split or stock dividend. This list is merely illustrative.
B. "Window" period policy for trading while not in possession of undisclosed material information

As an additional measure to minimize the risk of misuse of inside information, directors and designated officers, if they are not in the possession of material non-public information regarding the Bank, may engage in purchases and sales of the Bank's common stock only during the period beginning on the third business day after the public release of the Bank's quarterly financial information if the public release is made after the close of the market on that day or on the second business day after the public release of the Bank's quarterly financial information if the public release is made before the close of the market on that day, and continuing until thirty calendar days prior to the end of a quarter ("window"). The Board of Directors may grant certain exceptions to this policy upon a showing that there is acceptable limited risk of misuse of inside information.

C. Confidentiality Serious problems could be caused for the Bank by unauthorized disclosure of internal information about the Bank, whether or not for the purpose of facilitating improper trading of the common stock.

Directors and personnel of the Bank should not discuss internal matters or developments with anyone outside of the Bank (including family members, analysts, individual investors, and members of the investment community and news media), except as required in the performance of regular corporate duties.

Directors and personnel of the Bank may assume that its legal counsel, accountants, consultants and other advisers will not disclose to third parties or trade on inside information given to them in confidence. However, with regard to negotiating with third parties at arms length for various transactions, including the sale of assets, material confidential information should not be given to such third party unless the third party enters into a confidentiality agreement with the Bank which agreement expressly addresses the issue of trading in the Bank's stock.

Directors and personnel of the Bank with knowledge of material non public information should only disclose such information to other such personnel on a need to know basis. The group of individuals with knowledge of the material information should therefore be kept as small as possible.

This prohibition applies specifically (but not exclusively) to inquiries about the Bank which may be made by the financial press, investment analysts or others in the financial community, and by shareholders.

  1. It is important that all such inquiries and responses thereto be channeled through an appropriate designated officer under carefully controlled circumstances.
  2. Unless an officer or employee is expressly authorized to the contrary, upon the receipt of any inquiries of this nature, such person should decline to comment and refer the inquirer to the Chief Financial Officer or in his or her absence to the Chief Executive Officer.
  3. Only executive officers designated by the Bank's Board of Directors should communicate with shareholders. Only information previously disseminated to the public may be disclosed to shareholders. Non-public information should never be disclosed to individual shareholders.
  4. If any director, officer or employee has any doubt as to his or her responsibilities under this policy, such person should seek clarification from the Chief Financial Officer or in his or her absence the President/CEO before they act.
  5. Personnel should not try to resolve uncertainties on their own.
  6. The Bank expects the strictest compliance with this policy by all personnel at every level. Failure to follow this policy may result in severe legal difficulties for the person involved, as well as the Bank. A failure to follow both the letter and the spirit of this policy shall be considered a matter of extreme seriousness.
D. Information will be deemed "non-public" until disclosed and adequate time has passed for dissemination to the market.

Normally, public disclosure occurs when the appropriate wire services are informed of the information and the market has time to react. Generally, officers, directors, and other insiders should refrain from trading for some period of time (at least 24 hours and up to 72 hours) after disclosure of earnings or a major development. This prohibition applies to all purchases and sales of American Bank, Inc. shares, whether held directly or in street name accounts.

E. "Tipping"

In addition to the aforementioned prohibitions against the "insider trading" activities, securities laws prohibit the "tipping" (communicating material, non-public information that results in personal gain to the "tipper") of such information to others.

"Insiders" generally includes officers, directors, and employees with access to material non-public information.

F. Controlling Person

Securities laws extend liability for officers, directors, and employees with access to material non-public information beyond actions of trading on "insider" information and "tipping" information. An "insider", or "controlling person", has an affirmative duty to supervise those within their control.

"Controlling persons" (i.e. may include employers and any person with power to influence or control the management, policies or activities of another person) are liable for civil penalties resulting from all insider trading and "tipping".

  1. A "controlling person" may be liable for the actions of a "controlled person" even if the "controlling person" does not participate in the violation or profit from it. Furthermore, "controlling persons" are also liable for civil penalties if they know or recklessly disregard the fact that a "controlled person" was likely to engage in insider trading or "tipping" and failed to take appropriate measures to prevent it. A "controlling person" has an affirmative obligation to inform those they control that insider trading and "tipping" is illegal.
  2. Violations of these securities laws may result in severe monetary penalties and imprisonment.
IX. REPORTING OF WRONGDOING

A. The Bank is subject to and the officers and employees are protected by Section 33(a) Depository Institution Employee Protection Remedy, of the Federal Deposit Insurance Act (12 U.S.C. §1831j, as amended), (the "Act"), which is commonly known as "Whistleblower Protections". Pursuant to the Act, officers and employees shall not be discharged, threatened or otherwise discriminated or retaliated against regarding their compensation, terms, conditions, location or privileges of employment because they or a person acting on their behalf, make a good faith report or are about to report verbally or in writing to the Bank or an appropriate authority an instance of wrongdoing.

  1. "Good faith report" shall mean a report of conduct defined as wrongdoing, which the person making the report has reasonable cause to believe is true and which is made without malice or consideration of personal benefit.
  2. "Wrongdoing" shall mean a violation which is not of a merely technical or minimal nature of a federal or state statute or regulation or of this Code of Ethics designed to protect the interests of the public or the Bank.
  3. All good faith reports and resulting investigations will be kept confidential.
B. Good faith reports of wrongdoing should be submitted, in writing, to the Chairman of the Corporate Governance and Ethics Committee. The Chairman of the Corporate Governance and Ethics Committee shall discuss the report with the Bank's General Counsel and may then arrange a meeting with the employee to allow the employee to present a personal and complete description of the situation. Thereafter, the Chairman of the Corporate Governance and Ethics Committee will take the matter under consideration, including any necessary investigation or evaluation of the facts related to the situation and after consultation with the Bank's General Counsel shall render a written decision, response or explanation as expeditiously as possible. If the employee is not satisfied with the response of the Chairman of the Corporate Governance and Ethics Committee, the employee may file a copy of the same written request to the Chairman of the Board within five (5) days of such response. The Chairman of the Board, or its designee, will discuss the matter with the employee and investigate the basis of the problem. Thereafter, the Board or its designee will provide the employee with a written response. Such a decision or response will be final and conclusive.

X. REPORTING PROCEDURES

A. Any officer or employee who has a question as to whether any situation or action may be a violation of the Code of Ethics, other than a good faith report of wrongdoing, should report it to the appropriate supervisor and ask for his/her advice. The supervisor shall promptly submit to the Chief Executive Officer a written report of the pertinent facts and the conclusion reached as to whether or not a violation may exist.

B. Similarly, any director or advisory board member who has a question whether any situation or action may be a violation of this Code of Ethics should report it to the Chief Executive Officer.

C. If it is concluded that a violation exists, the Chief Executive Officer shall approve the means of resolving the violation or approve an exception to the policy and shall report the matter to the Audit Committee.

XI. COMPLIANCE MONITORING

As an integral part of the Annual Internal Audit Program, the Chief Operating Officer will test compliance with the provisions of the Code of Ethics. Deviations from the Code of Ethics detected by the Chief Operating Officer will be reported to appropriate management and the Audit Committee of the Board of Directors.

XII. THE SARBANES-OXLEY ACT OF 2002

Corporate Governance, Accounting and Corporate Reporting Reform Legislation

On July 30, 2002 President Bush signed into law the Sarbanes-Oxley Act of 2002 (the "Act"), which imposes significant new obligations, restrictions and responsibilities on public companies and their executive officers, directors and independent auditors. As a general matter, the Act applies to any company (a "Public Company") that has equity or debt securities registered with the Securities and Exchange Commission (the "SEC") under the Securities Exchange Act of 1934 (the "Exchange Act"). Many provisions of the Act are directed in particular to the chief executive officer (the "CEO"), the chief financial officer (the "CFO") and the audit committee. Certain provisions of the Act are effective immediately (e.g., the prohibition on loans to directors and executive officers), while others will become effective (over a period of 30 to 270 days). The Act imposes new civil and criminal penalties for violations of the federal securities laws. Every Public Company should give immediate attention to compliance with its provisions.

One consequence of the Act is the establishment of a Public Company Accounting Oversight Board (the "Oversight Board") to regulate, examine and when appropriate sanction, accounting firms that audit the financial statements of a Public Company. An accounting firm will have to be registered with the Oversight Board, and therefore will be subject to its supervision, in order to audit, or participate in the audit of, a Public Company's financial statements. The Oversight Board will be funded by assessments levied on all Public Companies on the basis of relative market capitalization. The Oversight Board is required to be functioning by April 26, 2003 and will be subject to SEC oversight.

This Section XII summarizes the provisions of the Act that are most likely to impact the Company and its executive officers and directors. This Section XII is not a complete description of the Act. There are numerous exceptions to the provisions of the Act described below, and the SEC regulations that will be issued to implement the Act may significantly affect their application. Finally, there are new corporate governance rules recently adopted or proposed by the securities exchanges (the NYSE, Amex and Nasdaq - referred to as the "Exchanges") that will supplement and enhance certain provisions of the Act.

Although the Company is no longer an SEC Registrant and does not need to comply with the provisions of Sarbanes-Oxley, it will comply with those provisions listed below which are applicable."

EXECUTIVE SUMMARY
The Act establishes: (i) new requirements for audit committees, including independence, expertise, and responsibilities; (ii) additional responsibilities regarding financial statements for the CEO and CFO of Public Companies; (iii) new standards for auditor independence and regulation of audits; (iv) increased disclosure and reporting obligations for Public Companies and their directors and executive officers; and (v) new and increased civil and criminal penalties for violations of securities laws. Highlights of the Act include the following:

  1. Audit Committees.
    • Independence - Each member of the audit committee must be "independent" of the Public Company and no audit committee member may receive compensation from the Company other than for service as a director.
    • Expertise - The Company will be required to disclose in their annual and quarterly reports whether or not the audit committee includes at least one member who is a "financial expert" (and if not, the reasons).
    • Responsibilities - The Audit committee is responsible for the appointment and compensation of the Company's auditor and for the oversight of the work of the auditor in preparing or issuing any audit report (and related work).
    • Complaints - The Audit committee must establish procedures for handling complaints regarding accounting and internal controls.
  2. CEO/CFO Certification. The CEO and CFO must certify to the correctness and completeness of annual reports and to their responsibility for and evaluation of internal controls.
  3. Forfeiture by CEO/CFO of Certain Bonuses and Profits. The CEO and CFO must disgorge incentive pay and stock profits (received during the 12 months following a restatement of its financial statements) if the Company restates its financial statements due to material non-compliance by the Company, as a result of misconduct.
  4. Code of Ethics. The Company must adopt a code of ethics for senior financial officers and publicly disclose waivers of and changes to the code.
  5. Loans to Insiders. Personal loans by the Company to its directors or executive officers are prohibited, other than certain customary consumer lending transactions, and in the case of insured depository institutions, loans permitted under Section 22(h) of the Federal Reserve Act. Existing loans can continue without material revision but cannot be renewed.
  6. Trading During Blackout Periods. Trading by directors and executive officers during any blackout period applicable to an employee stock benefit plan is prohibited.
  7. Auditor Independence. New standards for determining auditor independence are established and accounting firms are prohibited from providing many of the non-audit services (other than tax services) that they in the past have provided. Audit partners must rotate off an audit engagement at least every five years.
  8. Accuracy of Financial Reports. All financial reports filed with the SEC must reflect all material correcting adjustments identified by the Company's independent auditor.
  9. Criminal Penalties. A "knowing" violation of the CEO/CFO certification is subject to a fine of up to $1,000,000 or imprisonment of 10 years, or both. A "willful" violation is subject to a fine of up to $5,000,000 or imprisonment for 20 years, or both.
DETAILED SUMMARY AND ANALYSIS


PROVISIONS OF THE ACT RELATING TO THE AUDIT COMMITTEE AND AUDITORS


A. AUDIT COMMITTEE LISTING REQUIREMENTS. By April 26, 2003, the SEC must promulgate rules directing the Exchanges to prohibit the listing of any security of an issuer that does not comply with the requirements set forth in 1 - 3 below.

  1. Composition. Each member of the audit committee must be an independent director. No director will be considered independent if he has accepted any consulting, advisory or compensatory fee from the Company (other than in his or her capacity as a director) or is an affiliated person of the company or any subsidiary. Although not defined in the Act, an affiliated person is likely to include executive officers, and controlling shareholders.
  2. Procedures for Complaints Regarding Accounting Related Matters. The audit committee must establish procedures for the receipt, retention and treatment of complaints received by the Public Company regarding accounting and auditing matters, as well as for the confidential submission by employees of concerns regarding questionable accounting or auditing matters. In a related provision, the Act prohibits the Company from discharging, demoting or otherwise discriminating against any employee who lawfully provides information regarding conduct reasonably believed by such employee to constitute a violation of the securities or financial fraud laws (the "whistle blower protection" provisions). Criminal and civil remedies are available for violations of the whistle blower protection provisions.
  3. Responsibilities, Authority and Funding. The audit committee must have the exclusive authority to appoint, compensate and oversee the work of the independent auditing firm, which must report directly to the audit committee. The audit committee must have the authority to engage additional advisors as it deems necessary, and the Company must provide such funding as determined necessary by the audit committee to provide for the compensation of the auditing firm and any other advisors employed by the audit committee.
B. OTHER PROVISIONS AFFECTING THE AUDIT COMMITTEE.

  1. Disclosure of Financial Expert. By January 26, 2003, the SEC must adopt rules requiring the Company to disclose in their periodic reports whether or not (and if not, why not) the audit committee is comprised of at least one member who is a "financial expert." In defining the term "financial expert," the SEC must consider whether the person has, through education and experience as a public accountant or auditor, or as a principal accounting or financial officer or controller of a Public Company: an understanding of GAAP and financial statements; experience in the preparation of financial statements of comparable companies and in the application of such principles in connection with accounting for estimates, accruals, and reserves; experience with internal accounting controls; and an understanding of audit committee functions.
  2. Approval of Audit and Non-Audit Services. All audit services (including comfort letters and statutory audits) must be pre-approved by the audit committee. The Act enumerates nine categories of services that (beginning 180 days after commencement of the operation of the Oversight Board) cannot be provided by the auditor, including: financial information systems design and implementation; internal audit outsourcing; appraisal or valuation services, fairness opinions, and contribution in kind reports; management functions or human resources; bookkeeping; broker or dealer or investment banking services; legal services unrelated to the audit; actuarial services; and services determined by the Oversight Board to be impermissible . All permissible non-audit services must be pre-approved by the audit committee (subject to a de minimus exception). The authority to approve audit and non-audit services may be delegated by the committee to one or more of its members, provided that any delegated approvals are reported to the full committee. All approvals of non-audit services must be disclosed in a the Company's periodic reports. The SEC is required to adopt rules implementing this requirement no later than January 26, 2003.
C. AUDITOR INDEPENDENCE.

  1. Auditor Reports to the Audit Committee. The auditor must timely report to the audit committee (i) all critical accounting policies and practices to be used, (ii) all alternative treatments of financial information within GAAP that have been discussed with management, the ramifications of the alternative treatments, and the treatment preferred by the auditor, and (iii) other material communications between the audit firm and management, such as a management letter or schedule of unadjusted differences.
  2. Audit Partner Rotation. The lead (or coordinating) audit partner having primary responsibility for the audit, and the audit partner responsible for reviewing the audit, must rotate off the audit at least every five years. The Act also directs the Comptroller General (of the General Accounting Office) to study the effects of requiring the mandatory rotation of the independent auditing firm.
  3. Auditor Conflict of Interest. An auditing firm is disqualified from performing audit services to the Company if the CEO, CFO, controller, chief accounting officer or persons serving in equivalent positions with the Company was employed by the audit firm and participated in any capacity in the audit of the company during the one year period preceding the date of initiation of the audit.
D. OTHER PROVISIONS OF THE ACT RELATING TO THE AUDIT COMMITTEE.

  1. Adoption of Code of Ethics for Senior Financial Officers. No later than January 26, 2003, the SEC is required to adopt rules requiring the Company to disclose whether or not, and if not why not, it has adopted a code of ethics for senior financial officers, applicable to the principal financial officer and controller or principal accounting officer, and persons performing similar functions. The SEC rules must include a requirement for the public disclosure in the Form 8-K of any change in, or waiver of, the code of ethics. The code of ethics must include standards reasonably necessary to promote: honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interests between personal and professional relationships; fair, accurate, timely, and understandable disclosure in periodic reports; and compliance with applicable governmental rules and regulations.
  2. Management and Independent Auditor Assessment of Internal Controls. The SEC is required to adopt rules requiring each annual report to contain an internal control report that: (i) states the responsibility of management for establishing and maintaining an adequate internal control structure and procedures for financial reporting; and (ii) contains an assessment, as of the end of the fiscal year, of the effectiveness of the internal control structure and procedures of the issuer for financial reporting. The audit firm is required to attest to and report on the assessment made by management in the internal control report. The attestation is deemed part of the audit engagement.
  3. Internal Control Certification to the Audit Committee. As part of the newly-imposed CEO and CFO certification (discussed below), and in connection with each annual and quarterly report, the Act requires the CEO and the CFO to certify to the auditor and the audit committee all significant deficiencies and material weaknesses in the design or operation of the internal controls, and any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal controls. The SEC is required to adopt rules implementing this provision by August 29, 2002.
  4. Improper Influence on the Conduct of Audits. The SEC is required to adopt rules no later than April 26, 2003, making it unlawful for any officer or director of the Company, or any person acting under the direction thereof, to take any action to fraudulently influence, coerce, manipulate, or mislead any accountant engaged in the performance of an audit, for the purpose of rendering such financial statements materially misleading. The SEC is given exclusive authority to enforce this provision in civil proceedings.
  5. Reports by Attorneys of Violations and Breaches of Fiduciary Duty. No later than January 26, 2003, the SEC is required to adopt rules setting forth minimum standards of professional conduct for attorneys appearing and practicing before the SEC, including a rule (i) requiring an attorney to report to the CEO or chief legal counsel any material violation of securities law or fiduciary duty, or a similar violation by the Public Company or any agent thereof, and (ii) if the counsel or CEO does not appropriately respond to the evidence (adopting, as necessary, appropriate remedial measures or sanctions), requiring the attorney to report the evidence to the audit committee or to the entire board.
CORPORATE RESPONSIBILITY AND ENHANCED PUBLIC DISCLOSURES

A. PROVISIONS APPLICABLE TO CEOS, CFOS, EXECUTIVE OFFICERS AND DIRECTORS.

  1. CEO and CFO Certifications. By August 29, 2002, the SEC must adopt regulations requiring the CEO and the CFO to certify in each annual and quarterly report that they have reviewed the report, based on their knowledge, the report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, based on their knowledge, the financial statements and other financial information included in the report, fairly present in all material respects the financial condition and results of operations as of and for the periods presented, they are responsible for establishing and maintaining internal controls, have designed the internal controls to ensure that material information is made known to them, have evaluated the effectiveness of the internal controls within 90 days prior to the report, and have presented in the report their conclusions about the effectiveness of the internal controls, they have disclosed to the auditors and the audit committee all significant deficiencies and material weaknesses in the design or operation of the internal controls, and any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal controls, and they have indicated in the report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
  2. Immediate Certification Requirement. Despite the language in the Act requiring SEC rules within 30 days of enactment to require CEO and CFO certifications, the penalty provisions of the Act impose criminal penalties on a CEO and CFO if a periodic report is not accompanied by a certification that: (i) the report complies with the requirements of the securities laws, and (ii) fairly presents in all material respects the financial condition and results of operations of the company. This penalty provision is effective immediately. Accordingly, despite a likely intention to require certifications following SEC rulemaking, the Act appears to require that all periodic reports filed after enactment be accompanied by a CEO and a CFO certification, including quarterly reports on Form 10-Q for the quarter ended June 30, 2002 that are required to be filed by August 14.
  3. Prohibition on Loans to Executive Officers and Directors. Effective immediately upon enactment, it is unlawful for the Company, directly or indirectly, to extend or maintain credit, to arrange for the extension of credit, or to renew an extension of credit, in the form of a personal loan to or for any director or executive officer. Loans in existence on the effective date are not prohibited, provided there is no material modification to any term or any renewal subsequent to enactment. Loans that are made in the ordinary course of business, of a type generally made available by the company to the public, and made on terms no more favorable than offered to the general public by the company, and are home improvement and certain consumer credit arrangements (e.g., credit card), are not prohibited. Loans made by an insured depository institution in accordance with the provisions of Section 22(h) of the Federal Reserve Act are not prohibited.
  4. CEO and CFO Disgorgement. If a Public Company is required to prepare an accounting restatement (i.e., restate its financial statements) due to the material noncompliance by the Company, as a result of misconduct, with any financial reporting requirement under the securities laws, the CEO and CFO shall reimburse the company for any (i) bonus or other incentive-based or equity-based compensation received by the officer during the 12 month period following the first public issuance or filing with the SEC of the document that did not comply with the financial reporting requirement, and (ii) any profits realized from the sale of securities of the company during that 12 month period.
  5. Prohibition on Trading During “Blackout Period” Applicable to Employee Benefit Plans. It will be unlawful for any director or executive officer of the Company to directly or indirectly purchase or sell an equity security of the company during a "blackout period." A "blackout period" is generally defined to include any period of three days or more during which at least 50% of the participants in a company's qualified employee stock benefit plan (e.g., a 401(k) plan) are subject to restrictions on trading company securities held for their account in such plan. This prohibition applies if the equity security was acquired or would be acquired in connection with such person's service as a director or executive officer. Any profit realized by a trade in violation of this prohibition is recoverable by the company, regardless of the officer's intent as to the trade, or if the company fails to bring an action, by a lawsuit that can be initiated by any stockholder of the company. Unlike Section 16(b), a matching trade during the blackout period is not required in order for liability to arise. The Company is required to timely notify executive officers and directors of any blackout period, and to provide plan participants thirty days advance notice of blackout periods. The provisions of the Act relating to blackout periods are effective January 26, 2003.
B. ENHANCED DISCLOSURE REQUIREMENTS.

  1. Accuracy of Financial Reports. Each financial report that contains financial statements prepared under GAAP and filed with the SEC under Section 13 of the Exchange Act must include all material correcting adjustments that have been identified by the "registered public accounting firm" (registered with the Oversight Board).
  2. Off-Balance Sheet Transactions. By January 26, 2003, the SEC must adopt regulations requiring each quarterly and annual report to disclose all material off-balance sheet transactions, arrangements, obligations (including contingent obligations) and other relationships with unconsolidated entities or other persons that may have a material current or future effect on financial condition, changes in financial condition, results of operations, liquidity, capital expenditures, capital resources, or significant components of revenues or expenses.
  3. Pro Forma Financial Information. By January 26, 2003, the SEC must adopt rules regarding pro forma financial information included in any periodic report or in any public disclosure or press release, which rules shall require that any such pro forma information not contain any untrue statement of material fact or omit to state a material fact, and reconciles such information with the financial condition and results of operation reported under GAAP.
  4. Real Time Disclosure of Material Information. The SEC is mandated to adopt rules requiring disclosure to the public, in plain English and on a rapid and current basis, information concerning material changes in the financial condition or operations of the company, including trend and qualitative information and graphic presentations.
  5. Mandated Review of Periodic Reports. The SEC is required to review the reports filed by Public Companies that have a class of securities listed or traded on an Exchange, including in particular the annual report on Form 10-K, on a regular and systematic basis, and in no event less than once every three years.
XIII. CERTIFICATION

All Directors, Officers and Employees will be required to read or review this Code of Ethics each year and certify, in writing, that they understand their responsibility to comply with the guidelines and provisions set forth herein.

Approved: 5/20/2008