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SAN JOAQUIN BANK
CODE OF BUSINESS CONDUCT AND ETHICS
Approved by the Board of Directors: February 21, 2007
This Code of Business Conduct and Ethics (referred to hereinafter as the “Code”) sets forth the Bank’s policies with respect to the way we conduct ourselves individually and operate our business. The provisions of the Code are designed to promote honest and ethical behavior among our employees, officers and directors.
In the course of performing our various roles in the Bank, each of us will encounter ethical questions in different forms and under a variety of circumstances. Moments of ethical uncertainty may arise in our dealings with fellow employees of the Bank, with customers, or with other parties such as government entities or members of our community. In achieving the high ground of ethical behavior, compliance with governmental laws is not enough. Our employees should never be content with simply obeying the letter of the law, but must also strive to comport themselves in an honest and ethical manner. This Code provides clear rules to assist our employees, directors and officers in taking the proper actions when faced with an ethical dilemma. In addition, employees should consult the Bank’s compliance manuals which address a variety of areas relevant to our business activities.
The reputation of the Bank is our greatest asset and its value relies on the character of its employees. In order to protect this asset, the Bank will not tolerate unethical behavior by employees, officers or directors. Those who violate the standards in this Code will be subject to disciplinary action. If you are concerned about taking an action that may violate the Code or are aware of a violation by another employee, an officer or director, follow the guidelines set forth in the sections below entitled “Compliance Guidelines and Resources” and “Reporting Procedures.”
This Code applies equally to all employees, officers and directors of the Bank. All references to “employees” contained in this Code should be understood as referring to officers and directors as well.
Bank policy requires that the Bank, as well as all employees, officers and directors of the Bank, comply fully with both the spirit and the letter of all laws, rules and regulations. Whenever an applicable law, rule or regulation is unclear or seems to conflict with either another law or any provision of this Code, all employees, officers and directors are urged to seek clarification from their supervisor or the appropriate compliance official as discussed below under “Compliance Guidelines and Resources.” Beyond mere compliance with the law, we should always conduct our business with the highest standards of honesty and integrity – wherever we operate. In the final analysis, we should operate our business in such a way that we would be proud to have all the facts disclosed.
Every employee has a primary business responsibility to the Bank and must avoid conflicts of interest. A conflict of interest arises when an employee takes actions or enters into relationships that oppose the interests of the Bank, harm the Bank’s reputation or interfere with the employee’s performance or independent judgment when carrying out any actions of behalf of the Bank. The Bank strictly prohibits its employees from taking any action or entering into any relationship that creates, or even appears to create, a conflict of interest. For purposes of determining whether a conflict exists, the actions of an employee’s immediate family members are treated as those of the employees and are therefore subject to the same considerations.
In order to avoid a potential conflict of interest, an employee may not receive any payments, compensation, or gifts (see “Gifts, Fees and Loans” below), from any entity that does business or seeks to do business with the Bank. Employees must be sensitive to other potential conflicts of interest that may arise and use their best efforts to avoid the conflict.
Any employee, officer or director who is aware of a transaction or relationship that could reasonably be expected to give rise to a conflict of interest in violation of this section must inform the appropriate personnel in accordance with the procedures set forth below under “Reporting Procedures” in this Code. If an employee has any questions regarding the Bank’s policy on conflicts of interest or needs assistance in avoiding a potential conflict of interest, he or she is urged to seek the advice of a supervisor or the Ethics Officer.
The following guidelines apply to the receipt of gifts and other items of material value:
- An employee should not accept a loan from a bank customer or supplier. This prohibition does not apply to loans from banks or other financial institutions on customary terms to finance proper credit needs. This Bank requires that officers report all their borrowings from other financial institutions to the board of directors.
- An employee should not receive anything of value for making a loan.
- An employee should not accept a fee for performing any act that the Bank could have performed.
- It is improper for an employee to accept a gift from a customer or from any other person seeking a relationship with the Bank or any of its affiliates. This rule does not apply to (a) food, refreshments, or entertainment at luncheon or business meetings, (b) advertising or promotional material of nominal value, (c) awards from charitable organizations, or (d) gifts of nominal value given on special occasions such as Christmas. (“Nominal value” means that it would be within the employee’s ability to reciprocate on a personal basis or with a legitimate claim to the bank for reimbursement under similar circumstances.)
- An employee should not sell anything to a customer at a value in excess of its worth, nor should he or she purchase anything from a customer at a price below its worth. (Acceptance of discounts or rebates on merchandise is permitted if they are also available to other routine customers of the firm).
- An employee should not indirectly perform any act that these rules prohibit directly. For example, it is just as wrong to arrange for a member of the family to receive a gift as it is for the employee to accept the gift directly.
- It is prudent to refrain from investing in a customer’s business, and it is improper for an employee to subscribe to new issues of stock in a customer’s business.
- In the event that a customer, vendor or any person or company should attempt to provide a gift or other valuable favor to an employee in circumvention of this policy, a report should be filed with the Bank’s Ethics Officer immediately (see “Reporting Procedures” below.)
- If an employee believes that he/she is being asked to perform a transaction or other act, or is offered a gift, that may be outside of the guidelines of this policy, the employee should discuss the situation with the Bank’s Ethics Officer before completing the transaction or agreeing to accept the gift. (See “Compliance Guidelines and Resources” below.)
Employees, officers and directors are prohibited from taking for themselves personally opportunities that are discovered through use of Bank property, Bank information or their position with the Bank. Furthermore, employees may not use Bank property, information or influence or their position in the Bank for improper personal gain. Finally, employees have a duty to advance the Bank’s legitimate interests when the opportunity to do so arises. Consequently, employees are not permitted to compete with the Bank.
Employees, officers and directors will frequently become aware of confidential non-public information concerning the Bank (and the parties with which the Bank does business). The Bank prohibits employees from using such confidential information for personal financial gain, such as for purposes of stock trading, or for any other purpose other than the conduct of our business. Employees must maintain the confidentiality of such information and may not make disclosures to third parties, including members of the employee’s family. All non-public information about the Bank should be treated as confidential information. To use non-public information for personal financial benefit or to “tip” others who may make stock trades on the basis of this information is not only unethical but also illegal. In addition to possible legal sanctions, any employee, officer or director found to be in violation of the Bank’s insider trading policy will face decisive disciplinary action. Employees are encouraged to contact the Ethics Officer with any questions concerning this policy.
Employees must maintain the confidentiality of confidential information entrusted to them by the Bank or its customers or suppliers, except when disclosure is authorized by the Bank or required by law. Confidential information includes proprietary information of the Bank, we well as all non-public information that might be of use to competitors, or harmful to the Bank or its customers, if disclosed.
All Bank assets should be used for legitimate business purposes and all employees, officers and directors must make all reasonable efforts to protect the Bank’s assets and ensure their efficient use. Theft, carelessness, and waste have a direct impact on the Bank’s profitability and must therefore be avoided. The suspected occurrence of fraud or theft should be immediately reported to the appropriate person in accordance with the procedures set forth below under “Reporting Procedures” in this Code.
An employee’s obligation to protect the Bank’s assets extends to the Bank’s proprietary information. Proprietary information includes intellectual property such as patents, trademarks, copyrights and trade secrets. An employee who uses or distributes such proprietary information without the Bank’s authorization will be subject to disciplinary measures as well as potential legal sanctions.
Although the success of our Bank depends on our ability to outperform our competitors, the Bank is committed to achieving success by fair and ethical means. We seek to maintain a reputation for fair dealing among our competitors and the public alike. In light of this aim, the Bank prohibits employees from engaging in any unethical or illegal business practices. An exhaustive list of unethical practices cannot be provided. Instead, the Bank relies on the judgment of each individual employee to avoid such practices. Furthermore, each employee should endeavor to deal fairly with the Bank’s customers, suppliers, competitors and employees. No employee should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair business practice.
The Bank takes pride in the open honesty of its accounting system and relies on the cooperation of all employees who are involved in keeping financial records of any type in maintaining the integrity of the system. Bank policy requires that all books and records be maintained accurately and that no fund, asset, liability, revenue or expense be concealed or incompletely recorded for any purpose. Furthermore, all entries must be supported by documentation adequate to permit the books and records to be verified by audit.
The Bank’s internal auditing mechanism is essential to ensuring the accurate reporting of the Bank’s financial information. The Audit Committee has the responsibility to review the Bank’s polices and practice with respect to financial reporting. By conducting this review, the Audit Committee helps the Bank identify deficiencies in its practices so that they may be promptly corrected. Auditors shall have unrestricted access to all Bank documents and records. All employees are required to cooperate fully with internal and external audits. In no case may an employee make a false or misleading statement to any internal or external auditor, withhold records, or otherwise interfere with an audit. An employee who has knowledge of any unreported or improperly reported financial activity must report such information to a supervisor, the Ethics Officer or the Audit Committee. Please consult the section below entitled “Reporting Procedures” regarding an employee’s right to report questionable accounting or auditing practices to the Audit Committee.
The Bank expects all employees, officers and directors to comply with the provisions of this Code. Any waiver of this Code for executive officers or directors may be made only by the Board of Directors or a Board committee and will be promptly disclosed to the public as required by law. When necessary, a waiver will be accompanied by appropriate controls designed to protect the Bank.
In some situations, our employees may not be certain how to proceed in compliance with this Code. This uncertainty may concern the ethical nature of the employee’s own acts or the employee’s duty to report the unethical acts of another. When faced with this uncertainty, the employee should carefully analyze the situation and make use of company resources when determining the proper course of action. The Bank also encourages employees to talk to their supervisors, or other personnel identified below, when in doubt about the best course of action.
- Gather all the facts. Do not take any action that may violate the Code until you have gathered all the facts that are required to make a well-informed decision and, if necessary, you have consulted with your supervisor or the Ethics Officer.
- Is the action illegal or contrary to policy? If the action is illegal or contrary to the provisions of this Code, you should not carry out the act. If you believe that the Code has been violated by an employee, an officer or director, you must promptly report the violation in accordance with the procedures set forth in “Reporting Procedures” below.
- Discuss the problem with your supervisor. It is your supervisor’s duty to assist employees in complying with this Code. Feel free to discuss a situation that raises ethical issues with your supervisor if you have any questions. You will suffer no retaliation for seeking such guidance.
- Additional resources. The Executive Vice President/Chief Financial Officer (Stephen M. Annis), or President (Bart Hill) are available to speak with you about problematic situations if you do not feel comfortable approaching your direct supervisor. You may request assistance in writing by sending a request to the Ethics Officer, Bruce Maclin, Chief Executive Officer and Chairman of the Board of Directors, at Post Office Box 9129, Bakersfield, CA 93389.
All employees have a duty to report any violations of this Code, as well as violations of any laws, rules, or regulations. The Bank does not permit retaliation of any kind against employees for good faith reporting of ethical violations.
If you believe that the Code has been violated by an employee you must promptly report the violation to his or her direct supervisor, the Ethics Officer, or the Chairman of the Audit Committee. If a report is made to a supervisor, the supervisor must in turn report the violation to the Ethics Officer or the Chairman of the Audit Committee. All violations by an officer or director of the Bank must be reported directly to the Ethics Officer or the Chairman of the Audit Committee. Every employee also has a right to submit reports of questionable accounting or auditing practices to the Chairman of the Audit Committee.
- Reports to the Ethics Officer may be sent anonymously to the following address: Post Office Box 9129, Bakersfield, CA 93389.
- Reports to the Audit Committee may be sent anonymously to the following address: Mr. Louis J. Barbich; Barbich, Longcrier, Hooper & King; Post Office Box 11171; Bakersfield, CA 93379.
- Reports may be made anonymously to the Chairman of the Audit Committee by signing on to the San Joaquin Bank Intranet Home Page, and click on the link titled, “Contact Audit Committee.” All communications sent via the intranet link to the Audit Committee are strictly anonymous, thereby protecting the identity of any employee who chooses to make a report by this method.
The Bank has implemented the following disciplinary polices to ensure that prompt and consistent actions are taken in response to Code violations:
- Range of Penalties. All violations of this Code will be treated seriously and will result in the prompt imposition of penalties which may include (1) an oral or written warning, (2) a reprimand, (3) suspension, (4) termination and/or (5) restitution.
- Disciplinary Process. The penalty for a particular violation will be decided on a case-by-case basis and will depend on the nature and severity of the violation as well as the employee’s history of non-compliance and cooperation in the disciplinary process. Significant penalties will be imposed for violations resulting from intentional or reckless behavior. Penalties may also be imposed when an employee fails to report a violation due to the employee’s indifference, deliberate ignorance or reckless conduct. Where there is credible evidence of a violation, the Ethics Officer will determine the appropriate sanction with the assistance of the Audit Committee.
This Code and any provision contained herein may be amended or repealed by a majority of the Board of Directors.
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