IV.
1. Personal Conduct.
An obligation rests with every officer and employee
of AFSB to render honest, efficient, and courteous performance of
duties and to conform to AFSB's standards of conduct. Respectful
behavior and a reasonable attitude toward work are required. All
officers and employees are required to comply with - and therefore
will be held responsible and accountable for adhering to - AFSB's
policies, rules, directives and procedures prescribed by AFSB through
supervisory or management personnel.
Furthermore, officers and employees must never use their position
with AFSB in an attempt to influence public officials or others
for personal gain or benefit. Nor should AFSB employment be used
as leverage for favors from customers or suppliers.
It is the policy of AFSB to thoroughly investigate the occurrence
of any major infraction and to appropriately discipline any responsible
officer or employee up to and including termination of employment.
Major infractions include but are not limited to the following:
(a) Any action which renders an officer, employee or director an
unacceptable security risk, adversely affects the Bank's public
image, or causes embarrassment to the Bank or its customers.
(b) Release of confidential information, or use of confidential
information for personal gain.
(c) Violation of AFSB's Equal Employment Opportunity Policy or Equal
Opportunity in Lending Policy.
(d) Violation of any federal, state, or local law or ordinance,
or any rule or regulation pertaining to job responsibilities.
(e) Misuse, misappropriation, or willful destruction or waste of
assets or property belonging to the Bank, its customers, or other
employees.
(f) Fighting with or physically abusing others or behaving in an
offensive manner during work hours.
(g) Unauthorized possession, distribution, or use of any intoxicant,
controlled substance, or drug (except as prescribed by a licensed
physician) during work hours.
(h) Removing or borrowing Bank property without permission.
(i) Helping anyone gain unauthorized entrance to the Bank's facilities
or property.
(j) Persistent financial irresponsibility.
(k) Willful failure to follow instructions; insubordination.
(l) Failure to report to work without proper notification to management
or leaving the Bank without proper authority.
(m) Disregarding safety or security regulations.
2. Dishonest or Fraudulent Acts.
All officers and employees have a duty to report, verbally or
in writing, promptly and confidentially, any evidence of any improper
practice of which they are aware. As used here, the term "improper
practice" means any illegal, fraudulent, dishonest, negligent
or otherwise unethical action arising in connection with Bank
operations or activities. Regulatory authorities require that
a written report be submitted, to the appropriate Bank officer
or employee, whenever a fraudulent act or theft occurs. Reports
of other types of improper practice should be submitted through
the department supervisor or Human Resources Officer.
Every employee is covered by our fidelity bond. AFSB will not
continue to employ anyone who ceases to be eligible for this coverage.
Coverage under the terms of our bond ceases for anyone who has
been found to commit any dishonest or fraudulent act. Obviously
this includes the misappropriation of money or other property.
While not so obvious, also included are the misposting of accounts
to favor oneself or another, or the making of any other false
entries, records, or reports, and the deliberate misrouting of
checks to delay payment. All transactions of the Bank will be
identified precisely and recorded in the financial records of
the Bank in accordance with generally accepted accounting practices.
(a) Whoever embezzles, abstracts or willfully misapplies any
of the Bank's money, funds, assets or valuables entrusted to the
custody or care of AFSB shall be liable for criminal prosecution.
(b) The same consequence applies to whoever makes any false entry
in any book, report or statement of AFSB with the intent to injure
or defraud AFSB or with the intent to deceive any officer of the
Bank, an examiner, or the FDIC or Office of Thrift Supervision.
(c) Whoever (except as provided by law) stipulates for or receives
or consents to receive any fee, commission, gift or thing of value
from any person or firm for procuring or endeavoring to procure
for such person or firm or for any other person or firm any loan
or extension or renewal of loan or substitution of securities,
or the purchase or discount of any paper, note or bill of exchange
shall be liable for criminal prosecution.
3. Protection of Confidential Information.
During the course of their work, AFSB officers, directors, and
employees may become aware of confidential information about the
Bank's customers and suppliers. Such information is privileged
and must be held in the strictest of confidence. It is to be used
solely for Bank purposes and never for personal gain by the employee
or any one else's personal benefit. Under no circumstances should
such information be transmitted to persons outside the Bank, including
family or associates, or even to other employees of AFSB unless
they need to know in order to discharge their responsibilities.
Care should be taken not to discuss any matter of a confidential
nature in public where the conversation might be overheard.
4. Financial Responsibility.
All officers, directors, and employees of AFSB should conduct
their financial affairs in such a responsible manner as to be
above criticism. The following list is intended only as a guide
and not as a complete or exhaustive list:
(a) Prompt payment of personal bills and debts.
(b) Avoid overdrafts in personal checking accounts.
(c) Use of any Bank credit cards, expense account reimbursements,
equipment and supplies only for official Bank use.
(d) Avoidance of salary advances.
(e) Employee loans are to be in strict compliance with internal
policies. This also applies to overdrafts.
(f) Employees are not to borrow money from customers or suppliers
of AFSB, other than recognized lending institutions. The term
"borrow" does not include a purchase from a customer
or supplier resulting in an extension of credit in the normal
course of business.
(g) Incurring indebtedness only for legitimate purposes made
in accordance with the requirements of Regulation O and any other
applicable laws, regulations or guidelines.
(h) Acting as an accommodation cosigner or guarantor for others
often results in the accommodation cosigner or guarantor having
to pay the obligation. Employees should not, therefore, assume
such liabilities unless they are in a position to pay the obligation
upon demand.
5. Personal Investments.
AFSB officers, directors, and employees should avoid entering
into transactions where it may appear that they are improperly
benefiting from their relationship with AFSB or which may violate
fiduciary relationships. While a complete list of such matters
cannot be given, the following transactions violate this policy
and suggest situations to be avoided:
(a) No investment interest, direct or indirect, in any of the
Bank's customers or suppliers is permitted except as outlined
below in paragraphs (b) and (c). Any exceptions must be approved
in advance by the Chairman of the Board or President of the Bank.
This prohibition applies to all forms of investment including,
but not limited to, securities, investment in a proprietorship,
joint venture, or similar business activities.
(b) Investments are permitted in companies who are customers
and/or suppliers if such securities are listed on an organized
exchange, or are traded in the over the counter market, or if
it is otherwise evident and clear that such investments are not
being made on any terms that are more favorable than those terms
available to the general public; subject, however, to the following
restrictions:
(1) Caution should be exercised by each officer, director, or
employee to assure that the nature and amount of such permitted
investments are in such amounts as are prudent for a person maintaining
a financial condition entirely within conservative limits.
(2) Acceptance of preferential treatment in the form of an allocation
of "hot" issues that are, or may become, in such demand
that the broker, investment banker, issuer, or other seller of
securities could reasonably expect to receive or has already received
favorable treatment by reason of making the allocation available
is prohibited.
(c) Investments in "limited partnership interests"
will be permitted if it is evident that such investments are not
being made on terms more favorable than those that are available
to the general public. In the case of "limited partnership
investments", it would be important that an individual's
investment be only one of several such interests sold to the general
public and in such amounts as are prudent for a person maintaining
a financial condition entirely within conservative limits.
(d) Personal investments or investments of immediate family members
should never involve the use of any confidential information which
might be considered to be "insider information", i.e.,
information not publicly disclosed.
(e) In the event that AFSB markets real or personal property
in which an officer, director, or employee has an interest to
purchase, the property will only be sold under the following conditions.
The transaction must occur on the same terms as would be available
to non-employees, the transaction must be approved by the Board
of Directors, and in the case of affiliated persons the transaction
must be approved by the Office of Thrift Supervision.
6. Membership in Community or Charitable Organizations.
Officers, directors, and employees have been and are encouraged
to be active and involved participants in the community. Membership
in organizations such as Big Brothers and Sisters, Jaycees, and
United Way is encouraged. Membership in service clubs is especially
encouraged for those employees who are in regular contact with
the public. Such activities should be limited by the person's
own interests and reasonable time requirements. Major outside
commitments must be approved in advance by the immediate supervisor
or other designated member of management. Other than the community
activity described above, officers and employees are discouraged
from engaging in any outside interest which will divert time or
attention from his/her Bank duties.
7. Directors, Officers, or Partners in Outside Companies.
No officer, director, or employee shall serve as an officer or
director of an outside business organization, except of a well-known
nonprofit organization, without notification to management. Likewise,
no officer, director, or employee shall become a partner in an
economic venture without notification to management.
8. Trade Associations and Relations with Competitors.
AFSB will act with trade associations and competitors only on
behalf of ethical objectives and will not participate in business
activities that are or could be construed to be in violation of
anti-trust laws.
9. Political Activities.
(a) It is the policy of AFSB not to contribute money, property,
or services to any government official, political party, or candidate
whether local, state or federal.
(b) It follows that the Bank is prohibited from offering or allowing
the use of its facilities, equipment, and personnel in connection
with any federal, state, or local election or campaign.
(c) Officers, directors, and employees may, and are encouraged
to, engage in any governmental, regulatory, and elective process
in which they are interested. This participation may be on an
individual basis, group basis, or as a member of a political action
committee. Since the Bank is without preference as to political
parties, candidates, and opinions, each officer, director, and
employee must act only on his/her own behalf and not give any
representation that he/she represents anyone other than himself/herself.
(d) At times when AFSB deems it appropriate to publicly state
a corporate position on a public issue, it will designate a spokesman
to speak either in support of or opposition to issues pending
before public bodies.
10. Public Statements.
(a) Although AFSB has a policy of maintaining good relations
with all news media and tries to accommodate media inquiries,
there is much information concerning the Bank that should not
be made available to the public. This includes information about
corporate customers which the Bank has a responsibility not to
divulge as well as information which may be valuable to a competitor.
(b) For these and other reasons, any inquiry made of you about
the Bank or a customer by the news media should be referred to
the appropriate officer.
11. Advertising Policy.
All AFSB advertising will ensure the ethical content and moral
impact of any advertising in any type media made for or on behalf
of the Bank shall be in accordance with social values and accepted
good taste.
12. Use of Bank Letterhead.
No officer, director, or employee will use official Bank stationary
for personal or non-job related purposes, particularly when such
use would imply endorsement by the Bank, or makes reference to
Bank employment in matters of personal dispute.
13. Receipt of Gifts.
Neither AFSB officers, nor employees shall accept gifts of substantial
value or unusual hospitality from any supplier or customer. It
is neither practical nor desirable to have an inflexible rule
against gifts of any specific kind or to precisely define a "substantial
gift". Any doubt about the proper course of action should
be discussed with your supervisor. Expenses paid for trips or
other extensive entertainment by customers or suppliers must be
approved in advance by the Chief Executive Officer or the President.
14. Bequests or Legacies from Non-relatives.
It is against the policy of AFSB for an officer or employee to
accept bequests or legacies from a customer under a Will or Trust
Instrument.
15. Customer Accounts.
AFSB is very conscious of its liability in handling all customer
accounts. Because of this concern, we do not want our officers
or employees included on customer accounts in any capacity unless
they are immediate family member accounts; accounts in which the
customer and the employee are contributors to the account; or
as a member of an organization having an account. In addition,
employees cannot personally do any transactions on their own personal
accounts or those of immediate family members or any account of
an organization to which they belong. These transactions include,
but are not limited to: loans, deposits and withdrawals, cashing
of checks, opening of new accounts, information changes on accounts,
handling of safety deposit boxes, etc. Any employee who notes
a suspicious transaction by another employee or officer should
bring it to the attention of their supervisor or any Bank officer.
For customer account purposes, immediate family is defined as:
spouse, children, parents, grandparents, brothers, sisters and
grandchildren and those spousal counterparts.
Revised June 2003
16. Conflicts of Interest.
(a) Officers, directors, and employees of AFSB are expected to
conduct their private business and personal activities in a manner
that avoids conflict of interest either with the Bank or the Bank's
customers. "Conflict of interest" is defined as any
situation where an individual has two or more duties or interests
that are mutually incompatible. Example: An officer, director,
or employee has a personal financial interest in a business or
venture that banks with AFSB so that one's judgment might reasonably
be influenced by that non-bank relationship. No lending officer
or employee should loan, review a loan, or make any decision regarding
a loan of any customer, syndicate, or corporation in which he
or she has a present or a prospective financial interest.
(b) Loan applications submitted to AFSB loan officers by relatives
or close personal friends (or entities controlled by relatives
or close personal friends) are to be approved by the Senior Loan
Committee.
(c) No officer, director, or employee should take advantage of
a business opportunity for his/her own or another person's personal
benefit when such opportunity is within the corporate powers of
AFSB and when the opportunity is of present or potential practical
advantage to AFSB.
17. Provision for Dealing with Policy Violations.
(a) Known or suspected conflicts of interest, usurpations of
corporate opportunity, dishonest or fraudulent acts, and/or significant
violations of the code of ethics must be reported as soon as possible
to an Executive Officer (chief executive officer, president, chief
lending officer, chief operations officer, or chief financial
officer). An appropriate response will be decided upon by the
Executive Officers no later than the next weekly Executive Officers
meeting following the report of known or suspected violation.
(b) Known or suspected violations involving the chief executive
officer or the president must be reported as soon as possible
to the vice-chairman of the Board of Directors. An appropriate
response will be decided upon by only the outside directors no
later than the next regular monthly Board of Directors meeting
following the report of known or suspected violation.
18. Additional items specifically for principal executive officer
(President and Chief Executive Officer), principal financial officer
(Senior Vice President - Treasurer), and principal accounting
officer (Vice President - Accounting and Compliance).
a) American Federal Savings Bank (the Bank) is a wholly owned
subsidiary of Eagle Bancorp (Eagle) which acts as the Bank's holding
company. Eagle has no other significant activities other than
acting as the Bank's holding company. As such, in substance, all
Bank employees are Eagle employees. Eagle is a publicly traded
company and therefore subject to federal and state rules and regulations
regarding financial securities. Herein, "Company" refers
to both the Bank and Eagle.
Revised June 2003
b) The President & Chief Executive Officer, Senior Vice President
- Treasurer, and Vice President - Accounting and Compliance will
report the company's financial position and activities in full,
fair, accurate, and timely reports to the Securities and Exchange
Commission (SEC) and in any other public release of financial
information in accordance with generally accepted accounting principles
and SEC rules and regulations.
c) All financial activities will be recorded in the company's
ledgers accurately, completely, and in the proper time period
in accordance with prescribed accounting standards. Those financial
items that encompass significant management assumptions (such
as, but not limited to allowance for doubtful accounts) will be
made in accordance with prescribed policies and procedures and
using best judgment and estimates. The overriding factor when
applying accounting assumptions will be to present the financial
results accurately and fairly. Under no circumstances will these
officers use their position to influence others in making inaccurate,
incorrect, or misleading entries into the company's financial
records.
d) Violations of these provisions are considered to be a serious
matter and if willful or flagrant will be considered grounds for
termination of employment.
V. SUMMARY:
In summary, the officers, directors, and employees of American
Federal Savings Bank must be conscious of the fact that in the
eyes of our customers and of the general public we are custodians
of their financial assets. It is their expectation that we will
exercise great care with these assets and the fact that we do
not have any conflicts of interest or the appearance of a conflict
of interest will contribute greatly to their confidence in American
Federal Savings Bank.
In order to assure that each officer, director, and employee
understands this policy, they will be required to sign a Certification
and Disclosure Form (Exhibit A) that acknowledges their responsibility
for ethical conduct and conflicts of interest.
Directors and Principal Officers (vice-president and above) will
also be required to sign Disclosure Form (Exhibit B) annually.
Exhibit A
Within its meaning, both expressed and implied, I am not aware
of any circumstance or activity of a personal or family nature
which would conflict with the interest of the savings bank except
as indicated below. (If nothing to report, please write "None").
Are you an officer or director of any business, other than the
savings bank, which is operated for a profit?
Are you directly or indirectly, either alone or with your spouse
and the members of your immediate family, affiliated with a business
as an owner, partner, or investor controlling 10% or more of the
shares outstanding in any corporation?
I wish to report the following information on the "Yes"
answers to the above questions. (Use the back of this sheet or
additional sheets, as needed).
