CODE OF ETHICS
COOPERATIVE BANKSHARES, INC.
AS APPROVED BY THE BOARD OF DIRECTORS
MAY 27, 2007
GENERAL
PHILOSOPHY
The
honesty, integrity and sound judgment of our directors, officers and employees
is essential to the reputation and success of Cooperative Bankshares, Inc.
This
Code of Ethics governs the actions and working relationships of directors,
officers and employees of Cooperative Bankshares, Inc., its subsidiaries and
affiliates, including Cooperative Bank and Lumina Mortgage (collectively,
“the Company”) with current and potential customers, consumers,
fellow employees, competitors, government and regulatory agencies, the media,
and anyone else with whom the Company has contact. These relationships are essential to the
continued success of the Company as a financial services provider.
This
Code of Ethics:
· Requires the highest standards for honest and ethical
conduct, including proper and ethical procedures for dealing with actual or
apparent conflicts of interest between personal and professional relationships.
· Requires full, fair, accurate, timely and
understandable disclosure in the periodic reports required to be filed by the
Company with governmental and regulatory agencies.
· Requires compliance with applicable laws, rules and
regulations.
· Addresses potential or apparent conflicts of interest
and provides guidance for directors, officers and employees to communicate
those conflicts to the Company.
· Addresses misuse or misapplication of Company property
and corporate opportunities.
· Requires the highest level of confidentiality and fair
dealing within and outside the Company environment.
· Requires reporting of any illegal behavior.
CONFLICTS OF
INTEREST
A
"conflict of interest" occurs when your private interest interferes
or appears to interfere in any way with the interests of the Company. You are expected to avoid all situations
that might lead to a real or apparent material conflict between your
self-interest and your duties and responsibilities as an employee, officer or
director of the Company. Any
position or interest, financial or otherwise, which could materially conflict
with your performance as an employee, officer or director of the Company, or
which affects or could reasonably be expected to affect your independence or
judgment concerning transactions between the Company, its customers, suppliers
or competitors or otherwise reflects negatively on the Company would be
considered a conflict of interest.
CONFIDENTIALITY
Nonpublic
information regarding the Company or its businesses, employees, customers and
suppliers is confidential. As a
Company employee, officer or director, you are trusted with confidential
information. You are only to use
such confidential information for the business purpose intended. You are not to share confidential information
with anyone outside the Company, including family and friends, or with other
employees who do not need the information to carry out their duties. You may be required to sign a specific
confidentiality agreement in the course of your employment at the Company. You remain under an obligation to keep
all information confidential even if your employment with the Company ends.
The
following is a non-exclusive list of confidential information:
(i)
Trade secrets,
which include any business or technical information, such as formula, program,
method, technique, compilation or information that is valuable because it is
not generally known.
(ii)
All rights to any
invention or process developed by an employee using the Company facilities or
trade secret information, from any work for the Company, or relating to the
business of the Company, is considered to be
"work-for-hire" under the
(iii) Proprietary information such as customer lists and
customers’ confidential information.
Public
and media communications involving the Company must have prior clearance from
the President or Executive Vice President of the Company.
CORPORATE
OPPORTUNITIES
Using
confidential information about the Company or its businesses, directors,
officers, employees, customers, consumers or suppliers for personal benefit or
disclosing such information to others outside your normal duties is prohibited.
Title
18 U.S. Code, Section 215, makes it a criminal offense for any employee of the
Company to corruptly:
(i)
solicit for
himself or herself or for a third party anything of value from anyone in return
for any business, service or confidential information of the Company; or
(ii)
accept anything of value (other than normal authorized
compensation) from anyone in connection with the business of the Company, either
before or after a transaction is discussed or consummated.
Directors,
officers and employees are prohibited from:
(i)
Personally
benefiting from opportunities that are discovered through the use of Company
property, contacts, information or position.
(ii)
Accepting
employment or engaging in a business (including consulting or similar
arrangements) that may conflict with the performance of your duties or the
interest of the Company.
(iii) Soliciting, demanding, accepting or agreeing to accept
anything of value from any person in conjunction with the performance of your
employment or duties at the Company.
(iv) Acting on behalf of the Company in any transaction in
which you or your immediate family has a significant direct or financial
interest.
There
are certain situations in which you may accept a personal benefit from someone
with whom you transact business such as:
(i)
Accepting a gift
in recognition of a commonly recognized event or occasion (such as a promotion,
new job, wedding, retirement or holiday).
An award in recognition of service and accomplishment may also be
accepted without violating these guidelines so long as the gift does not exceed
$250 from any one individual in any calendar year. Amounts of $250 to $1,000 do not violate
these guidelines provided the acceptance of such gift is disclosed and
pre-approved by the Audit Committee of the Company.
(ii)
Accepting
something of value if the benefit is available to the general public under the
same conditions on which it is available to you.
(iii) Accepting meals, refreshments, travel arrangements,
accommodations and entertainment of reasonable value in the course of a meeting
or other occasion to conduct business or foster business relations if the
expense would be reimbursed by the Company as a business expense, if the other
party did not pay for it.
INSIDER
TRADING
It
is both unethical and illegal to buy, sell, trade or otherwise participate in
transactions involving the Company common stock or other security while in possession
of material information concerning the Company that has not been released to
the general public, but which when released may have an impact on the market
price of the Company common stock or other equity security. It is also unethical and illegal to buy,
sell, trade or otherwise participate in transactions involving the common stock
or other security of any other company while in possession of similar
non-public material information concerning such company. Directors, officers and employees are
advised that they are required to comply with the Company Insider Trading
Policy (the “Insider Trading Policy”). Any questions concerning the propriety
of participating in a Cooperative Bankshares or other company stock or other
security transaction should be directed to Linda Garland, Vice President
/Corporate Secretary, at (910) 343-0181. Copies of the Insider Trading Policy
are available from Linda Garland and are included in the Employee Manual.
EXTENSIONS
OF CREDIT
The
Company's subsidiary bank may extend credit to any executive officer, director,
or principal shareholder of the Company only on substantially the same terms as
those prevailing for comparable transactions with other persons or that may be
available to bank employees generally as permitted by and in accordance with
Regulation O of the Board of Governors of the Federal Reserve System.
OUTSIDE
BUSINESS RELATIONSHIPS
Before
agreeing to act as a director, officer, consultant, or advisor for any other
business organization, you should notify Frederick Willetts, III in writing.
Directors
should disclose all new directorships or potential directorships to the
Chairman of Board of Directors and the Audit Committee in order to avoid any
conflicts of interest and to maintain independence.
The
Company encourages civic, charitable, educational and political activities as
long as they do not interfere with the performance of your duties. Before
agreeing to participate in any civic or political activities, you should
contact your immediate supervisor.
Employees
who are considering outside employment should first notify Frederick Willetts,
III. Employees in some positions of
the Company are prohibited by law from holding outside employment. Managers will review outside employment
requests for potential conflicts of interest.
FAIR DEALING
Each
director, officer and employee should undertake to deal fairly with the
Company's customers, suppliers, competitors and employees. Additionally, no one should take
advantage of another through manipulation, concealment, abuse of privileged
information, misrepresentation of material facts, or any other unfair-dealing
practices.
Employees
must disclose prior to or at their time of hire the existence of any employment
agreement, non-compete or non-solicitation agreement, confidentiality agreement
or similar agreement with a former employer that in any way restricts or
prohibits the performance of any duties or responsibilities of their positions
with the Company. Copies of such
agreements should be provided to Dare Rhodes, Vice President-Human Resources to
permit evaluation of the agreement in light of the employee's position. In no event shall an employee use any
trade secrets, proprietary information or other similar property, acquired in
the course of his or her employment with another employer, in the performance
of his or her duties for or on behalf of the Company.
Employees
should not directly or indirectly accept bequests under a will or trust if such
bequests have been made to them because of their employment with the Company.
PROTECTION
AND PROPER USE OF COMPANY PROPERTY
All
directors, officers and employees should protect Company property and assets
and ensure their efficient and proper use.
Theft, carelessness and waste can directly impact the Company's
profitability, reputation and success.
Permitting Company property (including data transmitted or stored
electronically and computer resources) to be damaged, lost, or used in an
unauthorized manner is strictly prohibited. Employees, officer and directors may not
use corporate, bank or other official stationery for personal purposes.
COMPLIANCE
WITH LAWS, RULES AND REGULATIONS
This
Code of Ethics is based on the Company's policy that all directors, officers and
employees comply with the law.
While the law prescribes a minimum standard of conduct, this Code of
Ethics requires conduct that often exceeds the legal standard.
REPORTING OF
ILLEGAL OR UNETHICAL BEHAVIOR AND VIOLATIONS OF THIS CODE OF ETHICS
All
directors, officers and employees are expected to demonstrate the ability to
properly manage their personal finances, particularly the prudent use of
credit. The Company recognizes that
its customers must have faith and confidence in the honesty and character of
its directors, officers and employees.
In addition to the importance of maintaining customer confidence, there
are specific laws that outline the actions the Company must take regarding any
known or suspected crime involving the affairs of the Company. With regard to financial affairs, a bank
must make a criminal referral in the case of any known or suspected theft,
embezzlement, check/debit card kiting, misapplication or other defalcation
involving bank funds or bank personnel in any amount.
Fraud
is an element of business that can significantly affect the reputation and
success of the Company. The Company
requires its directors, officers and employees to talk to supervisors, managers
or other appropriate personnel to report and discuss any known or suspected
criminal activity involving the Company or its employees. If, during the course of employment, you
become aware of any suspicious activity or behavior including concerns
regarding questionable accounting or auditing matters, you must report
violations of laws, rules, regulations or this Code of Ethics to the Audit
Department. Reporting the activity
will not subject the employee to discipline absent a knowingly false report. All employees should review the
Cooperative’s Whistleblower Procedures contained in the Bank’s
Employee Manual.
ADMINISTRATION
AND WAIVER OF CODE OF ETHICS
This
Code of Ethics shall be administered and monitored by the Company’s Audit
Department. Any questions and
further information on this Code of Ethics should be directed to this
department.
All
managers and direct supervisors are responsible for reviewing this Code of
Ethics with their subordinates each time a new edition of the Code of Ethics is
published.
The
provisions of the Ethics Policy will be included in the Company Employee
Handbook. The Employee Handbook
will be issued to all new employees and officers at the time of employment and
reissued to existing employees and officers from time to time. Employees will be required to sign a
receipt form for the Employee Handbook indicating they have read this Code of
Ethics and comply with its provisions.
The Code of Ethics will also be posted on our internet website.
Directors,
officers and employees of the Company are expected to follow this Code of Ethics
at all times. Generally, there
should be no waivers to this Code of Ethics. However, in rare circumstances conflicts
may arise that necessitate waivers.
Waivers will be determined on a case-by-case basis by the Company Audit
Committee with the advice of the Company attorneys. However, waivers for directors and
executive officers must be determined by the Board of Directors. For members of the Board of Directors
and executive officers, the Board of Directors shall have the sole and absolute
discretionary authority to approve any deviation or waiver from this Code of
Ethics. Any waiver and the grounds
for such waiver by directors or executive officers shall be promptly disclosed
to stockholders in a Current Report on Form 8-K.
Known
or suspected violations of this Code of Ethics will be investigated and may
result in disciplinary action up to and including immediate termination of
employment.
ACKNOWLEDGEMENT
The
undersigned has read, understands, and agrees to abide by this Code of Ethics
and has retained a copy for his/her records.
By: ___________________
Name: ___________________
Title: ___________________
Date: ___________________