EXCESSIVE OR LUXURY
Adopted – AUGUST 31, 2009
This Policy fulfills the requirements under the American Recovery and
Reinvestment Act of 2009 (ARRA) enacted February 17, 2009. ARRA requires each
recipient of funds under the Capital Purchase Program (CPP) of the Troubled
Assets Relief Program (TARP) to have in place a company-wide policy regarding
excessive or luxury expenditures, as identified by the Secretary of the
Department of the U.S. Treasury.
NCAL Bancorp, Inc (Company) and its subsidiary, National Bank of California,
prohibit excessive or luxury expenditures on entertainment and events, office or
facility renovations, aviation or other transportation services or other
activities or events that are not reasonable expenditures for conferences, staff
development, reasonable performance incentives or other similar measure
conducted in the normal course of business operations, including facility
Renovations of facilities and office spaces should be relative to the approved
project and current profit plan of the Company. An exception to this can
be allowed if management must deal with an emergency situation, such as an act
of nature, and the expenditure is necessary to make the facility operational for
customer use. At no time should renovations be done that would have the
appearance of being extraordinary, or excessive from a shareholder perspective.
Entertainment is defined as an activity that an Employee or Executive would use
corporate funds for business development purposes relating to a current customer
or prospective customer, or to further enhance the Company’s marketing efforts.
Our policy is that all expenses incurred by the Bank would be for Company
purposes, and used to maintain or drive business to the Bank. Occasional
events such as taking customers or prospects on trips, playing golf, eating
dinner, or taking them to other events the customer/prospect would find
pleasurable is a necessary part of the Company’s marketing efforts and is not
deemed as “luxury” or a violation of this Policy. These expenses should be
documented and detailed as to the benefit derived by the Bank through the normal
accounts payable process.
Events and parties focused on customers for the purpose of attracting their
business would not fall under this Policy.
We encourage our staff to attend conferences that are appropriate educational
opportunities. These conferences must be related to the financial services
industry and have a direct correlation to their job. At times it may be
appropriate that a spouse would travel to these conferences with Company
attendees. Typically these conferences are sponsored by vendors, banking
associations, or other industry related entities.
We feel that employee recognition/holiday parties are part of an employee
appreciation process. These events should be local in geographic nature, and may
not cost the Bank more than an average day’s payroll per employee, on average.
(Example: If the payroll is $8.3m annually divided by 260 days, equals
$40k in expense available for an appropriate holiday party.)
Retreats shall only be used for educational or business planning purposes, and
should be kept in consideration and looked at, in the same view and discretion
as all other expenses. Board education is a vital part of maintaining, and
keeping a dynamic director base, and this Policy should not limit a retreat that
is focused on strategic planning or education.
Transportation for Company staff to outlying locations, including bank
locations, conferences, business development purposes and merger and acquisition
research, should be conducted in the most cost appropriate way for the Company.
Modes of transportation to be used may consist of vehicle, commercial air or
rail service. The selection of transportation services will factor in
cost, efficiency and timeliness of travel. Private air services are not
allowed without the approval of the President & CEO of National Bank of California.
The CFO is responsible for the day-to-day administration of this Policy, and the
CEO is accountable for overall adherence to this Policy and must approve any
exceptions. Strict adherence to this Policy in mandated for all Company
employees. Violations of this Policy shall be promptly reported to the Board of
Directors. Following any approval of private air services by the President &
CEO, and the CFO shall certify that such approval was obtained and such
certification shall be maintained in the Company’s corporate records.
This Policy and any amendments hereto, shall be posted on the Company’s Internet