Policy Regarding Excessive or Luxury Expenditures
FIRST STATE BANK
Gothenburg - Omaha - Ralston
Current Board Approval: June 18, 2010
The Board of Directors and Executive Management of First State Bank (FSB)
are committed to complying fully with the requirements of the TARP (Troubled
Asset Relief Program) Standards for Compensation and Corporate Governance
as defined by the Department of the Treasury (31 CFR Part 30) pursuant to
requirements set forth in the Emergency Economic Stabilization Act of 2008
("EESA"), as amended by the American Recovery and Reinvestment Act
of 2009 ("ARRA") during the period that FSB participates in the
TARP Capital Purchase Program.
Objectives and General Policy
FSB prohibits excessive or luxury expenditures. This includes entertainment
and other events, facility renovations, aviation and other travel, and any
other activities that are not reasonable expenditures for business development,
conferences or staff development. An expenditure is considered "excessive
or luxury" if the cost is greater than the benefit derived by the FSB
or if the benefit is at least equal to the cost, but the amount of the expenditure
is substantial and might be perceived as disproportionately greater than the
benefit. Any expenses that could be considered excessive or luxury require
approval by the CEO. All employees of First State Bank and any subsidiaries
are subject to this policy and will be held accountable for compliance with
It is the policy that FSB employees utilize corporate assets in a prudent
manner and as such are hereby precluded from engaging in excessive or luxury
All travel expenses shall be incurred and approved in accordance with policies
and procedures included in the FSB Employee Manual. All travel related expenses
incurred by an employee in the ordinary course of business shall be submitted
on an employee expense report and approved by such employee's supervisor before
being submitted to Accounts Payable for reimbursement.
Auto: The standard rate for mileage reimbursement for using personal
vehicles for business purposes is the IRS guideline in effect at the time
Lodging: Employees and directors are encouraged to avoid overnight stays
whenever possible. All overnight stays require approval by the employee's
supervisor or the CEO. When possible, all lodging should be booked through
the appropriate personnel with knowledge of any corporate rates or discounts.
Meals: The Bank will reimburse employees for reasonable meal expenses
that are incurred during business related travel. All meal costs greater then
$25 must be substantiated with a valid receipt and submitted for reimbursement
on the employee's expense report.
Air and other Transportation: All transportation must be conducted in
the most cost appropriate way for FSB, depending on cost, efficiency, availability,
and timeliness of travel. All air fares and reservations should be booked
in a method to facilitate obtaining the lowest reasonable rate. Travel by
commercial carrier should be in coach class unless approved by the CEO.
Office and Facility Improvements and Renovations
FSB strategy and objectives for fixed assets is to minimize costs to promote
a strong efficiency ratio. Renovations of facilities and office spaces should
be proportionate to the need and the current profit and strategic plans. At
no time should renovations be done that would have the appearance of being
extraordinary or excessive. All fixed asset expenditures over $5,000 require
approval of the Chairman and CEO.
Events and Entertainment
All meetings and entertainment costs must serve a legitimate business purpose.
All meetings or events with a cost exceeding $1,000 require approval by the
CEO. Entertainment expenses include use of corporate funds relating to a current
or prospective customer. Occasional events, such as taking prospects golfing,
meals or other similar events are not considered "Luxury or Excessive."
Discretion should be used and it is recommended that employees utilize existing
bank season sporting events tickets if available. All event and entertainment
expenses must be documented and approved on the employee expense report.
Staff training events, holiday parties and employee-appreciation events may
be held. These events are expected to be nominal in cost and if an event cost
exceeds $2,500 must be approved by the CEO.
Reporting of Violations
Any individual who knows a violation of this Policy must report the violation
immediately to such individual's supervisor who shall then report the violation
to the CEO. Any employee who engages in extravagant spending shall be subject
to disciplinary action.
The respective CEO and the Chief Financial Officer of FSB shall certify to
the Board annually that the provisions of this Policy are being enforced and
are sufficient to provide reasonable assurance that the expenditures for such
purposes are not excessive.
Amendments and Modifications
This Policy shall be subject to modification only with the approval of the
Board stating the specific business rationale for the change in policy.