Armed Forces Bank

Armed Forces Bank

Serving active military, retired military, and civilian customers since 1907.

Armed Forces Bank specializes in military banking and has been serving active military, retired military, and civilians since 1907. True to our motto “Your Hometown Bank Around the World,” customers can bank with us, worldwide, by phone, mail, internet, and automated teller machines.

We provide easy and affordable access to our services through toll-free customer service numbers, a toll-free 24-hour automated account information line, a web site, e-mail, and through the major ATM networks. We are one of the few banks in the U.S. that has a fully staffed call center to provide round-the-clock, 24-hour, 7-day-a-week customer support. Our customers receive competitive loan rates and, in many cases, same day loan approval. As a result, we have customers in each of the 50 states, in foreign countries, and on many U.S. ships.

In addition, we have opened full-service branches inside the Main Exchange on a number of military installations. These branches offer 7-day-a-week banking and are open during Exchange business hours. Our goal is to provide individualized, personal service that meets the needs of our customers wherever they are stationed around the world.

Armed Forces Bank is a national bank, financially strong and stable. We are part of a military banking group owned and operated by Dickinson Financial Corporation (DFC). DFC is a multi-bank holding company headquartered in Kansas City, Missouri. DFC also owns Armed Forces Bank of California, San Diego, California, and Academy Bank with branches throughout Colorado.

*Academy Bank

**Armed Forces Bank of California

A. Purpose
The Board of Directors of Dickinson Financial Corporation II (the “Company”) has adopted this Excessive or Luxury Expenditure Policy (“Policy”) in compliance with the requirements under the American Recovery and Reinvestment Act of 2009 (“ARRA”) enacted February 17, 2009. The ARRA, which amends certain sections of the Emergency Economic Stabilization Act of 2008, requires each recipient of funds under the Capital Purchase Program of the Troubled Assets Relief Program (“TARP”) to have in place a company-wide policy regarding excessive or luxury expenditures during the period that the Company participates in TARP, as identified by the Secretary of the Department of the U.S. Treasury (“Treasury”).

It is the Company’s Policy and that of its banking subsidiaries (individually, a “Bank” and collectively, the “Banks”), to prohibit excessive or luxury expenditures with respect to the following:

* entertainment and events;
* office and facility renovations;
* aviation or other transportation services; and
* other activities or events that are not reasonable expenditures for conferences, staff development, reasonable performance incentives, or other similar measures conducted in the normal course of Company or Bank business operations.

Executive management of the Company is responsible for the effective implementation of this Policy. To that end, executive management shall have the following roles:

1. Monitor expenditures addressed by this Policy to ensure compliance.
2. Document and justify any exceptions to this Policy and report exceptions to the Board.
3. Promptly recommend modifications of this Policy to the Compensation Committee to ensure that it remains compliant with the TARP Standards for Compensation and Corporate Governance as defined by the Treasury (31 CFR Part 30) as it may be amended.
4. Ensure that the Policy is posted on the Company and Bank websites.
5. This Policy applies to all employees of the Company and the Banks. Additionally, this Policy specifies prohibits expenditures, approval procedures for expenditures which require prior approval, certification requirements of the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), the reporting of actual or suspected violations, and compliance monitoring.

B. Scope of Policy

The types and categories of expenditures covered by this Policy are as follows:

1. Entertainment: Entertainment is defined as an activity that an employee or executive officer would use corporate funds for business-development purposes relating to a current customer or prospective customer or to further enhance the Company or a Bank’s marketing efforts. The Company’s Policy is that all expenses incurred by the Company or any of the Banks should be for corporate purposes and used to develop business of the Company or the Banks. 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 Company or Bank marketing efforts and not deemed as “luxury” or a violation of this Policy. These expenses should be documented and detailed as to the benefit derived by the Company or a Bank through the normal accounts payable process.

2. Conferences/Events: The Company encourages its employees and officers 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 or Bank attendees. Typically these conferences are sponsored by vendors, banking associations, or other industry-related entities. Meetings and conferences may include both those that are internally organized as well as those organized by other banks, trade associations, vendors and similar organizations. The cost of such meetings and conferences must be approved in advance by a supervisor or member of executive management of the Company or appropriate Bank.

3. Employee Recognition/Holiday Parties: Employee recognition/holiday parties are part of the Company’s employee appreciation process. These events should be local in geographic nature and reasonable in cost.

4. Board/Management Retreats: Retreats shall only be used for educational or business-planning purposes. 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.

5. Office and Facility Renovations: Renovations of facilities and office spaces should be relative to the approved project and current business plan of the Company or a Bank. An exception will be permitted to address an emergency situation, such as an act of nature, and the expenditure is necessary to make the facility operational for customer use. Expenditures for office furnishings, remodeling, or redecoration for any senior executive officer as defined in the EESA (“SEO”), the aggregate cost of which exceeds $25,000, is generally prohibited. This prohibition does not extend to a corporate relocation or remodeling impacting a majority of the corporate offices or a newly-constructed branch, branch renovation, or branch relocation.

6. Aviation or Other Transportation Services: Transportation for Company or Bank 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 and the Banks. 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. Expenditures for the use of an automobile by Company or Bank officers must be reasonable. Private air services are not allowed without the approval of the Company Chief Executive Officer (“CEO”).

C. Expenditures Requiring Prior Approval

1. General: The following expenditures require the pre-approval of the CEO or the CFO if the amount exceeds $10,000 and are not otherwise prohibited by this Policy:

1. entertainment, conferences, board/management retreats, or other events;
2. office and facility renovations;
3. aviation or other transportation services; and
4. other similar items, activities, or events for which the Company may reasonably anticipate incurring expenses or reimbursing an employee for incurring expenses.

2. Exceptions: Notwithstanding the foregoing, prior written approval is not required for the following expenditures:

1. to remediate emergency or hazardous conditions;
2. to comply with building codes and ordinances;
3. to satisfy legal, contractual, or regulatory requirements; and
4. under the Board-approved annual operating budget.

D. Administration and Certifications

The Company’s Chief Financial Officer (“CFO”) and accounting staff are 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 is mandated for all Company and Bank employees.

Within 90 days of the completion of each fiscal year of the Company, the CEO and CFO of the Company shall certify that the Company and its employees have complied with this Policy during the fiscal year or since the date of enactment of this Policy and that any expenses requiring approval were properly approved. This certification shall be provided to the Department of the Treasury and the Office of the Comptroller of the Currency.

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