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Board Approved 09-13

Summary of Requirements

This policy fulfills the requirements under the Emergency Economic Stabilization Act of 2008 (“EESA”) enacted October 3, 2008, and the American Recovery and Reinvestment Act of 2009 (“ARRA”) enacted February 17, 2009. ARRA requires each recipient of funds under the Capital Purchase Program of the Troubled Assets Relief Program to have in place a company-wide policy regarding excessive or luxury expenditures, as identified by the Secretary of the Department of the United States Treasury and the Interim Final Rule promulgated under EESA and AARA.

Grand Mountain Bancshares, Inc., a Colorado corporation (the “Company”), and its banking subsidiary, Grand Mountain Bank, a federal savings bank (the “Bank”), 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 measures conducted in the normal course of business operations of the Company or the Bank.

All employees, officers and Directors of the Company and the Bank are subject to this policy and will be held accountable for violations of this policy.

I. Activities Covered by the Policy

The following activities are covered by this policy which prohibits excessive or luxury expenditures for these activities. The employees, officers and Directors of the Company and the Bank must be cognizant of the requirement that expenditures for these items be both necessary for the Company’s and Bank’s operations and reasonable in regards to their cost and benefit to the Company and the Bank.


Renovations of facilities and office spaces should be consistent with to the approved project budget and current strategic plan, and with the capital expenditure policy of the Company. An exception to this can be allowed if management must address 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 performed that would have the appearance of being extravagant or excessive from a shareholder perspective. Other than emergency conditions, renovations to facilities and office space with an estimated cost over $5,000 must be approved by the Board of Directors.


Entertainment is defined as an activity for which an employee or officer would use corporate funds for business development purposes relating to a current customer(s) or prospective customer(s) or to further enhance the Company’s and the Bank’s marketing efforts.

Our expectation is that all expenses incurred by the Bank will be for business purposes, and used to drive business to the Bank. Permitted activities include but may not be limited to dinner, golf or other sporting events, other entertainment events which the customer/ prospect would find pleasurable such activities are considered necessary part of the Company’s and the Bank’s marketing efforts and are not deemed as “entertainment” or violation of this Excessive or Luxury Expenditures 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 specifically designed and focused on customers for the purpose of attracting their business are not subject to this policy.

Entertainment activities involving trips outside of Grand County will need the approval of the Chief Financial Officer prior to the start of the trip. If this authorization is not obtained, then reimbursement to the employee may be denied. Activities of this type by the Chief Financial Officer and President will require prior approval by the President and Board Chairman, respectively.


We encourage our staff to attend conferences that are appropriate educational opportunities. These conferences should be related to the financial service 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. Spouses would be required to cover their own expenses, such as air fare and meals as further explained in Section III below. Typically these conferences are sponsored by vendors, banking associations, or other industry related entities.

This Policy does not apply to reward conferences whether paid for by the Company or other vendors and will not be considered a violation of this policy if the purpose is meant to be a reward for achieving appropriate production goals.

The attendance at conferences must be approved by the employee’s supervisor prior to registration. The activities of this type by the Chief Financial Officer and President will require prior approval by the President and Board Chairman, respectively.

Employee Recognition/Holiday Parties

We believe that employee recognition/holiday parties are an important part of the employee appreciation and development process. These events should be held in the Bank’s geographical market area and would include costs for such things as service awards and nominal door prizes. An event should not cost the sponsoring business unit more than an average day’s payroll per employee.

Board/Management Retreats

Retreats should only be used for educational or strategic planning purposes, and should be held in the Bank’s geographical market area. It is understood that Board education is a vital part of maintaining a dynamic director base, and this policy not limit retreats that are focused on strategic planning or education.

Events and parties focused on customers for the purpose of attracting their business would not fall under this policy.

Aviation Services

Transportation for Company and Bank staff to out of market locations, including bank locations, conferences, business development activities and merger and acquisition research, should be conducted in the most cost appropriate way for the Company. The accounting department will analyze, when appropriate, the mode of transportation most appropriate for the Company. Modes of transportation to be considered would generally include personal vehicle, commercial air service or private air service. The analysis should consider factors such as cost, efficiency and timeliness of travel. An employee’s mode of travel will be approved by their supervisor prior to purchase.

III Spouse and Family Travel

At times it is necessary for the Employee, Officer or Director to bring their spouse or family with them to conferences or sponsored events. The Company and the Bank will pay for their general registration to events which are designed for joint attendance. However, their travel costs (airline) and extracurricular activities will not be paid by the Bank. The Employee, Officer or Director may make a request to the Chief Financial Officer payment of these extra items if he or she believes that payment should be made based on the circumstances. The activities of this type by the Chief Financial Officer and President will require prior approval by the President and Board Chairman, respectively.

IV Non-Compliance with Policy

Employees will be subject to disciplinary action if they are found to be in violation of this policy. This may include activities which are considered excessive and costly in relation to their benefit. The employee’s supervisor may deny reimbursement above what would be considered reasonable cost as well as consider a prohibition from future activities or outright termination. Employees have been informed by a formal internal communication that employees are required to report instances of what they consider to be excessive expenditures to the President or if in regards to the President, then to the Board Chairman.


Policy: Excessive or Luxury Expenditures Policy

Date Adopted: September 27, 2013

This is to certify that the Excessive or Luxury Expenditures Policy was presented to the Board of Directors of Grand Mountain Bancshares, Inc. at its regularly scheduled meeting held on September 27, 2013, was unanimously approved and adopted.

Attest: Frank L. Delay, President and CEO

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