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Community Bancorp. LogoFor Community Bancorp. and Community National Bank

The boards of directors of Community Bancorp. (the “Company”) and its subsidiary, Community National Bank (the “Bank”), aspire to the highest standards of corporate governance and ethical conduct. To that end, they have adopted the following corporate governance principles to assist them in fulfilling their role in the oversight of the management of the Company and the Bank for the benefit of the shareholders.  These principles reflect the directors’ commitment to oversee the effectiveness of policy and decision making at both the board and management level and reflect their recognition that the best interests of the Company’s shareholders are advanced by also responsibly addressing the interests of our customers, employees, communities and other relevant stakeholders. The corporate governance principles set forth below are intended to serve as a flexible framework, not legally binding requirements, and should be interpreted and applied in the context of the charter documents and bylaws and applicable law. The directors periodically review these principles and other aspects of the corporate governance framework, including board committees and charters, and may amend them from time to time.

General Principles

  • The basic responsibility of corporate directors is to exercise their business judgment in a manner they reasonably believe to be in the best interests of the corporation and its shareholders and to act in accordance with their duties of care and loyalty.
  • In discharging their obligations, the directors are entitled to rely on the honesty, integrity, business acumen, competence and experience of management, its outside auditors and other advisors.
  • Board members should be qualified for their positions, have a clear understanding of their role in corporate governance and be able to exercise sound judgment about the affairs of the Company and the Bank.
  • The members of the board should collectively possess a broad range of skills, expertise, knowledge and business and other experience useful to the effective oversight and promotion of the Company’s banking business.
  • A substantial majority of the board should meet the independence standard under the NASDAQ rule, which is the standard the board has voluntarily adopted. The board, by resolution, should review and affirmatively determine the independence of directors each year.
  • The board of directors should approve and oversee the Bank’s strategic objectives, risk tolerance and corporate values and ensure that they are communicated throughout the banking organization.
  • The board of directors should select and retain competent management and ensure that key members of the management team receive the training and ongoing support they need to be successful. The board should also ensure that management succession plans and procedures are in place for the Company and the Bank.
  • The board should ensure that the Company and the Bank, through senior management, maintain high ethical standards and effective policies and practices designed to protect the reputation, assets and business of the Company and the Bank. The board has adopted a code of ethics for the Company’s senior financial officers and the principal executive officer which embodies these standards.
  • The board of directors should set and enforce clear lines of responsibility and accountability throughout the organization.
  • The board should ensure that there is appropriate oversight by senior management of the day-to-day banking business, consistent with board policy.
  • The board and senior management should effectively utilize the work conducted by internal audit, external auditors, and internal control functions.
  • The board should ensure that Bank compensation policies and practices are consistent with the Bank’s corporate culture, long-term objectives and strategy, risk tolerance and control environment.
  • The organization should be governed in a manner that is transparent to all stakeholders , including shareholders, directors, employees, auditors and regulators.
  • The board and senior management should understand the Bank’s operational structure, including where and how the Bank operates and the products and services it provides.
  • The board and senior management should be cognizant of the legal and regulatory environment in which the Company and the Bank operate.
  • The composition and depth of a company’s corporate governance structure will depend upon the company’s complexity, risk profile, and scope of operations, and should evolve over time as the company evolves.
  • Corporate governance principles should recognize and preserve the distinctions between the responsibilities of the board of directors and senior management. Specifically, the board’s role should be oversight and strategic direction and not day-to-day management.

Board Practices

  • The board should have the flexibility to configure the leadership in a way that best serves the interests of the Company and Bank at the time and, accordingly, has no fixed policy with respect to combining or separating the offices of Chairman and CEO. That decision is made on a case by case basis.
  • The board should promote a culture of risk-aware decision making through the establishment of an explicit risk appetite that considers the Bank’s business strategy and objectives and management’s ability to identify, monitor, manage, and control the risks of business activities related to the strategy and objectives. This will be done primarily through the adoption of an overall strategic plan and the following policies and plans:
  • Capital Plan
  • Loan Policy
  • Investment Policy
  • Asset Liability Management and Liquidity Policy
  • The board should review the long term strategic plans and objectives and the major issues that it expects the Company and Bank may face in the future, during at least one board meeting or board retreat each year.
  • The boards of the Company and of the Bank and all holding company committees (Audit, Compensation, and Governance/Nominating) should have the opportunity to meet in executive session, without management present during every meeting.
  • In order to help ensure appropriate independent oversight of management by the board, the nonmanagement directors should be able to meet in executive session if they deem it advisable. The board should designate one of its independent members as a lead “outside” director, who should preside at meetings of the nonmanagement directors.
  • Committees of the Company’s board (Audit, Compensation, and Governance/Nominating) should have written charters, outlining their composition, member qualifications, roles and responsibilities.
  • Board members should have complete access to the senior officers and management. The board should encourage the CEO to invite executives and employees to board and committee meetings to provide additional insight on business issues or other agenda items. 
  • The board should have authority to retain such outside advisors or other experts as it deems necessary or appropriate to assist it in carrying out its responsibilities.
  • In addition to evaluating senior management, the board of directors should conduct a self-evaluation annually of the board and its governance functions, including committees. The board should satisfy itself that the internal structure of the Bank provides for clear lines of management accountability to the board. It is important for all directors to consider whether they have the requisite time and skills to serve effectively as a bank and bank holding company director.
  • Nonmanagement directors should have, and continue to maintain, appropriate skills and technical and professional competence relevant to their roles as bank and bank holding company directors. To this end, the Company and/or Bank should provide opportunities for on-going director education.
  • The board values the experience and insights of long-serving directors, but also recognizes the desirability of obtaining new ideas and perspectives.  Accordingly, a director who has reached the age of 72 may serve until the next annual meeting, but not thereafter.
  • In order to facilitate the free exchange of ideas and opinions among directors, the directors should keep confidential the proceedings and deliberations of the board and its committees.
  • The board should ensure that management has established control systems to detect material problems and risks and to report, as appropriate, to senior management or the board. 

Risk Management

  • The corporate strategy of the Bank should be explicitly related to its risk appetite and risk management, in order to both minimize exposure to loss and maximize opportunities for profit and growth.
  • Senior management should create a pervasive risk-aware culture throughout the organization and create an environment that sustains this culture over time. The Company and the Bank should avoid incentives that reward inappropriate risk-taking.
  • The board should expect sound management of the following risk areas:
    • Credit Risk                                                       
    • Liquidity Risk
    • Operational Risk                                             
    • Compliance Risk
    • Strategic Risk                                                    
    • Interest rate risk
    • Reputation Risk
  • Risk management responsibilities should be part of the responsibility of employees and line managers throughout the organization and at different levels of the organization. Risk management performance evaluations should be integrated into employees’ goals and compensation decisions.
  • The Bank has committed to the establishment of an enterprise risk program which was developed in 2010 and became operational in 2011. Risk management responsibilities should be staffed adequately. 
  • Risk management and compliance personnel should:
    • Be actively involved in new product approval and material product modifications; and
    • Collaborate with management to insure that all risks are identified and controlled across product and service lines.


  • The board’s governance and oversight functions do not relieve executive management of the primary responsibility for preparing financial statements which accurately and fairly present the Company’s and Bank’s financial results and condition. Executive management should maintain systems, procedures and a corporate culture that promote the ethical conduct of business and compliance with applicable legal and regulatory requirements.
  • Quantitative and qualitative information about the material business activities of the Bank and the key drivers of profit and loss as well as information on significant risks arising from the Bank’s business activities (both actual and anticipated) should be communicated to the board on a regular basis.
  • Quantitative and qualitative information on how the Bank’s balance sheet and cash flows are managed and any significant risks should be provided to external stakeholders, including regulators, as appropriate.  In this regard the Company is committed to furnishing financial and other periodic reports that are thorough and accurate.
  • The risk management process and governance structure should be communicated clearly and comprehensively to stakeholders. Relevant corporate governance principles, policies and committee charters will be posted on the Company’s website.
  • The board welcomes communication from shareholders and has approved a process which provides that the corporate secretary will review and forward shareholder correspondence to the appropriate board member or members for response. This process is described in the Company’s proxy statement for the annual meeting of shareholders.

Adopted July 10, 2012