Expenditure Policy

  

This policy fulfills the requirements the American Recovery and Reinvestment Act of 2009 (ARRA) enacted February 17, 2009.  ARRA requires each recipient of funds under 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.

Georgia Primary Bank prohibits excessive or luxury expenditures on entertainment and events, office or facility renovations, aviation or other transportation services or 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.

All employees and subsidiaries of Mountain Valley Bancshares, Inc. are subject to this policy.  Any suspected violation of this policy should be reported to a member of the executive management or to the chairman of the audit committee.  This can be reported via Personnel, letter or phone.

Any violation of this policy will follow the disciplinary action as outlined in our Personnel Manual, which includes oral reprimand, formal written reprimand, and termination.  None of these steps preclude immediate termination if warranted.

Renovations:

Renovations of facilities and office spaces should be relative to the approved current business plan, and tracked within the capital expenditure policy of the Company.  An exception of 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.

Entertainment:

Entertainment is defined as an activity that an Employee or Executive would use corporate funds for business development purposes relating to a current customer (s) or to further enhance the Company's marketing efforts.  Excessive entertainment or an excessive event is defined as any single occurrence or event where the activity is not designed to enhance the marketing efforts of the ban or support business development efforts of the bank.

Our exception is that all expenses incurred to the Bank would be for company purposes, and used to generate for the bank.

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

Conferences:

We encourage our staff to attend conferences that are appropriate educational opportunities.  These conferences should be related to the financial services industry and have a direct correlation to their jog.  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.

Employee Recognition / Holiday Parties:

We feel that employee recognition/holiday parties are part of an employee appreciation process.  These events should be local in geographic nature, and should not cost the Company more than an average days payroll per employee, on average.  (If the payroll is $2M annually divided by  260 days, equals $8K in expenses available for the appropriate holiday party).

Board / Management Retreats:

Board Retreats should only be used for educational purposes, and should always 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.

Aviation Services:

Transportation for Company staff to 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 for the analysis, for example may consist of vehicle, commercial air service and and private air service.  At determination of transportation analysis will factor in cost, efficiency and timeliness of travel.