Charter of Audit Committee

The general area of responsibility of the Audit Committee is to direct and monitor the operation of audits, both internal and external, and to scrutinize the elements, the basis and the performance of the financial reporting for accuracy, prudent accounting practices, financial volatility and compliance with regulatory and accounting requirements.

Each member of the Audit Committee must be independent. Independencies require the member to not be compensated for any other services other than those performed as a board member or a board committee member. The committee member and his or her family members cannot be an affiliate or have any current transactions (such as consulting agreements) with the company or the bank. In addition, former employees of the company or the bank can not serve on the Audit Committee until the termination of the cooling off period of three years. All committee members at their appointment must be able to read and understand the financial statements of the company. The legal, accounting and securities counsel of the bank are excluded from serving on this committee.

Of the Audit Committee, a preference is to designate a financial expert from the directorship as a member. Due to the stringent qualifications as listed below, a financial expert has not been designated to the committee. A financial expert should be more than financially literate - as indicated by governing law. The financial expert must have acquired through education and experience as a public accountant or an auditor or a principal financial officer or a similar position in an entity with the same characteristics:

• Understanding of GAAP and financial statements.
• Experience with corporate issues.
• Experience with application of principals for accounting estimates, accruals, and reviews.
• Experience with internal controls.
• Understanding of audit committee functions.
• Experience in preparation of financials or an audit of a similar entity.

The Audit Committee will be solely responsible for hiring and overseeing the outside auditor. The responsibilities in this area include negotiating the engagement terms, the scope of the audit and the approval of the audit fees as well as assessing the qualifications and the independence of the outside auditors. Management may be consulted for their evaluation of the auditors. The initial meeting and the annual meeting with the external auditors or independent auditing firm should encompass a discussion of the company=s critical accounting policies, operations and financial position, public reporting practices, internal controls, related party transaction and other significant information imperative in the conducting of an audit.

The Audit Committee will meet quarterly. At the quarterly meetings, the Audit Committee will receive quarterly financial reports presented by the Chief Executive Officer and the Chief Financial Officer and summary audit reports provided by the Internal Auditor. Reports may be received from the External Auditor, if applicable.

The Audit Committee plays an important role in the proper disclosing of the company's financial data and other related information to the public through regulatory means. To address this role, critical accounting policies, alternative accounting treatments within generally accepted accounting principles, and the importance of timely or "real time" financial disclosures will be considered at each meeting.

Standards for Audit Committees require the Audit Committee of the company to review internal controls, internal audit procedures and stock transactions of related parties and to establish procedures to receive and respond to any concerns and complaints regarding the company's financial reporting and accounting.

Discussions during the meeting of the Audit Committee will be maintained in the minutes as well as any actions taken. Members of management, not limited to the Chief Executive Officer, Chief Financial Officer and Internal Auditor, will meet with the committee to assist in a comprehensive review of the reports presented and to answer questions regarding material transactions and potential trends and risks in the operation.

As needed, the Audit Committee will have the authority to consult with external professional sources on matters and areas that may be outside of the member's realm of knowledge and expertise.

The Audit Committee will submit a report to be included in the annual proxy statements and will submit the Charter of the Audit Committee at least once every three years to be included in the proxy statements. The members of the committee will be required to disclose his or her background and experience information to be included with the proxy statement.