Exhibit 14
July 25, 2003
PROVIDENT BANCORP, INC.
CODE OF ETHICS
FOR
DIRECTORS, OFFICERS AND
EMPLOYEES
INTRODUCTION. In exercising our responsibilities, we will behave honestly, treat
others fairly, and act with integrity. We believe behaving ethically is good
business, and by doing so, we expect to earn the trust of our customers,
shareholders, co-workers, and others we interact with. To guide us in our
behavior, we have adopted this Code of Ethics.
I. POLICY
It is the Company's policy to conduct its business and operations
according to the standards and guidelines of ethical business conduct stated in
this Code of Ethics and all applicable laws and regulations. The term "Company"
refers to Provident Bancorp, Inc. and all its subsidiaries. This policy
supplements other policies and procedures adopted by the Company, such as those
contained in the Employee Handbook. Adherence to the standards set forth herein
and to those contained in other relevant sources is required.
II. APPLICABILITY
Each of us has a responsibility to deal ethically and honestly in all
aspects of the Company's business. This includes the ethical handling of actual
or apparent conflicts of interest and complying fully with all laws, regulations
and Company policies. You are expected to assume responsibility for applying
these standards of ethical conduct and for acquainting yourself with the various
laws, regulations and Company policies applicable to your assigned duties. When
in doubt, you have the affirmative responsibility to seek clarification from
your supervisor, or, if necessary, from the Ethics Officer or other designated
sources.
III. ADMINISTRATION AND ENFORCEMENT
Board of Directors. The Board of Directors of the Company is responsible
for approval and oversight of the Company's Code of Ethics. The Board has
responsibility for implementing and administering this Code, reviewing and
assessing the effectiveness of this Code at least annually and updating and
amending this Code. The Chief Executive Officer of the Company and the
designated Ethics Officer are charged with the responsibility of reviewing
changes in laws applicable to the Company, consulting with the Company's
approved legal counsel as appropriate, and recommending changes in the Code to
the Board. Accordingly, the Board may adopt supplements to and revisions of this
Code from time to time.
Ethics Officer. To assist the Board in administering this Code on a
regular basis and to provide guidance in situations where you may have questions
concerning the right course of action to take, the Board has appointed an Ethics
Officer. It is the responsibility of the Chief
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Executive Officer, with assistance from the Ethics Officer, to ensure that this
Code has been read and understood by all directors, officers and employees.
Certification Statements and Candor. All directors, officers and employees
are required to certify that they have read and understand the current version
of this Code, and are in compliance with it. Newly appointed directors, officers
and employees are required to certify that they have read and they understand
the current version of this Code within thirty days of attaining such status.
Directors and executive officers must recertify annually; other officers
and employees are required to recertify upon any change in the Code. The Ethics
Officer shall report to the Board noting anyone who has not executed a
certification statement as required. All information disclosed in the
certification statements shall be treated on a confidential basis, except to the
extent reasonably necessary to protect the Company's interests or comply with
legal or regulatory requirements.
THIS CODE OF ETHICS IS INTENDED TO CREATE AN OPPORTUNITY FOR YOU TO
EXPRESS CONCERNS RELATING TO CORPORATE ACCOUNTABILITY, ALLEGED VIOLATIONS OF
COMPANY POLICY, FEDERAL AND STATE STATUTES AND ALLEGATIONS OF CORPORATE
MISDEEDS. THERE WILL BE NO DISCRIMINATION OR RETALIATION AGAINST ANY OF YOU WHO
REPORT SUCH VIOLATIONS OR ALLEGATIONS IN GOOD FAITH.
III. ACCURACY IN REPORTING
Corporate Records. Each of you has a responsibility to ensure that all
Company documents and reports for which you are responsible are prepared and
maintained properly and are free of any false, misleading, incomplete or
otherwise improper information. It is prohibited to mislead, manipulate, defraud
or coerce any employee, officer or director of the Company or any advisor to the
Company, including outside counsel or auditor.
Public Reporting. We must provide full, fair, accurate, timely and
understandable disclosure in reports and documents filed with the SEC, and in
other public communications made by the Company.
This means, among other things, that if you are responsible for the
preparation or review of the Company's financial statements that are to be filed
with the SEC, or otherwise made publicly available, you shall ensure they are
prepared in accordance with generally accepted accounting principles in force at
the time.
Errors or Misleading Statements. If you ever become aware of an error or
potential misstatement in any company documents, including financial statements
or other documents filed with the SEC, you must contact your supervisor and the
Ethics Officer immediately and report the error or potential misstatement.
Audits. Everyone must cooperate fully with any audits of the Company's
financial statements or other corporate documents, whether conducted internally
or by a third party.
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IV. CONFLICTS OF INTEREST
Definition. A conflict of interest exists when your private interest
interferes in any way with the interests of the Company. Your private interests
include the interests of your immediate family members and any company,
partnership, trust or other entity you or a member of your immediate family
directly or indirectly control, or have a material financial interest in. These
are referred to as your related interests or as related parties. Members of your
immediate family are your spouse (or life partner), your children, or any
relative by blood or marriage living in the same household with you. A material
financial interest includes, without limitation, an equity interest of 5% or
more.
Examples of conflicts of interest are:
1. loans which will directly benefit you or a related interest;
2. the determination of the Company to enter into a contract or other
business arrangement for the delivery of goods or the performance of
services with you or a related interest;
3. the availability of a business opportunity for the Company where you
or a related interest might compete for or otherwise seek the same
opportunity.
Appearance of a Conflict. An appearance of a conflict of interest arises
when the facts and circumstances do not give rise to an actual conflict of
interest, but are sufficiently similar in nature that they may create doubt as
to your impartiality or loyalty relative to your obligations to the Company. For
example:
1. A loan by the Company to your brother-in-law may not provide a
direct or indirect benefit to you or a related interest; therefore
an actual conflict of interest does not exist. The existence of the
relationship itself does, however, create the appearance of such a
conflict.
2. If you assume responsibility for analyzing and recommending approval
of a loan to a director, a major shareholder or executive officer of
another financial institution with which you have a significant
borrowing relationship, there may be no actual conflict. The
existence of the relationship itself does, however, create the
appearance of a conflict.
3. If you act in a professional advisory or financial capacity on
behalf of a borrower or potential borrower, an actual or apparent
conflict of interest exists regarding the borrower's dealings with
the Company.
If there is an appearance of a conflict of interest you should act in the
same way as if there is an actual conflict of interest.
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Procedure in the Event of a Conflict. Whenever you have a conflict of
interest you must make full disclosure of the nature of the conflict of
interest, disclose all non-privileged information you have at the time, and
refrain from taking any further part in the decision-making process.
Corporate Opportunities. You may not profit or otherwise take advantage of
inside information, or take corporate opportunities that belong to the Company.
A corporate opportunity belongs to Provident Bancorp, Inc. (the "Bancorp")
if it is within its corporate powers and:
(1) you become aware of the opportunity under circumstances where (a) it
is reasonable to believe the person offering the opportunity expects
it to be offered to the Bancorp, or (b) you learn of the opportunity
through the use of information gained through your affiliation with
the Bancorp or its subsidiaries; or
(2) you are aware that the opportunity is closely related to a business
in which the Bancorp engages or expects to engage.
A corporate opportunity belongs to Provident Bank (the "Bank") or its
subsidiaries if it is a chance to (1) engage in a business activity that is
within the corporate powers of the Bank or that of its subsidiaries, and (2) it
is of present or potential practical advantage to the Bank or its subsidiaries.
If you are presented with or otherwise become aware of a corporate
opportunity that belongs to the Company, you must fully disclose both the
details of the opportunity and your interest in it to the Ethics Officer or
other officer designated by the Board or the CEO. Thereafter you must abstain
from discussion and further action regarding the Company's consideration of the
opportunity.
If, after full disclosure, the Company elects not to take a corporate
opportunity presented to it, to the extent it does not otherwise present a
conflict of interest, or the Company does not otherwise restrict further action,
you are free to pursue the opportunity. Any opportunity disclosed by an
Executive Officer or Director may be rejected only by the Board.
Competition with the Company. You and a related party may not compete with
the Company. You are also prohibited from having certain relationships with any
entity that competes with the Company. You may not serve as a director, officer
or employee, own more than 5% of the stock or other equity interest, or directly
provide consulting, legal or advisory services.
If you are not employed full time at the Company, and you disclose a line
of business you are in at the time you first associate with the Company, you are
not competing with the Company if the Company does not object at the time. For
directors and executive officers, disclosure must be made to the Board of
Directors.
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Business Transactions with the Company. You must disclose all conflicts of
interest you or a related party may have with regard to any contract or other
business arrangement to be entered into by the Company. Contracts or other
business arrangements between the Company and you or a related party may be
approved only after you make full disclosure. You shall thereafter refrain from
any further involvement in the decision-making process.
Any contract or business arrangement entered into by the Company with you
or a related interest may be only on such terms and conditions and at such costs
as would be reasonable under the facts and circumstances if entered into with an
unrelated third party. All contracts or other business arrangements must comply
with any applicable statutes, rules or regulation.
For Directors or Executive Officers, approval of the transaction must be
made by the Board. Otherwise, approval of the CEO is required.
Loans to Directors, Officers and Employees. Provident Bank is in the
business of making loans and must abide by a range of regulations in its lending
activity. Loans made in accordance with those regulations and in accordance with
the bank's lending policies are acceptable transactions. You will need to
provide the Bank with the same credit information, and are subject to the same
credit evaluation as the Bank requires of loans made to the general public. You
may not participate in any evaluation or approval process regarding your loan.
In addition, loans to executive officers and directors are subject to the
insider lending restrictions of section 22(h) of the Federal Reserve Act and
regulations issued thereunder. Provident Bancorp, Inc. is prohibited by law from
making loans to directors and executive officers.
Acceptance of Gifts and Other Gratuities
General. You or a related party are prohibited from (a) soliciting for
yourselves or a third party (other than the Company) anything of value from
anyone in return for any business, service or confidential information of the
Company; or (b) accepting anything of value (other than salary, wages, fees or
other usual compensation from the Company) from anyone in connection with the
business of the Company, either prior to or after a transaction.
Exceptions. Exceptions to the general prohibition regarding acceptance of
things of value in connection with the Company's business may include the
acceptance of:
1. gifts, gratuities, amenities or favors based on obvious family or
personal relationships (such as those with the parents, children or
spouse of a Company official) where the circumstances make it clear
that it is those relationships rather than the business of the
Company, which are the motivating factors;
2. meals, refreshments entertainment, accommodations or travel
arrangements, all of reasonable value, during the course of a
meeting or other occasion, the purpose of which is to hold bona fide
business discussions or to foster better business relations,
provided that the expense would be paid for by the Company as a
reasonable business expense, if not paid for by another party;
3. advertising or promotional material of reasonable value, such as
pens, pencils, note pads, key chains, calendars and similar items;
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4. discounts or rebates on merchandise or services that do not exceed
those available to other customers;
5. gifts of a value of $75.00 or less that are related to commonly
recognized events or occasions, such as a promotion, new job,
wedding, retirement, Christmas or bat or bar mitzvah; or
6. civic, charitable, educational, religious organizational awards for
recognition service and accomplishment.
Notification. In the event you are offered anything of value from anyone
in return for any business, service or confidential information of the Company
and the item of value is not clearly subject to the exceptions described above,
you must report it immediately to your supervisor or to the Ethics Officer for
guidance on how to proceed.
V. PROTECTION AND PROPER USE OF COMPANY ASSETS
The Company acquires assets to promote its business affairs. Each of you
has a duty to protect the company's assets and to take all reasonable steps to
ensure their efficient use. Assets include all the Company's financial assets,
real estate assets, other tangible property, and confidential information, as
defined below.
VI. CONFIDENTIAL INFORMATION
Each of you will obtain confidential information about the Company, its
customers, operations, business prospects and opportunities in the course of
your employment or tenure with the Company. Confidential information includes
financial performance information; current and prospective client and customer
lists; information about client and customer accounts, requirements and
practices; sales methods and ideas; employee lists and employment data;
documents, books, records, data, materials, supplies, and contract forms; and
other information relating to the Company, its employees, its products,
services, and operations.
You are given this information because it is necessary or useful in
carrying out your duties for the benefit of the Company. You may not use it for
any other purpose. The Company has adopted policies and procedures intended to
safeguard this information. It is your obligation to adhere to those
requirements and any changes or modifications that the Company may adopt.
VII. FAIR DEALING
We believe that behaving ethically is good business. We intend to live up
to our obligations and be honest and fair in our dealings with others. We may
not seek unfair advantage with customers, suppliers, co-workers or competitors
by concealment, manipulation, or abuse of privileged information,
misrepresentation of material facts, or any other unfair-dealing practice.
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VIII. INSIDER TRADING
The company has separately adopted policies and procedures relating to
trading in the securities of Provident Bancorp, Inc. It is your obligation to
comply with them. Briefly, if you are aware of material information that has not
been publicly disclosed you may not directly or indirectly buy or sell
securities issued by Provident Bancorp, Inc., including its common stock. It is
illegal and unethical to do so.
You should assume that any information that may be significant to an
investor in determining whether to buy, sell or hold the common stock would be
material. You must also keep information confidential as described in this Code
of Ethics and in other of the Company's policies.
IX. REPORTING ILLEGAL OR UNETHICAL BEHAVIOR
The Company strives to maintain sound and ethical business practices and
holds all directors, officers and employees to high ethical standards. In order
to maintain these standards, you have an affirmative obligation to report to
your supervisor, if appropriate, the Ethics Officer or other officer designated
by the CEO or Company policy, a violation of any laws, regulations or provisions
of this Code. If you are ever uncertain of the best course of action in a
specific situation, you should seek clarification and help immediately from your
supervisor or the Ethics Officer.
THE COMPANY WILL NOT TOLERATE ANY ATTEMPT BY ANYONE TO RETALIATE AGAINST
ANY OF YOU WHO, WHILE ACTING IN GOOD FAITH PURSUANT TO THIS CODE, REPORTS
ILLEGAL OR UNETHICAL BEHAVIOR BY ANY EMPLOYEE, DIRECTOR, OFFICER OR THIRD PARTY
ADVISOR TO THE COMPANY. YOU MAY NOT BE DISCHARGED, DEMOTED, SUSPENDED, OR IN ANY
MANNER THREATENED, HARASSED OR DISCRIMINATED AGAINST FOR PROVIDING INFORMATION
ABOUT VIOLATIONS OF THE LAW OR THIS CODE.
X. BREACHES OF ETHICAL BEHAVIOR
Executive Officers and Directors. Any breach of this code by an Executive
Officer or Director shall be reported to the Board by the Ethics Officer, the
Chief Executive Officer, or both. The Board will consider the facts and
circumstances pertaining to the breach and determine the appropriate remedy. Any
waiver of any provision of this Code may be made only by the Board and shall be
reported in accordance with applicable law, regulation or rules. The Board may
appoint a committee to provide a recommendation for their consideration.
Other Officers and Employees. Any breach by a non-executive officer or
employee shall be reported to the supervising officer and the Chief Executive
Officer. The C.E.O. will determine the appropriate remedy and may appoint an
officer or officers to consider the facts and circumstances to aid in the
decision. Only the C.E.O. may grant a waiver. Any breach of this Code by an
officer shall be reported to the Board of Directors together with the action
taken.
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PROVIDENT BANCORP, INC.
Code of Ethics
Certification Statement
I hereby acknowledge receipt of a copy of the "Code of Ethics" of Provident
Bancorp, Inc. (the "Company") which applies to my professional and personal
dealings with the Company. By executing this Certification Statement, I
acknowledge that I have read and understand the Company's Code of Ethics and
agree to be bound by all provisions therein. I further acknowledge that I am now
and at all relevant times have been in compliance with its provisions.
Acknowledged and Agreed:
_________________________________ ______________________
(Signature) (Date)
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