================================================================================
Exhibit 14
First Defiance Financial Corp. and Subsidiaries
Conflict of Interest/Code of Ethics Policy
February 20, 2006
================================================================================
Exhibit 14
In order to protect First Defiance Financial Corp. (Company) and its
subsidiaries from self-dealing, fraud and misconduct of directors, management
and employees, the Board of Directors of the Company (Board) intends to hold its
directors and employees accountable to the policies and procedures contained in
this code of ethics and to require the reporting of any violations hereof. This
code of ethics shall apply to the directors and employees of the Company and its
wholly owned subsidiaries, First Federal Bank of the Midwest (First Federal) and
First Insurance and Investments. References to the Company herein shall be
deemed to include First Federal and First Insurance and Investments.
All directors and employees are required to act in a responsible and respectable
manner and to remain free of influences that may result in the loss of
objectivity regarding business conducted with the Company's customers or the
Company itself. Each director and employee must disclose and avoid any interest
or activities involving another organization or individual that may result in a
conflict of interest between the Company or its subsidiary and that organization
or individual. This code of ethics has been adopted to assist all directors and
employees in determining what is appropriate personal and professional conduct
and reaffirms the Company's policies of ethical conduct. Violations of these
rules, policies or procedures provide a basis for disciplinary action, which may
include termination.
At the Company's discretion and judgment, the Company may revise, withdraw or
add any rules, policies, or procedures at any time. Changes and amendments to
this code of ethics will be approved by the Company's Board and disclosed or
reported in compliance with any SEC or Nasdaq regulations. In addition to this
code of ethics, directors and employees must also comply with the Company's
Commercial and Consumer Lending Policies, the Insider Trading Policy, the First
Federal Employee Handbook, and Reg FD guidelines.
Exhibit 14
I. Confidential Information
All oral or written information concerning the Company, its customers,
business partners, suppliers or others related to the Company that is
acquired during the scope of an employee or director's employment or
directorship and that is not otherwise available to the public constitutes
confidential information. All directors and employees of the Company may
use confidential information for the Company's business purposes only and
may not use such information for personal, familial, or other gain.
Confidential information may not be disclosed to others except when such
disclosure is authorized by the Company or legally required.
In addition, although information may be available to the public, it may
be deemed proprietary information that is the property of the Company.
Proprietary information includes work product produced for the Company by
directors or employees, customer and prospective customer names,
presentation materials, marketing materials, product information and
business methods or processes. Directors and employees have no personal
right to such proprietary information during or after employment with the
Company and may use such information for the Company's business purposes
only.
II. Investments
Personal investments should be made with prudence, avoiding situations
that may raise conflict of interest issues. Directors and employees should
avoid substantial investments in the business of a customer or supplier
unless there is no possibility for a conflict of interest. Confidential or
proprietary information of the Company may not be used as a means for
personal gain.
If directors or employees purchase Company stock, they are encouraged to
hold such stock for long-term investment. The purchase or sale of Company
stock based on insider information is prohibited. Other Company policies
related to trading in Company stock are contained in the Company's Insider
Trading Policy.
III. Gifts and Entertainment
Employees shall not (a) solicit anything of value from prospective or
current customers, associates, or any other individual or business in
return for any business, service or confidential information of the
Company, or (b) accept anything of value (other than compensation paid by
the Company) from prospective or current customers, associates, or any
other individual or business either before or after a transaction is
discussed or completed.
Exhibit 14
Unsolicited gifts from prospective or current customers, associates, or
any other individual or business should be declined to avoid any
appearance of impropriety with the following exceptions:
o Business meals;
o Holiday gifts;
o Gifts based upon a personal relationship pre-dating your
involvement with the Company;
o Discounts or rebates generally available to the public.
Even if an unsolicited gift meets one of the above exceptions, directors
and employees should consider the reasonableness of the gift's value to
avoid potential conflict of interest issues. Generally, if the value of
the gift is greater than $100, it should be rejected.
Employees are expected to participate in entertainment and activities of
reasonable cost to facilitate business. Tickets for sporting, cultural, or
other events purchased by the Company are to be used for entertaining
potential or current customers, suppliers, or others for business
purposes. If it is determined prior to the event that the tickets will not
be used for such business purposes, tickets may be offered to directors or
employees.
IV. External Involvement
The Company encourages involvement in outside activities, including
charitable and political functions. At no time, however, will directors or
employees solicit the Company's employees for political contributions or
coerce or pressure others into contributing to any organization. Federal
law prohibits First Federal from making contributions to political
candidates. Outside activities must not give the perception of benefit to
the Company or that connections with the Company are sought or desired.
Offers of directorship to any outside organization that has or desires a
business relationship with the Company, or to any institution within the
financial industry, must be reported to the Chairman of the Board of
Director, or the corporate governance committee prior to acceptance.
Capitalizing on opportunities for personal gain or compensation outside of
the Company for the performance of services for the Company is strictly
prohibited. Employees must report any additional employment outside of the
Company to such employee's immediate supervisor.
Exhibit 14
V. Conduct of Insiders
"Insider" is defined as a director, executive officer, or 10% shareholder
of the Company. Insiders must take care that their conduct does not
violate rules relating to self-dealing and personal gain. At no time are
Insiders allowed to take advantage of their position in the Company for
personal profit or influence over credit and other decisions with regard
to their business or personal interest.
Decisions relating to the sale or purchase of Company assets and services
must be made in the best interest of the Company, with no influence on
insiders resulting from gifts, entertainment, or gratuities. All conduct
of such business must be at "arm's length."
VI. Compliance with Laws
The Company is subject to numerous federal, state and local laws, rules
and regulations. Directors and employees are expected to comply with these
laws, rules and regulations, including the policies, guidelines and
procedures that the Company has adopted to facilitate such compliance.
VII. Company Reporting
All directors and employees must disclose to management all information
necessary to assist the Company in creating full, fair, accurate, timely
and understandable disclosure in reports and documents that the Company
files with the SEC and other regulators and in other public communications
made by the Company. All directors and employees must honestly and
accurately record and report all business information. All financial
transactions must be executed in accordance with management's
authorization, and must be recorded in a proper manner in order to
maintain accountability for the Company's assets.
VIII. Extensions of Credit to Insiders
Any and all loans to Insiders must be made on substantially the same terms
including interest rate and collateral, as a loan made to an unrelated
party. Loans to Insiders must also be subject to the same underwriting
process as comparable transactions made between First Federal and the
general public.
A Director or employee is prohibited from being involved in the loan
approval process where such director or employee may benefit directly or
indirectly from the decision to grant credit. This prohibition extends to
professional relationships with any company or firm receiving remuneration
as a result of a decision to grant credit.
Exhibit 14
First Federal is subject to laws regulating and restricting loans to
directors and certain employees, including Regulation O. Directors and
employees should consult the Company's Commercial and Consumer Lending
Policies regarding such lending restrictions.
IX. Employee Accounts
All employees are encouraged to maintain their personal accounts at First
Federal to allow First Federal to provide services and direct deposit of
payroll checks. Under no circumstances will First Federal pay a rate of
interest in excess of the rate available to all customers.
All applicable fees, including overdraft charges, will be assessed on all
accounts of employees, directors, principal shareholders, and executive
officers.
X. Procedures for Reporting Violations
Directors or employees who discover that any other director or employee is
engaging in an illegal or unethical act (other than accounting, accounting
controls or auditing matters - see the next paragraph) have the
responsibility to promptly notify the Audit Committee of the Board of
Directors.
Any oral notification should be followed up with a written report. A
report can be submitted anonymously or on a confidential basis. If a
report is submitted on a confidential basis, the reporting director or
employee's name will not be disclosed in the Company's investigation, but
the Company may be required to disclose the person's name to government
entities. There will be no retaliation against a person making good faith
reports or complaints.
If a director or employee has a complaint or a concern about any
accounting practice, accounting control, or auditing matters at the
Company (for example, if it is believed that an accounting or auditing
practice is questionable or incorrect), the director or employee must
submit a complaint or concern to:
Audit Committee of the Board of Directors
c/o TeleSentry toll free at 888-883-1499
A complaint or concern can be submitted anonymously or on a confidential
basis. If submitted on a confidential basis, the director or employee's
name will not be disclosed in the Company's investigation, but the Company
may be required to disclose the person's name to governmental entities.
There will be no retaliation against any person making good faith reports
or complaints.
Exhibit 14
On an annual basis, the Compliance Officer will conduct a review of
procedures, documentation, and minutes of the meetings of the Board to
test compliance with code of ethics. It will report its findings to the
audit committee of the Board of Directors.
XI. Consequence of Noncompliance
Failure to comply with this code of ethics may result in the termination
of employment or other disciplinary action. The action will be
commensurate with the seriousness of the conduct and an evaluation of the
situation.
All violations of this code of ethics will be reported to the Board.
Termination of employment or other disciplinary action may be determined
by an officer who is either the direct or indirect supervisor of the
employee concerned.
XII. Questions
Refer any question regarding proper conduct or this code of ethics to an
immediate supervisor. Director or employee's actions or acceptance of
gifts that are not specifically discussed in this code of ethics must be
reviewed as to intent and purpose. Directors and employees should ask
themselves: "If this situation were to be made public, would my conduct be
embarrassing or come into question?"
XIII. Waivers
Any waiver of this code of ethics for directors or executive officers of
the Company may be made only by the Board and must be promptly disclosed
to shareholders, along with the reasons for the waiver.