Code of Ethics & Conflicts of Interest Policy





The reputation and successful operation of Community First, Inc., and Community First Bank & Trust (collectively, “Community First”) is built upon Community First's business philosophy and the ethical conduct of Community First and its directors, officers, and employees (the “Representatives”). Financial institutions depend upon the public's trust. The preservation of that trust and of Community First’s reputation for excellence requires close observance of both the letter and spirit of relevant laws and regulations, and also continuing and careful regard for the high standards of conduct set forth in the policy statements which follow.


These policies and statements will address the subjects of legal and ethical standards in our conduct of business, conflict of interest, and compliance with antitrust law. The President/Chief Executive Officer (the “CEO”) and the Board of Directors are responsible for the administration of this Code of Ethics and Conflicts of Interest Policy (the “Code”).


Community First expects its Representatives to conduct business and business-related dealings in accord with the intent of all applicable laws, whether local, state, or federal, and to refrain from any form of dishonest or unethical conduct.


Compliance with this Code, and all of the policies set forth herein is the responsibility of every Representative, and failure to comply with this Code can result in disciplinary actions, including without limitation, oral or written reprimands, suspension or termination of employment or potential legal actions against violators of this Code.




Confidentiality of Customer Information


It is the policy of Community First that information with respect to our customers acquired by an employee through his or her employment is considered to be held in the strictest confidence. Except where legally required, in no instance shall such information be transmitted to unauthorized persons outside Community First, including family and associates, or other Representatives of Community First who do not need to know the information.


Financial Privacy


All customer records are protected under federal and state law. All employees are expected to maintain the privacy of all customers and no information is permitted to be disclosed to any person that is not authorized to receive the information, and in any event in compliance with all applicable laws.

All governmental requests for information are to be directed immediately to the President/CEO.


All requests for credit related information are to be directed to the Chief Credit Officer or designee and only experience by Community First is permitted to be disclosed as allowed under the Fair Credit Reporting Act.


Fair Credit Reporting Act


Credit reports are obtained for permissible purposes for legitimate business transactions initiated by the consumer as directed under the Fair Credit Reporting Act. Information contained in these reports is confidential and are not to be distributed in any manner to a third party.


Proprietary Information


With respect to corporate information regarding Community First, confidentiality is essential. Information of a financial, technical, or business nature regarding Community First is not to be released to any outside person unless it has been made available to the public and approved by the President/CEO.


Gifts Received by Employees


No Representative should give or accept any cash, gifts exceeding a retail value of $25.00, special accommodations, favors, or the use of property or facilities to or from anyone with whom such person is doing, negotiating, soliciting, or being solicited for business on behalf of Community First. It should be understood that under some circumstances a gift may be considered an illegal "kickback" which is a crime under federal and state law. Notification of any cash or gift which exceeds the $25.00 retail value limit must be reported in writing to the Human Resources department within 30 days of receipt.


Giving of Gifts


Direct or indirect gifts, offers, or promises of any gift, bribe, kickback, favor, loan, service, or anything else of value to any individual, business entity, organization, governmental unit, public official, political party or other person by an employee on behalf of Community First in connection with any transaction or business for the purpose of influencing the action of the recipient is expressly prohibited. This standard of conduct is not meant to prohibit normal business practices such as providing entertainment, meals, favors, discounts, tickets to cultural and sporting events, gifts given as a token of friendship or for special occasions as long as the gift is of nominal and reasonable value under the circumstances and promotes legitimate business development.

Preferential Treatment


Representatives shall not purchase or appropriate to their own personal use, any corporate property, service, or profit opportunity in the basis of or under situation not otherwise available to members of the public with the exception of:


1. Special employee programs and services; or


2. Purchase of property from Community First provided the purchase price is at fair market value, such valuation having been properly documented; or


Representatives may be asked for legal or tax advice or are asked for a referral to an attorney, tax expert, accountant, real estate agent, etc. The law generally prohibits Representatives from offering legal and tax advice, but Representatives may provide guidance by referring to the type of service they may need to use but not to a specific individual or company.


Political Contributions


Although recent decisions by the Federal Election Commission liberalize certain restraints on banks and corporations supporting political action committees, it remains illegal to use corporate or bank funds for the purpose of making contributions or expenditures in connection with elections to any local, state, or federal office. However, federal election laws do permit the use of corporate funds and assets for certain limited political purposes such as:


1. Establishing political action committees to solicit contributions to separate political funds to be utilized for political purposes; or


2. Communicating direct political messages to shareholders; or


3. Implementing non-partisan voter registration or to "get-out-the-vote" campaigns.


Each Representative is free to decide if and to whom personal political contributions will be made. Directors, officers and supervisors are prohibited from placing any pressure, either direct or indirect, on employees regarding their personal political contributions.

Improper Transaction and Payments


It is commonly recognized that there is a direct correlation between illegal and otherwise improper payments and inaccurate books and records. To ensure the integrity of Community First's books and records, the following principles should be followed:


1. All transactions or conduct of business must be properly reflected in Community First's books and records; and


2. No secret or unrecorded fund of money or other assets may be established or maintained; and


3. Any payment is prohibited if no record of its disbursement is entered in Community First's accounting record; and


4. Making false or fictitious entries in the books or records of Community First or issuing false or misleading documents is prohibited and in most instances will constitute a criminal offense; and


5. A Representative should avoid processing transactions for the Representative’s own personal account, an account on which the Representative signs with another person, and accounts belonging to members of a Representative’s family; and


6. Representatives must also avoid participating in transactions, which give the appearance of circumventing established Bank policies. Any transaction that gives the appearance of circumventing established Bank policies may be considered a violation of the code of conduct. Transactions include but are not limited to deposits, processing of payments, waiving fees or charges, making loans, etc.; and


7. Representatives and their immediate families, acting either individually or as a fiduciary, may not sell assets to or purchase assets from Community First unless the purchase or sell is at a fair market value price, documentation is maintained, and prior approval is granted by the President/CEO.

Improper conduct involving Community First, regardless of the amount, is a federal offense and is and shall be reported to the proper authority.



Corporate Policy


It is the policy of Community First that all Representatives must avoid potential conflicts of interest.


A potential conflict of interest exists whenever a Representative has an outside interest, direct or indirect, which might either conflict with the individual's duty to Community First or adversely affect the individual's judgment in the discharge of his or her responsibilities to Community First.


In the event a potential conflict does arise, its nature and extent should be fully disclosed immediately to the President/CEO (or the Board of Directors in the event of a potential conflict of interest involving the President/CEO) who, after making a thorough review of the circumstances, will determine appropriate action. A written report of the disposition of the matter will be retained if deemed appropriate by the reviewing officer or the Board of Directors as the case may be.


Fiduciaries and Legacies


Except with respect to an employee’s immediate family (parents, spouse, or children) relatives or any other persons related to the employee, no employees may accept an appointment or continue to act as a fiduciary or co-fiduciary of any estate, trust, agency, guardianship, or custodianship account of a Community First customer unless authorized by the Board of Directors.


No employee of any Community First trust activity should receive, directly or indirectly, any substantial legacy from a Community First customer, except:


1. Where such customer is a relative or the Representative involved; or


2. The employee named in the legacy has never dealt with the grantor as a representative of Community First.


Whenever an individual becomes aware of being named as a beneficiary in a will or trust or upon first learning of the fact after the death of a grantor, the employee should immediately notify the President/CEO for a determination as to whether the employee should continue as a beneficiary of legatee.



It is the position of Community First that lending services be available to serve the legitimate and deserving credit needs of all customers on equal basis. Loan terms and conditions shall be based upon a borrower's creditworthiness.


Lending officers are not permitted to extend credit to relatives, unless approved by the President/CEO or the Chief Credit Officer.


Extending credit to companies in which the lending officer has a controlling interest or in which a relative of the lending officer has such an interest, is not permitted, unless approved by the President/CEO or the Chief Credit Officer.


Community First seeks business relationships with businesses and individuals, however, those persons or businesses providing professional services, for example, accountants, attorneys, appraisers, etc., shall not be extended loans or obtain deposits on a preferential basis.


Outside Employment


Full-time Community First employees should carefully scrutinize outside employment, including the performing of any service for compensation, to avoid potential conflicts of interest and excessive demands on one's time.


Outside employment may be undertaken, unless objected to by the President/CEO on the grounds that such outside employment interferes with job performance or is not consistent with the mutual best interests of the employee and Community First.


Participation in Public Affairs


It is the philosophy of Community First to encourage its employees to have an awareness of their responsibility and to participate in civic and political activities. Each employee is free to support community activities or the political process as he or she desires.


Voluntary efforts for civic or political activity normally take place outside of regular business hours. If voluntary work requires Community First time, prior approval should be obtained from the President/CEO.

In all cases, employees in civic or political activities do so as individuals and not as representatives of Community First.

Corporate Directorships, Public Office, and Commissions


Election or appointment to public office, commissions, boards, or as an officer or director of a nonprofit corporation, may be accepted by the employee. Participation in such activities should be undertaken only if the time required will not unduly encroach on normal working time or necessitate such long hours as to impair the employee's ability to meet regular job responsibilities.


Election or appointment as a director of a business corporation must be approved in advance by the President/CEO. To avoid the problem of interlocking directorships or management interlocks prohibited by applicable antitrust or banking laws, any question concerning service with any financial services institution shall be referred to the President/CEO who will confer with Community First's attorneys.


Approval to serve in such activities shall not imply that Community First employee is serving at the direction or desire of Community First. If indemnity or coverage under the Company's Directors and Officers Liability Insurance Policy is desired with respect to such service, the specific written approval of the President/CEO must be obtained. No request for indemnification or insurance coverage will be considered until the Board of Director of the Community First entity involved approves such request by resolution referring explicitly to the office and the individual. A copy of each such resolution shall be forwarded to the Secretary of Community First’s Board of Directors.


Unless specifically approved by the Board of Directors, no Representative shall serve on the Board of Directors of any non-Bank entity which:


1. Competes with Community First; or


2. Is in default to Community First or any loan, contract or other obligation; or


3. Is involved in a controversy or litigation with Community First.


In like manner, no employee, officer, director or substantial shareholder of another company shall serve as a director of Community First where such circumstances exist.


Unusual Business Transactions


No Community First employee, directly or through a controlled entity, shall be a regular supplier to, or purchaser from, Community First of goods or services apart from usual banking services offered to the general public without written approval of the President/CEO. In the event the transaction exceeds $5,000, disclosure for an approval from the Board of Directors shall also be required. All such transactions, including purchases or sales of goods, property or services, shall be for full and fair value.



Accounting Policies


Community First and each of its subsidiaries, if any, will make and keep books, records and accounts, which in reasonable detail accurately and fairly present the transactions and disposition of the assets of Community First.


All directors, officers, employees and other persons are prohibited from directly or indirectly falsifying or causing to be false or misleading any financial or accounting book, record or account. You and others are expressly prohibited from directly or indirectly manipulating an audit, and from destroying or tampering with any record, document or tangible object with the intent to obstruct a pending or contemplated audit, review or federal investigation. The commission of, or participation in, one of these prohibited activities or other illegal conduct will subject you to federal penalties, as well as punishment of up to and including termination of employment.


No director, officer or employee of Community First may directly or indirectly:


• Make or cause to be made a materially false or misleading statement, or


• Omit to state, or cause another person to omit to state, any material fact necessary to make statements made not misleading


in connection with the audit of financial statements by independent accountants, the preparation of any required reports whether by independent or internal accountants, or any other work which involves or relates to the filing of a document with the Securities and Exchange Commission (the “SEC”) or any other governmental agency.


Disclosure Policies and Controls


The continuing excellence of Community First’s reputation depends upon our full and complete disclosure of important information about Community First, in compliance with all federal and state laws. Our financial and non-financial disclosures and filings with the SEC or other governmental agency must be transparent, accurate and timely. Proper reporting of reliable, truthful and accurate information is a complex process involving cooperation between many departments and disciplines. We must all work together to insure that reliable, truthful and accurate information is disclosed to the public in accordance with all state and federal laws.

Community First must disclose to the SEC or other governmental agency, current security holders and the investing public information that is required, and any additional information that may be necessary to ensure the required disclosures are not misleading or inaccurate. Community First may require you to participate in the disclosure process, which is overseen by the Board of Directors, the President/CEO or the Chief Financial Officer (“CFO”). The disclosure process is designed to record, process, summarize and report material information as required by all applicable laws, rules and regulations. Participation in the disclosure process is a requirement of a public company, and full cooperation and participation by the Board of Directors, President/CEO, CFO and, upon request, other employees in the disclosure process is essential to our successful compliance with these requirements.


Officers, directors and employees must fully comply with their disclosure responsibilities in an accurate and timely manner or be subject to discipline of up to and including termination of employment.


The Need for a Policy Statement


Because Community First, Inc. is a public company, we believe it is important to call your attention to the responsibility that each employee has to protect the confidentiality of all information related to Community First and its business. A central objective of this policy is to protect our corporate information from misuse and to respond to federal and state laws applicable to each of you regarding the misuse of corporate information. In particular, this policy is designed to prevent your engaging in securities transactions based upon material information that is in your possession but not known by the general public or selectively disclosing such information. Community First has adopted this policy to avoid even the appearance of improper conduct on the part of anyone employed by or associated with Community First. Representatives of Community First are required to comply with the terms of any insider trading policy.


Confidentiality Policy


It is the policy of Community First that documents and other sources of material nonpublic information should only be distributed to employees who have a “need to know.” Individuals who are in possession of such information should take appropriate steps to ensure that the confidentiality of such information is protected. Such steps may include coding (in computer files and otherwise) documents as “confidential,” locking files and desk drawers containing sensitive information, limiting the copying of sensitive documents, and maintaining a record of employees who ask to obtain documents containing material nonpublic information. If you have any questions whatsoever about the application of this policy to any information in your possession, please contact Jon Thompson, Community First’s Chief Financial Officer, at (931) 490-6389.


It is also the policy of Community First that only authorized information may be released to the news media and other members of the public and that it may only be disseminated through authorized channels. If you receive any request for sensitive corporate information from outside parties such as the news media, government investigators, or clients, such request should be specifically referred to the Chairman, the President/CEO, or the Chief Financial Officer. No written response should be made and any verbal response should be limited to “no comment” unless otherwise specifically authorized. Community First has a responsibility to provide accurate information to its shareholders, its clients, and the community in which it operates. Thus, strict observation of this policy is absolutely necessary.


Securities Trading Policy


Under the federal securities laws, it is illegal to engage in “insider trading,” which is purchasing or selling securities when one is in possession of material nonpublic information relating to those securities; or (ii) “tipping,” which is communicating material nonpublic information to another when it can be expected that the other person might trade or tip another person based on such information. It is our policy that if a director, officer, or any employee has material nonpublic information relating to Community First, he or she may not buy or sell securities of Community First or engage in any other action to take advantage of, or pass on to others, that information. Tippers can be subjected to penalties, regardless whether the tipper personally benefits financially from another's actions. To avoid tipping, you should be careful to avoid discussing sensitive information about Community First in any place (i.e., at a restaurant, in elevators, on an airplane) where such information may be overheard or seen.


The same restrictions that apply to you also apply to your family members and others living in your household. Employees are responsible for the compliance of their immediate family and personal household. Purchases or sales that may appear necessary or justifiable for independent reasons (such as the need to raise money for an emergency expenditure) are no exception. Even the appearance of an improper transaction must be avoided to preserve our reputation for adhering to the highest standards of conduct. This policy also applies to material information relating to any other company obtained in the course of employment.


Information Covered by this Policy


This policy applies to all material nonpublic information. “Material” and “nonpublic” are defined below to help you better understand the scope of Community First’s policy. Whenever you are in doubt as to whether information is material and nonpublic, you should assume that it is, and refrain from trading or communicating such information, until you can verify with Jon Thompson, Community First’s Chief Financial Officer, that such information is not material and nonpublic.


“Material” Information. Material information is any information that a reasonable investor would consider important in a decision to buy, hold, or sell stock. In short, any information that could reasonably affect the price of the stock is “material.” Material information can be positive or negative. Chances are, if you learn something that leads you to want to buy or sell stock, that information will be considered material.


Examples. Common examples of material information are: projections of future earnings or losses; information regarding branch performance; news of a pending or proposed merger, acquisition, or tender offer; news of a significant sale of assets or the disposition of a subsidiary; changes in dividend policies, the declaration of a stock split, or the offering of additional securities; changes in management; and impending bankruptcy or financial liquidity problems.


“Nonpublic” Information. Information is “nonpublic” when it is not reasonably available to the investing public. Thus, internal company reports, projections, and plans are “nonpublic.” Such information can be considered “public” only when it has been announced to the public in a source such as the Dow Jones broad tape, wire services such as AP or UPI, radio, television, newspapers and magazines of wide circulation, and documents filed with the Securities and Exchange Commission (the “SEC”). Because it can take some time for information once announced to be fully disseminated and understood by the investing public, you should continue to treat information as nonpublic, and thus refrain from trading or communicating such information, until the third business day after the announcement.


Further Restrictions for Directors, Senior Officers, and other employees with regular access to material nonpublic information.


SEC regulations stipulate “blackout” periods when Directors, Senior Officers and other employees with regular access to material nonpublic information are prohibited from executing any transactions involving Community First stock. Blackout periods begin 30 days prior to the end of a regular financial reporting period and end immediately after the financial results of that period have been made publicly available through an SEC filing. This regulation limits individuals who are subject to it to three very short periods during each year when they may execute transactions involving Community First stock. In general, those dates are as follows: May 15 through May 31, August 15 through August 31, and November 15 through November 30. The exact effective dates of blackout periods fluctuate from quarter to quarter. Individuals subject to this restriction are encouraged to contact Jon Thompson to verify if the company is in a blackout period prior to executing any transactions.







The Consequences


The consequences of insider trading violations can be staggering:


For individuals who trade on inside information or tip information to others, penalties can include:


° An order requiring the violator to disgorge any profits with interest;


° A civil money penalty of up to three times the profit gained or loss avoided;


° A criminal fine (no matter how small the profit) of up to $5 million; and


° A jail term of up to twenty years.


For a company (as well as possibly any supervisory person) that fails to take appropriate steps to prevent illegal trading:


° A civil penalty of the greater of $1 million or three times the profit gained or loss avoided as a result of the employee’s violation; and


° A criminal penalty of up to $25 million.


You should be aware that stock market surveillance techniques are becoming more sophisticated and the chance that federal authorities will detect even small-level trading is a significant one. Furthermore, SEC enforcement efforts appear to reflect “zero tolerance” for violations. Further, in light of recent events regarding public companies and securities activities by insiders, even greater caution must be taken. The risk is simply not worth taking.


Moreover, it is Community First’s policy to consider additional sanctions, including immediate dismissal for cause, against any employee who fails to comply with Community First’s policy or procedures. Additionally, any of the above consequences, even an SEC investigation that does not result in prosecution, can tarnish one’s reputation and irreparably damage a career.


Remember, if your securities transactions become the subject of scrutiny, they will be viewed after-the-fact with the benefit of hindsight. That is to say, the SEC and others will have the benefit of knowing how the stock price was affected once the information became public. As a result, before engaging in any transaction, you should carefully consider how the SEC and others might view the transaction in hindsight. Even the appearance of an improper transaction should be avoided to preserve our reputation for adhering to the highest standards of conduct.

Additional Prohibited Transactions


Because Community First believes it is improper and inappropriate for Community First personnel to engage in short-term or speculative transactions involving Community First’s stock, it is Community First’s policy that any investing you do in Community First’s securities be on a “buy and hold” basis. Directors, officers, and employees should not engage in any of the following activities with respect to securities of Community First:


Short sales in Community First’s stock (selling stock you have borrowed in anticipation of a drop in price); or

Purchases or sales of puts or calls (options to buy or sell) on Community First’s stock.


Company Assistance


Any person who has any questions about specific transactions may obtain additional guidance from Jon Thompson, Community First’s Chief Financial Officer. Should you become aware that any other officer, director, or employee is violating, or about to violate, this policy, you should report such information immediately to Jon Thompson. Remember, the ultimate responsibility for adhering to the Policy Statement and avoiding improper transactions rests with you. In this regard, it is imperative that you use your best judgment.




Officers, directors, and employees are required to sign the written statement at the end of this Code of Ethics and Conflicts of Interest Policy certifying that they have read, understand, and intend to comply with this policy. Furthermore, officers, directors, and employees may be required to certify their past compliance and intended future compliance with Community First’s policy on an annual basis. By signing the certification at the end of this Code of Ethics and Conflicts of Interest Policy I acknowledge that I have received copies of the Community First, Inc. Statement of Policy on Prevention of Insider Trading and certify that I have read, understand, and will comply with the policies and procedures set forth in such documents. I understand that my failure to comply in all respects with Community First’s policies, including the Statement of Policy on Prevention of Insider Trading, can be a basis for termination of my employment with, or my status as director of, Community First and any subsidiary thereof.



In offering its full range of financial services, Community First engages in vigorous yet fair and open competition. All Representatives are expected to observe the highest standards of ethical conduct in relationships with competitors. This dissemination of rumors or disparaging statements regarding competitors is inappropriate and unethical. It is Community First's policy to emphasize the quality and competence of its own services and staff, rather than to criticize those competitors.


Employees are prohibited from entering into arrangements with competitors for the purpose of setting or controlling prices, rates, trade practices or marketing policies, or disclosing to competitors future plans of Community First which have not been disclosed generally to the public.


Antitrust laws require that the company may not in any manner extend credit, lease or sell property of any kind, furnish any service, or fix or vary the consideration for any of the foregoing, on the condition or requirement that:


The customer obtain some additional credit, property or service other than a loan, discount, deposit, or trust service; or


That the customer obtain any additional service from another Community First subsidiary; or


That the customer provide some additional service to Community First; or


That the customer shall not obtain some other service other than loans from a competitor of Community First.




The President/CEO shall bear primary responsibility for ensuring that the Representatives comply with this Code.


The Board of Directors has adopted this Code and delegated to management the responsibility for its administration throughout Community First. It shall be management's responsibility to disseminate this Code to all affected parties and to adopt appropriate procedures to review compliance throughout Community First. This Code shall be delivered to each Representative and the office of Human Resources shall retain the acknowledgement signed by the Representative.

It is the responsibility of each Representative to be familiar with this Code and to abide by the letter and spirit of its provisions at all times.

Amendments and Modifications of this Code


There shall be no amendment or modification to this Code except by a vote of the Board of Directors or a designated board committee that will ascertain whether an amendment or modification is appropriate.

In case of any amendment or modification of this Code that applies to an officer or director of Community First, the amendment or modification shall be posted on Community First’s website within four business days of the board vote or shall be otherwise disclosed as required by applicable law or rules. Notice posted on the website shall remain there for a period of 12 months or made available in accordance with applicable laws and regulations and shall be retained in Community First’s files as required by law.


Non-retaliation for Reporting


In no event will Community First take or threaten any action against you as a reprisal or retaliation for making a complaint or disclosing or reporting information in good faith. However, if a reporting individual was involved in improper activity the individual may be appropriately disciplined even if he or she was the one who disclosed the matter to Community First. In these circumstances, we may consider the conduct of the reporting individual in reporting the information as a mitigating factor in any disciplinary decision.

We will not allow retaliation against any employee for reporting a possible violation of this Code in good faith. Retaliation for reporting a federal offense is illegal under federal law and prohibited under this Code. Retaliation for reporting any violation of a law, rule or regulation or a provision of this Code is prohibited. Retaliation will result in discipline up to and including termination of employment and may also result in criminal prosecution.


Reporting of Code Violations


You should be alert and sensitive to situations that could result in actions that might violate federal, state, or local laws or the standards of conduct set forth in this Code. If you believe your own conduct or that of a fellow employee may have violated any such laws or this Code, you have an obligation to report the matter in a timely fashion.


Generally, Representatives should raise such matters first with an immediate supervisor. However, if you are not comfortable bringing the matter up with your immediate supervisor, or do not believe the supervisor has dealt with the matter properly, you should raise the matter with the President/CEO. Directors and executive officers should report any potential violations of this Code to the Board of Directors. The most important point is that possible violations should be reported and we support all means of reporting them.



There shall be no waiver of any part of this Code for any director or officer except by a vote of the Board of Directors or a designated board committed that will ascertain whether a waiver is appropriate under all the circumstances. In case a waiver of this Code is granted to a director or officer, the notice of such waiver shall be posted on our website within four days of the Board of Director’s vote or shall be otherwise disclosed as required by applicable law or rule. Notices, if any, posted on our website shall remain there for a period of 12 months or as otherwise required by applicable laws and regulations and shall be retained in Community First’s files as required by applicable law.