**EXHIBIT 14**

 

**CODE OF ETHICS**

 

**Introduction**

 

Merrill Merchants Bancshares, Inc.’s reputation forhonesty, integrity and security depends upon the ethical conduct of eachdirector, officer and employee of Merrill Merchants Bancshares, Inc. (the“Company” including its subsidiary, Merrill Bank).  To protect this reputation, to assure uniformity in standards forethical conduct, and to ensure compliance with applicable laws and regulations,the Company has established this Code of Business Conduct and Ethics. This Codecovers a wide range of business practices and procedures.  It does not cover every issue that mayarise, but it sets out basic principles to guide all directors, officers andemployees of the Company (collectively referred to as “Company Personnel”).  All Company Personnel must conductthemselves accordingly and seek to avoid even the appearance of improperbehavior.

 

In addition to this Code, the Company has adopted aCode of Ethics for the Senior Financial Officers, which establishes additionalstandards of conduct applicable to the Company’s chief executive officer andall of its senior financial officers (see Appendix A).

 

If a law conflicts with a policy in this Code, youmust comply with the law.  Employees whohave any questions about these conflicts should ask their supervisors how tohandle the situation.  Directors andexecutive officers should refer any questions regarding such conflicts to theCompany’s Human Resource Officer.

 

Those who violate the standards in this Code will besubject to disciplinary action, up to and including termination ofemployment.  ***If you are in a situation which youbelieve may violate or lead to a violation of this Code, follow the guidelinesdescribed in Section 13 of this Code.***

 

**1.****             ****Compliance with Law, Rules andRegulations**

 

The Company seeks to conduct its business incompliance with applicable laws, rules and regulations.  No director, officer or employee shallengage in any unlawful activity in conducting the Company’s business or inperforming his or her day-to-day Company duties, nor shall any director,officer or employee instruct others to do so.

 

**2.****             ****Conflicts of Interest**

 

A “conflict of interest” exists when a person’sprivate interest interferes in any way with the interests of the Company.  A conflict situation can arise when CompanyPersonnel take actions or have interests that may make it difficult to performtheir roles within the Company objectively and effectively.  Conflicts of interest may also arise when CompanyPersonnel or their family members receive improper personal benefits as aresult of their relationship with the Company. Loans to, or guarantees of obligations of, Company Personnel and theirfamily members may create conflicts of interest.  Company Personnel are not permitted to process or approve anytransactions between the Company and:

 

a.                 themselves:

 

b.                any of their family members;

 

----

 

c.                 any organization of which they or any of their familymembers are a sole proprietor, controlling shareholder, executive officer orpartner;

 

d.                any trust or other estate in which they or theirfamily members have a substantial beneficial interest, or for which they ortheir family members serve as trustee or in a similar capacity; or

 

e.                 any entity whereby the individual is serving as adirector/trustee/officer of a company or a non-profit organization.

 

Any material transaction or relationship thatreasonably could be expected to give rise to a conflict of interest should bereported promptly to the Human Resource Officer. The Human Resource Officer maynotify the Audit Committee or the Board of Directors as deemedappropriate.  Actual or potentialconflicts of interest involving a director, executive officer or our HumanResource Officer should be disclosed directly to the Chairman of the Board of Directors.

 

**3.****             ****Gifts**

 

Gifts to or from customers, suppliers, or publicofficials require discretion and common sense. Gifts of a nominal value (under $100) on special occasions or legitimateentertainment for proper business purposes are acceptable.  Gifts of such value or frequency as to beinterpreted as a gratuity for doing business with the Company are prohibited.

 

Legacies by will or bequests to Company Personnel inreturn for services rendered in their capacity as a representative of theCompany must be refused.  Legacies andbequests from relatives or persons who pose no past, present or future conflictof interest may be accepted.  CompanyPersonnel that serve as a personal representative for a customer should notifyour Human Resource Officer.

 

**4.****             ****PersonalFinancial Responsibility**

 

Company Personnel areexpected to maintain their personal finances in a responsible manner.  Company Personnel must conduct theirpersonal affairs so there can be no opportunity for unfavorable reflection uponthe Company, either expressed or implied.

 

**5.****             ****InsiderTrading**

 

Company Personnel who have access to confidentialinformation are not permitted to use or share that information for stocktrading purposes or for any other purpose except the conduct of ourbusiness.  All nonpublic informationabout the Company should be considered confidential information.  To use nonpublic information for personalfinancial benefit or to “tip” others who might make an investment decision onthe basis of this information is not only unethical but also illegal.  In order to assist with compliance with lawsagainst insider trading, the Company has adopted a specific policy governingtrading in the Company’s securities by Company Personnel. This policy has beendistributed to Company Personnel and is included in the Company’s EmployeeHandbook.

 

**6.****             ****CorporateOpportunities**

 

Company Personnel owe a duty to the Company to advanceits legitimate business interests when the opportunity to do so arises.  Company Personnel are prohibited from:

 

a.               diverting to himself or herself or to others anyopportunities that are discovered through the use of the Company’s property orinformation or as a result of his or her position with the Company,

 

b.                using the Company’s property or information or his orher position for improper personal gain, or

 

c.                 competing with the Company.

 

----

 

**7.****             ****Competitionand Fair Dealing**

 

Competing vigorously, yet lawfully, with competitorsand establishing advantageous, but fair, business relationships with customersand suppliers is a part of the foundation for long-term success.  However, unlawful and unethical conduct,which may lead to short-term gains, may damage a company’s reputation andlong-term business prospects. Accordingly, it is the Company’s policy that Company Personnel mustendeavor to deal ethically, honestly and lawfully with the Company’s customers,suppliers, competitors and employees in all business dealings on the Company’sbehalf.  Company Personnel shall nottake unfair advantage of another person in business dealings on the Company’sbehalf through the abuse of privileged or confidential information or throughimproper manipulation, concealment or misrepresentation of material facts.

 

**8.****             ****Discrimination and Harassment**

 

The diversity of the Company’s employees is animportant asset.  We are firmlycommitted to providing equal opportunity in all aspects of employment and willnot tolerate discrimination or harassment of any kind.  Limited examples include derogatory commentsbased on racial or ethnic characteristics and unwelcome sexual advances.

 

**9.****             ****Health and Safety**

 

The Company strives to provide a safe and healthy workenvironment.  All Company Personnel havea responsibility for maintaining a safe and healthy workplace for each other byfollowing safety and health rules and practices.  Personnel are required to report accidents, injuries, unsafeequipment, and unsafe practices or conditions.

 

Violent behavior and threatening behavior are notpermitted.  Company Personnel shouldreport to work free from the influence of alcohol or illegal drugs.  The Company will not tolerate the illegaluse of drugs in the workplace.

 

**10.****      ****Accuracy of Records**

 

The Company requires honest and accurate recording andreporting of information in order to make responsible business decisions.  All of the Company’s books, records,accounts and financial statements must be maintained in appropriate detail,must fairly reflect the Company’s transactions and must conform both toapplicable legal requirements and to the Company’s system of internalcontrols.  Unrecorded or “off the books”funds or assets should not be maintained unless permitted by applicable law orregulation.

 

Company Personnel have the duty to promote full, fair,accurate, timely and understandable disclosure in reports and documents filedwith or submitted to the Securities and Exchange Commission and in other publiccommunications.

 

Business records and communications often becomepublic.  Company Personnel should avoidexaggeration, derogatory remarks, guesswork, or inappropriate characterizationsof people and companies that can be misunderstood.  This applies equally to e-mail, internal memos, and formalreports.  Records should always be retainedor destroyed according to the Company’s record retention policies.  In accordance with those policies, in theevent of litigation or governmental investigation, please consult the Company’sCompliance Officer

 

**11.****      ****Confidential Information**

 

Company Personnel must maintain the confidentiality ofinformation entrusted to them by the Company, its customers or suppliers,except when disclosure is authorized by the Company or required by laws orregulations.  All information concerningcustomers or suppliers is considered confidential.  Specific details of a customer’s banking relationship with theCompany are confidential.  Theobligation to preserve

 

----

 

confidential information continues even after yourassociation with the Company ends.  TheCompany has adopted a Consumer Privacy Policy specifically regarding theprotection of nonpublic personal information regarding the Company’s consumersor customers.  All Company Personnel arerequired to maintain the confidentiality of such information in accordance withthat policy.

 

**12.****      ****Protection and Proper Use of Company Assets**

 

All Company Personnel should endeavor to protect theCompany’s assets and ensure their efficient use.  Theft, carelessness, and waste have a direct impact on theCompany’s profitability. Any suspected incident of fraud or theft should beimmediately reported for investigation. Company equipment should not be used for non-Company business, thoughincidental personal use may be permitted.

 

**13.****      ****Reporting Concerns**

 

Company Personnel are required to actproactively by asking questions, seeking guidance and reporting suspectedviolations of the Code and other policies and procedures of the Company.  Company Personnel are also required toreport any violation or suspected violation of applicable law, rule orregulation arising in the conduct of the Company’s business or occurring on theCompany’s property.  **If any employee believes that actions have takenplace, may be taking place, or may be about to take place that violate or wouldviolate the Code, he or she is obligated to timely bring the matter to theattention of the Company’s Human Resource Officer.**

 

The best starting point for Company Personnel seekingadvice on ethics-related issues or reporting potential violations of the Codewill usually be his or her supervisor. However, if the conduct in question involves his or her supervisor, ifthe employee has reported the conduct in question to his or her supervisor anddoes not believe that he or she has dealt with it properly, or if the officeror employee does not feel that he or she can discuss the matter with his or hersupervisor, the employee may raise the matter with the Human Resource Officer.

 

 CompanyPersonnel may communicate with the Human Resource Officer by the followingmethods: 

 

•                  In writing (which may be done anonymously), addressedto the Human Resource Officer either by facsimile to (207) 990-4075 or by U.S.mail to 201 Main Street, Bangor, Maine 04401;

 

•                  By e-mail to jmadigan@merrillmerchants.com (anonymitycannot be maintained)

 

Company Personnel must not use these reportingchannels in bad faith or in a false or frivolous manner.  Further, employees should not use theReporting Line to report grievances that do not involve the Code or otherethics-related issues.

 

Company Personnel must read the Company’s AuditCommittee Complaint Procedures (available on the Company’s internal websiteunder Policies and Procedures), which describes the Company’s procedures forthe confidential, anonymous submission to the Audit Committee of reportsregarding questionable accounting, internal accounting controls, or auditingmatters.  Any employee may submit a goodfaith concern regarding questionable accounting or auditing matters or otherimproper activities without fear of dismissal or retaliation of any kind.

 

**14.****      ****Monitoring Compliance and Disciplinary Action**

 

The Company’s management, under the supervision of itsBoard of Directors or a committee thereof or, in the case of accounting,internal accounting controls or auditing matters, the Audit Committee, shalltake reasonable steps to (i) monitor compliance with the Code, including theestablishment of monitoring systems that are reasonably designed to investigateand detect conduct in violation of the Code, and (ii) when appropriate, imposeand enforce appropriate disciplinary measures for violations of the Code.

 

----

 

Disciplinary measures for violations of the Code mayinclude, but are not limited to, counseling, oral or written reprimands,warnings, probation or suspension with or without pay, demotions, reductions insalary, termination of employment or service and restitution.

 

The Company’s management shall periodically report tothe Board of Directors or a committee thereof on these compliance effortsincluding, without limitation, periodic reporting of alleged violations of theCode and the actions taken with respect to any such violation.

 

**15.****      ****Employee Rights and ProtectionsAgainst Discrimination and Retaliation**

 

Employees have a right toconfidentiality in the reporting of complaints under this policy.  In addition, the Company does not permitretaliation of any kind against employees for good faith complaints submittedpursuant to this policy.  Furthermore,no employee shall be adversely affected because the employee refuses to carryout a directive which, in fact, constitutes corporate fraud, or is a violationof state or federal law or regulation.

 

**16.****      ****Waivers of the Code of BusinessConduct and Ethics**

 

Any waiver of this Code for executive officers ordirectors may be made only by the Audit Committee of the Board of Directors andwill be promptly disclosed as required by law or stock exchangeregulation.  Any waivers of the Code forother employees may be made by the Human Resource Officer or Audit Committee ofthe Board of Directors. Any waiver shall be reported to the Company’s Board ofDirectors at their next scheduled meeting.

 

----

 

**Appendix A**

 

**CODE OF ETHICS FORSENIOR FINANCIAL OFFICERS**

 

This Code of Ethics applies to the Company’s Chief Executive Officer,Chief Financial Officer and Assistant Controller (“Senior FinancialOfficers”).  These Senior FinancialOfficers hold an important role in corporate governance to ensure that thefinancial affairs of the Company are conducted honestly, ethically, accurately,objectively, consistent with best accounting practices and in compliance withall applicable governmental law, rules and regulations.

 

All Senior Financial Officers shall:

 

1.               Act with honesty and integrity, avoidingactual or apparent conflicts of interest in personal and professionalrelationships.

 

2.               Provide information that is accurate, complete,objective, relevant, timely and understandable.

 

3.               Comply with rules and regulations of federal,state and local governments, and other appropriate private and publicregulatory agencies.

 

4.               Act in good faith, responsibly, with duecare, competence and diligence, without misrepresenting material facts orallowing independent judgment to be subordinated.

 

5.               Respect the confidentiality of informationexcept when authorized or otherwise legally obligated to disclose.  Ensure confidential information acquired inthe course of work is not used for personal advantage.

 

6.               Proactively promote ethical behavior.

 

Should any irregularities or breaches of thisCode of Ethics be observed by any Senior Financial Officer, they are duly boundto report these to the Audit Committee of the Board of Directors.

 

----

 

**ACKNOWLEDGEMENT OF RECEIPT OFMERRILL MERCHANTS BANCSHARES, INC.’SCODE OF BUSINESS CONDUCT AND ETHICS**

 

By signing below, I acknowledge that I have received acopy of Merrill Merchants Bancshares, Inc.’s Code of Business Conduct andEthics (the “Code”).  I acknowledge thatI have read the Code and that I understand its contents.  I understand that a violation of the Codemay result in disciplinary action up to and including the termination of myemployment with the Company. 

 
|   |   |   |
|--------|--------|--------|
|   |   |   |
| Signed |   |
|   |   |
|   |   |   |
|   |   |   |
| Name   |   |
|   |   |
|   |   |   |
|   |   |   |
| Title  |   |
|   |   |
|   |   |   |
|   |   |   |
| Date   |   |

 

----