**Exhibit 14.0**

 

COAST NATIONAL BANK EMPLOYEE HANDBOOK:SECTION 1YOUR ROLE AT COAST NATIONAL BANK

 

The reputation of an organization can hinge on many things, yet weoften form an opinion of a company based on experience with a singleemployee.  Many people will get theirmost lasting impression of Coast National Bank through you.  Your personal qualities, such as courtesy,helpfulness, knowledge and being good at what you do, influence the public’sattitude toward you and our organization.

 

1.0           CODE OF ETHICS

 

Coast National Bank’s reputation for integrity and honesty is at thecornerstone of its business and its most valuable asset.  Such a reputation is built and maintainedthrough the efforts of its officers, managers and employees at all levels.  Coast National Bank must conduct all of itsactivities in a manner deserving of the constant trust and confidence of itscustomers.  All employees, officers andmanagers of Coast National Bank are expected to adhere to the highest ethicalstandards by conducting themselves in a manner which will bring credit to CoastNational Bank, and avoiding any actions which might discredit Coast NationalBank.

 

An employee’s actions under this policy are deemed to be significantindications of the individual’s judgment and competence.  Accordingly, disregard of or insensitivity tothe principles of this policy will be grounds for disciplinary action, up toand including immediate discharge.

 

1.1           CONFIDENTIALCUSTOMER INFORMATION

 

In the course of performing Bank duties, Coast National Bank employeesacquire confidential information considered to be extremely sensitive bycustomers.  This information shall not berevealed to unauthorized persons nor shall customers’ finances be discussedwith others within the Bank unless their duties require the information.  Additionally, you should always be discretewhen discussing customer information where others might hear you.  Information about customers can be releasedonly when authorized by the customer or subpoenaed by the court or administrativeagencies, and then the information released must be accurate and within theconfines of the release-authorizing document.

 

When a customer identifies Coast National Bank in writing as a creditreference, this is a signed authorization to release credit information.  Banks also share credit information with eachother, but this is only done when there is a written authorization.  This sharing is only done to support creditdecisions, and the sharing is based on assurances that source confidentialitywill be respected and that the information is accurate and not misleading.  No information should be given over thephone; the only exception would be to confirm if there are sufficient funds inan account to cover a check at a particular moment.  The inherent conflict between the customer’sright to confidence and privacy and the need for creditors to share creditexperience should be recognized.  Thisconflict cannot be entirely resolved, but its consequences can be mitigated byexercising extreme care when exchanging credit information.

 

1.2           INTEGRITY

 

Coast National Bank does not want to be in a position where it might bethought that one of our employees compromised his/her professional integrity oracted in a biased manner for any reason. Employees should never use anycustomer information for the benefit of themselves or others.  Confidential information about Bank customersthat reflects favorably or adversely on the investment value of any businessenterprise is “insider information”.  Itshould not be used for personal investment advantage or provided to others fortheir investment advantage.

 

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•      ACoast National Bank employee should not represent the Bank in any transactionwhere he or she has a material connection or a financial interest.  Examples of material connections wouldinclude relatives or close personal friends, whether the transaction involvesthem as individuals or as principals in a firm doing business with theBank.  An example of a financial interestwould be an officer’s involvement as a proprietor, partner, or joint venture ofor with a firm doing business with the Bank.

 

•      Bankemployees should avoid taking part in transactions involving any of the abovecircumstances.  By “transactions”, we aretalking about not only making loans, but also about approval of overdrafts,accepting checks on uncollected funds, waiving NCF, overdrafts or late charges,and waiving the requirements for financial statements or collateral documents.  When there is a potential conflict ofinterest, ask someone else in the Bank to handle the transaction.

 

# **1.2.1**.      GIFTS, FEES,LEGACIES AND LOANS

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Coast National Bank cannot permit the impartial judgment of itsemployees to be compromised through the inappropriate receipt of entertainment,gifts, gratuities or other courtesies (collectively “gratuities”).  Employees may not accept anything as a resultof, or in anticipation of any transaction with a present or prospectivecustomer or vendor.  It is important thatemployees decline any gratuities which would cause even the slightest questionof improper influence.  The receipt ofany cash gratuities from anyone and receipt of any gratuities from competitorsis absolutely prohibited.

 

When in doubt, employees should neither accept nor offergratuities.  Employees should immediatelydiscuss any questions or concerns regarding the application of this policy toany specific situation with the President or Chairman.

 

These ethical standards flow both ways. Accordingly, it would be a violation of these standards for any CoastNational Bank employee to offer an inappropriate gratuity to any customer,vendor or competitor.

 

•      ABank employee should not accept a loan from a Bank customer, supplier, or anyother person seeking a relationship with the Bank (hereinafter collectivelyreferred to as “Bank customer”).  Thisprohibition does not apply to loans from banks or other financial institutionson customary terms to finance proper credit needs.  All executive officers must report within10 days to the Board of Directors any borrowings from other Banks*.*

 

•      ABank employee should not personally make loans to a Bank customer.

 

•      ABank employee should not receive anything of value for making a loan.

 

•      ABank employee should not accept a fee for performing any act that the Bankcould have performed.

 

•      Itis improper for a Bank employee to accept a gift from a customer.  This rule does not apply to (a) food,refreshments or entertainment at meals or business meetings, (b) advertising orpromotional material of nominal value, (c) awards from charitableorganizations, or (d) gifts of nominal value on special occasions such asChristmas.  (Nominal value will bedetermined on a case-by-case basis; however, items valued at over $50 wouldneed to be reviewed by the Board of Directors.)

 

•      ABank employee should not sell anything to a customer at a value in excess ofits worth nor should he or she purchase anything from a customer at a pricebelow its worth.  (Acceptance ofdiscounts or rebates on merchandise is permitted if they are also available totheir routine customers of the Bank.)

 

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•      ABank employee should refuse any legacy or bequest from a Bank customer who isnot a close relative.  He or she shouldalso refuse to serve personally as an executor, trustee, or guardian of theBank customer’s real estate or trust unless the customer is a close relative.

 

•      ABank employee should not indirectly perform any act that these rules prohibitdirectly; for example, it is just as wrong to arrange for a member of thefamily to receive a gift as it is for the employee to accept the gift directly.

 

# **1.2.2.**      INVESTMENTS

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•      Itis prudent to refrain from investing in a Bank customer’s business and it isimproper for a Bank employee to subscribe to new issues of stock in a Bankcustomer’s business.

 

•      Speculativeinvesting such as playing the commodities market, margin buying, shortaccounts, puts, calls, or combinations are not prudent for Bank employees.

 

1.2.3        DISHONEST OR FRAUDULENTACTS

 

Any form of dishonesty or fraud on the part of Coast National Bankemployees is totally unacceptable conduct. Acts which are considered to be dishonest or fraudulent include, but arenot limited to:

 

•      Employeesperforming transactions on any account on which they have a personal interest,i.e., co-owner, co-signer.

•      Manipulationof loan accounts, documents, computer records, shares, or checking accounts.

•      Theftof any kind, including stealing from customers’ accounts, overpayments ofinterest or creating fictitious loans.

•      Repeatedincidents of non-sufficient funds checks.

•      Checkkiting.

•      Forgeries.

•      Tampering,altering, or falsifying time sheets.

•      Unauthorizedor unapproved salary advances or overtime.

•      Violationof Coast National Bank rules, internal controls, regulations or procedures.

•      Failingto secure collateral, to properly record a security interest in collateral, orpledging a customer’s account as collateral without that customer’s permission.

•      Grantingor requesting preferential treatment for ANYONE.

 

Upon discovery of a dishonest or fraudulent act committed by anemployee or any evidence suggesting such an act, the Personnel Department mustbe immediately notified.

 

Federal law requires Coast National Bank to submit a written report tovarious agencies (including the F.B.I. and the U.S. Attorney’s Office) wheneverCoast National Bank becomes aware of or suspects any of the followingsituations:  any violations of federal orstate banking laws; any check kiting operations (whether or not Coast NationalBank suffers a loss); any mysterious disappearance or unexplained shortage ofBank funds or other assets.  Oncereported, these matters become the sole responsibility of the federalauthorities and Coast National Bank is powerless to protect its employees fromany penalties such authorities might impose.

 

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**COAST BANCORP**

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**CODE OF ETHICS**

 

# **March 2004**

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The Board of Directors of Coast Bancorp (with its subsidiaries, the “Company”)has adopted this code of ethics (this “Code”) to:

 

•      promotehonest and ethical conduct, including fair dealing and the ethical handling ofconflicts of interest;

 

•      promotefull, fair, accurate, timely and understandable disclosure;

 

•      promotecompliance with applicable laws and governmental rules and regulations;

 

•      ensurethe protection of the Company’s legitimate business interests, includingcorporate opportunities, assets and confidential information; and

 

•      deterwrongdoing.

 

All Directors, Officers and Employees of the Company are expected to befamiliar with the Code and to adhere to those principles and procedures setforth in the Code that apply to them. The Company’s more detailed policies and procedures set forth in theCode of Conduct Policy are separate requirements and are not part of this Code.

 

For purposes of this Code, the “Code of Ethics Contact Person” will bethe Company’s Audit Committee Chair.

 

From time to time, the Company may waive some provisions of thisCode.  Any waiver of the Code forexecutive officers or directors of the Company may be made only by the Board ofDirectors and must be promptly disclosed as required by the rules andregulations of the Securities and Exchange Commission (the “SEC).  Any waiver for other Employees may be madeonly by the President and CEO. 

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**Honest and Candid Conduct**

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Each Director or Officer owes a duty to the Company to act with integrity.  Integrity requires, among other things, beinghonest and candid. Deceit and subordination of principle are inconsistent withintegrity.

 

Each Director and Officer must:

 

•      Actwith integrity, including being honest and candid while still maintaining theconfidentiality of information where required or consistent with the Company’spolicies.

 

•      Observeboth the form and spirit of laws and governmental rules and regulations,accounting standards and Company policies.

 

•      Adhereto a high standard of business ethics.

 

**Conflicts of Interest**

 

A “conflict of interest” occurs when an individual’s private interestinterferes or appears to interfere with the interests of the Company.  A conflict of interest can arise when aDirector or Officer takes actions or has interests that may

 

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make it difficult to perform his or her Company work objectively andeffectively.  For example, a conflict ofinterest would arise if a Director or Officer, or a member of his or herfamily, receives improper personal benefits as a result of his or her positionin the Company.  Any material transactionor relationship that could reasonably be expected to give rise to a conflict ofinterest should be discussed with the Code of Ethics Contact Person. 

 

Service to the Company should never be subordinated to personal gain andadvantage.  Conflicts of interest should,wherever possible, be avoided.

 

Clear conflict of interest situations may include the following:

 

•      anysignificant ownership interest in any supplier or client;

•      anyconsulting or employment relationship with any supplier, competitor or client;

•      anyoutside business activity that detracts from an individual’s ability to devoteappropriate time an attention to his or her responsibilities with the Company ;

•      thereceipt of non-nominal gifts or excessive entertainment from any company withwhich the Company has current or prospective business dealings;

•      beingin the position of supervising, reviewing or having any influence on the job,evaluation, pay or benefit of any immediate family member: and

•      sellinganything to the Company or buying anything from the Company, except on the sameterms and conditions as comparable Directors or Officers are permitted to sopurchase or sell.

 

Such situations, if material, should always be discussed with the Codeof Ethics Contact Person.

 

Anything that would present a conflict for a Director or Officer would likelyalso present a conflict if it is related to a member of his or her family.

 

### **Disclosure**

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Each Director, Officer or Employee involved in the Company’s disclosureprocess, including the Chief Executive Officer, the Chief Financial Officer,the Controller and the Credit Administrator, is required to be familiar withand comply with the Company’s disclosure controls and procedures and internalcontrol over financial reporting, to the extent relevant to his or her area ofresponsibility, so that the Company’s public reports and documents filed withthe SEC comply in all material respects with the applicable federal securitieslaws and SEC rules.  In addition, eachsuch persons having direct or supervisory authority regarding these SEC filingsor the Company’s other public communications concerning its general business,results financial condition and prospects should, to the extent appropriatewithin his or her area of responsibility, consult with other Company Officersand Employees and take other appropriate steps regarding these disclosures withthe goal of making full, fair, accurate, timely and understandable disclosure.

 

Each Director or Employee who is involved in the Company’s disclosure process,including without limitation the Senior Financial Officers, must:

 

•      Familiarizehimself or herself with the disclosure requirements applicable to the Companyas well as the business and financial operations of the Company.

 

•      Noknowingly misrepresent, or cause others to misrepresent, facts about theCompany to others, whether within or outside the Company, including to theCompany’s independent auditors, governmental regulators and self-regulatoryorganizations.

 

•      Properlyreview and critically analyze proposed disclosure for accuracy andcompleteness.

 

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### **Compliance**

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It is the Company’s policy to comply with all laws, rules andregulations.  It is the personalresponsibility of each Officer and Director to adhere to the standards andrestrictions imposed by those laws, rules and regulations. 

 

It is against Company policy and in many circumstances illegal for aDirector or Officer to profit from undisclosed information relating to theCompany or any other company.  AnyDirector or Officer may not purchase or sell any of the Company’s securities(stock) while in possession of material nonpublic information relating to theCompany.  Also, any Director or Officermay not purchase or sell securities or any other company while in possession ofany material nonpublic information relating to the company.

 

Any Director or Officer who in uncertain about the legal rules involvinga purchase or sale of any Company securities or any securities in companies heor she is familiar with by virtue of his or her work for the Company, shouldconsult with the Company’s legal representative. 

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### **Reporting andAccountability**

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The Company’s Audit Committee is responsible for applying this Code tospecific situations in which questions are presented to it and has theauthority to interprets this Code in any particular situation.  Any Director who becomes aware of any existingor potential violation of this Code is required to notify the Code of EthicsContact Person promptly.  Failure to doso is itself a violation of this Code. 

 

Any questions relating to how this Code should be interpreted orapplied should be addressed to the Code of Ethics Contact Person.  A Director or Officer who is unsure o whethera situation violates this Code should discuss the situation with the Code ofEthics Contact Person to prevent possible misunderstandings and embarrassmentat a later date. 

 

Each Director or Officer must:

 

•      Notifythe Code of Ethics Contact Person promptly of any existing or potentialviolation of this Code.

 

•      Notretaliate against any other Director, Officer or Employee for reports ofpotential violations that are made in good faith.

 

The Company’s Audit Committee shall take all action they considerappropriate to Investigate any violations reported to them.  If a violation has occurred, the Company willtake such disciplinary or preventative action as it deems appropriate, after consultationwith the Audit Committee. 

 

From time to time, the Company may waive some provisions of thisCode.  Any waiver of the Code forExecutive Officers or Directors of the Company may be made only by the Board ofDirectors and must be promptly disclosed as required by SEC.

 

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### **Corporate Opportunities**

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Directors and Officers owe a duty to the Company to advance the Company’sbusiness interests when the opportunity to do so arises. Directors and Officersare prohibited from taking (or directing to a third party) a business opportunitythat is discovered through the use of corporate property, information orposition, unless the Company has already been offered the opportunity andturned it down.  More generally,Directors and Officers are prohibited from using corporate property, informationor position or for personal gain and from competing with the Company.

 

Sometimes the line between personal and Company benefits is difficultto draw, and sometimes there are both personal and Company benefits in certainactivities. Directors and Officers who intend to make use of Company propertyor services in a manner not solely for the benefit of the Company shouldconsult with the Company. 

 

**Confidentiality**

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In carrying out the Company’s business, Directors and Officers oftenlearn confidential or proprietary information about the Company, its customers,clients, suppliers or joint venture parties. Directors and Officers must maintain the confidentiality of allinformation so entrusted to them, except when disclosure is authorized orlegally mandated.  Confidential orproprietary information of the Company, and of other companies, includes anynonpublic information that would be harmful to the relevant company or usefulor helpful to competitors if disclosed. 

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**Fair Dealing**

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We have a history of succeeding through honest businesscompetition.  We do not seek competitiveadvantages through illegal or unethical business practices. Each Director andOfficer should endeavor to deal fairly with the Company’s customers, clients,service providers, suppliers, competitors and employees.  No Director or Officer should take unfairadvantage of anyone through manipulation, concealment, abuse or privilegedinformation, misrepresentation of material facts, or any unfair dealingpractice. 

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**Protection and Proper Use of Company Assets**

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All Directors and Officers should protect the Company’s assets andensure their efficient use.  All Companyassets should be used only for legitimate business purposes. 

 

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