**Exhibit 14**

 

**OAK VALLEY BANCORP**

 

**OAK VALLEY COMMUNITY BANK**

 

**Code of Ethics**

 

Approved by the Board of Directors: November 18,2008

 

----

 

**CODE OF ETHICS**

 
| I.     | PHILOSOPHY                                        | 5B - 1      |
|--------|---------------------------------------------------|-------------|
|   |                                              |        |
| II.    | EXECUTIVE OFFICER                                 | 5B - 1      |
|   |                                              |        |
| III.   | CONFIDENTIALITY                                   | 5B - 2      |
|   |                                              |        |
| IV.    | CONFLICTS OF INTEREST AND CORPORATE OPPORTUNITIES | 5B - 3      |
|   |                                              |        |
| V.     | INSIDER TRADING                                   | 5B - 5      |
|   |                                              |        |
| VI.    | EXTENSIONS OF CREDIT                              | 5B - 5      |
|   |                                              |        |
| VII.   | OUTSIDE ACTIVITIES                                | 5B - 5      |
|   |                                              |        |
| VIII.  | OUTSIDE EMPLOYMENT                                | 5B - 6      |
|   |                                              |        |
| IX.    | FAIR DEALING                                      | 5B – 7 |
|   |                                              |        |
| X.     | PROTECTION AND PROPER USE OF OVCB PROPERTY        | 5B – 9 |
|   |                                              |        |
| XI.    | PERSONAL FINANCIAL RESPONSIBILITY                 | 5B - 9      |
|   |                                              |        |
| XII.   | COMPLIANCE WITH LAWS, RULES AND REGULATIONS       | 5B - 9      |
|   |                                              |        |
| XIII.  | EXPRESSIONS OF OPINIONS                           | 5B - 10     |
|   |                                              |        |
| XIV.   | OTHER GUIDELINES/SARBANES-OXLEY ACT (SOX)         | 5B - 10     |
|   |                                              |        |
| XV.    | NO RETALIATION                                    | 5B - 11     |
|   |                                              |        |
| XVI.   | REPORTING OF ILLEGAL OR UNETHICAL BEHAVIOR        | 5B - 11     |
|   |                                              |        |
| XVII.  | ADMINISTRATION AND WAIVER OF CODE OF ETHICS       | 5B - 12     |

 

**This Codeof Ethics (“Code of Ethics”) applies to all employees, officers and directors (“employee”)of Oak Valley Community Bank and Oak Valley Bancorp  (collectively the “Company” or the “Bank”).**

 

----

 

**I.   PHILOSOPHY**

 

The Company iscommitted to the highest standards of legal and ethical business conduct and weseek to foster an environment of awareness where the prompt reporting of anyunethical or illegal behavior or any violation of our corporate policies, isprotected, encouraged and dealt with fairly. Ethical conduct is an inherent obligation of our directors and employeesand in furtherance of our commitment and consistent with our core values wehave adopted the following Code of Ethics.

 

This Code ofEthics governs the actions and working relationships of Company employees anddirectors with its current and potential customers, consumers, fellow employeesand directors, competitors, government and self-regulatory agencies, the mediaand anyone else with whom the Company has contact.  These relationships are essential to thecontinued success of the Company as a leading financial service provider.

 

Compliancewith this code is mandatory and it is the responsibility of each director andemployee to read and become familiar with the ethical standards described herewithin.

 

This Code ofEthics:

 

·                  Requires the highest standards forhonest and ethical conduct, including proper and ethical procedures for dealingwith actual or apparent conflicts of interest between personal and professionalrelationships.

·                  Requires full, fair, accurate, timelyand understandable disclosure in the periodic reports required to be filed bythe Company with governmental and regulatory agencies.

·                  Requires compliance with applicablelaws, rules and regulations.

·                  Addresses potential or apparentconflicts of interest and provides guidance for employees and directors tocommunicate those conflicts to the appropriate party.

·                  Addresses misuse or misapplication ofCompany property and corporate opportunities.

·                  Requires the highest level ofconfidentiality and fair dealing within and outside the Company environment.

·                  Requires reporting of any illegalbehavior.

 

**II.**            **EXECUTIVE OFFICER**

 

For purposesof this policy, executive officers are defined as the Chief Executive Officer,President, Chief Financial Officer and other Executive Officers.  In addition to the other requirements of theCode of Ethics, Executive Officers must ensure:

 

·                  Business transactions are properlyauthorized and completely and accurately recorded on the Bank’s books andrecords in accordance with Generally Accepted Accounting Principles (GAAP) andestablished policy.

·                  The retention or proper disposal ofCompany records shall be in accordance with established policies and applicablelegal and regulatory requirements.

 

5B-1

----

 

·                  Disclosures in periodic reports areaccurate, complete, objective, relevant, timely and understandable.

·                  Compliance with applicable laws, rules andregulations of federal, state and local governments *(both U.S. and foreign)* and other appropriate private andpublic regulatory agencies.

 

ExecutiveOfficers also must:

 

·                  Act in good faith, with due care,competence, and diligence, without misrepresenting material facts or allowingindependent judgment to be subordinated.

·                  Respect the confidentiality ofinformation acquired in the course of employment.

·                  Share knowledge and maintain skillsnecessary and relevant to the Bank’s needs.

·                  Proactively promote ethical andhonest behavior within the Company environment.

·                  Assure responsible use of, andcontrol of all assets, resources and information of the Bank.

 

**III.****           CONFIDENTIALITY**

 

Nonpublicinformation regarding the Company or its businesses, employees, customers andsuppliers is confidential.  As a Companyemployee or director, you are entrusted with confidential information.  You are only to use such confidentialinformation for the business purpose intended. You are not to shareconfidential information with anyone outside of the Bank, including family andfriends, or with other employees who do not need the information to carry outtheir duties.  You will be required tosign the Handbook &IIPP Revision Acknowledgement Form in the course of youremployment.  You remain under anobligation to keep all information confidential even if your employment withthe Company ends.

 

The followingis a non-exclusive list of confidential information:

 

·                  Trade secrets, which include anybusiness or technical information, such as formula, program, method, technique,compilation or information that is valuable because it is not generally known.

·                  Information from a business plan orother confidential material that would be beneficial to competitors orinvestors.

·                  Comments on highly controversial orsensitive subjects. If the Company is to respond on these matters, executivemanagement will reply.

·                  All rights to any invention orprocess developed by an employee using Company facilities or trade secret information, resulting from any workfor the  Company or relating to the Bank’sbusiness, is considered to be work-for-hire under the U.S. copyright laws andshall belong to the Bank.

·                  Proprietary information such ascustomer lists and confidential customer information.  Of particular concern is unintentionaldisclosure which includes leaving confidential information on copiers, faxmachines, printers and desks or in other places where they 

 

5B-2

----

 

may be viewed by either unauthorized individuals, which includeemployees without a need-to-know, customers, clients, vendors or serviceproviders.

·                  Public and media communicationsinvolving the Company must have prior clearance from an executive officer.

·                  Information regarding therelationship between the Company and present and former employees. Any verbalor written request regarding disclosure of information of past and presentemployees should be directed to the Human Resources Department.

·                  State and federal exams and otheragency reports are strictly confidential. Information contained in the reportsshould not be communicated to anyone not officially connected with the Bank.

 

**IV.****                                CONFLICTS OF INTERESTAND CORPORATE OPPORTUNITIES**

 

Our directorsand employees should not be involved in any activity that creates or gives theappearance of a conflict of interest. A “conflict of interest” exists when aperson’s private interest interferes or *appears* tointerfere in any way with the interests of the Bank.  You are expected to avoid all situations thatmight lead to a real or apparent material conflict between your self-interestand your duties and responsibilities as an employee or director of theBank.  Any position or interest,financial or otherwise, which could materially conflict with your performanceas an employee or director, or which affects or could reasonably be expected toaffect your independence or judgment concerning transactions between the Bank,its customers, suppliers or competitors or otherwise reflects negatively on theBank, would be considered a conflict of interest.

 

Usingconfidential information about the Company or its businesses, employees,directors, customers, consumers or suppliers for personal benefit or disclosingsuch information to others outside your normal duties is prohibited.

 

Title 18 U.S.Code, Section 215, makes it a criminal offense for any Company employee tocorruptly:

 

·                  Solicit for himself or herself or fora third party anything of value from anyone in return for any business, serviceor confidential information of the Company or;

 

Acceptanything of value *(other than normalauthorized compensation)* from anyone in connection with the businessof the Bank, either before or after a transaction is discussed or consummated.

 

Employees anddirectors, on behalf of the Company, are prohibited from:

 

·                  Personally benefiting fromopportunities that are discovered through the use of Company property,contacts, information or position.

·                  Accepting employment or engaging in abusiness *(including consulting or similararrangements)* that may conflict with the performance of your dutiesor the Bank’s interest.

 

5B-3

----

 

·                  Soliciting, demanding, accepting oragreeing to accept anything of value from any person in conjunction with theperformance of your employment or duties at the Bank.

·                  Acting on behalf of the Company inany transaction in which you or your immediate family has a direct or indirectfinancial interest.

·                  Providing gifts and entertainment ofa nominal value *(generally not to exceed $100)*are acceptable, to the extent that they are fit and suitable under thecircumstances, meet the standards of ethical business conduct and involve noelement of concealment. Gifts given to customers or suppliers should beapproved by an officer authorized to approve business expense claims.

·                  Making direct or indirectcontribution of funds or other property of the Company in connection with acandidate to any state or federal political office. Contributions may be madeto candidates of any local office only when the prior approval of an executiveofficer is first obtained. Company expenditures of a nonpartisan nature may bemade in support of public issues of concern to the Bank, such as for politicaleducation, “get out and vote,” etc.

 

There arecertain situations in which you may accept a personal benefit from someone withwhom you transact Company business such as:

 

·                  Accepting a gift in recognition of acommonly recognized event or occasion *(such as a promotion, newjob, wedding, retirement or holiday.)* An award in recognition ofservice and accomplishment may also be accepted without violating theseguidelines so long as the gift does not exceed $100 from any one individual inany calendar year.

·                  Accepting something of value if thebenefit is available to the general public under the same conditions on whichit is available to you.

·                  Accepting meals, refreshments, travelarrangements and accommodations, and entertainment of reasonable value in thecourse of a meeting or other occasion to conduct business or foster businessrelations if the expense would be reimbursed by the Company as a businessexpense if the other party did not pay for it.

 

Directors andemployees should be sensitive to any situation where there is the potential fora conflict of interest or the appearance of a conflict of interest. Judgment onwhether a conflict of interest exists can be difficult to make and therefore,directors and employees who are uncertain should promptly consult with thefollowing to determine the appropriate course of action:

 
| Executive  Officers |   | Chief  Executive Officer               |
|---------------------|--------|----------------------------------------|
| Directors           |   | Chair of the  Board of Directors       |
| Employees           |   | Manager of  Human Resources Department |

 

Members of theBoard of Directors (Board) have a special responsibility because our directorsare prominent individuals with other responsibilities.  To avoid other conflicts of interest, Directorsare expected to recuse themselves from participation in any decision in whichthere is a conflict between their personal interests and the interest of theBank.

 

5B-4

----

** **

**V.****            INSIDER TRADING**

 

It isunethical and illegal to buy, sell, trade, recommend to others or otherwiseparticipate in transactions involving Company common stock or other securitywhile in possession of material information that has not been released to thepublic, but which when released may have an impact on the market price ofCompany common stock or other equity security. It is also unethical and illegal to buy, sell, trade, recommend toothers or otherwise participate in transactions involving the common stock orother security of any other Company while in possession of similar non-publicmaterial information concerning such Bank. Any questions concerning thepropriety of participating in Company stock or other security transactionsshould be directed to the CFO at: 209-844-7538. Common examples of thismaterial are as follows:

 

·                  Projections of future earnings orlosses.

·                  News of pending or proposed merger oracquisition.

·                  Tender offer or exchange offer.

·                  News of a significant sale of assetsor the disposition of a subsidiary.

·                  Changes in dividend policies or thedeclaration of a stock split or the offering of additional securities.

·                  Significant changes in management,new products or discoveries; or impending financial liquidity problems.

 

Any requestsof employees for “material inside information” that is not germane to theexecution of the employee’s duties should be immediately reported to anexecutive officer. The employee should first inquire why such information isbeing requested.

 

**VI.****           EXTENSIONS OF CREDIT**

 

Regulation Oaffects, to varying degrees, extensions of credit to insiders of the Bank and,in some instances, insiders of any affiliate of the Bank. Executive officers,directors and related interests of a director or executive officers are coveredunder the Bank’s Loan Administration Policy, (Regulation O.)

 

**VII.****         OUTSIDE ACTIVITIES**

 

Beforeagreeing to act as a director, officer, consultant or advisor for any otherbusiness organization, employees should obtain the approval of their immediatesupervisor.

 

Directorsshould disclose all new directorships or potential directorships to theChairman of the Board in order to avoid any conflicts of interest and tomaintain independence.

 

5B-5

----

 

Employees areencouraged to support and take active roles in public affairs, including civic,charitable, educational and political activities as long as they do notinterfere with the performance of your Company duties.  This can be accomplished through voluntaryaction and involvement in such activities. Normally these activities take placeoutside of normal business hours. Before agreeing to participate in any civicof political activities, you should contact your immediate supervisor.  If the efforts require corporate time, again,prior approval should be obtained through the employee’s immediate supervisor.

 

Employeeswishing to accept appointed office such as with the city, county, state orfederal government must first seek approval of an executive officer. They mustcampaign on their own time and not use Company property or services for suchpurposes.

 

No employee ordirector should enter into investment transactions that would create, or givethe appearance of creating, a conflict of interest between the employee ordirector and the Company or between the Company and customer. The policy coversinvestments for the personal account of an employee or director as well asmembers of his or her family. Such investment situations are too numerous tolist.  However, specific examples of suchsituations that should be avoided are listed in the Human Resources Policy.

 

**VIII.****        OUTSIDE EMPLOYMENT**

 

Employees whoare considering outside employment must notify their supervisor. Employees insome positions of the Company and its affiliates are prohibited by law fromholding outside employment.

 

It is contraryto Company policy for an employee to engage in outside employment thatinterferes, competes or conflicts with the interests of the Bank, or that willencroach on the normal working time, or necessitates such long hours as toimpair the employee’s ability to meet regular job responsibilities of the Bank.An employee may be required to withdraw from a paid outside activity at such atime as management determines it is in the best interest of the employee and/orBank.

 

Outsideemployment must be disclosed in writing with a description of the employment,along with the hours of expected commitment on a daily basis, scope ofinterest, etc., and submitted to the employee’s supervisor. Final writtenapproval must be given by an executive officer. A copy of the approval will besent to the Human Resources Department and will be kept in the employee’spersonnel file.  If approval is denied orapproved and later revoked, the employee will be required to discontinue theoutside employment or resign. Failure to disclose such outside employment maybe subject to corrective action, up to and including employment termination.

 

Even thoughthe outside employment may be approved, employees must abstain fromnegotiating, processing or approving any business transaction between theCompany and the outside organization with which they are affiliated, whetheracting as a representative of the Company or the outside organization.

 

5B-6

----

 

Examples ofsituations arising from outside employment that may involve a conflict ofinterest or be subject to criticism are:

 

·                  Employment or personally engaging inany activity that is competitive with the Bank.

·                  Employment that involves the use of theBank’s equipment, supplies and facilities.

·                  Employment that involves thepreparation, audit or certification of statements or documents upon which wouldbe presented to the Bank, and that may place reliance for lending or otherpurposes.

·                  Employment that involves renderinginvestment, legal or other advice or exercising judgment that is predicatedupon information, reports or analyses that are accessible from or throughemployment with the Bank.

·                  Employment that may reflect adverselyon the employee or on the Bank.

·                  Employment under circumstances thatmay infer sponsorship or support of the Company on behalf of the outsideemployer or an outside organization.

·                  Employment as an insurance orsecurities broker, agent or representative.

·                  While the Company has no policyagainst employees obtaining any real estate sales or brokerage license,specific prior approval must be obtained when engaging in any activity requiringthe use of such license.

·                  Rendering accounting services.

·                  Drawing wills or practicing law.

·                  Performing a service that the Companyitself could perform.

 

Additionally,in a situation where in the context of your outside employment you propose toperform work for the Bank, you must disclose this in writing with a descriptionof the work to be performed for your outside employment, and it must besubmitted to the employee’s supervisor. Final written approval must be given by an executive officer. A copy ofthe approval will be sent to the Human Resources Department and will be kept inthe employee’s personnel file

 

Any otheroutside activity or venture involving customers, vendors or affiliates of theCompany that may not have been covered in the foregoing, but raise some basisfor concern, must first be reviewed and approved by the employee’s supervisorand final approval must be given by an executive officer.  Any business or professional listing of theemployee’s outside activity, as in the telephone or other directory, is alsoprohibited.

 

**IX.****           FAIR DEALING**

 

Each employeeand director should undertake to deal fairly with the Bank’s customers,suppliers, competitors and fellow employees. Additionally, no one should take advantage of another throughmanipulation, concealment, and abuse of privileged information,misrepresentation of material facts or any other unfair-dealing practices.

 

5B-7

----

 

Employees mustdisclose prior to or at their time of hire the existence of any employmentagreement, non-compete or non-solicitation agreement, confidentiality agreementor similar agreement with a former employer that in any way restricts orprohibits the performance of any duties or responsibilities of their positionswith the Bank.  Copies of such agreementsshould be provided to Human Resources to permit evaluation of the agreement inlight of the employee’s position. In no event shall an employee use any tradesecrets, proprietary information or other similar property, acquired in thecourse of his or her employment with another employer, in the performance ifhis or her duties for or on behalf of the Bank.

 

In the eventthat the Company becomes engaged in the business of serving as executor,trustee and guardian of estates of individuals, employees will be encouraged torecommend these services to qualified individuals.  Employees may serve as fiduciaries, personalexecutor, trustee or guardian on an estate or trust for members of their ownfamilies.  The definition of familyincludes: spouse, son, daughter, niece, nephew, cousin, grandchild, father,mother, brother, sister, father-in-law, mother-in-law, sister-in-law,brother-in-law, grandfather, grandmother or any member of a household from thislist of relatives.   With respect to anyother person, employees should not seek nor accept appointment to any fiduciaryor co-fiduciary position without the written approval of an executive officer.Due to the danger of customer misunderstandings, potential liability to theBank, its employees and inherent conflicts of interest, such approval will notnormally be given.

 

Employees willrefuse any legacy or bequest. They also should not directly or indirectly acceptbequests under a will or trust if such bequests have been made to them becauseof their employment with the Bank.  Anemployee may not receive anything of value for making a loan or accept a feefor performance of any act that the Company could have performed.

 

Officersresponsible for making internal investments with correspondent banks on behalfof the Company shall not accept any gifts that may be implicated as aninfluential transaction.

 

An employeewill not sell anything to a customer at a value in excess of its worth, norwill they purchase anything from a customer at a value below its worth.

 

It is improperfor an employee of the Company to accept a gift from a customer, supplier orfrom any other person or business seeking a relationship with the bank.  An employee should decline any gift wherethere would be even the slightest implication of influence on future businessdealings. An employee may not do indirectly what they are prohibited from doingdirectly, to include but not limited to arranging to have a member of their ownfamily accept a gift from a customer.

 

Employees maynot, on behalf of the Company in connection with any transaction or business ofthe Bank, directly or indirectly give, offer or promise anything of value to an

 

5B-8

----

 

individual forthe purpose of influencing the actions of the recipient.  This is not intended to prohibit normalbusiness practices such as providing meals, entertainment, promotional giftsand tickets to cultural and sporting events, or gifts given for specialoccasions, so long they are of nominal and reasonable value under thecircumstances and promote the Bank’s legitimate business interests.

 

**X.****                                  PROTECTIONAND PROPER USE OF COMPANY PROPERTY**

 

All employeesand directors should protect the Bank’s property and assets and ensure theirefficient and proper use.  Theft,carelessness and waste can directly impact the Bank’s profitability, reputationand success.  Permitting Company property*(including data transmitted or storedelectronically and computer resources)*to be damaged, lost or usedin an unauthorized manner is strictly prohibited.  No Company information may be used in theperformance of any authorized or unauthorized non-Company related activity.

 

**XI.****                              PERSONALFINANCIAL RESPONSIBILITY**

 

As employeesof a financial institution, it is important to consistently demonstrate anability to properly manage personal funds, particularly the intelligent use ofcredit. This includes avoidance of the following:

 

·                  Borrowing from customers orsuppliers.

·                  Borrowing from other financialinstitutions is appropriate as long as it is at the same terms, rates andconditions as would be offered to other customers of similar credit worthiness.

·                  Borrowing from other employees isstrongly discouraged, as it may lead to animosity among employees.

·                  Signing on customers’ accounts,unless the customer is related by blood or marriage.

·                  Taking advantage of a businessopportunity that rightfully belongs to the Bank.

·                  Acting as principal for eitherthemselves or their immediate families in the supply of goods, properties orservices to the Bank.  This includespurchases from the Company of foreclosed properties and repossessed vehicles orother personal property, unless approved by the Board.

 

**XII.****                        COMPLIANCEWITH LAWS, RULES AND REGULATIONS**

 

The successful business operationand reputation of the Company is built upon the principles of fair dealing andethical conduct of our employees.  Ourreputation for integrity and excellence requires careful observance of thespirit and letter of all applicable laws and regulations, as well as ascrupulous regard for the highest standards of conduct and personal integrity.

 

The Company will comply with all applicable laws and regulations and expectsits directors, officers and employees to conduct business in accordance withthe letter, spirit and intent of all relevant laws and to refrain from anyillegal, dishonest, or unethical 

 

5B-9

----

 

conduct.  While thelaw prescribes a minimum standard of conduct, this Code of Ethics requiresconduct that often exceeds the legal standard.

 

Compliance with this policy ofbusiness ethics and conduct is the responsibility of every Companyemployee.  Disregarding or failing tocomply with these standards could lead to disciplinary action, up to andincluding possible termination of employment

 

The Companyrecognizes that its customers must have faith and confidence in the honesty andcharacter of its employees and directors. In addition to the importance of maintaining customer confidence, thereare specific laws that outline the actions the Company must take regarding anyknown, or suspected, crime involving the affairs of the Bank.  In accordance with the Bank Secrecy Act(BSA), the bank must file a Suspicious Activity Report in the case of any knownor suspected theft, embezzlement, check/debit card kiting, misapplication,structuring or other defalcation involving bank funds or bank personnel in anyamount.  All such information should beimmediately forwarded to the BSA Department for documenting, filing andretention.

 

**XIII.****                    EXPRESSIONS OFOPINIONS**

 

Use of Companyletterhead for the purpose of personal letters, testimonials and letters ofrecommendation may lead to embarrassing situations for both the writer and theBank. Accordingly, it is inappropriate for employees or directors to useofficial stationery for either personal correspondence or other non-businesspurposes.

 

Employeesshould also refrain from giving legal or tax advice to customers, even ifasked. The customers should be directed to seek qualified practitioners forsuch advice. Employees should also be careful not to recommend specificindividuals, rather provide a list of professionals in the professionalservices field requested. The Bank’s relationship with the media is animportant factor that affects our image to the community.  Employees should seek the approval of anexecutive officer, before making a definite commitment on behalf of the Companyduring a speech or the creation of an article for publication.  All questions or requests for informationfrom reporters or other media representatives to executive staff, ensuringconsistency and accuracy of information released.

 

**XIV.****                     OTHER GUIDELINES/SARBANES-OXLEYACT (SOX)**

 

Congress passed the Sarbanes-Oxley****Act****in response toserious accounting abuses by Enron, WorldCom, Tyco, Global Cable, and a host ofpublicly traded companies.  Title III(Corporate Responsibility) Section 301 of the Act, contains a requirementthat the Company establish procedures where employees can confidentially andanonymously submit negative information about the Company to the AuditCommittee.  The information might be withregards to accounting practices, internal control deficiencies, seniorexecutive abuses, or matters that need to be investigated by an internalauditor.  Title VIII *(Corporate and Criminal Fraud Accountability Act of2002)* Section 806

 

5B-10

----

 

prohibits retaliation against an employee for disclosing information toa government or law enforcement agency, where the employee has reasonable causeto believe that the information discloses a violation of state or federalstatue, or a violation or noncompliance with a state or federal rule orregulation.

 

The Companyencourages vigorous, yet fair and open competition while providing a full rangeof financial services.  Employees anddirectors are expected to observe the highest standards of ethical conduct inrelationships with competitors. The dissimulation of rumors or disparagingstatements regarding competitors is considered inappropriate and unethical. Inaddition, for ethical and legal reasons, employees and directors are prohibitedfrom entering into arrangements with competitors for the purpose of controllingprices, rates, trade prices or marketing policies or disclosing to competitorsfuture plans of the Company which have not been disclosed generally to thepublic.

 

It is thepolicy of the Company to maintain records and accounts that accurately andfairly reflect its assets, liabilities, receipts and disbursements.  The falsification of any records, accounts ordocuments of the Company is grounds for dismissal.  There should never be issued any informationthat is false, misleading, incomplete or would lead to mistrust by the public,our customers, or our stockholders.

 

**XV.****                         NORETALIATION**

 

From time totime, employees may become aware of ethical shortcomings, internal controlweaknesses and financial improprieties. Matters such as these are to be reported to the employee’s immediatesupervisor, the Human Resource Department, or CFO.  These written reports can be submittedanonymously or employees may reveal their names; this is a matter left to thechoice of each employee. Once the reports are received by the Human ResourceDepartment, they will begin an investigation of the complaint.  In cases where the employees reveals theirname, the Company will respond if, *(or as)*appropriate.  No director or employee whoin good faith reports a violation of the Code shall suffer harassment,retaliation or adverse employment consequence. An employee who retaliatesagainst someone who has reported a violation in good faith is subject todiscipline up to and including termination of employment.

 

All complaints will be documented on the Ethics/Whistle-BlowerComplaint Log, maintained by the Human Resources Department.  A copy of all logged items with be sharedwith the Board Audit Committee via the Risk Management Officer at the nextscheduled meeting, or sooner if warranted.

 

**XVI.****                    REPORTING OFILLEGAL OR UNETHICAL BEHAVIOR**

 

We hold alldirectors and employees individually responsible for carrying out and for   monitoring compliance with this Code.Directors should immediately report in person or in writing any known orsuspected illegal or unethical behavior to the Chair of the Board of Directors.Employees should immediately report any known or suspected illegal or 

 

5B-11

----

 

unethicalbehavior to their immediate supervisor, Manager of Human Resources, or the CFO.

 

125 N ThirdAvenue

Oakdale, CA95361

 

**XVII.****                ADMINISTRATION ANDWAIVER OF CODE OF ETHICS**

 

This Code ofEthics shall be administered and monitored by the Bank’s Human ResourcesDepartment.  Any questions and furtherinformation on this Code of Ethics should be directed to this department.

 

All managersand direct supervisors are responsible for reviewing this Code of Ethics withtheir subordinates each time a new edition of the Code of Ethics is published.The provisions of the Code of Ethics Policy will be included in the Bank’s EmployeeHandbook.  The Employee Handbook willbe issued to all new employees at the time of employment and reissued toexisting employees and officers from time to time. Employees will be requiredto sign a receipt form from the Employee Handbook indicating they have readthis Code of Ethics and will comply with its provisions.

 

Employees anddirectors are expected to follow this Code of Ethics at all times.  Generally, there should be no waivers to thisCode of Ethics, however, in rare circumstances conflicts may arise thatnecessitate waivers. Waivers will be determined on a case-by-case basis by theHuman Resources Department with the advice, as needed, from Legal Counsel.However, the Board of Directors must determine waivers for directors andexecutive officers. For members of the board of directors and executiveofficers, the Board of Directors shall have the sole and absolute discretionaryauthority to approve any deviation or waiver from this Code of Ethics. Anywaiver and the grounds for such waiver by directors or executive officers shallbe promptly disclosed to stockholders in the Bank’s Annual Proxy Statement.

 

The Boardshall have the sole and absolute discretionary authority to approve anydeviation or waiver from the Code of Ethics for executive officers.  Any waiver and the grounds for such waiverfor a executive officers shall be promptly disclosed through a filing with theSecurities and Exchange Commission on Form 8-K. Additionally, any changeof this Code of Ethics for executive officers shall be promptly disclosed tostockholders.

 

Known orsuspected violations of this Code of Ethics will be investigated and may resultin disciplinary action up to and including immediate termination of employment.

 

5B-12

----