Washington Banking Company, and all of its subsidiaries and affiliates, (hereinafter referred to as "WBCO" or "Company") believes in building a positive reputation by upholding a value standard based on integrity and trust. The basic corporate values forming the foundation for WBCO are trust, honesty, commitment and respect. It is essential that all employees use these values as guides for individual actions, as this will instill the confidence of our customers and the public.
 
The success of the Company reflects the loyalty and dedication of its staff. As professionals, we are judged by our conduct, and the nature of banking requires both a careful observance of legal regulations and a scrupulous regard for high standards of conduct and personal integrity. We have full confidence that employees will conduct themselves in a manner that will reflect positively upon them and the Company.
 
WBCO's continued progress requires that employees maintain a sense of pride in the Company and themselves as professional leaders. This pride should be conveyed through both word and action to each other, to our customers, and to our communities. The conduct of each individual is expected to reflect this commitment.
 
 
All officers, directors and employees of WBCO need to be aware of the importance of meeting the standards expressed in this Code of Conduct and are responsible for following and promoting compliance with this Code. While the Code is intended to present general guidelines, each individual must accept responsibility to recognize and respond to specific situations as they may arise. Adherence to these principles is an essential part of each individual's responsibilities. The Corporate Governance Committee of Washington Banking Company's Board of Directors periodically reviews this Code. This Committee is also charged with administering the Code and enforcing its provisions.
 
Employees are encouraged to discuss questions of interpretation and applications of the provisions of the Code of Conduct with their manager or any Senior Management Team member. Questions that are not resolved in this manner may be referred to the Corporate Governance Committee, which shall have the ultimate authority to resolve questions of interpretation and applications of the provisions of the Code of Conduct. Situations involving a possible violation of the Code are to be reported to the Company either directly to the Chief Executive Officer or through the "whistleblower" access at www.ethicspoint.com or 1-866-292-1815. Such reporting will offer an opportunity for employees to express concerns confidentially and anonymously, with the communication being 12/2003 safeguarded as much as possible. All reports will be reviewed, however such review does not necessarily imply that a violation exists or will exist. Furthermore, any individual making such report will be treated with respect. Retaliation against the employee in any manner will not be tolerated.
 
Adherence to the policies and guidelines contained in the Code of Conduct do not constitute an expressed or implied employment contract between WBCO and its employees. All employees may resign or be discharged at any time without notice and without cause; provided, that such discharge shall not affect any rights an employee may have under an employment agreement with WBCO. Without the approval of WBCO's Board of Directors or the Compensation Committee of the Board of Directors, no WBCO employee has any authority to enter into an agreement with any other WBCO employee contrary to the foregoing. Violations of the guidelines in the Code of Conduct may be grounds for disciplinary action including dismissal.
 
The following paragraphs are set forth to assist all employees and directors in determining what is appropriate personal and professional conduct and how their conduct affects relationships with WBCO and its customers.
 

Generally, we rely on our personal values and integrity to guide each of us in making decisions. We must keep in mind how our actions will affect the credibility of our Company. Our business ethics must reflect the values and standards of conduct outlined in this Code. If you encounter a situation that causes you to be unsure of the best solution, ask yourself the following questions:
  • Are my actions legal? If legal, are they also ethical?
  • Am I being fair and honest?
  • Will my actions stand the test of time?
  • Can I defend my action with a clear conscience?
  • Would I be proud to read about my action in the newspaper?
  • Is it the right thing to do? What would I tell my child to do?
  • How would my friends, family, customers, other employees, community, regulators and shareholders react to my actions?
If your answers to these questions are troubling in any respect, it may be that whatever you are considering is the wrong course of action. You are encouraged to seek guidance and to express any concerns that you may have until you are certain that you are doing the right thing. When in doubt, contact a senior officer.
 
 
Financial Responsibility
Due to the nature of the financial services industry, WBCO must maintain financial credibility at all times. For this reason, all employees are expected to demonstrate an ability to manage personal finances properly, 12/2003 particularly the use of credit. Imprudent personal financial management can affect job performance and reflects poorly on the employee's ability to perform responsibilities of a financial nature.
Financial Transactions
Employees are prohibited from processing any transaction for themselves, family members, business partners, or anyone living in the staff member's home. Additionally, employees are not to handle transactions where a personal interest might take, or appear to take, precedence over the best interests of the Company. Nor should an employee handle any part of an account where they might have a personal interest or serve as a signer. Loan Officers will not approve and/or process loan transactions for any family member, or derive any personal benefit from loan proceeds. All employee accounts are subject to random review and audit.
 
Borrowing from an individual who is a customer of WBCO, or from a business that is a customer of WBCO, must be avoided under all circumstances. Besides the obvious possibility of influencing the employee's judgment and decisions, the granting or denial of such a request imposes a burden on the customer. Borrowing from other banks and lending to employees of other banks must be free of any reciprocity regarding terms or interest rates received or given.
 
 
Employees are expected to conduct their private business and personal activities in a manner that avoids conflict with the interest of WBCO and its customers. A conflict of interest is defined broadly to include any situation in which an employee is engaged in two or more activities or relationships that, to some degree, are mutually incompatible. A conflict of interest exists when an officer, director, or employee is involved in or invests in outside interests that could interfere (or have the potential to interfere) with the individual's responsibility to WBCO, and/or adversely affect (or have the potential to affect) judgment or job performance.
 
Outside Employment
It is the policy of WBCO that no employee shall have an outside employment interest which:
  • Significantly encroaches on the time or attention which should be devoted to corporate duties;
  • Adversely affects the quality of work performed;
  • Competes with WBCO interests or business development;
  • Involves any use of Company equipment, supplies, or facilities.
  • Implies ownership or support of the Company on behalf of the outside employment or interest;
  • Adversely affects the good name of WBCO.
Policy requires that employees obtain prior written approval of the department head and appropriate Human Resources Officer prior to accepting any outside employment.
Outside Directorships
Prior approval by the CEO/ President is required before an employee may accept a position as officer or director of a corporation or become a member of a business partnership. The only exceptions to this requirement are services as an officer or director of a homeowner's association or of a social, civic, religious or philanthropic institution.
Taking Personal Advantage of Corporate Opportunity
Individual employees must not take for themselves any opportunity that belongs to WBCO. Whenever time, personnel, or other resources have been devoted in developing a business opportunity, that opportunity rightfully belongs to the Company.
 
Examples of taking corporate opportunity include: selling information which an employee has access to; or acquiring interest in property knowing that the Company has the opportunity to lease or purchase the same property.
Purchase of Company Assets
Employees and their immediate families, whether acting individually or in a fiduciary capacity, are not permitted to sell assets to or purchase assets from WBCO without prior consent from the appropriate officer. Exceptions would exist when assets are being offered by the Company at public sale or public auction, or the purchase or sale has been approved by a court having jurisdiction.
Gifts, Gratuities and Other Payments
It is a federal crime for any employee, officer, director or agent to solicit or accept anything of value in connection with any business or transaction of a financial institution. All transactions are covered, including extensions of credit, underwriting transactions, investment advice, trust matters, checking accounts, purchases from suppliers, etc. The Bank Bribery Act applies not only to the person receiving or asking for a bribe but also to any person who gives, offers, or promises a bribe.
 
In keeping with the law, WBCO employees are expressly prohibited from (1) soliciting for themselves or for a third party (other than WBCO) anything of value from any customer, prospective customer, competitor; supplier or any other person in return for any business services or confidential information of WBCO; and (2) accepting anything of value (other than normal authorized compensation from the Company) from any customer, prospective customer, competitor, supplier or any other party in connection with the business of WBCO, either before or after a transaction is discussed or completed.
 
Possible exceptions to the prohibition regarding accepting things of value include:
    • Gifts based on personal or family relationship;
    • Meals, refreshments, lodging, travel arrangements, or entertainment of a nominal value ($100 or less);
    • Acceptance of loans from other financial institutions on customary terms;
    • Acceptance of advertising or promotional materials such as pens, note pads, key chains and other similar items;
    • Acceptance of discounts or rebates available on merchandise or services that do not exceed those available to others;
    • Acceptance of gifts of nominal value related to a commonly recognized event such as a wedding, promotion, retirement, etc;
    • Acceptance of charitable, civic, educational, etc. awards o f a reasonable value for recognition of service.
No WBCO employee shall provide directly or indirectly, any gratuity to an individual, company, or governmental unit in consideration for doing business with the Company. This policy applies to potential customers, or suppliers of equipment or services. In this context, normal business entertainment is appropriate if reasonable in nature.
 
 
It is imperative that information regarding Washington Banking Company be distributed in a manner that provides fair disclosure to all investors. All public communications, including filings with the Securities and Exchange Commission, banking regulators and other regulatory agencies and authorities, are written and distributed in a manner that is expected to provide full, fair, accurate, timely and understandable disclosure. Corporate executives may rely to some extent, on statements from other senior officers regarding the accuracy of information provided from their respective departments.
 
Financial information about WBCO is not to be released to any individual, unless it has been made generally available to the public in accordance with applicable disclosure regulations. Buying, selling, or recommending securities transactions, investments, or other property because of material non-public information obtained through association with the Company is prohibited. Any questions concerning disclosure of confidential insider information should be addressed to executive management.
 
WBCO employees and directors have an obligation to maintain the confidentiality of information entrusted to them by customers, suppliers and others related to the business of WBCO. Confidential information is considered to be all oral and/or written communications acquired during employment or directorship that relates to WBCO, its customers, suppliers, shareowners or employees, which is not otherwise available to the general public. In no case shall such information be transmitted to persons outside the Company, including family or associates.
 
 
WBCO employees and directors have an obligation to maintain the confidentiality of information entrusted to them by customers, suppliers and others related to the business of WBCO. Confidential information is considered to be all oral and/or written communications acquired during employment or directorship that relates to WBCO, its customers, suppliers, shareowners or employees, which is not otherwise available to the general public. In no case shall such information be transmitted to persons outside the Company, including family or associates.
 
All employees and directors are expected to conduct themselves in a manner which is in full compliance with all applicable laws, rules and regulations, as well as with all of the Company's policies and procedures, while employed by WBCO and when acting on its behalf. All persons - whether customers, prospects, suppliers, employees or otherwise - will be treated without regard for race, sex, religion, national origin, marital status, age or related criteria. WBCO provides a work environment in which harassment is not permitted and where the dignity and individuality of each staff member must be respected by other staff.
 
In no case shall an employee, officer or director use illegal (theft, bribery, misrepresentation, or espionage) or unethical means or methods when acting on behalf of the Company. Employees convicted of felony violations committed outside the workplace may be subject to dismissal. Employees arrested or under investigation for any felony violation or misdemeanor charges involving dishonesty or breach of trust, or moral turpitude may be suspended without pay during the course of the investigation.
 
 
The requirements of banking as a public trust, where the confidentiality of a customer's financial affairs must remain inviolate, makes it absolute that this Code of Conduct be observed. A violation of the Code of Conduct may not only jeopardize the integrity of Washington Banking Company and its affiliates, but may result in unusual liability to individual employees as well as to the Company. Therefore, it is the responsibility of each individual to protect the Company's reputation by ensuring compliance with the Code. Situations involving a possible violation of the Code are to be reported to the Company either directly to the Chief Executive Officer or through the "whistleblower" access at www.ethicspoint.com or 1 -866-292-1815.
 
Failure to adhere to the Code of Conduct and its underlying principles may be cause for dismissal.
 
 
Any waiver of this Code for executive officers and directors may be authorized only by the Company's Board of Directors and will be disclosed to the Company's stockholders as required by applicable laws, rules and regulations.

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