2003 Audit Charter: UMPQAUDIT AND COMPLIANCE COMMITTEE CHARTER
The Audit and Compliance Committee shall carry out the Board's overall responsibility with respect to: (1) the integrity of the Company's financial statements and the financial reporting process, (2) the independent auditor's qualifications and independence, (3) the performance of the Company's internal audit function and independent auditors, (4) the Company's compliance with legal and regulatory requirements, (5) oversight of the Company's system of internal controls, including controls relating to operations, financial reporting and compliance with laws and regulations and (6) the credit review function.
The Audit and Compliance Committee shall review and approve the report required by the rules of the Securities and Exchange Commission (the "SEC") to be included in the Company's annual proxy statement.
The Audit and Compliance Committee shall consist of no fewer than four members. All members of the Audit and Compliance Committee shall meet the independence and experience requirements of the NASD, Section 10A(m)(3) of the Securities Exchange Act of 1934 (the "Exchange Act") and the rules and regulations adopted by the SEC. As soon as practical after adoption of this Charter, at least one member of the Audit and Compliance Committee shall be an "audit committee financial expert" as defined by SEC regulations. Audit and Compliance Committee members shall not simultaneously serve on the audit committees of more than two other public companies.
The Board shall appoint the members of the Audit and Compliance Committee on the recommendation of the Board Chairperson. The Board shall appoint the Committee's members at the Board meeting next following the Corporations' annual meeting of shareholders. The Board may replace a Committee member at any time.
The Board shall appoint one of the Committee members as the Chairperson of the Committee. The Committee may appoint one of its members as Vice Chairperson, to carry out the duties of the Committee Chairperson in his or her absence.
The Audit and Compliance Committee shall meet as often as it determines, but at least quarterly. The Audit and Compliance Committee shall meet periodically with management, the internal auditors and the independent auditors and it shall regularly meet in executive sessions, without management present. The Audit and Compliance Committee may request any officer or employee of the Company or the Company's outside counsel or independent auditor to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee.
The Chairperson of the Committee shall report the Committee's activities and actions to the Board at the Board meeting next following each Committee meeting. The Committee may refer to the Board any matter that the Committee believes should be addressed by the Board. The Audit and Compliance Committee shall review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval. The Audit and Compliance Committee shall annually review the Audit and Compliance Committee's own performance, as it relates to compliance with this Charter.
COMMITTEE AUTHORITY AND RESPONSIBILITIES
The Audit and Compliance Committee shall have the sole authority to appoint or replace the Company's independent auditor (subject, if applicable, to shareholder ratification). The Audit and Compliance Committee shall be directly responsible for the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work. The independent auditor shall report directly to the Audit and Compliance Committee.
The Audit and Compliance Committee shall preapprove all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed for the Company by its independent auditor, subject to the de minimus exceptions for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act, which are approved by the Audit and Compliance Committee prior to the completion of the audit. The Audit and Compliance Committee may form and delegate authority to subcommittees consisting of one or more members when appropriate, including the authority to grant preapprovals of audit and permitted non-audit services, provided that decisions of such subcommittee to grant preapprovals shall be presented to the full Audit and Compliance Committee at its next scheduled meeting.
The Audit and Compliance Committee shall oversee development and administration of the Company's corporate governance structures and monitor the Company's compliance with related legislation and regulations.
The Audit and Compliance Committee shall have the authority, to the extent it deems necessary or appropriate, to retain independent legal, accounting or other advisors. The Company shall provide for appropriate funding, as determined by the Audit and Compliance Committee, for payment of compensation to the independent auditor for the purpose of rendering or issuing an audit report and to any advisors employed by the Audit and Compliance Committee.
The Audit and Compliance Committee shall have all of the authority of the Board to act or exercise corporate powers with respect to the following:
Financial Statement and Disclosure Matters
Review and discuss with management and the independent auditor the annual audited financial statements, including disclosures made in management's discussion and analysis, and recommend to the Board whether the audited financial statements should be included in the Company's Form 10-K.
Review and discuss with management and the independent auditor the Company's quarterly financial statements prior to the filing of its Form 10-Q, including the results of the independent auditor's review of the quarterly financial statements.
Discuss with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of the Company's financial statements, including any significant changes in the Company's selection or application of accounting principles, any major issues as to the adequacy of the Company's internal controls and any special steps adopted in light of material control deficiencies.
Review and discuss the periodic reports from the independent auditors on:
All critical accounting policies and practices to be used.
All alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor.
Other material written communications between the independent auditor and management, such as any management letter or schedule of unadjusted differences.
Discuss with management the Company's earnings press releases, including the use of "pro forma" or "adjusted" non-GAAP information, as well as financial information and earnings guidance provided to analysts and rating agencies. Such discussion may be done generally (consisting of discussing the types of information to be disclosed and the types of presentations to be made).
Discuss with management and the independent auditor the effect of regulatory and accounting initiatives as well as off-balance sheet structures on the Company's financial statements.
Discuss with management the Company's major financial risk exposures and the steps management has taken to monitor and control such exposures, including the Company's risk assessment and risk management policies.
Discuss with the independent auditor the matters required to be discussed by Statement on Auditing Standards No. 61 relating to the conduct of the audit, including any difficulties encountered in the course of the audit work, and restrictions on the scope of activities or access to requested information, and any significant disagreements with management.
Review disclosures made to the Audit and Compliance Committee by the Company's CEO and CFO during their certification process for the Form 10-K and Form 10-Q about any significant deficiencies in the design or operation of internal controls or material weaknesses therein and any fraud involving management or other employees who have a significant role in the Company's internal controls.
Oversight of the Company's Relationship with the Independent Auditor
Review and evaluate the lead partner of the independent auditor team.
Obtain and review a report from the independent auditor at least annually regarding (a) the independent auditor's internal quality-control procedures, (b) any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm, (c) any steps taken to deal with any such issues, and (d) all relationships between the independent auditor and the Company. Evaluate the qualifications, performance and independence of the independent auditor, including considering whether the auditor's quality controls are adequate and the provision of permitted non-audit services is compatible with maintaining the auditor's independence, and taking into account the opinions of management and internal auditors. The Audit and Compliance Committee shall present its conclusions with respect to the independent auditor to the Board.
Ensure the rotation of the lead and concurring audit partners every five (5) years and the rotation of other audit partners every seven (7) years, or as otherwise required by law. Consider whether, in order to assure continuing auditor independence, it is appropriate to adopt a policy of rotating the independent auditing firm on a regular basis.
Recommend to the Board policies for the Company's hiring of employees or former employees of the independent auditor who participated in any capacity in the audit of the Company.
If appropriate, discuss with the national office of the independent auditor issues on which the Company's audit team consulted them and matters of audit quality and consistency.
Meet with the independent auditor prior to the audit to discuss the planning and staffing of the audit.
Oversight of the Company's Internal Audit Function
Review, with the Company's CEO, the appointment and replacement of the senior internal audit executive.
Review the audit plans, operational audit reports, compliance audit reports and other significant reports prepared by the internal audit department and management's responses to those reports.
Discuss with the independent auditor and management the internal audit department responsibilities, budget and staffing and any recommended changes in the planned scope of the internal audit.
Compliance / Risk Management Oversight Responsibilities
Review and report to the Board on all state and federal regulatory examination reports and management's response to those reports.
Obtain from the independent auditor assurance that Section 10A(b) of the Exchange Act has not been implicated.
Obtain reports from management, the Company's senior internal auditing executive and the independent auditor that the Company and its subsidiary/foreign-affiliated entities are in conformity with applicable legal requirements and the Company's Business Ethics and Conflict of Interest Code. Review reports and disclosures of insider and affiliated party transactions. Advise the Board with respect to the Company's policies and procedures regarding compliance with applicable laws and regulations and with the Company's Business Ethics and Conflict of Interest Code.
Establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.
Discuss with management and the independent auditor any correspondence with regulators or governmental agencies and any published reports that raise material issues regarding the Company's financial statements or accounting policies.
Discuss with the Company's General Counsel legal matters that may have a material impact on the financial statements or the Company's compliance policies.
Periodically review the Company's insurance coverage, to include property and casualty, directors and officer's insurance, entity errors and omissions, fiduciary liability and other coverage carried by or recommended to the Company.
Oversight of the Credit Review Function
Review and approve the annual Credit Review Plan on an annual basis.
Review activity reports, portfolio analysis, project summaries and plan to actual status on a periodic basis.
Discuss with management, the credit review department responsibilities, budget, staffing and any recommended changes in planned scope.
Corporate Governance Responsibilities
Review and report to the Board on the Company's corporate governance structures, policies and procedures and recommend changes, as appropriate.
Review and recommend for approval or modification the following policies:
AUD 1.000 Internal Audit Program
BRP 1.000 Business Resumption Plan
BSA 1.000 Bank Secrecy Act Policy
BSA 2.000 Know-Your-Customer Policy
BSA 3.000 OFAC Policy
COMP 1.000 Affiliate Transactions- UB
COMP 1.100 Affiliate Transactions- UHC
COMP 1.200 Affiliate Tax Sharing Agreement
COMP 2.000 Bank Security Program Manual
COMP 4.000 Electronic Funds Transfer Act Policy (Reg E)
COMP 5.000 Fair Credit Reporting Act
COMP 6.000 HMDA Policy & Procedures
COMP 7.000 Non-Deposit Investment Statement & Policy
COMP 9.000 Regulatory Management Policy
COMP 10.000 Safeguarding of Customer Information
COMP 11.000 Truth-In-Savings Act (Reg DD)
COMP 12.000 Unfair or Deceptive Practices (Reg AA)
FIN 2.000 Authorized Signing Authority
FIN 2.000A Delegated Authorities Procedures
FIN 13.000 Section 16 Reporting Policy
FIN 16.000 Insider Trading Policy
FIN 18.000 Wire Transfer Policy
GOVN 1.000 Corporate Governance
GOVN 2.000 Business Ethics & Conflict of Interest Code Policy
GOVN 3.000 Code of Ethics for Financial Officers
IS 1.000 Automatic Clearing House Policy
IS 2.000 Backup & Offsite Storage Policy
IS 3.000 Change Control Policy
IS 4.000 Corporate Cellular Telephone Policy
IS 5.000 Data Security Policy
IS 6.000 Electronic Banking Policy
IS 7.000 Electronic Information Authentication Policy
IS 8.000 E-Mail Policy
IS 9.000 Incident Handling
IS 10.000 Information Management Policy
IS 11.000 Internet Policy
IS 12.000 Information Systems Audit Trail Policy
IS 13.000 Item Processing Policy
IS 14.000 Microcomputer Policy
IS 15.000 Network & Telecommunication Policy
IS 16.000 Password Policy
IS 17.000 Physical Access Security Policy
IS 18.000 Remote Access Policy
IS 19.000 User Education Policy
OPS 1.000 Branch Opening & Closing Policy
OPS 2.000 Cash Limits & Controls Policy
OPS 3.000 Dormant Accounts Policy
OPS 4.000 Funds Availability Policy (Reg CC)
LIMITATION OF COMMITTEE'S ROLE
While the Audit and Compliance Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit and Compliance Committee to plan or conduct audits or to determine that the Company's financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations. These are the responsibilities of management and the independent auditor.