Alliance Bankshares Corporation
Alliance Bank Corporation
Alliance Insurance Agency, Inc. 

I.          Background and Purpose

The reputation of Alliance Bankshares Corporation (the “Company”), Alliance Bank Corporation (the “Bank”) and Alliance Insurance Agency, Inc. (“AIA”), together, with the Company, The Bank, AIA and future subsidiaries, referred to hereinafter as “Alliance”) for honesty and integrity is determined by the personal reputations of our directors, officers and employees.   To protect this reputation and to warrant our customers’ trust, all directors, officers and employees of Alliance are expected to comply with the principles established by this Code of Ethics.

II.         Policy

The bank’s reputation for honesty and integrity is determined by the personal reputations of our individual staff members.  To protect this reputation and to warrant our customers’ trust, each of us must strive to avoid situations that might cause a conflict of interest among the bank, its customers, its suppliers, and ourselves.  The following principles have been established as the bank’s code of ethics.  Any exceptions to these policies must be approved in writing.  All employees are also required to read and acknowledge the Code of Ethics Policy.  This policy is given to all employees with their orientation packet and the corresponding signature page is maintained in each employees personnel file.

III.        General Policy Objectives

The Company’s Board of Directors is responsible for setting the standards of business conduct contained in this Code of Ethics and updating these standards as it deems appropriate to reflect changes in Alliance’s legal and regulatory framework, the business practices within Alliance’s industry, and Alliance’s own business practices.  While the Company’s President and Chief Financial Officer will oversee the procedures designed to implement this Code of Ethics to ensure that they are operating effectively, it is the individual responsibility of each Alliance director, officer and employee to comply with this Code of Ethics.

IV.       General Business Practices

It is the policy of Alliance that you conduct your business affairs in such a manner and with such ethics and integrity that no conflict of interest, real or implied, could exist.  In addition, you must avoid developing a personal relationship with another person that will interfere with your impartial judgment in Alliance matters.

Conflict of Interest

It is the policy of the bank that all staff members conduct their business affairs in such a manner and with such ethics and integrity that no conflict of interest, real or implied, could exist.  Avoid developing personal relationship with an employee that will interfere with your impartial judgment in bank matters.

Extension of Credit to Relatives and Business Associates

You shall not make or approve loans to any bank, partnership, estate, trust, association, other entity or person in which you have an interest directly or indirectly (whether as a director, officer, shareholder, manager, lender, joint venture, or other otherwise controlling investor), or in which a member of your immediate family or business associate has such an interest.  Any such request for credit extension must be referred to another Alliance employee with no connection or affiliation to the potential borrower.  All transactions are to be arm’s-length transactions. Loan Officers should also avoid making or approving loans to individuals or organizations controlled by those individuals where their personal relationships would create the appearance of a conflict of interest or otherwise appear to compromise one’s judgment.

Employee Indebtedness

Employees should always avoid borrowing from an individual or business customer of Alliance (unless the customer is a recognized lending institution).  The approval or denial of such a request imposes a wrongful burden on the customer and could impair your judgment when making business decisions involving the customer.

Executive officers of Alliance are reminded of the reporting requirements of Regulation O.  If you are unclear about these requirements, please contact the President.

Personal Finances

Because of Alliance’s position of trust in the community, your personal finances should be managed with prudence.  Personal financial affairs should be conducted in such a manner as to be above regulatory or auditing criticisms or concerns.  Directors and officers should discuss any financial emergency with the Company’s President.  Employees may discuss any financial emergency with the Vice President of Human Resources or the Company’s President. 

Employees should assume the position of a regular customer when handling their own personal bank business.  All transactions should be handled in the normal over-the-counter procedure.  No employee will be permitted to transact his or her own or a relative’s banking business.  Employees should avoid direct or indirect financial interest with competitors, customers, and suppliers. Employee loans will be subject to the same underwriting standards, information reporting and collection processes as loans to the general public.

Confidential Information

All of our records are confidential and may not be copied or disclosed without authorization from management.  You should never discuss customer affairs, accounts, files, or printed material, except on a need-to-know basis with other directors, officers or employees.  Confidential information includes all personnel and payroll records, information about Alliance’s customers, and anything else about the way Alliance operates.

On a periodic basis, Alliance is examined.  The reports that examiners furnish remain the property of the regulatory agency and are strictly confidential.  Information contained in the reports is privileged information and should not be communicated to anyone not officially connected with Alliance.

Alliance respects your privacy in matters that are unrelated to your service or employment.  Matters of a personal nature concerning fellow directors, officers or employees should be treated with the utmost confidentiality.

Financial information regarding Alliance is not to be released to any person unless it has been published in reports to shareholders or otherwise made available to the public in accordance with applicable disclosure regulations currently in effect.  Any questions regarding disclosures of confidential financial information should be reviewed with the Company’s President and/or outside legal counsel prior to disclosure.

Confidential information obtained as a result of comments made within Alliance should not be used for private interests.

Outside Employment

Alliance does not wish to control your personal affairs, nor will Alliance attempt to regulate the use of your time outside your service or employment with us.  However, Alliance does not look with favor upon a director, officer or employee working elsewhere if such outside employment in any way affects the individual’s work, fellow workers or Alliance.  Of particular concern, and requiring the approval of the Company’s President, are jobs working for a competitor, supplier, or customer.  Engaging in self-employment that in any way competes with Alliance is prohibited.

Working second jobs may cause a conflict of interest with your job.  Whenever outside employment causes a conflict of interest or a conflict in schedules, Alliance will not permit such outside employment.  If you are considering outside employment, you must have written approval from your Supervisor.

Gifts and Fees

You and your family (as wall as your agents or attorneys) are not to solicit or accept a personal benefit from any customer, vendor, individual, or organization seeking to do business with Alliance.  A personal benefit is any type of gift, gratuity, loan, fee, compensation or anything of monetary value.  Any deviation from this prohibition must be specifically approved in writing by the Company’s President, except as follows. 

Alliance recognizes that situations may arise when it would be appropriate for you to accept the benefit of a gift.  Such situations include:

• Gifts of nominal value (not in excess of $250) given at Christmas or other holidays or special occasions that represent expressions of friendship.
• Reasonable entertainment such as a golf outing, luncheon, dinner, or business meetings with present or prospective customers and suppliers, when the return of the expenditure on a comparable basis is likely to occur and is properly chargeable as a business expense.
• Gifts or bequests based strictly on a family relationship.
• Reasonable and ordinary tickets/access to sporting events such as baseball, soccer, football and golf.

Political Contributions and Activities

Individual participation in political and civic activities is encouraged, including the making of personal contributions to political candidates or activities. If you wish to donate money or services to a candidate or party you may do so as an individual, but not as a representative of Alliance.  To avoid any interpretation of sponsorship or endorsement by Alliance, neither Alliance’s name nor its address should be used.  You may not use Alliance’s name in or associate it with any political advertisements or literature. Likewise, the display of political literature or propaganda in the workplace or any other conduct which may suggest Alliance’s endorsement of a candidate or incumbent public official is prohibited.

Business Conduct

In the conduct of Alliance’s business, no bribe, kickback, or similar remuneration or consideration of any kind is to be given or offered to any individual or organization.  The activities of Alliance must always be in full compliance with all applicable laws, rules and regulations.  Alliance expects its directors, officers and employees to comply fully with the letter, spirit, and intent of all laws, rules and regulations.

It is the policy of Alliance to comply fully with the anti-bribery provisions.  It is a criminal offense for any U.S. enterprise to offer a bribe to an official, political party, party official or candidate for political office for the purpose of obtaining, retaining, or directing business to any person, regardless of whether that person is the one making the bribe.  A bribe may take the form of an offer, payment, promise to pay, or authorization of the payment of any money or anything of value.

Customer Referral

You may be requested by customers of Alliance and the general public to provide a referral for professional services, such as attorneys, securities brokers, certified public accountants, insurance agents, and real estate agents.  You shall, when approved by management, recommend several qualified sources from which the customer can select.  You should not make any adverse or negative comments regarding any outside professional.  If you cannot give a positive recommendation regarding the outside professional, you should indicate to the customer that you have no recommendation to give regarding the particular professional.  If you do make a positive referral, it should be limited to a statement that you have heard good comments regarding the professional but that neither you nor Alliance can make any specific referrals or endorsements.  You should exercise extreme care not to make any statement that could subject you or Alliance to an action for libel or slander.

In several instances, discussions with customers may lead to a request that you give an opinion or statement about the legality of a particular transaction.  You are not qualified to give legal advice.  Alliance does not engage in the business of giving investment or tax advice.  These are areas that are best left to a professional in that particular field.  Extreme care must be exercised in discussions with customers, and nothing should be said that could be construed as the giving of legal advice, tax advice, or investment advice.

Fiduciary Appointment

Without specific approval, you are not to act as agent or deputy in any signing capacity on any account (except for members of your family) held through Alliance.  Further, you may not act as executor, administrator, trustee, guardian, custodian, or in any fiduciary capacity without authority granted by Alliance.  Such authority will generally be granted only to act for a spouse, mother, father, brother, sister, son, daughter or dependent.

There may be instances in which you are requested to accept an appointment as a fiduciary or co-fiduciary (personal representative, trustee, administrator, guardian, executor, or custodian) with Alliance, another person, or a firm or corporation.  Except where the request is for a member of your immediate family, you must obtain prior approval of the Company’s or the Bank’s board of directors before accepting such a position.  You are reminded to consult senior management of the Company or the Bank, because federal and state regulations govern the acceptance of fees as a fiduciary.

Compliance with Laws, Rules and Regulations

Alliance will comply with all applicable governmental laws, rules and regulations, and expects that all directors, officers and employees acting on behalf of Alliance will obey the law.  Specifically, Alliance is committed to:

• maintaining a safe and healthy work environment;
• promoting a workplace that is free from discrimination or harassment basedon race, color, religion, sex or other factors that are unrelated to Alliance’s business interests;
• supporting fair competition and laws prohibiting restraints of trade and other unfair trade practices;
• complying with all applicable state and federal securities laws; and complying with all applicable state and federal banking laws.

In addition, you are prohibited from illegally trading the Company’s securities while in possession of material, nonpublic information about the Company or its subsidiaries and from “tipping” others who might make an investment decision on the basis of this information.

Accurate and Timely Public Communications

Alliance is committed to providing investors with full, fair, accurate, timely and understandable disclosure in the periodic reports that it is required to file and in

• other public communications made by the Company and its subsidiaries.  To this end, Alliance shall:
• comply with generally accepted accounting principles at all times;
• maintain a system of internal accounting controls that will provide reasonable assurances to management that all transactions are properly recorded;
•  maintain books and records that accurately and fairly reflect the Company’s, the Bank’s, and AIA’s transactions;
• prohibit the establishment of any undisclosed or unrecorded funds or assets;
• maintain a system of disclosure controls that will provide reasonable assurances to management that material information about the Company, the Bank and AIA is made known to management, particularly during the periods in which the Company’s periodic reports are being prepared; and
• present information in a clear and orderly manner and avoid the use of legal and financial jargon in the Company’s periodic reports and other public communications.

Reporting and Effect of Violations

You shall promptly report, in person or in writing, any known or suspected violations of governmental laws, rules and regulations or this Code of Ethics to the Company’s President, Chief Financial Officer or head of the Audit Committee.  It is Alliance’s policy to prohibit retaliation for reports of misconduct by others made in good faith by a director, officer or employee.  You are expected to cooperate in internal investigations of misconduct.

The Company’s President, Chief Financial Officer or head of the Audit Committee will investigate any reported violations and will oversee an appropriate response, including corrective action and preventative measures.  Directors, officers and employees that violate any governmental laws, rules and regulations or this Code of Ethics will face appropriate, case-specific disciplinary action, which may include demotion or termination.

Waivers

The provisions of this Code of Ethics may be waived for directors or executive officers only by a resolution of the Company’s independent directors.  The provisions of this Code of Ethics may be waived for employees who are not directors or executive officers by the Company’s President, Chief Financial Officer or head of the Audit Committee.  Any waiver of this Code of Ethics granted to a director or executive officer will be publicly disclosed as required by the Securities and Exchange Commission and The NASDAQ Stock Market, Inc.

V.        Policy Management

i.        The Board of Directors has the authority to approve this policy, and annually approves the policy and amendments thereof.

ii.      Senior management is responsible for ensuring the directives are implemented and administered in compliance with the approved policy.

iii.    All policy exceptions must be documented and approved by the Board of Directors at its next scheduled board meeting.

iv.     Changes to this policy require approval of the Board of Directors. Changes in daily operating procedures, standards, guidelines and technology, as long as they are consistent with this policy, may be authorized by senior management.

v.       The Vice President of Human Resources has primary responsibility for this policy.

vi.     No part of this policy or its supporting operating procedures should be interpreted as contravening or superseding any other legal and regulatory requirements placed upon Bankshares or the Bank.