Luxury Expenditures

Luxury Expenditures Policy

The Boards of Directors and the Executive Officers of Horicon Bank and its parent company, Sword Financial Corporation, are committed to complying fully with the requirements of the Troubled Asset Relief Program Standards for Compensation and Corporate Governance as defined by the Department of the Treasury pursuant to the requirements set forth in the Emergency Economic Stabilization Act of 2008 (EESA), as amended by the American Recovery and Reinvestment Act of 2009 (ARRA) and the rules and regulations promulgated under EESA and ARRA during the period that Horicon and Sword participate in the U. S. Treasury Capital Purchase Program.

The objective of this Luxury Expenditure Policy is to fulfill the requirement that our organization have in place a companywide policy regarding excessive or luxury expenditures as defined by the Department of the Treasury pursuant to EESA and ARRA. It is our policy that excessive or luxury expenditures on travel and entertainment, office and facility renovations, and other similar items, activities or events are prohibited to the extent that such expenditures are not reasonable expenses conducted in the normal course of business and consistent with our other policies and goals.

Travel expenses should follow the guidelines set forth in the Employee Handbook, and expenses within the guidelines set forth in the Employee Handbook are not deemed as “excessive” or as a “luxury” and do not violate this Policy. These expenses should continue to be documented and detailed as to the benefit derived by our bank through the normal accounts payable process. We do not have a corporate aircraft, and air travel required by any employee for business purposes will be on commercial airlines unless a less expensive method is utilized. Travel expenses in excess of $5,000 require approval of the President or the board of directors.

Entertainment expense occurs when an employee uses our funds to develop business for the bank as part of our marketing efforts. Our policy is that all expenses incurred to the bank would be for business purposes. Occasional events such as taking customers or prospects on trips, playing golf, dining, or taking them to athletic or other events the customer/prospect would find entertaining is a necessary part of our marketing efforts and is not deemed as “luxury” or a violation of this Policy. These expenses should be documented and detailed as to the benefit derived by the bank through the normal accounts payable process. Events focused on customers for the purpose of attracting their business is not limited by this Policy. Entertainment expenses in excess of $5,000 require prior approval of the President or the board of directors.

Construction and renovation expenditures for facilities and office spaces should be made in accordance with an approved project and must be consistent with our historical standards of utility and quality workmanship. Construction expenditures in excess of $25,000 require prior approval of the board of directors.

The President and the Chief Financial Officer are required to certify that the approval of any expenditure requiring prior approval under this Policy was properly obtained.

The board of directors of Horicon Bank has oversight responsibility of our compliance with the requirements of the U.S. Treasury standards and has adopted this Policy pursuant to these standards. The directors shall review this Policy not less than annually and shall approve any subsequent amendments to the Policy that may be required by the government. Exceptions to the Policy must be approved by the board of directors of Horicon Bank. Strict adherence to this Policy is mandated for all Horicon Bank and Sword Financial Corporation employees. Any violations of this Policy must be promptly reported to the President and Chief Financial Officer, unless the violations relate to the President or Chief Financial Officer, in which case such violations must be promptly reported to the Board of Directors. Compliance with this policy is a condition of employment, and any violations of the Policy may result in disciplinary action.

The President is responsible for the effective implementation of this Policy. The bank will post this Policy and any subsequent amendments on Horicon Bank’s website, and it will be filed with the Federal Deposit Insurance Corporation.  This Policy was approved in November 2009.