Audit Committee Charter



The Audit Committee is appointed by the Board of Directors to assist the Board in fulfilling its oversight responsibilities. The Audit Committee’s primary duties and responsibilities are to:

  • Monitor the integrity of the Company’s financial reporting process and systems of internal controls regarding finance, accounting and regulatory compliance.
  • Monitor the independence and performance of the Company’s independent auditors and internal auditing department.
  • Provide an avenue of communication among the independent auditors, management, the internal auditing department, and the Board of Directors.

To effectively perform his or her role, each Committee member will obtain an understanding of the detailed responsibilities of Committee membership.


Each member of the Committee shall meet the independence and eligibility criteria set forth in all applicable rules and regulations of the Securities and Exchange Commission and NASDAQ, unless the member satisfies an applicable exemption. The Audit Committee shall be comprised of three or more directors as determined by the Board. One of the members shall be designated as “The Chair”. To the extent required by law, regulation or listing agreement, The Chair of the Audit Committee shall serve as the Company’s “Audit Committee Financial Expert”.

The Committee will meet monthly, with the authority to convene additional meetings as circumstances require. All Committee members are expected to attend each meeting. Committee members are paid a fee as determined by the Board of Directors for each meeting attended, with fees paid for one excused absence annually. The Committee will invite members of management, auditors or others to attend meetings and provide pertinent information, as necessary. The Committee may, in its discretion, hold private meetings with auditors (see below) and executive sessions. Meeting agendas will be prepared in advance, along with appropriate briefing materials. Minutes will be prepared.

The Committee believes that the above mission statement sets forth its primary roles and responsibilities. In that connection, the following is meant to serve as a guide in achieving that mission.


Financial Statement Review Procedures

  1. Review the Corporation’s interim financial results and annual audited financial statements prior to filing or distribution. The review should include discussion with management and independent auditors of significant issues regarding accounting principles, practices, and judgments. Discuss with Independent Auditors its judgment about the quality, not just acceptability, of the Company’s accounting principles as applied in its financial reporting.
  2. In consultation with management, as well as the Corporation’s independent accountants, verify that the CEO and CFO have certified that they disclosed to the independent auditors and to the Audit Committee all significant deficiencies in the design or operation of internal controls that could affect the Corporation’s ability to record, process, summarize and report financial data, any material weaknesses in the internal controls, and any fraud- whether or not material- that involved management or other employees who have a significant role in the Corporation’s internal controls.
  3. Review the adequacy of the company’s internal controls.
  4. In consultation with management, independent accountants, and internal auditors, consider the integrity of the Corporation’s financial reporting processes and controls. Discuss significant financial risk exposures and steps taken by management to monitor, control, and report such exposures.
  5. Review significant findings prepared by the independent accountants and the internal auditors together with management’s responses. Confirm that management has implemented internal control recommendations made by internal auditors and independent accountants, if any.
  6. The Committee’s job is one of oversight as set forth in this Audit Charter. It is not the duty of the Committee to prepare the Company’s financial statements, to plan or conduct audits, or to determine that the Company’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles. The Company’s management is responsible for preparing the Company’s financial statements and for maintaining internal control, and the independent auditors are responsible for auditing the financial statements.
  7. In performing their duties and responsibilities, Committee members are entitled to rely in good faith on information, opinions, reports or statements prepared or presented by:
    • One or more Officers or employees of the company whom the Committee members reasonably believe to be reliable and competent in the matters presented;
    • Counsel, independent auditors, or other persons as to matters which the Committee members reasonably believe to be within the professional or expert competence of such person;
    • Another committee of the Board as to matters within its designated authority which committee the Committee members reasonably believe to merit confidence.

Independent Accountants

  1. The independent accountants are ultimately accountable to the Audit Committee and the Board of Directors. The Audit Committee shall review the independence and performance of the accountants and shall be directly responsible for the appointment and compensation for the independent accountants and any discharge of the independent accountants when circumstances warrant.
  2. Review the independent accountants’ timetable, scope and approach of the quarterly reviews and annual examination of the financial statements. Confirm that the lead partner having primary responsibility for the audit, the audit partner responsible for reviewing the audit and any other individual(s) so required, have been rotated on a periodic basis, as may be required by applicable law or regulation.
  3. Review and discuss with the independent accountants, as may be required by law or regulation (1) all critical accounting policies and practices to be used, (2) all alternative treatments of financial information within GAAP that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent accountant, and (3) other material written communications between the independent accountant and management, such as any management letter or schedule of unadjusted differences.
  4. Obtain from the independent accountants their annual communication to the Audit Committee in satisfaction of PCAOB Auditing Standard No. 1301 regarding communication with the Audit Committee, and, if applicable, any commentary on internal contracts or other recommendations.
  5. Ensure receipt from the outside auditors of a formal written statement delineating all relationships between the auditor and the Company, actively engage in a dialogue with the auditor with respect to any disclosed relationships or services that may impact the objectivity and independence of the auditor and take, or recommend that the full board take, appropriate action to oversee the independence of the outside auditors.
  6. Review and pre-approve all audit and permitted non-audit services provided by the independent accountants. The Chair of the Committee has the authority to grant preapprovals for certain permitted non-audit services to the extent permitted by law. All preapprovals granted by the Chair of the Committee shall be presented to and reviewed by the full committee at its next regularly scheduled meeting.
  7. Resolve any financial reporting disagreements between the independent accountants and management.

Internal Auditors

  1. Review the Internal Audit Risk Assessment and Audit Plan developed by the internal auditors.
  2. Meet quarterly, or as needed, with the internal auditors to gain an understanding of the effectiveness of the internal audit function. These meetings will also serve in evaluating their performance.
  3. Review significant reports prepared by the internal auditors together with management’s response and follow-up to these reports.
  4. The Audit Committee may contract for internal audit services as necessary to assess the adequacy and effectiveness of internal controls, the accuracy of management reporting and compliance with laws, regulations and bank policy. The Audit Committee will set forth the outsourcing vendor’s responsibilities in a written contract the terms of which comply with the “Interagency Policy Statement of Internal Audit and Internal Audit Outsourcing.”

Compliance with Laws and Regulations

  1. Receive updates quarterly from management and compliance auditors regarding compliance with laws and regulations.
  2. Review the findings of any examination by regulatory agencies such as the Federal Reserve, FDIC, State of Maryland, or the United States Securities and Exchange Commission.
  3. Review Management’s response to regulatory examinations.

Other Committee Responsibilities

  1. Review the Audit Charter annually and submit proposed amendments, if any, to the Board of Directors for review and approval. Ensure that the charter is included within the Corporation’s proxy statement once every three years, or as otherwise may be required by law or regulation.
  2. Prepare an annual Audit Committee Report for inclusion in the Corporation’s Annual Proxy Statement that states a formal audit charter has been approved and that the Audit Committee has satisfied its responsibility during the year.
  3. Perform other oversight functions as requested by the Board of Directors. Further, the Audit Committee shall have the power to conduct or authorize investigations into any matters within the committee’s scope of responsibilities.
  4. The Audit Committee has the authority to engage independent counsel and other advisors, as they determine necessary to carry out their duties, and to obtain appropriate funding, as determined by the Audit Committee, for compensating such advisors, for compensating the independent accountants for their audit services and for ordinary administrative expenses necessary or appropriate in the carrying out of the committee’s duties.
  5. Maintain minutes of meetings and periodically report to the Board of Directors on significant results of the activities.
  6. Meet periodically with the internal auditors, the independent accountants, and management in separate executive sessions to discuss any matters that the committee or these groups believe should be discussed privately with the audit committee.
  7. Report Audit Committee actions to the Board of Directors with such recommendations, as the Audit Committee may deem appropriate. This includes significant delinquencies and uncorrected audit program deficiencies. Such deficiencies will be reported to the Board of Directors promptly and the full Board of Directors will determine the appropriate escalation and remediation of issues.
  8. Review and validate, at least annually, the Allowance for Credit Losses (ACL) or CECL methodology employed by the Corporation.
  9. Establish procedures for the receipt, retainment and treatment of complaints received regarding accounting, internal accounting controls, or auditing matters. Such procedures shall have provisions designed to protect the confidentiality of any anonymous complaints from the employees of the Company or its subsidiary regarding such matters.

Approved by Audit Committee: March 09, 2023
Approved by Board of Directors: March 09, 2023