Committee Charters

ECB BANCORP, INC.

THE EAST CAROLINA BANK CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

As approved by the Board of Directors on February 17, 2004

This Charter sets forth the composition, authority, duties and responsibilities of the Audit Committee of the Boards of Directors of ECB Bancorp, Inc. (the "Corporation") and The East Carolina Bank (the "Bank").

Purpose

The Audit Committee is appointed as a joint committee of the Boards of Directors of ECB Bancorp, Inc. (the "Company") and The East Carolina Bank (the "Bank") to assist the Boards in fulfilling their oversight responsibilities. As more specifically described below, the Audit Committee's primary duties and responsibilities are to:

  • Monitor and oversee the accounting and financial reporting process and systems of internal controls of the Company and its subsidiary, The East Carolina Bank (the "Bank").
  • Monitor and oversee annual audits of the Company's consolidated financial statements and 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.
  • Encourage adherence to, and continuous improvement in, the Company's and the Bank's policies, procedures, and practices at all levels.
  • Review areas of potential significant financial risk to the Company and the Bank.

Composition and Meetings

Audit Committee shall meet applicable listing requirements of in effect from time to time for the Company's common stock to remain listed on the The Nasdaq Stock Market ("Nasdaq"), as well as applicable requirements of bank regulatory agencies having jurisdiction over the Company and the Bank. The Audit Committee shall be comprised of at least three and not more than six directors as determined from time to time by the Board. Except to the extent otherwise permitted by rules, regulations and listing requirements of the Securities and Exchange Commission (the "SEC"), Nasdaq, and the Federal Deposit Insurance Corporation (the "FDIC"), each committee member shall (1) be an "independent director as that term is defined in the SEC's rules and regulations and Nasdaq's listing requirements, (2) be "independent of management" as that term is defined by the FDIC's rules and regulations, (3) be able to read and understand fundamental financial statements (including the Company's balance sheet, income statement and cash flow statement), and (4) not have participated in the preparation of the financial statements of the Company or any current subsidiary of the Company at any time during the preceding three years. At least one member of the Committee shall have had past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background, which, in the view of the Board, results in that member's financial sophistication (including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities). The Board may, from time to time, impose other eligibility requirements for service on the Audit Committee.

Audit Committee members shall be appointed each year by the Boards for terms of one year or until their successors shall be elected and qualified. However, Committee members shall serve at the pleasure of and may be removed at any time by the Boards, and the term of a member shall immediately terminate if the member dies, resigns, or otherwise ceases to be a Director. The members of the Audit Committee shall designate a Chair by majority vote of the Committee membership.

The Committee shall meet at least four times annually, or more frequently as circumstances dictate. The Audit Committee Chair shall prepare and/or approve an agenda in advance of each meeting. The Committee shall meet privately in separate executive session at least annually with management, the director of the internal auditing department, and the independent auditors, to discuss any matters that the Committee or each of these groups believes should be discussed. At the Committee's pleasure they may ask members of management or others to attend meetings and provide pertinent information as necessary. In addition, the Committee shall direct the independent auditors to communicate directly with them, or to the Chair, at any time there are significant findings or issues regarding accounting principles, practices, and judgments during the auditors quarterly limited review procedures. The Committee shall maintain minutes of its meetings, and it shall report periodically to the Board of Directors on its activities.

In carrying out its duties and responsibilities under this Charter, the Audit Committee will have the authority, to the extent it considers it necessary or appropriate, to retain or consult with independent legal, accounting or other advisors. The Company shall provide for appropriate funding, as determined by the Audit Committee, for payment of compensation to any such advisors employed by the Audit Committee.

Authority, Responsibilities and Duties

Review Procedures

1. At least annually, the Committee will review and reassess the adequacy of this Charter and, in the event that it believes that revisions to this Charter are necessary or desirable, it shall propose appropriate revisions to the Board of Directors for approval.

2. Prior to their filing or distribution, the Committee will review the Company's annual audited consolidated financial statements, discuss with management and the Company's independent auditors the financial statements and any significant issues regarding accounting principles, practices, and judgments, and recommend to the Company's Board of Directors whether the financial statement be included in the Company's Annual Report on Form 10-K or 10-KSB.

3. In consultation with management, the independent auditors, and the internal auditors, the Committee will consider the integrity of the Company's financial reporting processes and controls, discuss significant financial risk exposures and the steps management has taken to monitor, control, and report such exposures, and review significant findings prepared by the independent auditors and the internal auditing department, together with management's responses.

4. Prior to the filing of the Company's quarterly financial statements, the Committee will discuss the Company's quarterly consolidated financial results with management and the other Board members and, if the independent auditors have notified the Committee or Chair of significant findings or issues regarding accounting principles, practices, and judgments during their quarterly limited review, the Committee shall review with the independent auditors the Company's quarterly financial results prior to filing the quarterly financial statements.

5. The Committee will review disclosures or reports made by the Company's Chief Executive Officer and Chief Financial Officer during their certification process for the Form 10-K or 10-KSB and Form 10-Q or 10-QSB about (1) the effectiveness of the Company's disclosure controls and procedures, (2) any significant deficiencies or material weaknesses in the design or operation of the Company's internal controls, (3) any change in the Company's internal control over financial reporting that occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and (4) any fraud involving management or other employees who have a significant role in the Company's internal controls.

Independent Auditors

6. The Committee will have the sole authority to appoint, retain or replace the Company's independent auditors, and it will be directly responsible for the compensation and oversight of the work of the independent auditors (and for resolution of disagreements between management and the independent auditors regarding financial reporting or other matters). The independent auditors shall report directly to the Audit Committee, and the Company shall provide for appropriate funding, as determined by the Committee, for payment of compensation to the auditors.

7. The Audit Committee shall pre-approve all audit services and permitted non-audit services (including the fees and terms thereof) to be performed for the Company by its independent auditors, subject to the de minimus exceptions for permitted non-audit services described in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934 which are approved by the Audit Committee prior to the completion of the audit. The Audit Committee may form and delegate authority to subcommittees consisting of one or more members where appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that decisions of the subcommittee to grant pre-approvals shall be presented to the full Audit Committee at its next scheduled meeting.

8. On an annual basis, prior to the filing of the Company's proxy statement, the Committee shall ensure receipt from the Company's independent auditors of written disclosure delineating relationships between the auditors and the Company, and containing other information required by Independence Standards Board Standard No. 1, that may impact the auditors' independence or objectivity, and discuss any such relationships and other information with the auditors and take or recommend any action necessary to ensure the auditors' independence.

9. Each year the Committee will review the independent auditors' audit plan. This review will include a discussion with the internal auditors of the scope, staffing, locations, reliance upon management and internal audit and general audit approach.

10. Prior to releasing year-end earnings, a representative of the Committee will make inquiry of the independent auditors, and the independent auditors will contact the Committee representative, to determine whether there are significant findings or issues regarding accounting principles, practices, and judgments that need to be reported to the Committee and, if so, the Committee will discuss those matters with the auditors before earning are released. Prior to the filing of the Company's Annual Report on Form 10-K or 10-KSB, the Committee will discuss with the independent auditors those maters required to be communicated to the Committee in accordance with AICPA SAS61. The items to be communicated include:

  • The auditor's responsibility under Generally Accepted Auditing Standards.
  • Significant accounting policies.
  • Management judgments and accounting estimates.
  • Significant audit adjustments.
  • Other information in documents containing audited financial statements.
  • Disagreements with management - including accounting principles, scope of audit disclosures.
  • Consultations with other accountants by management.
  • Major issues discussed with management prior to retention.
  • Difficulties encountered in performing the audit.
  • Review of the year end results including the financial statements (Annual Report).
  • SAS 61 findings.

11. The Committee will consider the independent auditors' judgments about the quality and appropriateness of the Company's accounting principles as applied in its financial reporting.

12. The Committee will review the plan, changes in plan, activities, organizational structure, and qualifications of the internal audit department, as needed. The internal audit department shall be responsible to the Chief Risk Officer, but will have direct reporting responsibility to the Board of Directors through the Committee.

13. The Committee will review and approve the appointment, performance, and replacement of the Senior Internal Audit Executive.

14. The Committee will review all significant reports prepared by the internal audit department together with management's response and follow-up to these reports.

15. On at least an annual basis, the Committee will review with the Company's counsel any legal matters that could have a significant impact on the Company's consolidated financial statements, the Company's compliance with applicable laws and regulations, and inquiries received from regulators or governmental agencies.

16. The Committee will review all reports concerning any significant fraud or regulatory noncompliance that occurs at the Company. This review should include consideration of the internal controls that should be strengthened to reduce the risk of a similar event in the future.

Other Audit Committee Authority and Responsibilities

17. Each year the Committee will prepare the report required by the SEC's rules to be included in the Company's annual proxy statement over the names of the individual committee members.

18. The Committee shall 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.

The Committee shall perform any other activities consistent with this Charter, the Company's by-laws, State and Federal banking regulations applicable to the Company or the Bank, and any other governing law, as the Committee or the Board deems necessary or appropriate.

Revised June 16, 2009

ECB BANCORP, INC.

THE EAST CAROLINA BANK CHARTER OF THE COMPENSATION COMMITTEE

As approved by the Boards of Directors on February 17, 2004

This Charter sets forth the composition, authority, duties and responsibilities of the Compensation Committee of the Boards of Directors of ECB Bancorp, Inc. (the "Corporation") and The East Carolina Bank (the "Bank").

Purpose

The Compensation Committee (the "Committee") is established as a joint committee of the Boards of Directors of the Corporation and the Bank generally to provide overall guidance for executive compensation and benefit programs of the Corporation and the Bank, and to make the specific recommendations described in this Charter to the Boards of Directors of the Corporation and the Bank. The Committee will have such other duties and responsibilities as are described in this Charter or as are assigned to it from time to time by the Boards of Directors.

Composition and Appointment

The Committee will be comprised of not less than three members who will be appointed annually by the Corporation's and the Bank's Boards of Directors. Members of the Committee will serve at the pleasure of, and may be removed at any time by, the Boards of Directors. The Boards will appoint one of the members of the Committee to serve as Committee Chairman. Except to the extent otherwise permitted by the listing standards of The Nasdaq Stock Market, each member of the Committee must be a director of the Corporation who is "independent" as that term is defined in those listing standards. Members of the Committee also must satisfy any other requirements of Nasdaq or the Securities and Exchange Commission that from time to time apply to the Corporation's Compensation Committee.

Committee Meetings

The Committee will meet as often as its members consider necessary in order to carry out the Committee's responsibilities. Dates, times and locations of meetings will be determined by the Committee or by its Chairman. A majority of the number of regular members then serving on the Committee will constitute a quorum. The Corporation's Chief Executive Officer may not be present during deliberations or voting by the Committee on any matter related to his compensation. The Committee itself will determine who, if anyone, other than Committee members may be present during its deliberations or voting with respect to the compensation of other persons or on other matters. The Committee will keep minutes of its meetings and, following each Committee meeting, the Chairman will make a report to the Corporation's and the Bank's Boards of Directors at their next scheduled meetings regarding the deliberations of or actions taken by the Committee.

Responsibilities

The Committee will:

  • make recommendations to the Corporation's and the Bank's Boards of Directors with respect to their determination of the amounts of cash and other compensation paid or provided by them, respectively, if any, to the persons serving as their Chief Executive Officers;
  • make recommendations to the Boards of Directors with respect to their determination of the amounts of cash and other compensation paid or provided by them, respectively, if any, to all other persons who are disclosed as "executive officers" of the Corporation in the Corporation's Annual Report on Form 10-K or who are deemed by the Corporation to be its "officers" for purposes of the beneficial ownership reporting requirements under Section 16 of the Securities Exchange Act of 1934 and the SEC's rules thereunder (without regard to whether such person actually is an officer of the Corporation or by whom those persons actually are employed);
  • make recommendations to the Boards of Directors with respect to the adoption of new incentive or other plans, or changes in any existing such plans, under which any compensation or benefits are or are proposed to be paid or provided by them, respectively, to the persons described above;
  • make such other recommendations to the Boards of Directors with respect to the amounts of cash and other compensation paid or provided to the Corporation's and the Bank's other officers and employees, either individually or in the aggregate, as the Boards of Directors shall request from time to time; and
  • undertake other specific duties and responsibilities within the scope of its primary functions outlined above as the Committee or Boards of Directors may from time to time determine.

After receipt of recommendations from the Committee, the Boards of Directors of the Corporation and the Bank, as appropriate, will make all final decisions regarding compensation paid or provided by them to persons employed by them.

Authority

The Committee is authorized to perform each of its duties and responsibilities listed in this Charter. If it considers it appropriate, the Committee may delegate any of its responsibilities to a subcommittee, provided that any such subcommittee is composed entirely of "independent" directors. In discharging its responsibilities, the Committee is authorized to retain outside counsel or other consultants (including a compensation expert or consulting firm) in accordance with procedures established by the Committee, and it has the authority to approve all terms of the engagement of those consultants, including their fees or other compensation.

In performing its duties under this Charter, the Committee may conduct such investigation and request and consider such information (from management or otherwise) as it shall consider necessary, relevant or helpful in its deliberations and the formulation of its recommendations. In connection with any such investigation, the Committee may rely on information provided to it by management without any further verification. However, whenever the Committee takes an action, it will exercise its independent judgment on an informed basis and in a manner it considers to be in the best interests of the Corporation and its shareholders.

Annual Assessment of Adequacy of Charter

The Committee will, on an annual basis, review and reassess the adequacy of this Charter and recommend any proposed changes to the Boards of Directors for approval.

ECB BANCORP, INC.

THE EAST CAROLINA BANK CHARTER OF THE NOMINATIONS COMMITTEE

As approved by the Board of Directors on February 17, 2004

This Charter sets forth the composition, authority, duties and responsibilities of the Nominations Committee of the Board of Directors of ECB Bancorp, Inc. (the "Corporation").

Purpose

The Nominations Committee (the "Committee") is established as a committee of the Corporation's Board of Directors generally to identify and make recommendations to the Board regarding candidates for service as directors and members of committees of the Corporation and its subsidiary, The East Carolina Bank (the "Bank"). The Committee will have such other duties and responsibilities as are described in this Charter or as are assigned to it from time to time by the Board of Directors.

Composition and Appointment

The Committee will be comprised of not less than three members who will be appointed annually by the Board of Directors. Members of the Committee will serve at the pleasure of, and may be removed at any time by, the Board of Directors. The Board will appoint one of the members of the Committee to serve as Committee Chairman. Except to the extent otherwise permitted by the listing standards of The Nasdaq Stock Market, each member of the Committee must be a director of the Corporation who is "independent" as that term is defined in those listing standards. Members of the Committee also must satisfy any other requirements of Nasdaq or the Securities and Exchange Commission that from time to time apply to the Corporation's Nominations Committee.

Committee Meetings

The Committee will meet as often as its members consider necessary in order to carry out the Committee's responsibilities. Dates, times and locations of meetings will be determined by the Committee or by its Chairman. A majority of the number of regular members then serving on the Committee will constitute a quorum. The Committee itself will determine who, if anyone, other than Committee members may be present during its deliberations or voting on any matter. The Committee will keep minutes of its meetings and, following each Committee meeting, the Chairman will make a report to the Board of Directors at its next scheduled meeting regarding the deliberations of or actions taken by the Committee.

Responsibilities

The Committee will:

  • identify individuals who are qualified to become directors of the Corporation and the Bank;
  • recommend candidates to the Corporation's Board of Directors each year for selection as nominees for election as directors of the Corporation at annual meetings of the Corporation's shareholders;
  • recommend candidates to the Corporation's Board of Directors from time to time for selection as nominees for appointment to fill vacancies on the Board of Directors;
  • recommend candidates to the Corporation's Board of Directors from time to time for election by it as directors of the Bank;
  • make recommendations to the Corporation's and the Bank's Boards of Directors each year or from time to time regarding their appointment of members of committees of the Boards of Directors;
  • make recommendations to the Corporation's Board of Directors from time to time regarding the size and composition of the Corporation's and the Bank's Boards and Board Committees; and
  • undertake other specific duties and responsibilities within the scope of its primary functions outlined above as the Committee or Board of Directors may from time to time determine.

In identifying candidates to be recommended to the Corporation's Board of Directors for selection as nominees or for appointment to fill vacancies, the Committee will seek to identify and recommend individuals who have high personal and professional integrity, who demonstrate exceptional ability and judgment, and who, in conjunction with other members of the Boards of Directors, will be effective in collectively serving the long-term interests of the Corporation's shareholders. Candidates recommended by the Committee must satisfy applicable requirements of state and federal banking regulators pertaining to qualifications to serve as directors of the Corporation and/or the Bank, and, in performing its duties, the Committee may develop other criteria or lists of minimum qualifications for use in its identification of individuals to be recommended or selected for consideration as directors (including, without limitation, independence, business experience relevant to the needs of the Corporation and its subsidiaries, leadership qualities, diversity, and special ability to represent shareholders). Any such criteria will be subject to the review and approval of the Board of Directors.

In identifying candidates to be recommended to the Board of Directors for selection as nominees for election as directors of the Corporation or for appointment to fill vacancies on the Corporation's Board, the Committee will consider individuals recommended by shareholders. The Committee may develop procedures to be followed in connection with shareholder recommendations (including without limitation deadlines for receipt of recommendations in connection with annual meetings, required information to be provided regarding a candidate, required consents of candidates to be considered by the Committee, and the treatment of previously recommended individuals). Any such procedures will be subject to the review and approval of the Board of Directors.

After receipt of recommendations from the Committee regarding candidates for election or appointment as directors of the Corporation or the Bank, the Corporation's Board of Directors will make all final decisions regarding the nomination or appointment of those persons.

Authority

The Committee is authorized to perform each of its duties and responsibilities listed in this Charter. If it considers it appropriate, the Committee may delegate any of its responsibilities to a subcommittee, provided that any such subcommittee is composed entirely of "independent" directors. In discharging its responsibilities, the Committee is authorized to retain outside counsel or other consultants (including a search firm) in accordance with procedures established by the Committee, and it has the authority to approve all terms of the engagement of those consultants, including their fees or other compensation.

In performing its duties under this Charter, the Committee may conduct such investigation and request and consider such information (from management or otherwise) as it shall consider necessary, relevant or helpful in its deliberations and the formulation of its recommendations. In connection with any such investigation, the Committee may rely on information provided to it by management without any further verification. However, whenever the Committee takes an action, it will exercise its independent judgment on an informed basis and in a manner it considers to be in the best interests of the Corporation and its shareholders.

Annual Assessment of Adequacy of Charter

The Committee will, on an annual basis, review and reassess the adequacy of this Charter and recommend any proposed changes to the Board of Directors for approval.