Peoples Community Bank

Corporate Governance

Peoples Community Bank is a publicly held company that operates in a highly competitive and regulated environment.

Peoples Community Bank has adopted specific Corporate Governance procedures and policies to help guide the company in the fulfillment of its responsibilities to shareholders, customers, employees and communities.

Select a link below for specific information about each guideline.

Corporate Governance Guidelines
Compensation Committee Charter
Audit Committee Charter
Nominating Committee Charter
Code of Conduct

Corporate Governance Guidelines

General Philosophy
The Board of Directors of Peoples Community Bancorp, Inc. (Board) sets high standards for the employees, officers, and directors of Peoples Community Bancorp, Inc. and its subsidiaries (Company). Implicit in this philosophy is the importance of sound corporate governance. It is the duty of the Board to serve as a prudent fiduciary for shareholders and to oversee the management of the Company’s businesses. The Board through management seeks to enhance the long-term value of the Company for the benefit of the shareholders. To fulfill its responsibilities and to discharge its duty, the Board follows the procedures and standards that are set forth in these guidelines.

Board Functions
The Board shall:

Review and approve strategic plans to enhance shareholder value.

Review and establish corporate performance goals and objectives.

Oversee and evaluate management's systems for internal control, financial reporting and public disclosure.

Establish corporate governance standards and enhance the integrity and reputation of the Company.

Oversee and evaluate senior management performance and compensation.

Plan for effective succession of executive officers.

Be apprised of relations with shareholders.

Set a tone for a climate of corporate trust and confidence.

Set standards for director qualification.

Set standards for director orientation and continuing education.

Undertake an annual performance evaluation of the Board.

Director Qualifications
The Nominating and Governance Committee is responsible for reviewing with the Board, on an annual basis, the requisite skills and characteristics of members of the Board. This assessment will include independence, business, strategic and financial skills, as well as overall experience in the context of the needs of the Board as a whole. Each Director should possess the highest level of professional ethics and integrity and be devoted to representing the best interests of the Company and its shareholders. A Director must be willing to devote sufficient time to carrying out his or her duties and responsibilities effectively. Nominees for director will be recommended to the Board by the Nominating and Governance Committee, in accordance with the policies and principles of its charter, these Corporate Governance Guidelines, and in accordance with the Company’s By-Laws. Shareholders may submit the name and qualifications of candidates for the Board to the Nominating and Governance Committee Chair. Each shareholder recommendation that is supported by adequate information about the candidate's qualifications will be evaluated by the Nominating and Governance Committee.

To preserve independence and to avoid conflicts of interest, each director shall advise the Chairman of the Nominating and Governance Committee in advance of accepting an invitation to serve on another company's board of directors. The following standards shall be used to determine director qualifications:

Depth and breadth of business and civic experience in leadership positions.
The individual has particular skills or expertise that enhance the overall composition of the Board.
There is no specified term limit that a director may serve on the Board. The Nominating and Governance Committee will review each director's performance annually to assess independence, attendance, and overall performance.

Executive Sessions of the Board
Annually, the Board shall hold at least one regularly scheduled executive session at which only independent directors are present. The Chairman of the Nominating and Governance Committee will be the presiding director for executive sessions of the independent directors. The Board may appoint a lead director who is "independent" to preside at all executive sessions of the Board.

Communications with Non-Management Members of the Board
The Directors shall maintain an open communication policy and invite any employee, officer or other interested party who has an interest in communicating with non-management members of the Board to do so directly.

Director Responsibility
Directors must exercise sound business judgment and act in what they reasonably believe to be the best interests of the Company and its shareholders. In discharging this obligation, directors may reasonably rely on the honesty and integrity of management as well as that of the Company’s internal auditor, independent auditor and counsel.

The Company will purchase reasonable directors' and officers' liability insurance for the benefit of its Board and management. In addition, directors and management shall be entitled to reasonable indemnification to the fullest extent permitted by law and the Company’s By-Laws. Director’s should always act in good faith and exercise their business judgment as they believe to be in the best interest of the Company. In discharging this responsibility, each Director shall: preserve the confidential nature of material information; disclose to the Board any potential conflict of interest; and not serve as a director, officer or employee of any entity which is in competition with the Company and not misappropriate any business opportunity or asset of the Company.

Director Attendance
In order to effectively oversee the management of the Company, all directors are expected to attend, in person or via telephone, meetings of the Board and meetings of committees of the Board of which they are members. Directors who attend less than seventy- five percent (75%) of meetings of the Board and meetings of committees of the Board of which they are members during a year will submit a personal plan to the Chairman of the Board to resolve such a problem for the following year. If such a deficiency exists for two (2) consecutive years, such director will not be eligible for nomination to the Board unless extenuating circumstances exist. Directors are expected to be prepared for these meetings and to be able to devote the time required. Information and data that are important to the understanding of the business to be conducted at a Board or committee meeting will generally be distributed in advance of the meeting. Directors are also expected to attend the Annual Meeting of Stockholders.

Board Committees
The Board will maintain an Audit Committee, a Compensation Committee, a Nominating and Governance Committee, and such other committees as it determines appropriate. All of the members of the Audit Committee, Compensation Committee and Nominating and Governance Committee shall be independent directors under the criteria established by these Corporate Governance Guidelines. Each member of the Audit Committee will also meet the more stringent criteria for independence established for members of the Audit Committee by rules of The Nasdaq Stock Market and Securities and Exchange Commission.

Independent Directors
A majority of the Board will be comprised of "independent directors" as defined by the rules of the Nasdaq Stock Market. The Board annually will make an affirmative decision as to the independence of each director, based on its judgment as to whether the person meets the criteria for director independence established by the rules of the Nasdaq Stock Market and does not otherwise have any relationship with the Company that would impair his or her independence. See Schedule A for a summary of the Company’s director independent standards.

Committee Charters
Each of the Audit Committee, the Compensation Committee and the Nominating and Governance Committee shall have written charters. These charters will address each committee's purpose, authority, composition and responsibilities as well as qualifications for committee membership, procedure for committee member appointment, committee structure and operations, and frequency that the committee will report to the Board.

Committee Responsibility
The Board and each committee shall have the power to engage independent legal, financial or other advisors as it may deem necessary, without consulting or obtaining the approval of the Board or management of the Company in advance.

The Audit Committee shall have exclusive authority to engage and terminate the independent registered public accounting firm. The Audit Committee shall also pre-approve audit engagements of the independent registered public accounting firm for all services.

The Nominating and Governance Committee shall have exclusive authority to engage and terminate any consultant or search firm used to identify or recruit director candidates and to nominate directors for election by shareholders.

The Compensation Committee shall have the authority to engage or terminate consulting firms used to provide guidance on executive compensation and to make recommendations to the Board on compensation matters, and the Board shall retain the authority to set the compensation of the executive officers.

Director Access to Officers and Employees
Directors have full and free access to officers and employees of the Company. Any meetings or contacts that a director wishes to initiate may be arranged through the chief executive officer or the secretary or directly by the director. Directors should use their judgment to ensure that any such contact is not disruptive to the business operations of the Company. The officers and employees of the Company are charged with the responsibility to manage the day to day affairs of the Company. Members of the Board should not attempt to micro-manage the business operations of the Company.

Director Compensation
The form and amount of director compensation shall be determined by the full Board upon recommendation of the Compensation Committee in accordance with policies and principles set forth in its charter. The Compensation Committee will conduct an annual review of director compensation. In order to maintain independence for members of the Audit Committee, members of the Audit Committee may not directly or indirectly receive from the Company fees or other compensation for services as a consultant, legal advisor or financial advisor, regardless of the amount.

Director Orientation and Continuing Education
All new directors must participate in a comprehensive orientation to acquaint them with the Company’s strategy, long-range plans, financial statements, properties and operations, corporate governance guidelines, and the code of conduct and ethics. The orientation program will introduce new directors to the Company’s principal executives, its internal auditor, and its independent auditor. All other directors are invited to attend the orientation program.

From time to time, directors will receive information and updates on legal and regulatory changes that affect the directors and the employees.

Crisis Management
The Board shall be proactive in the context of any governance, compliance or business crisis affecting the Company. The Board will work with management and any outside advisors in order to assess a crisis situation and choose a proper course of action. The Board will use its best efforts to maintain and preserve the value, integrity and control of the Company.

Annual Performance Evaluation
The Board will conduct an annual evaluation of itself and its committees to determine whether they are functioning effectively. The Nominating and Governance Committee will survey and receive comments from each director and report annually to the Board with an assessment of the Board’s performance.

Amendment and Modification
These Guidelines may be amended, modified or waived by the Board of Directors subject to complying with any applicable provisions of laws, rules and regulations.
Approved: June 23, 2006

Schedule A
Independent Director Standards

The Board of Directors of Peoples Community Bancorp, Inc. (the “Company”) has adopted the following Director Independence Standards to assist in determining the independence of a director.

In order for a director to be considered “independent”, the Board must affirmatively determine that the director has no relationship that would interfere in the exercise of independent judgment in carrying out the responsibilities of a director. In each case, the Board will consider all relevant facts and circumstances, including the director’s commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships. The Board also will consider such other criteria as it may from time to time deem appropriate. A director will not be considered “independent” if the director fails to qualify as an “independent director” under Rule 4200(a)(15) of the Nasdaq Stock Market, Inc., or any successor thereto, as now or hereafter in effect.

Additionally, none of the following persons will be an independent director:

Any officer or employee of the Company.
Any person who has been employed by the Company at any time within the past three years.
Any director who accepted or who has a family member that accepted any payments from the Company or any subsidiary exceeding $60,000 during the current or any of the last three fiscal years, other than:

Any director who has a family member who is currently, or was at any time in the last three years, an executive officer of the Company or any of its subsidiaries;
A director who is, or has a family member who is, a partner, controlling shareholder or executive officer of any organization (for profit or nonprofit) to which the Company made, or from which the Company received, payments for property or services in the current or any of the last three fiscal years that exceed the greater of (1) 5% of the recipient's consolidated gross revenues for the year or (2) $200,000 (excluding payments solely from investments in Company stock or payments under nondiscretionary charitable contribution matching programs.)
Any director who within the past three years, has been part of an interlocking directorate in which an executive officer of the company serves on the compensation committee or a committee of a similar nature of another company that employed the director, or a family member of the director as an executive officer.

In addition to the relationships described above, an Audit Committee member must not (i) directly or indirectly accept any consulting, advisory or other compensatory fee from the Company, except as a director or member of the Audit Committee, or (ii) be an affiliated person of the Company, except as a director or member of any committee. An Audit Committee member may receive fees in the form of cash, stock, stock units, stock options or other consideration ordinarily available to directors, as well as regular benefits that other directors receive.

For purposes of these standards, a "family member" means a director's spouse, parents, children and siblings, whether by blood, marriage or adoption (including "in-law" relationships), or anyone residing in the director's home.

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Compensation Committee Charter

The Board of Directors of Peoples Community Bancorp, Inc. (Board) has established a Compensation Committee (Committee) with authority, responsibilities, and duties as described in this charter. The Committee will serve both Peoples Community Bancorp, Inc. and its subsidiaries (Company).

The Committee shall provide assistance to the Board in fulfilling the Board's responsibilities relating to management organization, performance, compensation and succession, and establishing compensation for members of the Board. Directors are not separately compensated for serving on the Committee.

PURPOSE

The purpose of the Committee is to assist the Board in fulfilling its oversight responsibilities relating to the compensation of the Company’s executive officers. The Committee has responsibility to evaluate and recommend to the Board the executive compensation plan including salary, benefits, bonus, severance and equity-based plans and programs for the chief executive officer and other executive officers.

AUTHORITY

The Committee has authority to conduct or authorize investigations into any matters within its scope of responsibility. It is empowered to:

Retain advisors, including compensation consultants, accountants and legal counsel, to assist in discharging its duties.
Meet with Company officers, external auditors, or outside counsel, as necessary.

The Company will provide appropriate funding, as determined by the Committee, for any advisors employed by the Committee or for ordinary administrative expenses.

COMPOSITION

The Committee shall consist of a minimum of three members of the Board. Members of the Committee are nominated by the Nominating and Governance Committee and appointed by the Board. Members of the Committee will select the Committee Chair.

Each Committee member shall be independent pursuant to the requirements applicable to The Nasdaq Stock Market (“NASDAQ”) and Securities and Exchange Commission (“SEC”) rules and regulations and any standards of independence that may be prescribed for purposes relating to the Committee’s duties and responsibilities, including the Internal Revenue Code.

MEETINGS

The Committee shall establish its own schedule for meetings throughout the year, with authority to convene additional meetings, as circumstances require. All Committee members are expected to attend each meeting, in person or via telephone. The Committee may invite members of management or others to attend meetings and provide pertinent information, as necessary. A majority of the members of the Committee shall constitute a quorum to transact business.

The Committee will meet in executive session annually to review the Corporate goals and objectives of the organization, the performance and compensation of management and to discuss any other matters that the Committee believes should be discussed without management present.

RESPONSIBILITIES

The following shall be the principal recurring processes of the Committee in carrying out its responsibilities. The processes are set forth as a guide with the understanding that the Committee may supplement them as appropriate. The responsibilities and processes of the Committee shall be consistent with the applicable law and, the rules and regulations adopted by the SEC, and the listing requirements of Nasdaq Stock Market rules.

Consider and authorize the compensation philosophy for Company personnel.
Annually review and evaluate the performance of the chief executive officer and the executive officers, in light of goals and objectives set by the Committee. In determining the CEO compensation and long-term incentive component, the Committee will consider the Company’s performance and relative shareholder return, the value of similar incentive awards to CEO’s at comparable companies and the awards given to the CEO in the past.
Recommend to the Board the chief executive officer and executive officers’ compensation based on individual and company performance. Neither the chief executive officer nor any individual executive officers are to be present during the Compensation Committee's or the Board's deliberations about or voting on their compensation.
Annually review and approve for the chief executive officer and the executive officers the following: (a) annual base salary level, (b) annual incentive, (c) long-term incentive opportunity, (d) stock plans and awards, and (e) any other perquisites.
Consider and make recommendations to the Board on matters relating to organization and succession of executive management.
Consider and approve the report of the Compensation Committee for inclusion in the proxy statement for the annual shareholders' meeting.
Make recommendations to the Board with respect to incentive compensation plans, deferred compensation plans, executive retirement plans, and equity-based plans.
Administer the Company’s incentive, deferred compensation, and equity-based plans as applicable.

Other Responsibilities

Evaluate the performance of the Committee and each Committee member.
Perform other activities related to this charter as requested by the Board.
Review and assess the adequacy of the Committee charter periodically, requesting Board approval for proposed changes.
Confirm annually that all responsibilities outlined in this charter have been carried out.

Reporting

Report to the Board the matters considered and actions taken by the Committee.

Approved: June 23, 2006

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Audit Committee Charter

The Board of Directors of Peoples Community Bancorp, Inc. (Board) has established an Audit Committee (Committee) with authority, responsibilities, and duties as described in this charter. The Committee shall serve both Peoples Community Bancorp, Inc. and its subsidiaries (Company).

PURPOSE
The purpose of the Committee is to assist the Board in fulfilling its oversight responsibilities for monitoring:

The integrity of the Company’s financial statements and financial reporting processes.
The internal control system, including internal control over financial reporting.
The independent registered public accounting firm qualifications, performance and independence.
The internal audit function’s performance.
The Company’s compliance with legal and regulatory requirements.

AUTHORITY

The Committee has authority to conduct or authorize investigations into any matters within its scope of responsibility. The Company will provide appropriate funding, as determined by the Committee, for any registered public accounting firm or advisors employed by the Committee or for ordinary administrative expenses. It is empowered to:

Appoint, compensate, retain and oversee the work of the registered public accounting firm employed by the Company to conduct the annual audit or such other review or services. This firm shall report directly to the Committee.
Resolve any disagreements between management and the independent registered public accounting firm regarding financial reporting.
Pre-approve all auditing and permitted non-audit services performed by the independent registered public accounting firm.
Appoint, compensate, and oversee the work of the Director of Internal Audit (Internal Auditor). This position shall report directly to the Committee.
Investigate any matter brought to its attention with full access to all books, records, facilities and personnel.
Meet with Company officers, external auditors, or outside counsel, as necessary.
Retain independent counsel, accountants, or others to advise the Committee or assist in the conduct of an investigation.

Exception – The pre-approval requirement for non-audit services set forth above, shall not be applicable with respect to the provision of non-audit services, if:

(i) the aggregate amount of all such non-audit services provided to the Company constitutes not more than five percent of the total amount paid by the Company to its independent registered public accounting firm during the fiscal year in which the non-audit services are provided;

(ii) such services were not recognized by the Company at the time of the engagement to be non-audit services; and

(iii) such services are promptly brought to the attention of the Committee and approved prior to the completion of the audit by the Committee or by the Chair of the Committee to whom authority to grant such approvals has been delegated by the Committee.

COMPOSITION

The Committee shall consist of a minimum of three members of the Board. Members of the Committee are nominated by the Nominating Committee and appointed by the Board. Members of the Committee will select the Committee Chair.

Each Committee member shall be independent pursuant to the requirements applicable to Nasdaq Stock Market (“NASDAQ”) and Securities and Exchange Commission (“SEC”) rules and regulations and any standards of independence that may be prescribed for purposes relating to the Committee’s duties and responsibilities.

All Committee members shall be able to read and understand fundamental financial statements, including a balance sheet, income statement, and cash flow statement. At least one member of the Committee must have past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background which results in the individual’s financial sophistication. The Board shall determine whether a member qualifies as an audit committee financial expert.

MEETINGS

The Committee shall meet four times a year, with authority to convene additional meetings, as circumstances require. All Committee members are expected to attend each meeting, in person or via telephone. The Committee may invite members of management, auditors or others to attend meetings and provide pertinent information, as necessary. A majority of the members of the Committee shall constitute a quorum to transact business.

Periodically, the Committee will meet separately with management, with the Internal Auditor and with the independent registered public accounting firm. It will also meet periodically in executive session.

RESPONSIBILITIES

The following shall be the principal recurring processes of the Committee in carrying out its responsibilities. The processes are set forth as a guide with the understanding that the Committee may supplement them as appropriate. The responsibilities and processes of the Committee shall be consistent with the applicable law and, the rules and regulations adopted by the SEC, and Nasdaq Stock Market rules.

Financial Statements

Review significant accounting and reporting issues and understand their impact on the financial statements. These issues include:
Review analyses prepared by management and/or the independent registered public accounting firm setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects of alternative GAAP methods on the financial statements.
Review with management and the independent registered public accounting firm the results of the audit, including any difficulties encountered. This review will include any restrictions on the scope of the independent registered public accounting firm’s activities or on access to requested information, and any significant disagreements with management.
Discuss the annual audited financial statements and quarterly financial statements with management and the independent registered public accounting firm, including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Review disclosures made by the CEO and CFO during the Forms 10-K and 10-Q certification process about significant deficiencies in the design or operation of internal controls or any fraud that involves management or other employees who have a significant role in the Company’s internal controls.
Discuss earnings press releases (particularly use of “pro forma,” or “adjusted” non-GAAP, information), as well as financial information and earnings guidance provided to analysts and rating agencies. This review may be general (i.e., the types of information to be disclosed and the type of presentations to be made). The Committee does not need to discuss each release in advance.

Internal Control

Consider the effectiveness of the Company's internal control system, including information technology security and control.
Understand the scope of management’s and the independent registered public accounting firm’s review of internal control over financial reporting, and obtain reports on significant findings and recommendations, together with management's responses.

Independent Audit

Ensure that the independent registered public accounting firm submits to the Committee written disclosures and the letter from the accountants required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), and discuss with the independent registered public accounting firm their independence.
Maintain an active dialogue with the independent registered public accounting firm regarding any disclosed relationships or services that could affect the objectivity and independence of the independent registered public accounting firm, and be responsible for taking, or recommending that the Board of Directors take appropriate action to oversee the independent registered public accounting firm’s independence.
Discuss with the independent registered public accounting firm the matters required to be discussed by Statement on Standards (“SAS”) No. 61 (Communication with Audit Committees) and SAS No. 90 (Audit Committee Communications).
Review the independent registered public accounting firm’s proposed audit scope and approach, including coordination of audit effort with internal audit.
Review the performance of the independent registered public accounting firm, and exercise final approval on the appointment or discharge of the independent registered public accounting firm. In performing this review, the Committee will:
Ensure the rotation of the lead and concurring audit partners after five years and other partners subject to rotation after seven years.
Consider whether there should be rotation of the audit firm itself.
Present the Committee’s conclusions with respect to the independent registered public accounting firm to the full Board.
Review any proposed hiring of employees or former employees of the independent registered public accounting firm.
On a regular basis, meet separately with the independent registered public accounting firm to discuss any matters that the Committee or independent registered public accounting firm believe should be discussed privately.

Internal Audit

Review with management and the Internal Auditor the plan, activities, staffing, and organizational structure of the internal audit function.
Obtain regular updates from the Internal Auditor regarding internal control matters.
Ensure there are no unjustified restrictions or limitations.
Review the effectiveness of the internal audit function.
Review the performance of, and exercise final approval on the appointment, compensation and retention of the Internal Auditor.
On a regular basis, meet separately with the Internal Auditor to discuss any matters that the Committee or Internal Auditor believes should be discussed privately.

Compliance

Review the effectiveness of the system for monitoring compliance with laws and regulations and the results of management's investigation and follow-up of instances of noncompliance.
Establish procedures for the receipt, retention, and treatment of complaints regarding accounting, internal accounting controls, or auditing matters, unethical or illegal conduct.
Establish procedures for the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.
Review the findings of any examinations by regulatory agencies, and any auditor observations.
Review the process for communicating the code of conduct to Company personnel, and for monitoring compliance therewith.
Obtain regular updates from the Compliance Officer, legal counsel and management regarding compliance matters.

Other Responsibilities

Take appropriate actions to set the overall corporate tone for quality financial reporting, sound business risk management practices, and ethical behavior.
Review and approve all related-party transactions. For purposes hereof “related-party transactions” shall refer to transactions required to be disclosed pursuant to SEC regulation S-K, Item 404.
Evaluate the performance of the Committee and each Committee member annually.
Institute and oversee special investigations as needed.
Perform other activities related to this charter as requested by the Board.
Review and assess the adequacy of the Committee charter annually, requesting Board approval for proposed changes.
Confirm annually that all responsibilities outlined in this charter have been carried out.

Reporting

Regularly report to the Board about Committee activities and issues that arise with respect to the integrity of the Company’s financial statements; the internal control system, including internal control over financial reporting; the independent registered public accounting firm’s qualifications, performance and independence; the internal audit function’s performance; and the Company’s compliance with legal and regulatory requirements.
Provide an open avenue of communication between the Internal Auditor, the independent registered public accounting firm, and the Board.
Report annually to the shareholders, describing the Committee's composition, responsibilities and how they were discharged, and any other information required by rule, including approval of non-audit services.
Review any other reports the Company issues that relate to Committee responsibilities.

Approved: June 23, 2006

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Nominating and Governance Committee Charter

The Board of Directors of Peoples Community Bancorp, Inc. (Board) has established a Nominating and Governance Committee (Committee) with authority, responsibilities, and duties as described in this charter. The Committee will serve both Peoples Community Bancorp, Inc. and its subsidiaries (Company).

PURPOSE

The purpose of the Committee is to assist the Board in fulfilling its oversight responsibilities for director nominations and appointments, and corporate governance.

AUTHORITY

The Committee has authority to conduct or authorize investigations into any matters within its scope of responsibility. It is empowered to:

Identify and recommend to the Board the selection of individuals qualified to serve as Board members and recommend to the Board director nominees for the annual meeting of shareholders.
Develop corporate governance principles applicable to the Company and govern the conduct of the Board and its members.
Oversee the evaluation of the Board and its members.
Access any consultant of the Company to aid it in its responsibilities.
Retain, terminate and obtain advice, reports or opinions from search firms or other internal or outside advisors and legal counsel in the performance of its responsibilities.

The Company will provide appropriate funding, as determined by the Committee, for any advisors employed by the Committee or for ordinary administrative expenses.

COMPOSITION

The Committee shall consist of a minimum of three members of the Board. Members of the Committee are nominated by the Committee and appointed by the Board. Members of the Committee will select the Committee Chair.

Each Committee member shall be independent pursuant to the requirements applicable to The Nasdaq Stock Market (“NASDAQ”) and Securities and Exchange Commission (“SEC”) rules and regulations and any standards of independence that may be prescribed for purposes relating to the Committee’s duties and responsibilities.

MEETINGS

The Committee shall establish its own schedule for meetings throughout the year, with authority to convene additional meetings, as circumstances require. All committee members are expected to attend each meeting, in person or via telephone. The committee may invite members of management or others to attend meetings and provide pertinent information, as necessary.

A majority of the members of the Committee shall constitute a quorum to transact business.

The Committee will meet in executive session annually to review the performance of the Board the Board members and to discuss any other matters that it believes should be discussed without management present.

RESPONSIBILITIES

The following shall be the principal recurring processes of the Committee in carrying out its responsibilities. The processes are set forth as a guide with the understanding that the Committee may supplement them as appropriate. The responsibilities and processes of the Committee shall be consistent with the applicable law and the rules and regulations adopted by the SEC and listing requirements of Nasdaq Stock Market rules.

Board Membership

Recommend to the Board the number of directors that shall constitute the whole Board consistent with the Company’s By-Laws.
Review qualifications of individuals for service on the Board.
Recommend to the Board individuals for Board membership.
Recommend to the Board nominees for election of directors at the annual meeting of shareholders or a special meeting of shareholders.
Evaluate the performance of the Board and each Board member annually.

Corporate Governance

Develop and annually review corporate governance guidelines.
Consider and advise the Board on matters relating to corporate governance.
Evaluate the performance of each Committee and each Committee member annually.
Review and assess the adequacy of each Committee charter periodically.

Reporting

Report to the Board the matters considered and actions taken by the Committee.

Approved: June 23, 2006

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Code of Conduct and Ethics

Introduction

In order to assure the proper and ethical performance of our business and to maintain the confidence of the public, our customers and our stockholders in Peoples Community Bancorp, Inc., Peoples Community Bank and our subsidiaries, all Directors, officers and employees of Peoples are expected to act in accordance with the highest standards of personal and professional integrity in all aspects of their activities, to comply with applicable laws, rules and regulations and to avoid misconduct and conflicts of interest and the appearance of conflicts of interest.

To promote these standards and values, the Board of Directors of Peoples has established and adopted this Code of Conduct and Ethics to provide guidance concerning the standards of ethical conduct by and responsibilities of our Directors and persons employed by Peoples or our subsidiaries.

This Code outlines the broad principles of legal and ethical business conduct embraced by Peoples. However, a written code cannot answer all questions raised in the context of business relationships. Therefore, this Code must be applied using common sense and good judgment. Issues with respect to conflicts, legality or ethics may not always be clear cut and officers and employees should consult with higher levels of management or the Human Resources or Compliance Departments. Directors should discuss the matter with the Compliance Department or outside counsel.

ETHICAL PRINCIPLES AND CORPORATE VALUES

The nature of the business of Peoples requires careful observance of applicable laws and regulations. High standards of conduct and personal integrity are essential for us to maintain the confidence of our stockholders, customers, employees, and the general public. In order to ensure that Peoples and all of our Directors, officers and employees embrace and promote sound ethical business practices, we require that you agree to:

Act with honesty and integrity, avoiding actual or apparent conflicts of interest in personal and professional relationships;
Comply with rules and regulations of federal, state and local governments, and other appropriate regulatory agencies;
Act in good faith, responsibly, and with due care, competence and diligence, without misrepresenting material facts or allowing one’s independent judgment to be impaired;
Provide information that is accurate, complete, objective, relevant, timely and understandable to ensure full, fair, accurate, timely, and understandable disclosure in reports and documents; and
Promptly report to our President or Chief Financial Officer or a member of the Audit Committee of our Board of Directors any conduct that the individual believes to be a violation of law or business ethics or of any provision of this Code, including any transaction or relationship that reasonably could be expected to give rise to a conflict of interest.

CONFLICTS OF INTEREST

A conflict of interest exists whenever you (or a member of your immediate family) has a personal interest in any entity or matter that may influence a decision or cloud your judgment in the discharge of your responsibilities to Peoples. It is your duty to avoid situations from which you (or an immediate family member) might benefit personally, directly or indirectly, or that give the perception that you (or an immediate family member) is benefiting personally, from business decisions, use of our facilities or from relationships with our customers, vendors or contacts.

If a business opportunity relating to our lines of business becomes available to or is made known to you, it must first be made available to Peoples before being acted upon by you, by your immediate family or by any other Director, officer or employee.

Employees are prohibited from making loans to companies in which the employee has a substantial interest as an owner, director, officer, or partner, or to companies in which a member of his or her immediate family has such an interest, or to a member of his or her immediate family. Such loans must be directed to another loan officer. When that is not possible, the application may be taken and processed, but must be reviewed and approved by another loan officer.

Employees should avoid any relationship that would cause a conflict of interest with their duties and responsibilities at Peoples. Employees are expected to disclose any situations that may involve inappropriate or improper conflicts of interests affecting them personally or affecting other employees or those with whom Peoples does business. Waivers of conflicts of interest involving executive officers require the approval of the Board of Directors or an appropriate committee.

To avoid conflicts of interest, Directors are expected to disclose to their fellow Directors any personal interest they may have in a transaction upon which the Board passes and to recuse themselves from participation in any decision in which there is a conflict between their personal interests and the interests of Peoples.

A. Compensation and Gifts

The Bank Bribery Act prohibits you or any agent of Peoples or attorney representing Peoples from offering or receiving anything of value where the item of value is offered with the intent of influencing the Director, officer or employee, agent or attorney or a business transaction. This law is broad and carries civil and criminal penalties, including fines and/or imprisonment. Gifts or awards given in recognition of your service or accomplishment in civic, charitable, educational, or religious organizations are not prohibited by this Code

1. General Prohibitions: Except as provided below, you are prohibited from soliciting or receiving anything of value in any amount in connection with the business of Peoples, including but not limited to money, goods, or services. This prohibition applies whether such was obtained as a gratuity/gift or as a “quid pro quo” exchange (something received or given as a reward for preferential action or service rendered by you. Additionally, this prohibition includes receiving compensation of any kind from any source for rendering services of a type that are performed or offered by Peoples. A Director or employee may not do indirectly what he or she is prohibited from doing directly; for example, arrange to have a prohibited gift made to a member of his or her immediate family. Similarly, you may not give gifts, meals, or entertainments (including a quid pro quo exchange) which are intended to influence, or that might give the appearance of influencing, another Director, officer or employee or a business contact in a business decision. Any action by you perceived to compromise another's judgment is prohibited.

Example: An employee may not solicit any sort of personal compensation in return for making a loan to a customer.

Example: A Director who is in a position, whether directly or indirectly, to sell goods or services to Peoples may not give gifts to the department responsible for making such purchasing decisions.

2. Permissible Gifts: Any Director, officer or employee may accept anything of value from customers only if it:

a. Is valued at $200 or less;
b. Is not intended to influence any decision by the Director, officer or employee;
c. Is unsolicited;
d. Is infrequent; and
e. Is not a quid pro quo.

Notwithstanding the foregoing, under no circumstances shall you accept money as a gift from any customer.

Examples of Permissible Gifts: Gifts which are likely to meet these guidelines are: advertising or promotional materials such as pens, pencils, key rings, calendars and similar items valued under $200.

Additionally, you may accept gifts from individuals who have both a personal relationship with you and a business relationship with Peoples, for such commonly recognized events or occasions as a promotion, wedding, retirement, or religious observance, if valued at less than $200.

Generally, there is no threat of a violation of the Bank Bribery Act if acceptance of a gift or benefit is based on an immediate family or personal relationship, which exists independent of any business with Peoples or if the gift or benefit is made available to the general public under the same conditions on which it is made available to you.

If you are offered or receive something of value in excess of the above-stated amounts which you believe may be impermissible under this Code, you must disclose the matter to the Compliance Department and seek a determination that the item of value may be accepted or must be returned. The reviewer will give due consideration to the criteria for permissible gifts and whether receipt poses a threat to the integrity of Peoples.

B. Business Gratuities.

Payments for travel, lodging, meals and entertainment are normally permissible if they (i) are reasonable in amount; (ii) are expended in the course of a legitimate business meeting or an event intended to foster better business relations; (iii) would be paid by Peoples as a business expense if not paid for by the outside source; and (iv) are unsolicited.

If you are offered payments of the type which you believe may be impermissible, you must disclose the matter to the Compliance Department and seek a determination that the offer may be accepted or must be rejected. The reviewer will give due consideration to the criteria for permissible payments and whether receipt poses a threat to the integrity of Peoples.

Example: It is not a prohibited business gratuity to accept a vendor’s offer to pay lodging and meals for an employee’s attendance at a conference sponsored in whole or in part by the vendor so long as the employee’s attendance has a business purpose.

C. Transactions with Insiders.

Peoples from time to time may purchase or lease real or personal property or goods or services from you, a member of your immediate family, or from business entities in which you or in which a member of your immediate family is an officer, director and/or controlling stockholder.

It is the policy of Peoples that any transaction involving insiders must be conducted at arm’s length and that any consideration paid or received by Peoples in connection with such a transaction shall be on terms no less favorable than terms available to an unaffiliated third party under the same or similar circumstances. In accordance with Regulation O, the Director’s or officer’s interest in any such transactions requiring Board action shall be disclosed to the Board prior to any action being taken, and any such transactions not requiring Board approval shall be reported to the Board quarterly.

CONFIDENTIAL INFORMATION

A. Confidential Information Regarding Customers and Others.

You must take all reasonable measures to protect the confidentiality of non-public information about Peoples or our subsidiaries and our customers, stockholders and suppliers obtained or created in connection with your activities and to prevent the unauthorized disclosure of such information unless required by applicable law or regulation or legal or regulatory process.

B. Permissible Dissemination of Confidential Information.

Dissemination of confidential customer information among our subsidiaries is permissible. Notwithstanding the foregoing, all queries of a legal nature that involve confidential information relating to our customers must be directed to outside counsel.

C. Confidential Information Regarding Current or Former Directors and Employees.

All requests for information regarding current or former Directors or employees must be referred to Peoples’ Human Resources Department. Our internal procedures and applicable laws limit the amount of information our Human Resources Department may provide.

D. Company Resources; Proprietary Information.

You are prohibited from selling, disclosing, or otherwise using Peoples' physical resources or proprietary information for personal benefit or for the benefit of any other party. The definition of Peoples' "physical resources or proprietary information" includes all of our intellectual property, including but not limited to any written materials, any computer or network-based information, data, any other types of information or data developed for us by an employee or a vendor, supplier or other contractor of Peoples.

Example: Employees are prohibited from using our marketing research for a personal venture or disclosing proprietary information to a competitor.

PERSONAL INVESTMENTS AND FINANCES

A. Insider Trading.

In the course of your duties, you may become privy to “insider information” within the meanings of state or federal laws. This means material, non-public information that might have an effect on our stock price if the information were publicly known. You should also be aware that the same prohibition against insider trading applies to trading in the stock of our customers, suppliers or any other company if you have inside information about them. Employees are strictly prohibited from providing inside information to other persons as this information might influence their trading activities or financial transactions.

Examples of such "inside information" may include: expansion plans, major management changes, future dividend rates, declaration of stock spilt or offerings of additional securities, current or future earnings projections, new contract or projects, mergers, acquisitions or divestitures or other such material matters. It should be noted that either positive or negative information may be material.

You are also prohibited from trading in put options or in short selling or in any other trade which would gain from a decrease in our stock price.

It is your responsibility to understand laws and policies that may apply to you. Further information on blackout periods, pre-clearance and other matters related to insider trading are contained in the Statement of Policy and Procedures Governing Trading in Shares of Peoples Community Bancorp, Inc.

B. Personal Investments.

Directors must disclose to the Chairman of the Board and employees must disclose to their direct supervisor when they know of any ownership or beneficial interest which they or members of their immediate families have with customers or suppliers of Peoples if they have responsibility for the account relationship. You and your immediate families are prohibited from investing in securities of customers or suppliers if they hold or share any responsibility for the account relationship, unless the securities are listed on an exchange and the purchase or sale is based upon information available to the general public, or unless approval is granted by a majority vote of the Board of Directors. In those instances where a personal investment in a given customer has been approved, you must avoid participation in any decisions concerning that customer.

Example: An employee who is the account officer for or deals with the loan account of ABC Company (a customer) may not invest personally in ABC Company without receiving prior approval of the Board of Directors. (See also Section V (D) “Loans” below).

C. Purchase of Company Owned Property.

Purchase of company owned or subsidiary owned property (real or personal) by you or members of your immediate families requires the approval of the Board of Directors and must be at fair market value.

D. Loans.

Loans by Peoples are available to Directors and designated Regulation O Officers on the same terms and conditions, including interest rates and collateral, as those prevailing for comparable loans with other customers; provided, however, that discounted consumer and residential loans which are offered as a benefit to all other employees may be extended to Directors and Regulation O Officers on the same terms (“Regulation O Loans”). Such loans must not involve more than the normal risk of repayment or present other unfavorable features.

The Securities Exchange Act of 1934, as amended (the “Exchange Act”), makes it unlawful for Peoples, directly or indirectly, including through any subsidiary, to extend or maintain credit, arrange for the extension of credit or renew the extension of credit in the form of a personal loan to or for any of its Directors or executive officers. Regulation O Loans are exempt from this prohibition set forth in the Exchange Act.

You are prohibited from lending personal funds to persons known to you as our customers, except if the customer is an immediate family member. You may not borrow from a customer unless the customer is a recognized lending institution.

V. BUSINESS CONDUCT

A. Business and Accounting Practices.

1. No funds or assets of Peoples shall be used for unlawful purposes.

2. No unrecorded fund or asset of Peoples shall be established or maintained for any purpose.

3. No false or misleading entries shall be made in the books and records of Peoples for any purpose. All items of income or expense shall be appropriately recorded.

4. No payment by Peoples shall be made with the intent or understanding that all or any part of such payment be used for any purpose other than that described in the books and records of Peoples.

5. No payment on behalf of Peoples shall be approved without adequate supporting documentation or with the intention or understanding that all or any part of such payment is to be used for any purpose other than that described by the documents supporting the payment.

6. Compliance is required with generally accepted accounting principles and procedures and with established internal accounting controls and procedures.

7. Peoples may require submission by Directors and employees of reports or statements in compliance with this section, at such time or from time to time and in such form as we may specify.

B. Political Contributions; Expenditures for Political Purposes.

1. No funds or assets of Peoples are to be used to make any unlawful political contribution. For purposes of this section, the term "political contribution" shall be deemed to include not only the direct or indirect delivery of cash or property of Peoples to a political party, candidate, committee or organization but also includes:

(a) the reimbursement by Peoples to any Director, officer or employee or any other person, for a political contribution made or to be made by such Director, officer or employee or other person; or

(b) the provision of services or the use of property or the making of a loan, to a political party, candidate, committee or organization by Peoples, except in the ordinary course of our business and on customary commercial terms. Purchases of tickets to political dinners or other similar events or of advertisements in political publications are considered to be political contributions and are not reimbursable.

2. Neither we nor you acting on our behalf shall establish any program to solicit, collect or distribute political contributions from a Director, officer or employee.

3. You shall not be under any obligation of any kind to us or to any other Director, officer or employee, to utilize any of your compensation to make political contributions and no Director, officer or employee or any other person acting on our behalf, shall seek to create or enforce any such obligation.

Nothing contained in this section is intended to discourage you from active personal involvement in the political process, including the making of personal political contributions, or to otherwise limit the rights and obligations of Directors, officers or employees as responsible citizens. Notwithstanding the foregoing, the Code (i) requires that before you seek or accept a nomination or appointment to any public office, whether paid or unpaid, that you must obtain our approval and (ii) prohibits political campaigning, wearing and/or displaying political campaign slogans, distributing political literature, and/or soliciting campaign funds at or in the work place.

C. Information Security - Use of Company-owned Computers, Networks, Hardware and Software.

The unauthorized use or duplication of computer software owned by Peoples is strictly prohibited. The use of computer software owned personally by employees on computer equipment owned by Peoples is strictly prohibited.

D. Outside Business Interests.

Prior approval must be obtained in situations where you or your immediate family members may profit from a relationship with a company or other entity with which you deal with in the course of your company duties.

E. Management Interlocks.

You should be aware of the various statutes and regulations either prohibiting or restricting dual service by you in the following areas:

1. Service as a director, officer or employee of any other commercial bank, banking association, trust company, savings bank, savings and loan association, or credit union;

2. Service in an organization primarily engaged in the issue, underwriting, public sale or distribution of stocks, bonds or other securities;

3. Service as an officer or director of a public utility or a registered public utility holding company or subsidiary; or

4. Service as a director, officer, partner, employee, appointee or representative of any obligor of securities for which our subsidiary with which he or she is affiliated is the indenture (corporate) trustee.

VI. SPECIAL ETHICS OBLIGATIONS FOR EMPLOYEES WITH FINANCIAL REPORTING RESPONSIBILITIES

As a public company, it is critical that Peoples Community Bancorp’s filings with the Securities and Exchange Commission be accurate and timely. Depending on your position with Peoples, you may be called upon to provide information to assure that our public reports are complete, fair and understandable. We expect you to take this responsibility seriously and to provide prompt and accurate answers to inquiries related to our public disclosure requirements.

All Directors, officers and employees bear a special responsibility for promoting integrity throughout Peoples. The CEO, the CFO, the Treasurer, the Controller, and all those persons acting in a similar capacity have a special role both to adhere to these principles and also to ensure that our corporate culture ensures the fair and timely reporting of our financial results and condition.

Because of this special role, our CEO, CFO, Treasurer, Controller, and all those persons acting in a similar capacity of Peoples are bound by the following Financial Officer Code of Ethics, and by signing the Certificate of Compliance attached to this Code, each agrees that he or she will:

Act with honesty and integrity, avoiding actual or apparent conflicts of interest in personal and professional relationships;
Provide information that is accurate, complete, objective, relevant, timely and understandable to ensure full, fair, accurate, timely, and understandable disclosure in reports and documents that Peoples files with, or submits to, government agencies and in other public communications;
Comply with rules and regulations of federal, state and local governments, and other appropriate regulatory agencies;
Act in good faith, responsibly, and with due care, competence and diligence, without misrepresenting material facts or allowing one’s independent judgement to be impaired; and
Promptly report to the Audit Committee of Peoples’ Board of Directors any conduct that the individual believes to be a violation of law or business ethics or of any provision of the Code of Conduct, including any transaction or relationship that reasonably could be expected to give rise to a conflict of interest.

Violations of this Financial Officer Code of Ethics, including failures to report potential violations by others, are a serious matter that may result in disciplinary action, including termination of employment. If you believe that a violation of the Financial Officer Code of Ethics has occurred, you should contact the Audit Committee of the Board of Directors.

VII. REPORTING ILLEGAL OR UNETHICAL BEHAVIOR

A. Reporting Illegal or Unethical Behavior

If you suspect or know of violations of this Code or illegal or unethical business or workplace conduct by employees, officers or Directors then you have an obligation to contact your supervisor or superiors. If the individuals to whom such information is conveyed are not responsive, or if there is a reason to believe that reporting to such individuals is inappropriate in particular cases, then you may contact the CEO of Peoples. Such communications will be kept confidential to the extent feasible. If you are still not satisfied with the response, then you may contact the Audit Committee of the Board of Directors of Peoples at P.O. Box 1171, Lebanon, Ohio 45036. If concerns or complaints require confidentiality, then this confidentiality will be protected to the extent feasible, subject to applicable law.

B. Accounting Complaints

Peoples’ policy is to comply with all applicable financial reporting and accounting regulations. If any Director, officer or employee of Peoples has unresolved concerns or complaints regarding questionable accounting or auditing matters, then you are encouraged to submit those concerns or complaints (anonymously, confidentially or otherwise) to the Audit Committee. Subject to its legal duties, the Audit Committee and the Board will treat such submissions confidentially. Such submissions may be directed to the attention of the Audit Committee, P.O. Box 1171, Lebanon, Ohio 45036.

C. Non-Retaliation

We prohibit retaliation of any kind against individuals who have made good faith reports or complaints of violations of this Code or other known or suspected illegal or unethical conduct.

VIII. CONCLUSION

Peoples conducts itself and its business dealings so as to comply with all applicable laws and regulations. Where the requirements of such laws and regulations are unclear, the advice of the Compliance Department or outside counsel must be sought to secure interpretation and to ensure compliance. You must understand our internal policies and procedures and the legal and regulatory framework within which Peoples operates and must take those steps necessary to ensure that any persons working with or under your supervision understand them. You are urged to reread the Code from time to time to refresh your recollection of the statutory and regulatory matters and the policies outlined herein.

This Code may be amended or modified by our Board of Directors. Waivers of this Code may only be granted by the Board of Directors or a committee of the Board with specific delegated authority. Waivers will be disclosed to shareholders as required by the Exchange Act and the rules thereunder and the applicable rules of the Nasdaq Stock Market.

Certificate of Compliance

I have reviewed and read Peoples Community Bancorp, Inc.’s Code of Conduct and Ethics as adopted by the Board of Directors on November 3, 2006.

I hereby certify that I am complying with all provisions of the Code and that I am not aware of any violations of the Code, except as noted below: ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

I understand that the Code requires that if I become aware of any violations of the Code, I must report them.

I have read and understand the Code and agree to comply with it at all times and in connection with the purchase and sale of Company stock.

I also understand that violations of the Code can result in sanctions, including discipline, suspension, discharge, and referral for criminal prosecution or civil action.

Date: __________________________

Signature: _______________________________________

Name (printed or typed): _________________________________

PLEASE SIGN, DATE AND RETURN TO

JOAN B. WOODWARD Email at jwoodward@pcbionline.com

DIRECTOR, HUMAN RESOURCES

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