HOMETOWN BANK Allowable Overdraft Disclosure Effective Date: All information listed in this disclosure is effective as of

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1 HOMETOWN BANK Allowable Overdraft Disclosure Effective Date: All information listed in this disclosure is effective as of It is important for you to use your checking account responsibly and to never intentionally overdraw your account. Overdraft and NSF fees can add up quickly, especially if multiple overdraft items clear the same day. Thus, we discourage the intentional and routine writing of checks or other transactions that will overdraw your account if we pay these items. However, we realize that financial shortfalls happen from time to time and we have several options available for you. Discretionary Overdraft Payments, such as our Allowable Overdraft Program, may benefit you because it can protect your reputation, avoid default, avoid our NSF fee, and avoid the additional fee that is often charged by the payee when an item is returned NSF. Discretionary Overdraft Payments means that we may pay overdrafts on your accounts at our discretion. Overdraft Coverage Options: As a benefit to our customers, we offer the following useful services to cover you in the event that you overdraw your checking account. If you expect more than occasional and inadvertent use of a discretionary overdraft program, we believe you should consider the less costly alternatives. Transfer from another account - If you have other accounts with us, you can authorize us to transfer the funds needed to cover your overdraft. (Account Transfer) You must inform us as to which accounts we may transfer to and from and you must sign an authorization form permitting us to make these account transfers. Line of Credit A line of credit is available to cover overdrafts. This service requires you to complete an application and approval is based on your credit worthiness. The amount of your limit varies. (Hometown Reserve Line of Credit) Please contact any Hometown Bank loan officer for applicable terms and conditions of a Hometown Reserve Account. Allowable Overdraft - Allowable Overdraft (AOD) is a service we add to your checking account to cover overdrafts to a set limit. With AOD we will generally pay your overdraft items up to $500 subject to the eligibility criteria as explained below. However, whether your overdrafts will be paid is at the discretion of Hometown Bank and we reserve the right not to pay an overdraft. For example, we typically do not pay overdrafts if your account is not in good standing, you are not making regular deposits, or if you have excessive overdrafts. Eligibility Criteria: No application is required for the Allowable Overdraft; eligibility is at the sole discretion of Hometown Bank and is based on you managing your checking account in a responsible manner. You must sign an authorization form before the service is granted and you must meet all eligibility requirements set forth below. However, at account opening, your account will be automatically granted an Allowable Overdraft of $100, unless you chose not to participate in the Allowable Overdraft Program, and provided that the account is an eligible account type as described below. When your account has been opened 60 days or more, we will review your account during our next quarterly review and provided that your account meets all the criteria listed below, your Allowable Overdraft limit will be increased to $500. Your Allowable Overdraft may be suspended or permanently removed based on the following criteria: You do not bring your account to a positive balance for at least one full business day within a 30 day period. We believe that you are not managing your account in a responsible manner which may harm you or us. You have an account that has been opened less than 60 days, or if you were overdrawn 5 or more days during the first 60 days that your account was open.

2 You had a charge-off amount on a previous account, whether that charge-off has been repaid or not. Your account type is not eligible (ex: guardians, representative payees, KY UTMA, trustees, escrow and other types of fiduciary accounts) or if the account is used for a business purpose, including a sole proprietorship account. You are more than 30 days past due on any Hometown Bank loan or delinquent on any other obligation to Hometown Bank. You are subject to any legal or administrative orders, levy, or are currently a party in a bankruptcy proceeding. You have an outstanding balance on an Overdraft Repayment Plan. Your account is being reviewed for fraudulent activity or transactions. An extended hold is being placed on your checking account or any other account relationship, in which case your Allowable Overdraft will be suspended without prior notice. The primary account owner is less than 18 years old. An Early Warning report or any other negative indicator has been reported to us. Your account is classified as dormant or inactive. We do not have a valid address for you. Transactions Covered by Allowable Overdraft : Allowable Overdraft will be available for all checks written, in-person withdrawals, ATM withdrawals, one-time debit card/pos transactions, recurring debit card transactions, ACH preauthorized transactions, internet banking and telephone banking transactions. At no time do you have a contractual right to the Allowable Overdraft Program and at no time is payment guaranteed. We WILL NOT authorize and pay overdrafts for ATM and one-time debit card transactions unless you ask us to do so. If you choose (Opt-In) for us to authorize and pay overdrafts on your ATM and one-time debit card transactions, you will be charged our $33.00 AOD Paid Item Fee(s). If overdraft items presented and any fees that have been charged cause the AOD limit to be exceeded, you may be charged our NSF Paid Item Charge(s) for each ATM and one-time debit card transaction presented for payment against a negative balance. If you choose not (Opt-Out) to have us authorize and pay overdrafts on your ATM and one-time debit card transactions, these transactions will be declined when presented for authorization if the transaction exceeds the available balance in the checking account. Customers who receive a Social Security or other entitlement benefit must opt-out if they do not want us to apply those funds to pay an overdraft. How to Opt-Out: You may choose to Opt-In or Opt-Out of the AOD program or the authorization and payment of ATM and one-time debit card transactions at any time. Simply contact us for an authorization forms. You may use any method below to request the form. Call our Deposit Operations Employees at Visit any of our branch locations in Corbin, London or Barbourville Visit our website at choose the Other Services tab; scroll to the bottom under Overdraft Form and click on the link You will be provided with a written notice confirmation of your Opt-In/Opt-out choice.

3 Fee Limits: When we pay overdraft items for you, you will be charged our normal AOD Paid Item Fee(s), currently $33.00, for each item that is presented. Both the amount of the overdraft items and all applicable fees, including but not limited to the $33.00 AOD Paid Item Fee(s), are included in the AOD limit. If overdraft items presented and any fees that have been charged cause the AOD limit to be exceeded, you may be charged our NSF Return Item Charge(s) or our NSF Paid Item Charge(s) for each overdraft transaction presented, up to a maximum of 3 charges per account per day. All overdrafts will be subject to our AOD Paid Item Fee, our NSF Return Item Charge(s) or our NSF Paid Item Charge(s) for each overdraft transaction presented up to a maximum of 3 charges per account per day, but never on an overdraft balance less than $10. Time for Repayment: Payment of an overdraft is due immediately. At the very least, you must bring your account back to a positive balance for at least one full business day in a 30 day period. All deposits to overdrawn accounts are applied to the negative balance. Payment Order of Items: The order in which items are presented may affect the total fees assessed to your account. All deposits, except deposits for interest earned on the account, are posted before any account withdrawals are posted. Account withdrawals are posted in dollar amount order, beginning with the smallest amount and ending with the largest amount, based on the transaction type. Transaction type posting order is as follows: Internet transfers and checks that are cashed at Hometown Bank; ATM transactions and Debit Card transactions authorized by using a PIN number; Debit Card transactions authorized with a customer s signature; ACH transactions; and Check transactions NOTE: Please be aware that holds placed on your account for pending electronic transactions, such as hotel or rental car deposits, reduce your available balance and may cause your account to become overdrawn. OD Counseling: Your account will be reviewed monthly to determine excessive overdraft practices, which are defined as more than 6 overdrafts in a rolling 12 month period. Accounts determined to have excessive overdrafts will be provided counseling to help you better understand your overdraft options. Should excessive overdraft practices continue after counseling, it may become necessary to remove the Allowable Overdraft (AOD) and/or close your account. Removing the Allowable Overdraft and/or closing your account is at the sole discretion of Hometown Bank. Account Agreement: Your account agreement describes the duties, obligations, and rights of depositors, authorized signatories and the Bank with regard to your deposit accounts. That account agreement is incorporated herein for all purposes as if it were set forth verbatim as to matters not directly addressed by this disclosure. Your account agreement and this disclosure shall be construed so as to minimize conflicts between them. Waiver: The Bank s forbearance from, or delay in, exercising any of the Bank s rights, remedies, privileges, or right to insist on your strict performance of any provisions of your account agreement, this Allowable Overdraft Disclosure, or any other provision related to your account, shall not be construed to be a current or future waiver of the Bank s rights, remedies or privileges. Remedy: You and Hometown Bank agree that the exclusive remedy and forum for all disputes arising out of the Allowable Overdraft or your or Hometown Bank s performance there under, except for matters you or Hometown Bank take to small claims court, is arbitration by an independent arbitrator pursuant to the applicable rules of the American Arbitration Association, except as prohibited by law.

4 Customer Overdraft Option Authorization Option 1: Account Transfer Transfer from another account I hereby authorize Hometown Bank to transfer the funds needed to cover my overdrafts from the account listed below. Option 2: Hometown Reserve Line of Credit A line of credit is available to cover overdrafts. This service requires you to complete an application and approval is based on your credit worthiness. The amount of your limit varies. Please contact any Hometown Bank loan officer for applicable terms and conditions of a Hometown Reserve Account and request an application to complete to determine your creditworthiness. Option 3: Allowable Overdraft Allowable Overdraft (AOD) is a service we add to your checking account to cover overdrafts to a set limit. With AOD we will generally pay your overdraft items up to $500 subject to the eligibility criteria as explained below. However, whether your overdrafts will be paid is at the discretion of Hometown Bank and we reserve the right not to pay an overdraft. For example, we typically do not pay overdrafts if your account is not in good standing, you are not making regular deposits, or you have excessive overdrafts. When we pay overdraft items for you, you will be charged our normal AOD Paid Item Fee(s), currently $33.00, for each item that is presented. Both the amount of the overdraft items and all applicable fees, including but not limited to the $33.00 AOD Paid Item Fee(s), are included in this limit. If overdraft items presented and any fees that have been charged cause the AOD limit to be exceeded, you may be charged our NSF Return Item Charge(s) or our NSF Paid Item Charge(s) for each overdraft transaction presented, up to a maximum of 3 charges per account per day All deposits to overdrawn accounts are applied to the negative balance. I will be required to authorize Hometown Bank to pay overdrafts on my ATM and everyday debit card transactions for the account(s) I indicate. This authorization form has been delivered to me at the opening of my Allowable Overdraft account and must be returned to Hometown Bank before these transactions are authorized. Option 4: Opt Out I do not choose any of the above options, including Allowable Overdraft on my account. I understand that there is no additional cost for the Account Transfer or Allowable Overdraft and that by signing the Opt Out form, I am instructing Hometown Bank to return unpaid any items presented against insufficient funds, including electronic items. By opting out of Allowable Overdraft, I understand that any and/or all of my insufficient fund checks or electronic items will be returned to the Payee, and I agree to hold Hometown Bank harmless, and without liability, for any fees or other consequences that may result from this action. I understand that Hometown Bank will deny overdraft access through any electronic channels such as ATM or debit card transactions. I further understand that even though I have opted out, I will still be charged a $33.00 NSF Return Item Fee(s) for each item returned.

5 (Customers who receive a Social Security, federal direct deposit, or any other entitlement benefit must opt out if they do not want the Bank to apply those funds to pay an overdraft.) AUTHORIZATION FORM Option Number Chosen: (Account Transfer) (Line of Credit) (Allowable Overdraft) (None of the Above) If Option 1: Transfer To: Transfer From: If Option 2: Loan Application provided to Customer on this date: Primary Account Owner: Other Account Owner: Applicable Account Numbers: (Please list only the last 3 digits of your account number) Signature(s): Primary Account Owner Date Other Account Owner Date Please mail form to: Hometown Bank Attn: Deposit Operations P.O. Box 1323 Corbin KY FAX to to info@ahometownbank.com For Bank Use Only: Account Type ineligible for AOD. Set AOD Status to 13 or 18 and set AOD No Recalc to 1.