HOMETOWN BANK. ELECTRONIC FUND TRANSFER DISCLOSURES Your Rights and Responsibilities Effective November 19, 2014

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1 HOMETOWN BANK ELECTRONIC FUND TRANSFER DISCLOSURES Your Rights and Responsibilities Effective November 19, 2014 For purposes of this disclosure, the terms we, us and our refer to Hometown Bank. The terms you and your refer to you, our customer. The Electronic Funds Transfer Act and Regulation E require institutions to provide certain information to customers regarding electronic funds transfers (EFTs). This disclosure applies to any EFT service you receive from us related to an account established primarily for personal, family or household purposes. Examples of EFT services include direct deposits to your account, automatic regular payments made from your account to a third party and one-time electronic payments from your account using information from your check to pay for purchases or to pay bills. This disclosure also applies to the use of your ATM/Debit Card at automated teller machines (ATMs) and for any point of sale (POS) transactions. Please read this document carefully and retain it for future reference. Customer Responsibility for Card and PIN Security If you receive an electronic fund transfer card (ATM/Debit Card) from us for the services described below, the following provisions are applicable: USING YOUR CARD AND PERSONAL IDENTIFICATION NUMBER (PIN). In order to assist us in maintaining the security of your account and the terminals, the ATM/Debit card remains the property of Hometown Bank and may be revoked or canceled at any time without giving you prior notice. You agree not to use your ATM/Debit Card to access an account that is no longer available. We will not be required to complete any such transaction, but if we do, we may, at our sole discretion, charge or credit the transaction to another account; you agree to pay us the amount of the improper withdrawal or transfer upon request. Your ATM card may only be used with your PIN. Certain transactions involving your Debit card require the use of you PIN. Your PIN is used to identify you as an authorized user. Because the PIN is used for identification purposes, you agree to notify Hometown Bank immediately if your ATM/Debit card is lost or if the secrecy of your PIN is compromised. You also agree not to reveal your PIN to any person not authorized by you to use your ATM/Debit card or to write your PIN on your ATM/Debit card or on any other item kept with your ATM/Debit card. We have the right to refuse a transaction on your account when your ATM/Debit card or PIN has been reported lost or stolen or when we reasonably believe there is unusual activity on your account. We also have the right to restrict and/or close your ATM/Debit card and/or your account if we reasonably believe there is unusual activity on your account. The security of your account depends on your maintaining possession of your ATM/Debit card and the secrecy of your PIN. You may change your PIN if you feel that the secrecy of your PIN has been compromised. You may change your PIN by visiting any Bank location. 1

2 Types of Permitted EFTs and Transaction Limitations Preauthorized Credits. You may make arrangements for certain direct deposits (such as Social Security or Payroll) to be accepted into your checking or savings account(s). Preauthorized Payments. You may make arrangements to pay certain recurring bills from your checking or savings account(s). ATM Transactions. You may access your checking or savings account(s) by ATM using your ATM card and personal identification number to withdraw cash, not to exceed $ per 24 hours. This amount may be changed at the discretion of the Bank and to access your account balance. When you use an ATM not owned by us, you may be charged a fee by the ATM operator or any network used, and you may be charged a fee for a balance inquiry even if you do not complete a fund transfer. The Bank reserves the right to restrict and/or close the card due to the misuse of the card and/or the account that it accesses. Debit Card (Check Card) Transactions. You may access your checking account by using your Debit Card and personal identification number, if applicable, to: Withdraw cash from an ATM, not to exceed $ per 24 hours. These amounts may be changed at the discretion of the Bank. Access your account balance from an ATM. Purchase goods or services from merchants that have arranged to accept your Debit Card as a means of payments, not to exceed $1,000 per 24 hours. These amounts may be changed at the discretion of the Bank. These transactions are referred to as Point of Sale (POS) transactions and will cause your designated checking account to be debited for the amount of the purchase. Receive cash from a merchant or financial institution, if they permit; Purchase goods and services at any merchant that accepts VISA debit cards or VISA credit cards. When you use your VISA card at a merchant that settles in currency other than US dollars, the charge will be converted into the US dollar amount. The currency conversion rate used to determine the transaction amount in US dollars is a rate selected by VISA from a range of rates available in wholesale currency markets for the applicable central processing date, which rate may vary from the rate VISA itself receives, or the government-mandated rate in effect for the applicable central processing date, in each instance, plus or minus any adjustment determined by the issuer. The conversion rate in effect on the processing date may differ from the rate in effect on the transaction date or the posting date. Important Additional Fee Notice: VISA charges an International Service Assessment Fee on all international transactions. Therefore, you will be charge 1.00% of the dollar amount of the transaction for each international transaction completed with your VISA card when the country of the merchant or machine is different than your country as cardholder. When you use your card on the PULSE, NYCE, STAR, ACCEL/EXCHANGE network(s) the transaction may be processed as a debit transaction without requiring PIN. Transactions that are completed as PIN-less debit transactions will not be processed by VISA and may post to your account as an ATM or Debit transaction rather than a VISA purchase. Transactions processed in this manner may not qualify for VISA rewards or points as they are not processed on the VISA network. Transactions completed as PIN-less debit transactions include, but may not be limited to, government payments and utility payments. 2

3 The Bank reserves the right to restrict and/or close the card due to the misuse of the card and/or the account that it accesses. Check Printing Charges. The charge for any checks that you order may be debited from your checking account. Re-presentment of Check Items. This type of EFT is used by merchants to re-present a check that has been processed through the check collection system and returned because of insufficient funds. Telephone-Initiated Transactions. You can access your checking or savings accounts by giving oral authorization to a third-party via the telephone for certain types of consumer debit entries. Electronic Check Conversions. You may authorize a merchant or other payee to make a one-time electronic payment from your checking account using information from your check to: Pay for purchases. Pay bills. Point-of-Purchase Transactions. This single-entry debit transaction is based on a written authorization and account information drawn from a check obtained from you at the point-ofpurchase. The check, which is voided by the merchant, is used to collect the Bank s routing number, and your account number, and the check serial number that will be used to generate the debit entry to your account. Internet-Initiated Transactions. You can access your checking or savings accounts via the Internet by authorizing a third-party and providing your account and bank routing information for certain types of consumer debit entries. Services provided through the use of our Internet Banking Service: You can inquire on account balances and initiate transfer of funds between your checking, savings, money market, NOW account and make loan payments. Bill Payment is also available upon bank approval. Bill Payment allows you to make payments directly out of your checking, savings, money market and NOW accounts in the amount and on the day you request. Services provided through the use of our VRU Telephone Banking: You may initiate transfers of funds between your checking, savings, money market and NOW accounts. You may make balance inquiries on your checking, savings, money market and NOW accounts. You may change your PIN via the telephone. Federal regulations limits the number of checks, telephone transfers, online transfers and preauthorized electronic transfers to third parties, including Point of Sale (POS) transactions from money market and savings type accounts. You are limited to six (6) such transactions, each statement cycle, from each money market and/or savings account for purposes of making a payment to a third party or by use of a telephone or computer. The terms of your account may limit the number of withdrawals you make each month. Restrictions disclosed at the time you opened your account, or sent to you subsequently, will also apply to your electronic withdrawals and electronic payments unless specified otherwise. 3

4 Fees Associated with EFTs Except as indicated elsewhere, we do not charge for any electronic fund transfer. We do not charge for preauthorized credits to any type of account. We do not charge for preauthorized payments from any type of account. We may charge $5.00 to replace a lost ATM or Debit Card. We may charge a monthly maintenance charge for your Debit Card. We may impose a fee for any ATM transaction conducted at our bank. When you use an ATM not owned by Hometown Bank, a fee may be charged for using that ATM by the owner of the ATM and by any national, regional, or local network used to complete the transaction and you may be charged a fee for a balance inquiry even if you do not complete a fund transfer. A 1% Currency Conversion Fee will be assessed on international transactions where VISA or PLUS has performed a currency conversion function. This fee will be based on a rate selected by VISA/PLUS from the range of rates available in wholesale currency markets for the applicable central processing date, which rate may vary from the rate VISA/PLUS itself receives, or the government mandated rate in effect for the applicable central processing date. A.20% (twenty basis points) Currency Conversion Fee will be assessed on international transactions where Cirrus, MasterCard or Maestro has performed a currency conversion function. This fee will be based on either a government mandated exchange rate, or a wholesale exchange rate selected by Cirrus, MasterCard, or Maestro and the rate used will be the applicable rate on the day the transaction was processed, which may differ from the date of the transaction or when it posted to the cardholder s account. A.80% (80 basis points) Cross Border Fee will be assessed on all international transactions whether or not a currency conversion function was performed by Cirrus, MasterCard, or Maestro. Documentation of Transfers Preauthorized credits. If you have arranged to have preauthorized credits made to your account at least once every 60 days from the same person or company, you may call us at any number listed above to inquire whether or not the credit has posted to your account. You may also call the automated 24-hour phone teller at Terminal transfers. You can get a receipt at the time you make any transfer to or from your account using one of our ATMs. However, transactions conducted at ATMs not owned by us may not give you the option to receive a receipt if your transaction is $15.00 or less. Your receipts should be retained to verify that a transaction was performed. Periodic statements. If your account is subject to receiving a monthly statement, all EFT transactions will be reported on it. If your account is subject to receiving a statement less frequently than monthly, then you will continue to receive your statement on that cycle, unless there are EFT transactions, in which case you will receive a monthly statement. In any case, you will receive your statement at least quarterly. Stop Payments Rights and Procedures If you have made an arrangement to have preauthorized payments debited from your account(s), you have the right to stop payment on any of these. Here are the procedures in doing so: Call us at the phone number or write us at the address listed elsewhere in this disclosure in time for us to receive your request 3 business days or more before the payment is scheduled to be made. If you call, we may also 4

5 require you to provide a written request within 14 days after you call. You will be charged a fee for each stop payment order. See our Fee Schedule for the current rate. If these regular payments may vary in amount, the person you have prearranged to pay will send you a notice 10 days before each payment as to date and amount of payment. You may choose to receive this notice only when the payment differs by more than a certain amount from the previous payment, or when the amount would be outside a certain range that you have set. If you order us to stop payment 3 business days or more before the EFT is scheduled and we fail to do so, we will be liable for your losses and damages. Responsibility to Notify Us of Loss or Theft Tell us AT ONCE if you believe that your ATM/DEBIT Card and/or PIN has been lost or stolen or, if you believe that an electronic fund transfer has been made without your permission using information from your check. Telephoning is the best way of keeping your possible losses down. Consumer s Liability for Unauthorized Transfers If you believe you ATM/DEBIT Card and/or PIN number has been lost or stolen, call (606) or (877) or write: Hometown Bank Attn: Deposit Services 3779 Cumberland Falls Highway PO Box 1323 Corbin KY If you tell us within 2 business days after you learn of the loss or theft of your ATM/DEBIT Card and/or PIN, you can lose no more than $50 if someone used your ATM/DEBIT card and /or PIN without your permission. If you do NOT tell us within 2 business days after you learn of the loss or theft of your ATM/DEBIT Card and/or PIN number, and we can prove we could have stopped someone from using your card and/or PIN number without your permission if you had told us, you could lose as much as $500. Also, if your statement shows transfers that you did not make including those made by card, code or other means, tell us at once. If you do not tell us within 60 days after the statement was mailed to you, you may not get back any money you lost after the 60 days if we can prove that we could have stopped someone from taking the money if you had told us in time. You could lose all the money in your account (plus your maximum overdraft line of credit). If a good reason (such as a long trip or a hospital stay) kept you from telling us, we will extend the time periods. Consumer s Liability for VRU, Telephone Banking, Internet Banking Service and Preauthorized Transfers The limitations on your liability for unauthorized transfers do not apply to preauthorized automatic payments from your checking accounts, savings accounts, money market accounts and NOW accounts unless you have complied with the procedures to stop the preauthorized payments described above. Your liability for such unauthorized transfers is unlimited. 5

6 In Case of Errors or Questions about Your Electronic Transfers Telephone us at the telephone number or write us at the address listed previously in this disclosure as soon as you can, if you think your statement or receipt is wrong or if you need additional information regarding a transfer listed on the statement or receipt. We must hear from you no later than 60 days after we sent the FIRST statement on which the problem or error appeared. Tell us your name and account number. Describe the error or the transfer you are unsure about, and explain as clearly as you can why you believe it is an error or why you need more information. Tell us the dollar amount of the suspected error. If you tell us orally, we will require that you send us your complaint or question in writing within 10 business days. If the error involves an unauthorized electronic fund transfer, we will require you to sign a Written Statement of Unauthorized Debit stating that the EFT was unauthorized. We will determine whether an error occurred within 10 business days after we hear from you and will correct any error within one business day after our determination. If the error is from a point-of-sale transaction using a Debit Card, we will determine whether an error occurred within 5 business days. If we need more time, however, we may take up to 45 days to investigate your complaint or question. If we decide to do this, we will credit your account within 10 business days, provided that you submitted to us the required written notice of the error, for the amount you think is in error, so that you will have the use of the money during our investigation time. If we ask you to send your complaint or question in writing and we do not receive it within 10 business days, we may not credit your account. For errors involving new accounts, point-of-sale, or foreign-initiated transactions, we may take up to 90 days to investigate your complaint or question. For new accounts, we may take up to 20 business days to credit your account for the amount you believe is in error. We will tell you the results within three business days after completing our investigation. If we decide that there was no error, we will send you a written explanation. You may ask for copies of the documents that we used in our investigation. Hometown Bank s Liability for Failure to Complete Transfer. If we do not complete a transfer to or from your account on time or in the correct amount according to our agreement with you, we will be liable for your losses or damages. However, there are some exceptions. We will not be liable, for instance: If, through no fault of ours, you do not have sufficient funds in your account to make the transfer; If the funds are subject to legal process or other restriction; If you have an overdraft line of credit and the transfer would go over the credit limit; If the ATM where you are making the transfer has insufficient cash; If the terminal or system was not working properly and you knew about the breakdown when you started the transfer; If circumstances beyond our control (such as fire, flood, computer or machine breakdown, or failure or interruption of communications facilities) prevent the transfer, despite reasonable precautions that we have taken; If we have terminated our Agreement with you. 6

7 When your ATM/Debit card has been reported lost or stolen or we have reason to believe that something is wrong with a transaction. If we receive inaccurate or incomplete information needed to complete a transaction. In the case of a preauthorized transfer, we will not be liable where there is a breakdown of the system which would normally handle the transfer. There may be other exceptions provided by applicable law. Confidentiality We will disclose information to third parties about your account or the transfers you make: When it is necessary to complete the transfer or to investigate and resolve errors involving the transfer; In order to verify the existence and condition of your account for a third party, such as a credit bureau or merchant; In order to comply with a government agency or court order; If you give us written permission; To Hometown Bancshares, Inc. for non-marketing purposes. Definition of Business Day For purposes of these disclosures, our business days are Monday through Friday, excluding holidays. 7