It is the policy of First National Bank of Hereford to return unpaid checks drawn on an account with insufficient funds. However, upon our approval, checking customers in good standing will be provided "Overdraft Protection" 30 days after opening.

If you write a check or initiate a transfer (such as ATM or CheckCard) or other transaction that will overdraw your account if paid, we will either (a) pay the overdraft, or (b) return the item unpaid for non-sufficient funds (NSF). If we pay the overdraft, this service is called "Overdraft Protection."

If we pay the overdraft, we may charge you a fee, typically called an NSF Paid Check Charge. If we return the item NSF we may charge you a fee, typically called an NSF Return Check Charge.

"Overdraft Protection" can be a valuable service because it protects your reputation, avoids default, and avoids the additional fee that often is charged by the payee when an item is returned NSF. Your reputation is protected because, for example, the payee will not know that there were insufficient funds to cover the item, and there won't be a return NSF to report to a consumer-reporting agency.

Overdraft fees can be substantial, especially in relation to multiple small overdrafts. Similarly, our NSF Return Check Charges and the fees imposed by payees when items are returned NSF can be substantial. Thus, we discourage the intentional and routine writing of checks or initiating of electronic funds transfers or other transactions that will overdraw your account if paid. "Overdraft Protection" should be used only for occasional and inadvertent overdrafts and should not be relied on in the same manner as, for instance, a line of credit.

FEES: If you have "Opted-in" for Overdraft Protection, the NSF Paid Check Charge for the payment of each transaction is $20.00 up to a maximum of 5 items per day or $100.00 per day. Overdrafts of less than $10.00 will NOT be charged a fee. If you "Opt-out" of Overdraft Protection, all items presented against insufficient funds, besides those we are legally obligated to pay, may be returned or denied whenever possible, at our discretion, and the NSF Return Check Charge for the return of each transaction is $20.00 per returned item without limit.

CATEGORIES OF TRANSACTIONS: The categories of transactions for which an NSF Paid Check Charge or NSF Returned Check Charge may be imposed are those by any of the following means: Check, in-person withdrawal, automated teller machine (ATM) transactions, debit card transactions, preauthorized transfers, telephone initiated transactions, online banking transactions, or other electronic means.

TIME FOR REPAYMENT: We reserve the right to require you to pay an overdraft immediately. In any event, you agree to pay us the full amount of any overdraft plus any related charges within five (5) business days of the mailing of an overdraft notice.

CIRCUMSTANCES UNDER WHICH WE WOULN'T PAY: The circumstances under which we wouldn't pay an item that would overdraw your account are entirely within our discretion, and we reserve the right not to pay. For example, we typically wouldn't pay if the customer is not depositing regularly, or the customer has too many overdrafts. The fact that we may pay one or more items creating overdrafts does not obligate us to do so in the future.

PROCESSING OF TRANSACTIONS: We may not process transactions in the order in which they occurred, and the order in which they are received by us and processed can affect the total amount of the NSF Paid Check Charges/NSF Returned Check Charges you are charged.

ORDER OF PAYMENT: The order in which we pay checks and process other transactions are: ACH debits first then checks presented from smallest to largest amounts.

DOLLAR LIMIT: We have established a dollar limit of $500.00 for payments resulting in overdrafts on your account. NSF Paid Check Charges/NSF Returned Check Charges (as well as the amounts of the overdraft items) will apply toward that limit, reducing the amount available under that limit. We will not be obligated to honor any overdraft of your account to the extent the overdraft, either alone or when aggregated with other overdrafts and related NSF Paid Check Charges/NSF Returned Check Charges exceeds this amount.

OUTSTANDING OVERDRAFT: If an overdraft of your account remains outstanding for forty-five (45) consecutive days or longer, we will have the right to terminate your account and notify applicable credit reporting agencies of such termination for a debt owed to us.

ACCOUNT LIMITATIONS: We reserve the right to limit the "Overdraft Protection" plan to no more than one account per customer. "Overdraft Protection" on additional accounts may be granted at the bank's discretion.

"OVERDRAFT PROTECTION" TERMINATION: We reserve the right to terminate the overdraft protection from your account(s) at any time for failure to comply with terms and conditions set forth herein.

FDIC INSURANCE: This institution is a Member of the Federal Deposit Insurance Corporation.

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