AUTOMATED CLEARINGHOUSE PAYMENTS Method of Making Payments to or From a Consumer’s Bank Account. Payments Made Electronically Through Automated ClearingHouse Network. ACH Network, a Nationwide Counterpart to the Checking System ACH Network Used for Electronic Transfers Between Accounts At American Financial Inst Most Commonly Used for Automated Deposits of Salaries or Bill Payments Transfers Governed by EFTA & Reg. E to the Extent Consumer Accounts Involved Transfers Governed by UCC 4A& to the Extent Between Business Accounts Network Governed By Operating Rules Rules Issued By National Automated Clearinghouse Association. NACHA Consists of 36 Regional Clearinghouse Associations Regional Associations Consist of 13,00 Depository Institutions

Receiver NACHA Rules Credit Transfer, Payee Debit Transfer, Payor Receiving Depository Institution NACHA Rules ' Credit Entry Payment Made Debit Entry From Which Payment Made Originator NACHA Rules ' Credit Transfer, Payor Debit Transfer, Payee RDF Sort and Post to Respective Accounts ACH Operator process Sorts by Region Determines Receiving ACH Operator Transmits to RDFI Message Entry from Originator Batches a part of large Volume of messages Originator’s Depository Financial Institution ODFI NACA Rules Credit Entry, Account From Which Payment Made Debit Entry, Account To Which Payment Is Made ODFI Examines Batches Directly Processes On-us entries Send others To ACH Operator Binds itself to Pay for all Credit transfers BASIC TERMINOLOGY OF ACH TRANSFERS Automated Clearinghouse Operator Carries Funds From ODFI To RDFI NACHA Rules Generally Local Federal Reserve Bank

Receiver NACHA Rules Credit Transfer, Payee Receiving Depository Institution NACHA Rules ' Credit Entry Payment Made Payment Made Originator Credit Transfer, Payor Employer Send Pay Check RDF Sort and Post to Respective Accounts ACH Operator process Sorts by Region Determines Receiving ACH Operator Transmits to RDFI Message Entry from Originator To ODFI Originator’s Depository Financial Institution Credit Entry, Employer’s Account From Which Payment Made ODFI Examines Entry Directly Processes On-us entries Send others To ACH Operator Binds itself to Pay for all Credit transfers CREDIT ENTRY Automated Clearinghouse Operator Carries Funds From ODFI To RDFI NACHA Rules Generally Local Federal Reserve Bank

Receiver NACHA Rules Debit Transfer, Payor Receiving Depository Institution NACHA Rules ' Debit Entry From Which Payment Made Originator Debit Transfer, Payee Electric Company Sends Bill RDF Sort and Debits Respective Accounts ACH Operator process Sorts by Region Determines Receiving ACH Operator Transmits to RDFI Message Entry from Originator To ODFI Originator’s Depository Financial Institution Debit Entry, Creditor’s Account To Which Payment Made ODFI Examines Entry Directly Processes On-us entries Send others To ACH Operator DEBIT ENTRY Automated Clearinghouse Operator Carries Funds From ODFI To RDFI NACHA Rules Generally Local Federal Reserve Bank