Online Internet Banking and Bill Pay Agreement and Disclosure

Agreement
This agreement and disclosure describes the terms governing the use of Farmers State Bank Online Internet Banking. This agreement is effective at the point you elect to use our Online Banking. You agree to notify us of any change in your e-mail address. Future disclosure or changes in terms may be communicated to you by e-mail or by posting notice on our website: wwwFarmersStateBank.com. These terms and conditions are in addition to those that apply to any accounts you have with us or any other services you obtain with us. This agreement, in conjunction with the “Understanding Your Deposit Account” brochure, fee schedules, and any other supplemental disclosures represents a contract with you and Farmers State Bank and should be kept for future reference. In this agreement, the words “you” and “your” refer to you and to each other person using Online Internet Banking to access any account or service offered by Farmers State Bank. “We” and “our” refer to Farmers State Bank (and may be referred to as FSB). The first time you access your accounts by using the FSB Online Banking, you agree to abide by the terms and conditions of this agreement. This agreement will be governed by and constituted in accordance with Indiana state laws.

Your Password
To use our Online Banking, you must be at least 18 years of age, you must have at least one account with FSB, and access to internet service. Once we have received your Online Banking application and verified your account information, we will send you by postal mail the confirmation of our acceptance of your enrollment. For joint accounts, we recommend that each person have a separate Banking ID and password. Each person on a joint account will be liable for all transactions that are made on that account by all other joint account holders of the account. Each person with a joint account must have a separate password. Accounts requiring more than one signature may not be accessed through Online Banking. The Banking ID and password issued to you are for your security purposes. You will be required to change your password the first time that you sign on the system. You will then be required to change your password at least every 60 days. Your password is confidential and should not be disclosed to anyone! You may change your password at any time. We recommend that you change your password regularly. You are liable for all transactions made or authorized with the use of your password. FSB has no responsibility for establishing the identity of any person who uses your password.

Online Banking Services
You can use Online Banking to review your account history, check the balance of your accounts, transfer funds between your accounts with FSB, view images of your checks and deposits, and send us e-mail. You can use Online Banking at your convenience at anytime. Some of our banking services may not be available occasionally due to system maintenance or an emergency. We will try to post notice of any extended periods of downtime. There are no charges for your use of the basic FSB Online banking services.

Security
Data transferred through Online banking is encrypted in an effort to provide transmission security. You will be required to implement 128-bit encryption or higher for your internet browser for security purposes. Online banking utilizes identification technology to verify that the sender and receiver of Online banking transmissions can be appropriately identified by each other. On the other hand, e-mail transmissions are not as secure, so please do not put your account numbers or Social Security Number on any e-mail that you send to us. You understand the importance of your role in preventing misuse of your accounts with Online Banking and you agree to promptly examine your account statements for each of your accounts as soon as you receive them.

Your Banking ID and password are intended to provide security against unauthorized entry and access to your accounts. Tell us at once if you believe your Banking ID and password have been lost or stolen. If you contact us within 2 business days, you can lose no more than $50.00 if someone used your Banking ID and password without your permission. If you do NOT contact us within 2 business days after you learn of the loss or theft of your Banking ID and password and we can prove we could have stopped someone from using your Banking ID and password to access your accounts without your permission; if, you had told us beforehand, you could lose as much as $500.00. If your account statement shows transfers that you did not make, contact us immediately. If you fail to notify the bank within 60 days after the first statement on which the problem appeared was mailed to you, it is possible that none of your funds lost after the 60 day period, will be returned to you if it is proven the loss of funds could have been prevented had you notified us in the time frame noted above. If a good reason (such as a long trip or hospital stay) keeps you from contacting us, we may extend the time periods. If you believe your Banking ID and/or password have been lost or stolen or that someone has transferred or may transfer money from your accounts without your permission, PLEASE CONTACT US IMMEDIATELY!

The best way is to call us at: (260) 463-7111 or Toll Free (888) 492-7111 during business office hours: Monday- Wednesday 8:00 a.m. to 4:30 p.m., Thursday & Friday 8:00 a.m. to 5:00 p.m., and Saturday 8:00 a.m. to 12:00 p.m., Indiana East time zone. You can also e-mail us at: Info@FarmersStateBank.com or you may also write to us at: Farmers State Bank, Attn: Internet Banking Dept., 220 S. Detroit Street LaGrange, IN 46761

Equipment
You are responsible for obtaining, installing, maintaining and operating all computer hardware and software necessary for accessing and successfully performing the Online services. Farmers State Bank has no liability or responsibility for any errors or failures relating to the malfunction or failure of your hardware or software.

Posting of Transfers between your Farmers State Bank accounts
Transfers initiated through our Online Banking before 5:00 p.m., Indiana-East time zone, on a business day, Monday through Friday, are posted to your account the same day. Transfers completed after 5:00 p.m., local time, on a business day, and those completed on a Saturday, Sunday, or a banking holiday will be posted on the next business day. You must have enough available funds in any account from which you instruct us to make a payment or transfer.

Stop-Payment Requests
You may initiate stop-payment requests Online only for paper checks that you have written (non-electronically) on your Farmers State Bank accounts. Stop-payment requests must be entered by 5:00 p.m. to take effect on that business day. To be effective, this type of stop-payment request must precisely identify the name of the payee, the check number, the amount, and the date of the check. Your account will incur a stop-payment charge as disclosed in the current fee schedule. The stop-payment request placed Online is only good for 14 days. If you wish to place a stop payment for a longer period, you must print the page of confirmation, sign it, and deliver it to: Farmers State Bank, Bookkeeping Department, 220 S. Detroit St, LaGrange, IN 46761.

Once a Bill Pay payment has been debited from your account, you CANNOT cancel or stop a bill payment which has been paid electronically. Bill Pay payments are subject to proceeding as scheduled. Please, refer to “Editing Bill Pay Payments” later in this disclosure.

Setting up a Payee for Bill Pay
When you fill out the application for Bill Pay, we will set up your designated checking account as your Bill Payment account. All bills paid through Bill Pay will be deducted from this checking account.

From the Bill Pay menu, select “Payee” and then the “Add Payee” box. You will be presented a screen which is used to establish a payee (the person or company you wish to pay). You have the option to pay by paper check or electronically. If you wish to send your payment electronically, your payee must already be established in the system’s electronic payee database. To see if your payee is in the database type in the name of the Payee as it reflects on your bill. If your Payee is an electronic payee it will automatically insert the information for you as electronic. If it is not, it will default to check (that is electronically generated) and you will need to fill in the appropriate information as it is on your bill. It is important for you to select the appropriate billing address to where your Bill Pay payment is going to credit your account. It is possible for a payee to have multiple addresses, an example for ABC Company is below:

Address City State Zip Code Select payee
PO Box 999 Some Town IN 987654321
PO Box 100 Anywhere IN 123456789
101 Main St Americana MI 123123123

If you do not find an exact match you will need to send your payment by an electronically generated check. Complete all the information on the payee screen and then click on “Submit”. Note that the “Account Number” field is your account number with your payee, not your checking account number. Enter the account number without dashes or spaces. Please note that companies may not be able to be paid electronically when you initially set them up as a Bill Pay account but may be added in the future.

To Be Alerted when a Bill Payment has Processed
When you are setting up your payees, there is a box that may be check marked to notify you when a bill payment has processed when you sign on your FSB Online Banking. To set up an alert for an existing Payee: Under the “Bill Payment” menu, go to “Quick Payment” and Submit. Then to the right of the screen choose the “Edit” link and you will be given your payees information along with an option for the Alert to be check marked and “Submit”.

Editing or deleting payees for Bill Pay
You can edit or delete payees by choosing from the Bill Pay menu - Payees. Then select the edit or delete icon. Make the appropriate changes and click on the “Submit”.

Making a payment with Bill Pay
Now that you have your payee set up you can send them a payment. Select “Quick Payment” from the Bill Pay menu. Enter the dollar amount, if paying by check, enter any memo information that you wish to include on the check (note that memo information cannot be sent with an electronic payment). Choose the frequency of the payment - the default is set to “One-Time”. Once you have completed all necessary fields click on “Submit”.

Note: For recurring payments, use the “Add Payment” option enter the expiration date of the payment and whether or not the amount is different for each payment. For variable or recurring payments, the system will change your payment amount to zero after each payment. You will need to edit variable amount payments prior to the next payment date.

Viewing your Bill Pay Payment History
You may view a history of payments you have made through Bill Pay Online. You will be able to see all the payment details for bills you have paid including the exact time the payment was processed. Select “History” from the Bill Pay menu. Enter the search criteria for the bills you wish to view (IE: View Payment History for: last 7 days, 14 days, 30 days or 60 days or select the “Range of Payment History”. A listing of all payments meeting the criteria you selected will be displayed.

Editing Bill Pay Payments
From the main page of Bill Pay menu, you may select the Bill Payment that needs a change, by placing a check mark in the box to the left of the Payee. Then click on either the “Quick Edit” box or the “Edit” link (on far right), if this payment is already scheduled. And make the appropriate changes and “Submit”. This will allow you to change the amount, memo, et cetra. If you wish to cancel a payment, it must be done on the same business day prior to the automatic timed schedule of 2:00 a.m. and 12 noon (CST) per business day (a business day is defined as 12:00 p.m. (CST) to 11:59 a.m. (CST) the following business day. Note that from Friday at 12:00 p.m. (CST) to Monday afternoon at 11:59 a.m. (CST) this will stand as one business day (transaction will credit/debit on the Monday’s date of business in this instance).

Payment Guarantee through Bill Pay
If we do not complete a Bill Pay payment on time or in the correct amount, according to our agreement with you when you have properly instructed us to do so, Farmers State Bank will be liable to you for your losses or damages caused as a result. However, there are some exceptions. Farmers State Bank WILL NOT be liable, for instance:

* If, through no fault of ours, you do not have enough money in your account to make the payment.

* If a legal order directs us to prohibit withdrawals from the account.

* If your account is closed, or if it has been frozen.

* If the payment would cause your balance to go over the credit limit of an established line of credit or the credit limit for any credit arrangement set up to cover overdrafts.

* If you, or anyone authorized by you, commits any fraud or violates any law or regulation.

* If any electronic terminal, telecommunication device, or any part of the Online Banking electronic system is not working properly and you knew about the problem when you started the payment.

* If you have not provided us with complete and correct payment information for the Bill Payment Service, including, without limitation, the name, address, your payee assigned account number, payment date, and payment amount for the payee on a bill payment.

* If you do not instruct us soon enough for your payment to be received and credited by the time it’s due.

* If circumstances beyond our control (such as fire, flood, interruption in telephone service or other communication lines) prevent the payment, despite reasonable precautions that we have taken.
Please refer to the “Security” section of the disclosure/agreement for limits and terms.

Rejected Payments
If a payment is rejected for any reason, Farmers State Bank will attempt to contact you for resolution, if necessary. If information is not provided by you within five business days, we will issue a credit to you for the amount of the payment.

Online Bill Payment Services
By using the Online Banking Bill Payment Service, you agree that, based upon instructions received under your password, we can charge your designated account by electronic transfer, “No signature required draft,” or by debiting and remitting funds on your behalf. Farmers State Bank has the right to refuse a transaction if the bank reasonably believes such refusal is necessary for security reasons. The minimum amount that can be paid on a single item is $1.00. The maximum amount that can be paid on a single item is $9,999.99. Payments may be made only to payees with a U.S. payment address. Payments cannot be made to business or individual payees outside the United States or in a foreign currency.

If the payee is to be paid by paper check (via Bill Pay) you understand and agree that paper checks are mailed to the payee from our processing center in Oklahoma City, Oklahoma and that you must allow for normal postal delivery time. If the payee is to be paid electronically (as indicated on the Bill Payee list), you understand and agree that the payee may not receive the payment up to 72 hours after the date the payment is debited from your account. You understand and agree that Farmers State Bank is not responsible for the timely delivery of mail or the improper transmission or handling of payments by a third party such as the failure of the bill payment payee to properly post a payment to your account.

You may use a vendor from our master list of vendors, but FSB does not guarantee that the mailing address for a particular vendor in our master list is the same mailing address for your particular payment. Many vendors have more than one mailing address for different kinds of payments. If you select a vendor from our master list, rather than entering in the payment mailing address information yourself; you are responsible for ensuring that the mailing address for your payment is correct. Please notice the example given for Bill Pay menu - payee in the “Setting up a Payee for Bill Pay” section of this disclosure/agreement. FSB accepts no responsibility for late or returned payments if you do not direct us to send the payment to the correct mailing address.

Fees for Bill Pay Online
Online Banking (without Bill Pay) is free and available to any customer and includes inquiry, transfer, internal FSB payments, and transaction export capability.

Online Banking (with Bill Pay) will be assessed a monthly fee to the designated account. This will reflect on your monthly checking statement. You will not receive a separate statement for Bill Pay fees or transactions. All transfers to and from your accounts using our Online Banking will appear on the respective monthly paper statement (s) for your FSB accounts.

The charges for Personal Bill Pay services are $5.00 per month with an unlimited amount of Bill Pay payments. The Business Bill Pay fees are $9.50 per month with $ .40 charge per transaction beyond 20 Bill Pay payments. The first month is a trial and is free of charge to so that you can better understand how Bill Pay works.

Additional information on the Bill Pay service
Your requests for bill payments must be entered prior to one of our scheduled processing times, Monday through Friday, to be processed the same day. Our Bill Pay processing times are at 2:00AM (CST) and again at 12 noon (CST). Bill payments entered after 12:00 noon, or on Saturday or Sunday, or on federal holidays will not be processed until the next business day. No payments are processed on weekends or Federal holidays. Typically an electronic payment is received within 2-5 business days; and an electronic check (paper) may take up to 3-6 days to credit your account. Please plan accordingly to the payment date.

When establishing a new payee with the electronic payment option, be sure you have chosen the correct payee from the look-up option and you have entered your account number correctly (without dashes or spaces). Remember that you must have sufficient funds available at the time an electronic payment is made. Electronic payments will not be sent if funds are not available.

If you have paid a bill by check (paper), this check will be mailed from our processing center in Oklahoma City, Oklahoma to your payee and will post against your account after it has cleared through the banking system, exactly as if you had written the check manually. You will see the check listed on your account statement and you will be able to view an image of the check through Online Banking.

Also, note that your e-mail address will not be solicited to any third party for special interest or profit.

Change in Terms
We may change any terms of this agreement at any time. If the change would result in increased fees for any Online Banking service, increased liability for you, fewer types of available electronic fund transfer (EFT), or more strict limitations on frequency or dollar amount of transfers, we agree to give you notice at least 21 days before the effective date of any such change, unless an immediate change is necessary to maintain the security of an account or electronic fund transfer system. We will post any required notice of the change in terms on our Farmers State Bank website or forward it to you by e-mail or by postal mail. If advance notice of the change is not required, and disclosure does not jeopardize the security of the account or our EFT system, we will notify you of the change in terms within 30 days after the change becomes effective. Your continued use of any or all of the subject Online Banking services indicates your acceptance of the change in terms. You acknowledge and agree that changes to fees applicable to specific accounts are governed by the applicable deposit agreements and disclosures.

Termination
You may cancel your Farmers State Bank Online Banking service at any time by contacting us by telephone or in writing. Your access will be suspended within 3 business days of our receipt of your instructions to cancel the service. We can terminate or limit your access to our Online Banking services at any time and by our discretion. Termination will apply only to the Farmers State Bank Online banking service and does not terminate your other relationships with us.