regional banking services for the texas state …

REQUEST FOR PROPOSALS

FOR

REGIONAL BANKING SERVICES

for

THE TEXAS STATE UNIVERSITY SYSTEM

By TransPecos Banks, SSB

RFP NO.:

758-18-00058

ALL PROPOSALS MUST BE RECEIVED BY:

September 14, 2018 - 3:00 p.m. (C.D.T)

1

TABLE OF CONTENTS

Page

Cover Page 1 Table of Contents 2

Execution of Offer 3Executive Summary and Rates 4

TSUS RFP 6

2

EXHIBITS 3 8

TransPecos Banks is pleased to offer is depository services to Sul Ross University. As a public entity

the safety of the funds and assets of the System is paramount, and the bank is pleased to offer full

FDIC Insurance through its CDARS and ICS products. See exhibit H for details. The bank will also

continue to bring applicable new technologies to its operations. Following please see our agreement

to each of the requests highlighted in Yellow. This offer is valid for 180 days after September 14, 2018.

TransPecos Banks will not charge a fee for service or require a minimum balance. Additionally, the

Bank will provide two Remote Deposit Capture machines to the University at no charge during the

length of the contract.

For a Money Market account, the Bank will pay 100% of the TexPool average monthly rate as

published on http://www.texpool.com/TexPool/mutualfunds/details/performance.do . This will

change the first business day of each month. Below are the last 12 months of rates.

MMDA

Month Rate

Sep‐17 1.02%

Oct‐17 1.03%

Nov‐17 1.05%

Dec‐17 1.18%

Jan‐18 1.30%

Feb‐18 1.34%

Mar‐18 1.52%

Apr‐18 1.67%

May‐18 1.72%

Jun‐18 1.81%

Jul‐18 1.89%

Aug‐18 1.92%

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Request for Proposals (posted 8/6/2018) Texas State University System - Regional Banking Services

RFP No. 758-18-00058 Page 1 of 25

REQUEST FOR PROPOSALS

FOR

REGIONAL BANKING SERVICES

for

THE TEXAS STATE UNIVERSITY SYSTEM

RFP NO.:

758-18-00058

ALL PROPOSALS MUST BE RECEIVED BY:

September 14, 2018 - 3:00 p.m. (C.D.T)

Prepared By: Daniel

Harper, Vice Chancellor for Finance The Texas State University System 601

Colorado Street Austin, Texas 78701 Phone: 512‐463‐1808 Fax: 512‐463‐1816

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RFP No. 758-18-00058 Page 2 of 25

TABLE OF CONTENTS

Section

Page

Cover Page 1

Table of Contents 2

I Introduction 4 II General Information & Requirements 4

2.1 Public Information 4 2.2 Clarifications and Interpretations 5 2.3 Execution of Offer 5 2.4 Proposer Questions 5 2.5 Point of Contact 5 2.6 Submission of Proposals 5 2.7 Evaluation of Proposals 6 2.8 TSUS Reservation of Right 7 2.9 Acceptance of Evaluation Methodology 7 2.10 Non Reimbursement of Costs 7 2.11 Historically Underutilized Business Submittal Requirements 7 2.12 Certain Proposals and Contracts Prohibited 7 2.13 Certification of Franchise Tax Status 8 2.14 Delinquency in Paying Child Support 8 2.15 Conflicts/Contact 8 2.16 Ownership and Use of Work Material 8 2.17 Validity Period 8 2.18 Contract Administration 8 2.19 Presentations 8 2.20 Negotiations 8

III General Statement of Banking Service Required 8 IV Proposal Submission Instructions and Qualifications 9

4.1 Local Presence 9 4.2 Proposal Format 9 4.3 Schedule for Proposal Submission 9 4.4 Proposal Submission 9 4.5 Pre-Proposal Conference 9 4.6 Bank Compensation 9

V System Financial Overview 10 VI Required Financial Institution Information 10 VII Required Banking Services 10

7.1 Consolidated Account Structure with Sweep Mechanism 10 7.2 Automated Cash Management Information Access 11 7.3 Depository Services 12 7.4 Standard Disbursing Services and Positive Payee 13 7.5 Account Reconciliation 13

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RFP No. 758-18-00058 Page 3 of 25

7.6 ACH Services 13 7.7 Wire and Transfer Services 14 7.8 Safekeeping of System and Component Owned Securities 14 7.9 Collateralization of Deposits 14 7.10 Account Analysis 15 7.11 Monthly Statements 15 7.12 Stop Payments 15

VIII Insurance 15 IX Execution of Offer 17 X Terms & Conditions 18

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RFP No. 758-18-00058 Page 4 of 25

SECTION I – INTRODUCTION

The Texas State University System (TSUS) (“System”) and its component Institutions (“Component(s)”) is requesting competitive proposals for a six (6) year regional banking services contract to be awarded November 2018, with service to begin December 2018 and extend through April 2025. All contracts will be subject to the approval of the Texas State University System Board of Regents. Through this contract the System intends to minimize banking costs, improve operational efficiency, and maximize investment capabilities.

It is the intent of TSUS to allow each Component to select a regional banking services institution, should they elect to do so. This regional banking services institution may be the Component’s sole banking services provider or may be in addition to an existing banking services provider. A regional banking institution must be within 10 miles of the main campus address of the Component to qualify as a regional banking service provider.

The Texas State University System and its Components covered under this Request for Proposal are:

The Texas State University System Administration, Austin, Texas Lamar University, Beaumont, Texas Sam Houston State University, Huntsville, Texas Sul Ross State University, Alpine, Texas Texas State University, San Marcos, Texas Lamar Institute of Technology, Beaumont, Texas Lamar State College - Orange, Orange, Texas Lamar State College - Port Arthur, Port Author, Texas

This Request for Proposal (“RFP”) details all TSUS and Components current banking services and specifies all qualifications desired of banking institutions, delineates all banking services needed, sets the method and terms of compensation, establishes required contract provisions, and provides submission instructions.

The banking institution(s) chosen shall agree to make the Required Services available to the System and Components at the proposed pricing levels during the entire contract period and agrees that all applicable service fees will be included on the proposed fee schedule. Initiation of any new service during the contract period but not encompassed by the RFP shall be priced at no more than the then current published rates.

Banks are encouraged to address any service not anticipated by or outlined in this RFP that will improve efficiencies.

All qualified financial institutions are invited to submit a proposal. Every effort has been made to notify banks within the Component(s) local service area. Banks responding to this Request for Proposal must be in good standing with the Texas State Comptroller in accordance with Section 2252.903 of the Texas Government Code, must be insured through the Federal Deposit Insurance Corporation (FDIC), and be able to demonstrate a capacity to meet the Components requirements as stated in this RFP.

SECTION II – GENERAL INFORMATION & REQUIREMENTS

2.1 PUBLIC INFORMATION: By submission of this agreement, TransPecos Banks acknowledges that the agreement, and the contents of any underlying proposals or other documents provided to TSUS in response to a competitive bid process from which the Agreement resulted, are public information

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RFP No. 758-18-00058 Page 5 of 25

under the Texas Public Information Act (Texas Government Code Chapter 552). TransPecos Banks agrees that TSUS may provide a copy of the Agreement and/or bid documents in response to a public information request, post the Agreement on its public website, or otherwise release the contents of the Agreement and/or bid documents at TSUS’s discretion and without prior notice to TransPecos Banks. Vendor acknowledges that the TSUS strictly adheres to all statutes, court decisions, and the opinions of the Texas Attorney General with respect to disclosure of public information.

2.2 CLARIFICATIONS AND INTERPRETATIONS: Any clarifications or interpretations of this

RFP that materially affect or change its requirements will be issued formally by TSUS as a written addendum. Addenda, if required, will be issued by TSUS for this RFP via the Texas Electronic State Business Daily at: http://www.txsmartbuy.com/sp. The Agency Number for Texas State University System is 758. It is the responsibility of all Respondents to check the status of formal addenda before the submission deadline and to obtain this information in a timely manner. All such addenda issued by TSUS before the submittals are due shall be acknowledged by Respondents and incorporated into its response to the RFP.

2.3 EXECUTION OF OFFER: Please complete, sign and return the attached Execution of Offer (Section X) as part of the proposal. The Execution of Offer must be signed by a representative of Proposer duly authorized to bind the Proposer to its proposal. Failure to sign and return the Execution of Offer will result in the rejection of the proposal.

2.4 PROPOSER QUESTIONS: After the RFP is advertised, proposers will have until Friday, August 31, 2018 at 3:00 p.m. (C.D.T.), to submit written questions for clarification of the proposal. Send questions to contact information listed under Section 2.5. All questions submitted and received will be reviewed, consolidated where possible, and answered in one addendum to the proposal. The addendum will be posted on the Texas Electronic State Business Daily at: http://www.txsmartbuy.com/sp. The Agency Number for Texas State University System is 758. Addenda are usually posted within 2 business days unless the questions involve legal issues or complex subjects. It is the proposer's responsibility to continually check the website for Addenda.

2.5 POINT-OF-CONTACT: TSUS designates the following person as its representative and Point-of-

Contact for this RFP. Respondents shall restrict all contact with TSUS and direct all questions regarding this RFP, including questions regarding terms and conditions, in writing to the Point-of- Contact person no later than Friday, August 31, 2018 at 3:00 p.m. (Central Daylight Time).

Daniel Harper, Vice Chancellor for Finance Direct Phone: 512-463-6449 The Texas State University System 601 Colorado Street Austin, Texas 78701-2407 Phone: 512-463-1808 Fax: 512-463-1816 [email protected]

2.6 SUBMISSION OF PROPOSALS: TSUS will receive Proposals, including HUB Plans, for RFP NO.: 758-18-00058 at the time and location described below. The Proposer (not the carrier/mail service/other or TSUS) is solely responsible for ensuring that the proposal is received prior to the specified opening date and time as specified on the RFP form.

Proposals Must Be Received By: September 14, 2018 - 3:00 p.m. (C.D.T)

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RFP No. 758-18-00058 Page 6 of 25

Proposals Are To Be Submitted To:

Daniel Harper, Vice Chancellor for Finance The Texas State University System 601 Colorado Street Austin, Texas 78701

2.6.1 Proposer should submit one (1) complete copy (including HUB plan) of its entire proposal

in Adobe Acrobat PDF format on a USB drive to the attention and address listed above. A signature by an authorized officer of Proposer must appear on the Execution of Offer included in the submitted proposal.

2.6.2 Unacceptable Proposal Delivery Methods: TSUS will not accept proposals submitted on

paper, by telephone, facsimile (fax) transmission, or electronic email submission in response to this RFP.

2.6.3 Proposal Envelope/Box/Container: Each proposal should be placed in an envelope, box, or

container that is completely and properly identified with the RFP number, due date and time. It is the proposer’s responsibility to have the proposal correctly marked and to TSUS’ point of contact by the specified date and time for receipt.

2.6.4 Format for Proposal: Proposer should submit their complete proposals in Adobe Acrobat

PDF format using substantially the following format in terms of order of content. Proposer shall make every effort to present the required information in a detailed, orderly, and compact presentation. Proposer should provide visual examples of functionality to clarify and reinforce key product features and services.

Cover Page:

Execution of offer, including pricing page(s):

Table of Contents:

Executive Summary of Proposal:

Company Information and History: including, but not limited to the following:

Company name, Federal Tax Identification Number, company address, contact information (company and proposer’s representative).

All required information as requested in the Evaluation Criteria and in Requirements and Specifications as well as any additional information the Proposer feels is relevant to their proposal.

The Contractors HUB Plan and all required HUB documentation.

NOTE: The above listing of items to be included in the proposal submission is a summary provided to aid proposers in putting together their proposal package. Any items stated in other sections of the RFP, but not listed in this section, are still required to be provided as part of the proposal submission.

2.7 EVALUATION OF PROPOSALS: All properly submitted Proposals will be reviewed,

evaluated, and ranked by TSUS. Proposals will be evaluated by a review panel on the basis of the criteria listed below. Relative weights of the criteria are listed below. Only criteria designated in the solicitation can be considered in the award determination.

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RFP No. 758-18-00058 Page 7 of 25

50 % - responsiveness, innovativeness, and ability to provide services required, 35 % - banking services and other costs, 5 % - potential earnings through banking facilities and sweeps to maximize System income,

10 % - creditworthiness and stability of the bank.

Award of the contract may not be made to the bank submitting the lowest price proposal. The System will choose the bank which submits the most responsive overall proposal.

2.8 TSUS RESERVATION OF RIGHTS: TSUS may evaluate the Proposals based on the anticipated

completion of all or any portion of the Project. The TSUS reserves the right to divide the Project into multiple parts, to reject any and all Proposals and re-solicit for new Proposals, or to reject any and all Proposals and temporarily or permanently abandon the Project. TSUS makes no representations, written or oral, that it will enter into any form of agreement with any respondent to this RFP for any project and no such representation is intended or should be construed by the issuance of this RFP.

2.9 ACCEPTANCE OF EVALUATION METHODOLOGY: By submitting its Proposal in response

to this RFP, Respondent accepts the evaluation process and acknowledges and accepts the determination of the “best value” firm(s) will require subjective judgments by TSUS.

2.10 NON REIMBURSEMENT FOR COSTS: Respondent acknowledges and accepts that any costs

incurred from the Respondent’s participation in this RFP process shall be at the sole risk and responsibility of the Respondent. Respondents submit Proposals at their own risk and expense.

2.11 HISTORICALLY UNDERUTILIZED BUSINESSES SUBMITTAL REQUIREMENTS: It is

the policy of The Texas State University System and each of its component institutions, to promote and encourage contracting and subcontracting opportunities for Historically Underutilized Businesses (HUB) in all contracts. Accordingly, TSUS has adopted the Policy on Utilization of Historically Underutilized Businesses. The Policy applies to all contracts with an expected value of $100,000 or more. If TSUS determines that subcontracting opportunities are probable, then a HUB Subcontracting Plan is a required element of the Proposal. Failure to submit a required HUB Subcontracting Plan will result in rejection of the Proposal.

2.11.1 TSUS has determined that subcontracting opportunities are probable. 2.11.2 Forms and Policy on Historically Underutilized Business can be found on the Texas State

Comptrollers website at:

https://www.comptroller.texas.gov/purchasing/vendor/hub/forms.php

2.12 CERTAIN PROPOSALS AND CONTRACTS PROHIBITED: Under Section 2155.004, Texas Government Code, a state agency may not accept a proposal or award a contract that includes proposed financial participation by a person who received compensation from the agency to participate in preparing the specifications or request for proposals on which the proposal or contract is based. All vendors must certify their eligibility by acknowledging the following statement, "Under Section 2155.004, Government Code, the vendor certifies that the individual or business entity named in this bid or contract is not ineligible to receive the specified contract and acknowledges that this contract may be terminated and payment withheld if this certification is inaccurate." If a state agency determines an individual or business entity holding a state contract was ineligible to have the contract accepted or awarded as described above, the state agency may immediately terminate the contract

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RFP No. 758-18-00058 Page 8 of 25

without further obligation to the vendor. This section does not create a cause of action to contest a proposal or award of a state contract.

2.13 CERTIFICATION OF FRANCHISE TAX STATUS: Respondents are advised the successful

Respondent will be required to submit certification of franchise tax status as required by State Law (H.B. 175, Acts 70th Leg. R.S., 1987, Ch. 283, p. 3242). The contractor agrees each subcontractor and supplier under contract will also provide a certification of franchise tax status.

2.14 DELINQUENCY IN PAYING CHILD SUPPORT: Under Section 231.006, Family Code, the

vendor or applicant certifies the individual or business entity named in this contract, bid, or application is not ineligible to receive the specified grant, loan, or payment and acknowledges that this contract may be terminated and payment may be withheld if this certification is inaccurate.

2.15 CONFLICTS/CONTACT: Respondents shall not contact existing members of the Board of

Regents, TSUS employees as well as those of System’s component institutions during the open period.

2.16 OWNERSHIP AND USE OF WORK MATERIAL: All work material, whether or not accepted

or rejected by TSUS, is the sole property of TSUS and for its exclusive use and re-use at any time without further compensation and without any restriction.

2.17 VALIDITY PERIOD: Each proposal should state that it will remain valid for a minimum of one

hundred and eighty (180) days after the submittal deadline to allow time for evaluation of proposals, award determination, and any unforeseen delays.

2.18 CONTRACT ADMINISTRATION: Contract administration will be by TSUS and the respective

Component. Proposer shall provide, as part of their response, a copy of Proposer’s Standard Contract Agreement.

2.19 PRESENTATIONS: TSUS may, at its sole discretion, invite selective responsive firm(s), at the

firm(s) expense, to give an oral presentation and respond to questions. Presentations, at the TSUS’ discretion, may be either on site at TSUS or by video conference.

2.20 NEGOTIATIONS: If possible, an award will be made without holding negotiations. If

negotiations are necessary, they will be scheduled after all proposals are evaluated. Negotiations will only be held with proposer(s) who have a reasonable chance of receiving contract award. Therefore, do not anticipate negotiations being held. Best and Final Offers will only be requested if negotiations are held. Therefore, you are strongly encouraged to submit your best offer at the time proposals are due.

The Bank acknowledges and agrees to all of section 2.

SECTION III -- GENERAL STATEMENT OF BANKING SERVICES REQUIRED

The banking services described in this RFP are directed toward four major goals: - efficient utilization of available banking services and technologies, - minimization of banking costs, - safety of System funds, and - effective, market rate, investment of idle bank-held funds.

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RFP No. 758-18-00058 Page 9 of 25

4.1

As a public entity the safety of the funds and assets of the System is paramount. The use of technology to minimize manual or time-consuming operations will be a continuing effort and the bank will be expected to bring applicable new technologies to the System's attention through the RFP and throughout the contract period. Dependent upon the rate environment, the System will review the selected bank’s short-term investment rates and may consider bank alternatives or short-term money markets through sweeps.

The System requires a depository that is fiscally strong and able to provide the required services on an uninterrupted basis. System funds are public funds and fall under provisions of the Public Funds Investment Act and the Public Funds Collateral Act (Texas Government Code Chapters 2256 and 2257). All time and demand funds above FDIC insurance coverage must be collateralized at a 102% margin by securities authorized as defined in this RFP.

Acknowledged. The Bank offers ICS (checking, savings, money market accounts) and CDARS (CDs) which will provide full FDIC insurance. See Exhibit H. In addition to maintaining funds in ICS and/or CDARS, the Bank will also either pledge bonds and/or utilize the FHLB Letter of Credit.

SECTION IV -- PROPOSAL SUBMISSION INSTRUCTIONS AND QUALIFICATIONS

By submitting a proposal in response to this RFP, depositories will be deemed to agree to the mandatory contract and service provisions contained herein. This RFP and the proposal submitted will be incorporated into and form the basis of the final depository contract.

Local Presence: To assure a close working relationship and to facilitate services, the System will give preference to those banks with full service capabilities within 10 miles to the Component. Local support for the Component and its programs will also be considered.

We have a local branch in Alpine, TX which is just a few miles from the university.

4.22 Proposal Format: In order to fully and equitably evaluate each bank proposal a standard reply format is required. Each proposal must include a response to each numbered item in the RFP in the order given. Only proposals submitted timely and in the prescribed format will be evaluated for contract award. An electronic copy of this proposal is available on the state proposal website.

4.3 Schedule for Proposal Submission: The System will make every effort to adhere to the following schedulee.

08/06/2018 Release of Request for Proposal 08/31/2018 3:00pm CST Deadline for all questions pertaining to Request for Proposal. 09/14/2018 3:00pm CST Deadline for proposal submission 11/15/2018 Award of contract

Implementation will commence after December 1, 2018 with each component representative who has elected to engage in the contracted banking services. The bank will review with each component representative(s) the functionality required and will agree upon an identified transition timeframe.

Proposal Submission: Proposals should provide a clear and straightforward description of services and the bank’s ability to meet the requirements of the RFP. There is no limit on the size of the proposal, but a complete, succinct, and unambiguous presentation of the services offered and the fees required will be required.

4.4

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RFP No. 758-18-00058 Page 10 of 25

4.5 Pre-Proposal Conference: No pre-proposal conference will be held for this solicitation.

4.66 Bank Compensation: Each TSUS Component reserves the right to utilize either a fee basis or compensating balance basis (or a combination of each) for payment of services. TSUS and each Component reserves the right to change the payment methodology during the contract period upon no less than 30 days written notice to the bank with the change commencing the first of the following month in order to react to changing interest rate environments. The intention is to use a fee basis when alternative investment earnings surpass the bank’s earnings credit rate (ECR).

A consolidated account, and individual account, account analysis for each Component is required monthly regardless of the payment basis. The analysis, although reviewed monthly, is required to be charged on an annualized basis.

All item and account charges will remain at the proposal price quoted for the duration of the contract period regardless of changes in service volumes. If fees are not listed for services provided as requested in this RFP they will not be applied or valid during the contract period. Should new services be required during the contract period not contemplated by this RFP, those services will be provided at fees not more than the bank’s then-current published rate and approved by the System. TransPecos Banks will not charge a fee for service or require a minimum balance. Additionally, the Bank will provide two Remote Deposit Capture machines to the University at no charge during the length of the contract.

SECTION V -- SYSTEM FINANCIAL OVERVIEW

TSUS and its Components require fully automated transactions, accounting and reporting in its goal of limiting and eliminating paper transactions and manual handling. Please note that continuing balances are not guaranteed. (Any data previous to this will not be provided to any proposer.)

The Components use a combination of ZBA and sub account, as well as general accounts. Primary revenue is received from Tuition and fees and received in August, September and January.

All financial transactions and reconciliation are handled and controlled through the General Accounting Office. Payroll is paid a few times per month, but the majority of the payments happen monthly, with a large amount subscribing to direct deposit. The bank will be expected to follow standard NACHA regulations for deposit of employee funds on the scheduled date as defined by the System.

Any or all System funds may be maintained and invested by the System outside the bank or at another banking service provider. The System will be under no obligation to maintain time or demand funds in the bank except when fees are paid under a compensating balance basis or an interest-bearing checking account is desired.

TransPecos Banks can offer these products including sweep accounts that will sweep deposits over the standard FDIC limit into the Bank’s Insured Cash Sweep (ICS) product in order for the funds to be fully FDIC Insured. Please see Exhibit H for more information.

SECTION VI -- REQUIRED FINANCIAL INSTITUTION INFORMATION

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To be considered proposal must include a response to each question in this Section in the order asked.

6.1 In order to fulfill the System’s fiduciary responsibility please provide an audited annual financial

statement for the bank’s most recent fiscal year. The bank will be required to submit an audited statement annually during the contract. Provide the current statement and confirm agreement to this condition.

We confirm agreement to this condition. Please see attached Exhibit A Audited Financial Statements.

6.2 Provide (a) the bank’s most recent Highline, Veribanc or comparable bank rating from an independent rating service or (b) the dual ratings of senior and subordinate holding company debt. The bank will be responsible for notifying the System within thirty (30) days of any change in this rating during the entire contract period. Provide the ratings and confirm agreement to this ongoing condition.

We confirm agreement to this condition. TransPecos Banks is currently rated 5 Stars out of 5 (Superior) from Bauer Financial, an independent rating service. Please see attached Exhibit B Bauer documents.

6.3 Provide a copy of all agreements (even if not directly referenced or required in this RFP) which will

be required to be executed under the contract for services rendered. Agreements should include all service agreements as well as the depository and collateral agreement. Any changes to provisions required on the agreements will be made and agreed upon before award of the contract is made.

Please see attached list:

Exhibit C: ACH Agreement

Exhibit D: ICS Agreements

Exhibit E: CDARS Agreements

Exhibit F: Sample Account Document Agreements

Exhibit G: Remote Deposit Capture Account Document Agreements

6.4 Customer Service is a primary focus of the System. Describe the bank's philosophy and approach to satisfying the service requirements in responses to the following.

a. How does the bank intend to support the ongoing operational and technical needs of the

Components?

We are dedicated to the welfare of the people in our community and a commitment to personal service. We have a local branch in Alpine, TX which is just a few miles from the university. In addition, we have partnered with Promontory Interfinancial Network to offer full FDIC insurance to public entites for their checking and money market accounts (ICS) as well as their CDs (CDARS). Below are the dedicated individuals to assist with implementation as well as any ongoing and technical needs:

Stacey Wood Janice Kaples Leonardo Walss

Alpine Market President Deposit Operation VP of Finance

[email protected] [email protected] [email protected] Main: (432) 837-0094 Main: (210) 228-9960 Main: (210) 228-9960 Cell: (432) 244-9405 Direct: (210) 228-9960 Direct: (210) 228-4416

b. What provisions has the bank made for business continuity planning and operations? What, if any, support does the bank intend to offer the Components in a disaster situation to maintain

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RFP No. 758-18-00058 Page 12 of 25

t

stable banking functions?

TransPecos Banks has a thorough, well thought out, regularly tested, business continuity and disaster recovery plan that would be used to guide the bank’s actions in the event the plan needed to be activated. The Bank, and its vendors, have built redundancy into their systems and processes. In the event our business continuity plan is activated, in addition to striving to minimize any system downtime, the Bank would be willing to provide you with direct cell phone numbers for certain bank personnel in order to create a single point of contact if needed.

6.5 How are the most recent legislative and regulatory changes impacting the bank’s ability to service the institution? I.e., Basel III, Department of Education Cash Management Rules, etc.

TransPecos Banks recognizes that ongoing legislative and regulatory change is now a normal part of our business environment and has hired and developed key staff with the requisite capability and capacity to deal with the constant change. Change is managed by senior management, who ensures that the Bank has the systems, tools, and processes necessary to keep pace with the change. In short, legislative and regulatory change has increased overhead costs, but does not serve as an impediment for this institution.

6.6 Provide a detailed timeline for implementation of the contract including the activities required by both parties and assignment of responsibilities during implementation.

The bank recommends an implementation meeting once informed of being awarded the contract during which the following will be defined including but not limited to the following:

1) Both parties to properly define account types and structure; 2) Sul Ross would then fully execute all necessary agreements – once the bank receives

agreements, the accounts would be fully operational; 3) The bank will come on-site to install and test Remote Deposit Capture machines as

well as provide any additional training and assistance to ensure a smooth and timely transition; and

4) Sul Ross will arrange for the transfer of funds from the prior depository.

SECTION VII-- REQUIRED BANKING SERVICES

To be considered, the proposal must include a response to each of the questions in this Section in the order given. All fees for associated and anticipated services must be detailed.

7.1 Consolidated Account Structure with Sweep Mechanism: The Components are intent on earning at the best available interest rates at all times. The Components may consider sweeping balances during the term of this contract.

The bank is being asked to offer an automated, daily sweep to a money market mutual fund, or internal bank alternative account, if applicable and competitive, when rates allow in order to reach its investment goal. A AAA-rated, SEC registered government, or enhanced government, money market fund is preferable for the sweep. A repurchase agreement and/or offshore accounts are not authorized as sweep investment vehicles.

The bank shall clearly stipulate and describe the bank’s most cost effective methodology for creating the sweep structure. The proposal should present the bank's most efficient and cost effective

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RFP No. 758-18-00058 Page 13 of 25

methodology in different rate environments (which, it is understood, may eliminate use of the sweep).

a. Fully describe the proposed sweep mechanism focusing on the bank's most cost effective and highest earning structure.

The Bank would recommend the University to maintain the maximum amount of dollars in the Money Market accounts. Interest bearing accounts can be directly linked to this account. Interest is distributed at the account level.

b. Provide the average monthly rates on your best sweep option for the last twelve months as indicated. Define which fund, of any, is being used.

For a Money Market account, the Bank will pay 100% of the TexPool average monthly rate as published on http://www.texpool.com/TexPool/mutualfunds/details/performance.do . This will change the first business day of each month.

MMDA

Month Rate

Sep‐17 1.02%

Oct‐17 1.03%

Nov‐17 1.05%

Dec‐17 1.18%

Jan‐18 1.30%

Feb‐18 1.34%

Mar‐18 1.52%

Apr‐18 1.67%

May‐18 1.72%

Jun‐18 1.81%

Jul‐18 1.89%

Aug‐18 1.92%

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a.

c. If the bank is proposing an alternative to a sweep, detail and describe fully. Identify and describe advantages of the account type. Provide twelve month rates history.

For a Checking Plus Interest account, the Bank will pay .20% less than the TexPool average monthly rate as published on http://www.texpool.com/TexPool/mutualfunds/details/performance.do . This will change the first business day of each month.

d. Is there a floor or ceiling on the earnings credit rate?

Earnings credit is not necessary as all fees are waived as noted above.

7.22 Automated Cash Management Information Accesss::

The System and Components strive for efficiencies in their operations and attempts to reduce paper transactions and staff time in the processing of transactions. The Components need complete and timely detail and summary Information and prefer cross-functionality of reporting.

The System and Components require timely access to prior and intra-day detail and balance reporting. It requires automation within the various service areas such as ACH, reconciliation, and, increasingly, EDI. Imaging retention and access is required. Imaging of deposit slips and deposit items is preferred. Preferably, all reports, statements, and account analyses are to be available in electronic form.

Fully describe the bank’s online service capabilities. List system capabilities by service (i.e. balance reporting, wires, positive pay, stop pay, etc.). Are all services provided through one portal?

• Wires can be requested online.

• Stop payment can be completed online any stop payments received after 3:00pm Monday -Friday will be posted to account next business day.

• Create transfers, View Transfers, and maintain transfer history

• Update address and phone number

• Send emails to Deposit Operations Directly from online banking

Checking Plus Interest Account

Month Rate

Sep‐17 0.82%

Oct‐17 0.83%

Nov‐17 0.85%

Dec‐17 0.98%

Jan‐18 1.10%

Feb‐18 1.14%

Mar‐18 1.32%

Apr‐18 1.47%

May‐18 1.52%

Jun‐18 1.61%

Jul‐18 1.69%

Aug‐18 1.72%

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RFP No. 758-18-00058 Page 15 of 25

• View Check images and pending transactions

• Add alerts to protect you from Identity theft, processing changes, balance increases, rate changes, Daily Electronic Deposits

• Download statements with or without check images.

All the above service can be completed in one portal.

b. Describe the security protocols for online services. How is authentication and authorization

provided? Multiple factor identification process with security code is required that is either emailed to you or text to you your preference. Prior to be able to send funds out of the account via ACH, wire or transfer you are required to enter a security code that is emailed or texted to you.

7.3 Depository Services: Standard commercial deposit services are required. Deposits are typically

made in the late afternoon. It is the desire to avoid a third-party courier service. The Components may use multiple methodologies for deposits. All merchant services are handled outside the banking contract. Merchant services will not be addressed in the RFP nor be a part of this contract.

The Components require same bank day credit on all coin and currency deposits, and on-us checks. All cleared deposits received by the bank's established deadline and in accordance with the banking institution’s availability schedule must be processed in accordance with that availability schedule or an expedited schedule as offered by the bank. The bank shall guarantee immediate credit on all incoming wire transfers. Failure to credit System and Components accounts in a timely fashion will require interest payment reimbursement to the institution at the then-current daily Fed Funds rate and represent an event of default.

a. Describe the bank's depository service capabilities.

•We follow all REG CC polices for holds •All coin and currency and on-us checks will receive same day credit with-in branch hours. •Night depository is reviewed next business day •We cannot guarantee all incoming wires if the information that is trying to come in from the other bank is inaccurate. •We do provide options for depositing checks onsite cut-off for posting same day is 4:00pm central

standard time via our Remote Deposit Capture

b. Describe the recommended process for depository services at the Component. Please see above.

Remote Electronic Check Acceptance and Conversion

Remote Electronic Check Acceptance and Conversion may be required during the contract period. It is anticipated that the System and Components will expand this collection process to all its campus locations during the contract period, if cost effective. The remote deposits will potentially be used at both point- of-sale and back office operations.

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a. Describe the bank's remote deposit processing and software capabilities. • No charge; we will install a TELLER SCAN TS240 on the computer of choice.

• No charge; we will install the software needed to run the checks.

• You can add several users for one machine.

• When you enroll in RDC you are approved for a daily limit that you cannot exceed unless you request for an exception that must be approved by upper management.

• You can operate multiple machines if necessary.

• Each user will be given a user name and passphrase.

• The screen below will appear, and you have the choice to view older deposit or

create a new deposit.

•

• Next you will enter the amount of total deposit

Example: 55,000.00 Select the account you want to deposit the set of checks into and beginning scanning all or 1 check at time your preference.

b. Describe the recommended process for remote processing of checks.

Ensure that your checks are aligned correctly Slide the checks into the document feeder of the check scanner and the checks will

begin to automatically pull through the scanner

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Last step is either accept the deposit or cancel deposit. For same day posting please scan all check no later then 4:00 pm central standard

time. Any deposits after 4:00pm will be processed next business day.

c. Are images provided as part of the processing process? Yes d. Are images maintained online? Yes e. When? Immediately For how long? 7 Years

Representment of Checks (RCK)

The System and Components may consider the representment of checks through ACH if it would prove cost efficient and improve collection of NSF checks.

a. Describe the bank’s representment procedure with an example showing timeline for processing. It will go back to the originating bank we do not redeposit checks.

7.4 Standard Disbursing Services and Positive Payee

Standard disbursing services for all accounts are required to include the payment of all System and Component staff and student checks without charge upon presentation. The System and Components require positive payee services for all its checks and accounts. Currently positive payee is used and will be required on all accounts under this contract. The System and Components require positive payee services with complete indemnification for fraudulent checks.

It is preferred that the proposal provide a fully automated and web compatible transmission process. Transmissions will be made as part of each check run or manual check written. Manual check information must be able to be entered and transmitted online.

The System and Components will be combining positive payee services with partial reconciliation services.

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a. The System and Components require that the bank cash free of charge all on-us checks for employees and students drawn on the System and Components, regardless of the individual's account status with the bank. Confirm agreement with this condition.

b. Describe the handling of exception or non-standard items through a payment consolidation process.

c. Are positive payee exceptions managed totally online? Describe the process. d. What elements are validated on your positive payee processing? Please confirm that it includes

the payee validation?

This service is not available

7.5 Account Reconciliation

Currently the System and Components use partial reconciliation services. Serial sort may be used. The System and Components require availability of reconciliation services combined with positive payee.

a. Describe the bank’s partial reconciliation service.

Not available b. Describe the bank’s full reconciliation service.

Not available

7.6 ACH (Automated Clearing House) Services

The System and Components expect to move toward increased use of ACH. The System and Components use electronic transactions (ACH, wires and transfers) to reduce paper transactions and are expected to increase the percentage and volume of electronic transactions. Payments over $10,000 are mostly made by electronic means. The System and Components will continue to move towards more complete and active use of ACH in both collections and disbursement. Currently, ACH is used for payrolls, transfers, and for many vendor payments and collections. The System and Components

actively encourages their employees to move to direct deposit. Utilization of ACH for collections has been limited but increased use is a goal of the System and Componentss.

a. Describe the bank’s recommended process for handling ACH transactions

7.7 Wire and Transfer Services

Incoming wire transfers must receive immediate same day, collected credit. It is preferred that wire initiation be available online. Real-time online wire and transfer monitoring is preferable. Book internal transfers are used extensively between accounts. There is an ongoing need for occasional international wires.

a. Describe the bank’s recommended process for handling incoming and outgoing wire transfers

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Incoming Wire received prior to 3pm will be posted to the customer’s account. Outgoing wires are processed the same day if wire is received prior to 3pm. Incoming and Outgoing wires received after 3pm will be processed the next business day.

b. Describe the security features that are available to protect Components from unauthorized wire transfers When a wire is submitted through online banking a call to the customer to a number we have on file is made to confirm the Outgoing wire request.

Safekeeping of System and Component Owned Securities

Although local government pools have been used as the primary investment vehicle, the System and Components may have a need for safekeeping services during this contract period. The ability to clear and safe keep securities must be available. The bank will be required to provide book entry safekeeping services.

All investments will be made by the System and Components or its adviser and instructions for clearing and safekeeping will be provided to the bank in writing via e-mail or fax. All clearing shall be made delivery versus payment (DVP).

The System and Components have no obligation to invest its funds with or through the bank. All investments are made on a competitive basis. The depository bank, or its brokerage subsidiaries, will not be authorized as a broker for the System and Components in order to perfect ownership on a DVP settlement.

b. Describe the safekeeping services that are available

Not Available

The System and Components may choose to purchase time deposits from the bank but all time deposits, like securities, will be competitively bid at the time of purchase and not be part of this contract except as regards collateral requirements.

The Bank offers CDARS (Certified of Deposit Account Registry Service) which would provide full FDIC Insurance. Please see Exhibit H for more information.

7.9 Collateralization of Deposits

The Depository Contract shall address the following conditions for collateral. These requirements are absolute minimums and will not be altered.

In conformance with State law, the bank must agree to obtain and maintain acceptable collateral to cover all time and demand deposits above FDIC coverage daily during the contract period. The proposal must state agreement and compliance to the following terms and conditions on that collateral.

7.8

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a. All time and demand deposits will be collateralized at a minimum of a 102% margin on principal plus accrued interest daily, net of FDIC insurance.

Confirmed and Agreed. The Bank offers ICS (checking, savings, money market accounts) and CDARS (CDs) which will provide full FDIC insurance.

b. The bank will be contractually liable for the daily monitoring and maintaining of collateral at

the System and Components required margin level of 102%. Confirmed and Agreed. The Bank offers ICS (checking, savings, money market accounts) and CDARS (CDs) which will provide full FDIC insurance.

c. State the bank’s acceptance of the collateral conditions above.

Confirmed and Agreed. The Bank offers ICS (checking, savings, money market accounts) and CDARS (CDs) which will provide full FDIC insurance.

d. Does the bank propose any collateral charges, if so how is the charge applied? No

7.100 Account Analysis

A monthly account analysis report must be provided for each account and on a consolidated basis for the System and each Component. After five business days of receipt of the monthly account analysis (and subsequent approval of the fees) the bank may direct debit the designated account for fees due if compensation is being calculated on a straight fee or combined fee/balance basis.

A complete account analysis will be required monthly regardless of the payment basis.

a. Provide a sample account analysis including calculation methodology. All fees are waived for Sul Ross University. Market President is always available for questions. Account activity statements are provided monthly.

b. Is the account analysis available online? In what format? All fees are waived for Sul Ross University. Market President is always available for questions. Account activity statements are provided monthly.

7.111 Monthly Statementss

The bank must provide monthly account statements on all accounts with complete supporting documentation. All accounts must be on a calendar month cycle. Timeliness of statements is critical and non-performance will be grounds for termination of contract.

a. Provide a sample monthly statement.

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Please see Exhibit I b. State when monthly statements will be available each month on paper and online.

Statements are available online the 1st Day of the next month. Statements by mail take an additional 5 days to receive and Sul Ross can always contact us before if needed.

7.122 Stop Paymentss

The institutions do have occasional stop pays. An automated stop pay process is desired.

a. Describe the process for initiating and monitoring stop pays

Stop payments can be initiated through online banking, in a branch, or over the phone.

Online banking you would complete the information under the accounts tab, stop payment, add stop payment.

Once completed it is processed in the Deposit Operations area.

In the branch, the stop payment form is completed by the customer and the branch representative. Once this is completed, the branch representative will key the information into the system. The form is then sent to Deposit Operations for filing.

Over the phone, same process as above. However, customer has 14 days from the phone call to come into the branch to complete the stop payment request form. If the form is not completed within this time frame, the stop payment is no longer valid and if presented the item may be paid.

Stop payments are also monitored in Deposit Operations. Accounts that have active stop payments will print out on our daily stop payment report if the account has items trying to clear that are in the range of the stop payment. Deposit Operations looks manually at all accounts that appear on the stop payment report to ensure these items need to be returned as stop payment or paid.

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SECTION VIII – INSURANCE

8.1 Insurance 8.1.1 Contractor, consistent with its status as an independent contractor will carry and will cause

its subcontractors to carry, at least the following insurance in the form, with companies admitted to do business in the State of Texas and having an A.M. Best Rating of A-VII or better, and in amounts (unless otherwise specified), as TSUS may require: 8.1.1.1 Workers’ Compensation Insurance with statutory limits, and Employer’s Liability

Insurance with limits of not less than Employers Liability - Each Accident $1,000,000 Employers Liability - Each Employee $1,000,000

Employers Liability - Policy Limit $1,000,000 Policies must include (a) Other States Endorsement to include TEXAS if business is domiciled outside the State of Texas, and (b) a waiver of all rights of subrogation and other rights in favor of TSUS;

8.1.1.2 Commercial General Liability Insurance with limits of not less than: Each Occurrence Limit $1,000,000 Damage to Rented Premises $ 100,000 Medical Expenses (any one person) $ 10,000 Personal & Advertising Injury $1,000,000 General Aggregate $2,000,000 Products - Completed Operations Aggregate $2,000,000

8.1.1.3 Business Auto Liability Insurance covering all owned, non-owned or hired automobiles, with limits of not less than $1,000,000 Combined Single Limit Bodily Injury and Property Damage;

8.1.1.4 Errors and Omissions Insurance with limits of not less than $1,000,000 per claim. 8.1.2 Contractor will deliver to TSUS:

8.1.2.1 Evidence satisfactory to TSUS in its sole discretion, evidencing the existence of all insurance after the execution and delivery of this Contract and prior to the performance or continued performance of any services to be performed by Contractor under this Contract.

8.1.2.2 Additional evidence, satisfactory to TSUS in its sole discretion, of the continued existence of all insurance not less than five (5) days prior to the expiration of any insurance. Insurance policies, with the exception of Workers’ Compensation and Employer’s Liability, shall be endorsed and name TSUS as an Additional Insured. All policies will be endorsed to provide a waiver of subrogation in favor of TSUS. All policies with the exception of Workers’ Compensation and Employer’s Liability will be endorsed to provide primary and non-contributory coverage. No policy shall be canceled until after thirty (30) days' unconditional written notice to TSUS. All policies shall be endorsed requiring the insurance carrier providing coverage to send notice to TSUS 30 days prior to any cancellation, material change, or non-renewal (60 days for non-renewal) relating to any insurance policy required herein.

8.1.3 The insurance policies required in this Agreement will be kept in force for the periods specified below: 8.1.3.1 Commercial General Liability Insurance, Business Automobile Liability

Insurance; will be kept in force until receipt of Final Payment by TSUS to Contractor; and

8.1.3.2 Workers' Compensation Insurance and Employer’s Liability Insurance will be kept in force until the Work has been fully performed and accepted by TSUS in writing.

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8.1.3.3 Errors and Omissions Insurance will be kept in force an additional two years after the Work has been fully performed and accepted by TSUS in writing.

The Bank carries its own standard and appropriate levels of insurance. Please inquire for additional information.

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SECTION X - TERMS & CONDITIONS

Items below apply to and become a part of proposal. Any exceptions there to must be in writing.

10.1 PROPOSAL REQUIREMENTS:

10.1.1 Rules, Regulations & Statutes: Proposers must comply with all rules, regulations and statutes relating to purchasing in the State of Texas in addition to the requirements of this form.

10.1.2 Unit Price: Proposers must price per unit shown. Unit prices shall govern in the event of extension errors.

10.1.3 Submittance: Proposals must be submitted on or before the specified opening date and time.

10.1.4 Late or Unsigned Proposals: Late and/or unsigned proposals will not be considered under any circumstances. Person signing the proposal must have the authority to bind the firm in a contract. The proposer (not the carrier/mail service/other or the TSUS) who is solely responsible for ensuring that the documentation is received in The Texas State University System’s Office prior to the specified opening date and time.

10.1.5 FOB Point: Quote FOB destination, freight prepaid and allowed unless otherwise stated within the specifications.

10.1.6 Pricing Firm: Proposal prices are requested to be firm for TSUS acceptance for 180 days from proposal opening date (unless otherwise stated in specifications). “Discount from list” proposals are not acceptable unless requested. Cash discounts are not considered in determining an award. Cash discounts will be taken if earned.

10.1.7 Tax Exempt: Purchases made for State use are exempt from the State Sales tax and Federal Excise tax, per Texas Tax Code, Section 151.309(4). Do not include tax in the proposal.

10.1.8 Right to accept or reject: The State reserves the right to accept or reject all or any part of any proposal, waive minor technicalities and award the proposal to best serve the interests of the State.

10.1.9 Withdrawal: Any proposal may be withdrawn prior to the date and time set for receipt of proposals. Any proposal not so withdrawn shall constitute an irrevocable offer, for a period of 180 days, to provide the commodity or service set forth in the specifications, or until a selection has been made by The TSUS.

10.1.10 Proposal Costs: Proposers electing to respond to this RFP are responsible for any and all costs of proposal preparation. The TSUS is not liable for any costs incurred by a proposer in response to this RFP.

10.1.11 Exceptions: If a proposer takes exception to any specifications within this Request for Proposal, they must notify The TSUS in writing prior to the scheduled proposal opening date and time.

10.1.12 Cost/Pricing: All cost/pricing must be in United States dollars. 10.1.13 Texas Public Information Act: By submission of this Agreement, TransPecos Banks

acknowledges that the Agreement, and the contents of any underlying proposals or other documents provided to TSUSin response to a competitive bid process from which the Agreement resulted, are public information under the Texas Public Information Act (Texas Government Code Chapter 552). TransPecos Banks agrees that TSUS may provide a copy of the Agreement and/or bid documents in response to a public information request, post the Agreement on its public website, or otherwise release the contents of the Agreement and/or bid documents at TSUS’s discretion and without prior notice to TransPecos Banks. Proposer

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acknowledges that the TSUS strictly adheres to all statutes, court decisions, and the opinions of the Texas Attorney General with respect to disclosure of public information.

10.2 SPECIFICATIONS

10.2.1 Brand Name Descriptive: Catalogs, brand names or manufacturer’s references are descriptive only, and indicate type and quality desired. Proposals on brands of like nature and quality will be considered unless otherwise stated in the Request for Proposal (RFP). If proposing other than brand referenced, proposal should show manufacturer, brand or trade name, and other description of product offered. If other than brand(s) specified is offered, illustrations and complete description of product offered are requested to be made part of the proposal. Failure to take exception to specifications or reference data will require proposer to furnish specified brand names, numbers, etc.

10.2.2 New Items: Unless otherwise specified, items shall be new and unused and of current production.

10.2.3 Electrical Standards: All electrical items must meet all applicable OSHA standards and regulations, and bear the appropriate listing from UL, FMRC or NEMA.

10.2.4 Samples: Samples, when requested, must be furnished free of expense to the State. Each sample should be marked with the proposer’s name, address, and RFP number. Do not enclose in or attach proposal to sample. All samples become the property of The TSUS.

10.2.5 Oral Statements: TSUS will not be bound by any oral statement or representation contrary to the written specifications of the Request for Proposal (RFP).

10.2.6 Manufacturer’s Warranty: Manufacturer’s standard warranty shall apply unless otherwise stated in the RFP.

10.2.7 Warranty-Product: Proposer shall not limit or exclude any implied warranties and any attempt to do so shall render this contract voidable at the option of TSUS. Proposer warrants that the goods furnished will conform to the specifications, drawings, and descriptions listed in the RFP, and to the sample(s) furnished by Proposer, if any. In the event of a conflict between the specifications, drawings, and descriptions, the specifications shall govern.

10.2.8 Safety Warranty: Proposer warrants that the product sold to TSUS shall conform to the standards promulgated by the U.S. Department of Labor under the Occupational Safety and Health Act of 1970. In the event the product does not conform to OSHA standards, TSUS may return the product for correction or replacement at the Proposer’s expense. In the event Proposer fails to make the appropriate correction within a reasonable time, correction made by TSUS will be at Proposer's expense.

10.2.9 No Warranty by TSUS Against Infringements: As part of this contract for sale Proposer agrees to ascertain whether goods manufactured in accordance with the specifications attached to this agreement or the like. TSUS makes no warranty that the production of goods according to the specification will not give rise to such a claim, and in no event shall TSUS be liable to Proposer for indemnification in the event that Proposer is sued on the grounds of infringement or the like. If Proposer is of the opinion that an infringement or the like will result, he will notify TSUS to this effect in writing within two weeks after the signing of this agreement. If TSUS does not receive notice and is subsequently held liable for the infringement or the like, Proposer will save TSUS harmless. If Proposer in good faith ascertains that production of the goods in accordance with the specifications will result in infringement or the like, this contract shall be null and void except that TSUS will pay Proposer the reasonable cost of this search as to infringements.

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10.3 DELIVERY

10.3.1 Delivery Days: Show number of days required to place material in receiving agency’s designated location under normal conditions. Delivery days’ mean calendar days, unless otherwise specified. Failure to state delivery time obligates proposer to deliver in 14 calendar days. Unrealistic delivery promises may cause proposal to be disregarded.

10.3.2 Foreseen Delays: If delay is foreseen, vendor shall give written notice to TSUS. Proposer must keep TSUS advised at all times of status of order. Default promised delivery (without accepted reasons) or failure to meet specifications authorizes TSUS to purchase supplies elsewhere and charge full increase, if any, in cost and handling to defaulting proposer.

10.3.3 Substitutions: No substitutions permitted without written approval of TSUS. 10.3.4 Delivery Hours: Delivery shall be made during normal working hours (8:00 a.m. to 4:00

p.m.) only, unless prior approval has been obtained from ordering agency.

10.4 INSPECTION AND TESTS

All goods will be subject to inspection and test by TSUS. Authorized TSUS personnel shall have access to supplier’s place of business for the purpose of inspection merchandise. Tests shall be performed on samples submitted with the proposal or on samples taken from regular shipment. All costs shall be borne by the proposer in the event products tested fail to meet or exceed all conditions and requirements of the specification. Goods delivered and rejected in whole or in part may, at TSUS’ option, be returned to the vendor or held for disposition at proposer’s expense. Latent defects may result in revocation of acceptance.

10.5 AWARD OF CONTRACT

10.5.1 A response to this RFP is an offer to contract based upon the best price, terms, conditions and specifications contained herein. Proposals do not become contracts until they are accepted through a purchase order. The contract shall be governed, construed and interpreted under the laws of the State of Texas, and TSUS policy as the same may be amended from time to time. Any legal actions must be filed in Travis County, Austin, Texas.

10.6 Incorporated Law: In accordance with Texas Education Code 51.9335, any contract for the acquisition of goods and services to which an institution of higher education is a party, a provision required by applicable law to be included in the contract is considered to be a part of the executed contract without regard to:

(1) whether the provision appears on the face of the contract; or (2) whether the contract includes any provision to the contrary.

10.7 Dispute Resolution: If a dispute, or controversy, or claim arises out of or relates to this contract, the parties will make a good faith attempt to resolve the issues. If the dispute cannot be settled by the parties, the parties agree to follow the dispute resolution process in Chapter 2260 of the Texas Government Code.

10.8 Tie Proposals: Awards will be made in accordance with Rule 1 TAC Section 113.6 (b) and 113.8 (preferences).

10.9 No Guarantee of Award: TSUS makes no warranty or guarantee that an award will be made as a result of this RFP. TSUS reserves the right to accept or reject any or all proposals, waive any formalities or minor technical inconsistencies and delete any requirement or specification from this RFP or the Agreement when deemed to be in TSUS’s best interest. TSUS reserves the right to seek clarification of any item contained in Proposer’s proposal prior to final selection. Such clarification may be provided by telephone or personal meeting with or in writing to TSUS, at TSUS’s

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discretion. Representations made by Proposer within its proposal will be binding on Proposer. TSUS will not be bound to act by any previous communication or response submitted by Proposer, other than this RFP.

10.10 CANCELLATION OF CONTRACT

If contract is cancelled, for any reason, any prepaid fees shall be refunded on a pro-rated basis.

10.11 PAYMENT

Proposer shall submit an itemized invoice showing TSUS purchase order number. TSUS will incur no penalty for late payment, if payment is made in 30 or fewer days from receipt of goods or services on an uncontested invoice. Regardless of the invoice date, the payment process will begin when TSUS receives the authorized authorization/acceptance from the awarding department, or system components. TSUS may pay proposer for any goods or services provided utilizing any one of the following methods of payment:

a) Paper check b) ACH c) Wire d) WEX Inc. Financial Services’ AP Direct e) Procurement Card

10.12 NON-DISCLOSURE

No public disclosures or news releases pertaining to this RFP shall be made without prior written approval of TSUS.

10.13 CONFLICTS

In event of a conflict between standard proposal requirements and conditions and the attached detail specification, the detail specification shall govern.

10.14 PATENTS OR COPYRIGHTS

The vendor agrees to protect TSUS from claims involving infringement of patents or copyrights.

10.15 PROPOSER ASSIGNMENTS

Proposer hereby assigns to ordering agency any and all claims for overcharges associated with this contract arising under the antitrust laws of the United States 15 U.S.C.A. Section 1, et seq. (1973), and the antitrust laws of the State of Texas, TEX. Bus. & Comm. Code Ann. Sec. 15.01, et seq. (1967).

10.16 FUNDING OUT CLAUSE

TSUS reserves the right to cancel, without penalty, if funds are not appropriated or otherwise made available at any time during the contract period.

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10.17 PROPOSER AFFIRMATION

Submitting this proposal with a false statement is material breach of contract and shall void the submitted proposal or any resulting contracts, and the proposer shall be removed from all proposal lists. By submitting this proposal, the proposer herein affirms:

10.17.1 The proposer has not given, offered to give, nor intends to give at any time hereafter any

economic opportunity, future employment, gift, loan, gratuity, special discount, trip, favor, or service to a public servant in connection with the submitted proposal.

10.17.2 The proposer is not currently delinquent in the payment of any franchise tax owed with the Texas Comptroller of Public Accounts. For more information see the website for the Texas Comptroller of Public Accounts: https://mycpa.cpa.state.tx.us/coa/

10.17.3 Neither the proposer nor the firm, corporation, partnership, or institution represented by the proposer, or anyone acting for such firm, corporation or institution has violated the antitrust laws of this State or the Federal Antitrust Laws (See Section 11, above) nor communicated directly or indirectly the proposal made to any competitor or any other person engaged in such line of business.

10.17.4 The proposer has not received compensation for participation in the preparation of the specifications for this RFP.

10.17.5 regarding child support, the proposer certifies that the individual or business entity named in this proposal is not ineligible to receive the specified payment and acknowledges that this contract may be terminated and payment may be withheld if this certification is inaccurate. Furthermore, any proposer subject to Section 231.006 must include the names and Social Security numbers of each person with at least 25% ownership of the business entity submitting the proposal. This information must be provided prior to contract award.

10.17.6 Pursuant to Section 2155.004 Government code re: collection of state and local sales and use taxes, the proposer certifies that the individual or business entity named in this proposal is not ineligible to receive the specified contract and acknowledges that this contract may be terminated and/or payment withheld if this certification is inaccurate.

10.17.7 The Proposer shall defend, indemnify, and hold harmless the State of Texas, TSUS, component institutions, all of its officers, agents and employees from and against all claims, actions, suits, demands, proceedings, costs, damages, and liabilities, arising out of, connected with, or resulting from any acts or omissions of proposer or any agent, employee, subcontractor, or supplier of contractor in the execution or performance of this contract.

10.17.8 Proposer agrees that any payments due under this contract will be applied towards any debt, including but not limited to delinquent taxes and child support that is owed to the State of Texas

10.17.9 Pursuant to Texas Government Code 2252.908 and Texas Ethic Commission Rule 46, for contracts that are either have a value of at least $1 million or require approval of the TSUS Board of Regents, a business entity (vendor) must submit a copy of Disclosure of Interested Parties filed with the Texas Ethics Commission when the business entity submits the signed contract. No such contract may be presented to the TSUS Board of Regents for approval without the disclosure. Information on the Disclosure of Interested Parties can be found at http://www.ethics.state.tx.us .

10.17.10 Vendor Ethics -- Gratuities: As an agency of the State of Texas The Texas State University System holds the trust of the public. All Proposers and persons doing business with TSUS must provide the highest level of ethics and service in all business interactions. A Proposer shall not give, offer to give, nor intend to give at any time any economic opportunity, future employment, gift, loan, gratuity, special discount, trip, favor, or service to a System employee that might reasonably appear to influence the

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employee in the discharge of official duties. TSUS may, by written notice to the Proposer, cancel this contract without liability to Proposer if it determined that gratuities, in the form of entertainment, gifts, or otherwise, were offered or given by the Proposer, or any agent or representative of the Proposer, to any officer or employee of TSUS with a view toward securing a contract or securing favorable treatment with respect to the awarding or amending, or the making or any determinations with respect to the performing of such a contract. In the event this contract is cancelled by TSUS pursuant to this provision, TSUS shall be entitled, in addition to any other rights and remedies, to recover or withhold the amount of the cost incurred by Proposer in providing such gratuities.

10.17.11 Prohibition Against Personal Interest in Contracts: No employee of TSUS shall transact any business in their official capacity with any business entity of which they are officers, agents, or members, or in which they own a controlling interest unless the Texas State University System Board of Regents has reviewed the matter and determined that there is no conflict of interest. Any violation of the section, with the knowledge, expressed or implies, of the person or corporation contracting with TSUS shall render the contract involved voidable by TSUS.

10.17.12 Pursuant to Texas Government Code 2252.908 and Texas Ethic Commission Rule 46, for contracts that are either have a value of at least $1 million or require approval of the TSUS Board of Regents, a business entity (vendor) must submit a copy of Disclosure of Interested Parties filed with the Texas Ethics Commission when the business entity submits the signed contract. No such contract may be presented to the TSUS Board of Regents for approval without the disclosure. Information on the Disclosure of Interested Parties can be found at http://www.ethics.state.tx.us.

10.17.13 Proposer certifies that they are in compliance with Texas Government Code, Title 6, Subtitle B, Section 669.003 of the Government Code, relating to contracting with the executive head of a State agency. If Section 669.003 applies, proposer will submit the following information with their response as an attachment in order for the proposal to be evaluated: Name of Former Executive: Name of State Agency: Date of separation from State Agency: Position with proposer: Date of Employment with proposer:

10.17.13 No Boycott of Israel: In accordance with Section 2270.002 of the Texas Government Code, Vendor does not, and will not during the term of this Agreement, engage in a boycott of Israel.

10.17.14 U.S. Produced Steel: Except as provided below the contract shall include a requirement that any iron or steel product produced through a manufacturing process and used in the Project shall be produced in the United States, within the meaning provided in Texas Government Code Section 2252.201.

Exemptions: a. Shall not apply to the Project for which the governing body of the Owner determines that.

1. iron or steel products produced in the United States are not: a. produced in sufficient quantities: b. reasonably available; or c. of a satisfactory quality;

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RFP No. 758-18-00058 Page 31 of 25

2. use of iron or steel products produced in the United States will increase the total cost of the project by more than 20 percent; or 3. comply with this Section is inconsistent with the public interest.

b. Electrical components, equipment and systems, and appurtenances thereto, as described in Texas Government Code Section 2252.203 (b), are exempt from the requirements.

10.18 TECHNOLOGY ACCESS CLAUSE

The Proposer expressly acknowledges that state funds may not be expended in connection with the purchase of an automated information system unless that system meets certain statutory requirements relating to accessibility by persons with visual impairments. Accordingly, the Proposer represents and warrants to TSUS that the technology provided to TSUS for purchase is capable, either by virtue of features included within the technology or because it is readily adaptable by use with other technology, of:

• providing equivalent access for effective use by both visual and non-visual means; • presenting information, including prompts used for interactive communications, in format

intended for non-visual use; and • being integrated into networks for obtaining, retrieving, and disseminating information used

by individuals who are not blind or visually impaired.

For purposes of this paragraph, the phrase “equivalent access” means a substantially similar ability to communicate with or make use of the technology, either directly by features incorporated within the technology or by other reasonable means such as assistive devices or services which would constitute reasonable accommodations under the Federal Americans with Disabilities Act or similar state or federal laws. Examples of methods by which equivalent access may be provided include, but are not limited to, keyboard alternatives

Access by Individuals with Disabilities. Proposer represents and warrants (the Electronic and Information Resources (EIR) Accessibility Warranty”) that the electronic and information resources and all associated information, documentation and support that it provides to the TSUS under the Agreement (collectively, the “EIRs”) comply with the applicable requirements set forth in Title 1, Chapter 213 of the Texas Administrative Code and Title 1, Chapter 206, Rule §206.70 of the Texas Administrative code (as authorized by Chapter 2054, Subchapter M of the Texas Government Code). To the extent Proposer becomes aware that the EIRs, or any portion thereof, do not comply with the EIR Accessibility Warranty, then Proposer represents and warrants that it will, at no cost to the TSUS, either (1) perform all necessary remediation to make EIRs satisfy the EIR Accessibility Warranty or (2) replace the EIRs with new EIRs that satisfy the EIR Accessibility Warranty. In the event the Proposer fails or is unable to do so, then the TSUS may terminate the Agreement and Proposer will refund to the TSUS all amounts the TSUS has paid under the Agreement within thirty (30) days after the termination date.

All submissions must include all Voluntary Product Accessibility Templates (VPAT), Information Technology Industry Council (ITIC) and General Services Administration (GSA), that describes compliance with Section 508.

The Proposer agrees to protect, defend, and save the TSUS, its elected and appointed officials, agent, and employees, while acting within the scope of their duties as such, harmless from and against all claims, demands, causes of action of any kind or character, including the cost of

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RFP No. 758-18-00058 Page 32 of 25

defense thereof, arising in favor of the Proposer’s employees or third parties on account of bodily and personal injuries, death, damage to property arising out of services performed or omissions of services or in any way resulting from the acts or omissions of the Proposer and/or its agents, employees, representatives, assigns, subcontractors, except the sole negligence of the TSUS under this Agreement with regard to Title 1, Chapter 213 of the Texas Administrative Code and Title 1, Chapter 206, Rule §206.70 of the Texas Administrative Code (as authorized by Chapter 2054, Subchapter M of the Texas Government Code.) United States Rehabilitation Act of 1973 and its amendments, Section 508; and World Wide Web Consortium (W3C), Web Accessibility Initiative (WAI), Web Content Accessibility Guidelines (WCAG) 1.0 and 2.0AA.

10.19 NOTICE TO PROPOSER

10.19.1 Any terms and conditions attached by the proposer to their proposal will not be considered

unless specifically referred to in their response and may result in the disqualification of their proposal.

10.19.2 Equal opportunity – This contractor and subcontractor shall abide by the requirements of 41 CFR § 60‐1.4(a), 60‐300.5(a) and 60‐741.5(a). These regulations prohibit discrimination against qualified individuals based on their status as protected veterans or individuals with disabilities, and prohibit discrimination against all individuals based on their race, religion, color, national origin, sex, age, sexual orientation, gender identity. Moreover, these regulations require that covered prime contractors and subcontractors take affirmative action to employ and advance in employment individuals without regard to race, religion, color, national origin, sex, age, sexual orientation, gender identity, protected veteran status or disability.

10.19.3 In the event that TSUS is closed due to inclement weather and/or emergency situations at the time set aside for the published bid opening, the published due date will default to the next open business day at the same time.

37

TRANSPECOS FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated Financial Statements

December 31, 2017 and 2016

EXHIBIT A

38

Dallas Fort Worth

Independent Auditor’s Report

To The Board of DirectorsTransPecos Financial Corporation and Subsidiary

We have audited the accompanying consolidated financial statements of TransPecos Financial Corporation and Subsidiary (the “Company”), which comprise the consolidated balance sheet as of December 31, 2017, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for the year then ended, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of TransPecos Financial Corporation and Subsidiary as of December 31, 2017, and the results of their operations and their cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

39

Other Matter

The consolidated financial statements of TransPecos Financial Corporation and Subsidiary as of December 31, 2016, were audited by other auditors whose report dated April 28, 2017 and May 5, 2017, expressed an unmodified opinion on those statements.

Report on Other Financial Information

Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The information contained in the supplemental schedules is presented for purposes of additional analysis and is not a required part of the consolidated financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. Such information has been subjected to the auditing procedures applied in the audits of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the consolidated financial statements as a whole.

Dallas, Texas May 30, 2018

40

ASSETS 2017 2016

Cash and cash equivalents:Cash and due from banks 25,617,923$ 5,210,921$Interest-bearing deposits in other banks 6,788,805 10,974,306Federal funds sold 10,000 10,000

Total cash and cash equivalents 32,416,728 16,195,227

Investment securities available-for-sale 23,624,139 17,773,791Loans, net of allowance for loan losses 105,055,593 106,236,517Accrued interest receivable 665,006 655,394Other real estate owned 26,000 112,529Premises and equipment, net 3,021,388 3,172,542Goodwill 1,856,617 1,856,617Bank-owned life insurance, at cash surrender value 3,271,804 3,179,079Other assets 4,454,388 3,835,706

Total assets 174,391,663$ 153,017,402$

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:Noninterest bearing 40,596,578$ 30,797,039$Interest bearing 115,175,293 98,569,341

Total deposits 155,771,871 129,366,380

Accrued interest payable 59,134 27,601Accumulated post retirement benefits 126,084 138,106Accrued pension benefit obligation 171,020 19,261FHLB advances - 6,000,000Debentures payable 8,248,000 8,248,000Other liabilities 249,722 532,957

Total liabilities 164,625,831 144,332,305

Stockholders' equity:Common stock, $1.00 par value; 1,000,000 shares

authorized 940,492 shares issued and outstanding 940,492 940,492Stock subscription receivable (277,649) (277,649)Additional paid-in capital 9,058,623 9,058,623Retained earnings 1,239,374 34,014Accumulated other comprehensive loss (1,195,008) (1,070,383)

Total stockholders' equity 9,765,832 8,685,097

Total liabilities and stockholders' equity 174,391,663$ 153,017,402$

December 31,

Consolidated Balance Sheet


See accompanying notes to consolidated financial statements.

141

2017 2016

Interest income:Loans, including fees 6,806,712$ 5,959,699$ Investment securities 494,619 615,473 Federal funds sold and interest bearing deposits 289,630 50,399

Total interest income 7,590,961 6,625,571

Interest expense:Other borrowings 320,043 318,858 Deposits 564,823 263,233

Total interest expense 884,866 582,091

Net interest income 6,706,095 6,043,480

Provision for loan losses 168,000 142,876

Net interest income after provision for loan losses 6,538,095 5,900,604

Noninterest income:Gain on sale of other real estate 35,415 84,738 Gain on sale of available-for-sales securities 1,306 90,594 Gain on sale of SBA loans 2,114,554 682,500 Gain on disposal of assets 14,388 - Gain on other investments 42,547 - Service charges on deposit accounts 640,930 678,800 Other 747,592 621,806

Total noninterest income 3,596,732 2,158,438

Noninterest expense:Salaries, wages and benefits 3,780,954 3,645,384 Occupancy and equipment 829,989 816,819 Amortization of servicing rights 358,146 - Regulatory assessments 102,939 205,432Legal and professional 301,226 446,077Information technology 1,263,750 1,353,591 Loss on other investments - 234,628 Other 1,790,067 890,367

Total noninterest expense 8,427,071 7,592,298

Income before income taxes 1,707,756 466,744

Income taxes expense (benefit) - state 2,396 (2,785)

Net Income 1,705,360$ 469,529$


Consolidated Statement of Income

For the Years Ended December 31,


242

2017 2016

Net income 1,705,360$ 469,529$

Other comprehensive loss:Reclassification for realized gains from sale of investment

securities available-for-sale included in net income (1,306) (90,594) Unrecognized pension obligation loss (191,911) (139,644) Net unrealized losses on investment securities available-for-sale (41,214) (359,007) Reclassification adjustments for amortization of actuarial

loss included in net income: 109,806 107,018

Total other comprehensive loss (124,625) (482,227)

Comprehensive income (loss) 1,580,735$ (12,698)$


Consolidated Statement of Comprehensive Income

For the Years Ended December 31,


343

CommonStock

StockSubscriptionReceivable

AdditionalPaid-InCapital

RetainedEarnings

AccumulatedOther

ComprehensiveLoss Total

Balance at January 1, 2016 865,492$ (277,649)$ 8,383,623$ (435,515)$ (588,156)$ 7,947,795$

Issuance of common stock 75,000 - 675,000 - - 750,000

Net income - - - 469,529 - 469,529

Other comprehensive loss - - - - (482,227) (482,227)

Balance at December 31, 2016 940,492 (277,649) 9,058,623 34,014 (1,070,383) 8,685,097

Net income - - - 1,705,360 - 1,705,360

Dividends paid - - - (500,000) - (500,000)

Other comprehensive loss - - - - (124,625) (124,625)

Balance at December 31, 2017 940,492$ (277,649)$ 9,058,623$ 1,239,374$ (1,195,008)$ 9,765,832$

Consolidated Statement of Changes in Stockholders' Equity

For The Years Ended December 31, 2017 and 2016



444

2017 2016

Cash flows from operating activities:Net income 1,705,360$ 469,529$ Adjustments to reconcile net income to net cash

from operating activities:Depreciation and amortization of premises and equipment 347,618 393,859 Loss on write down of other real estate 24,593 13,499 (Gain) loss on disposal of premises and equipment (14,388) 7,995 Loss on writedown of other assets - 100,019 Net amortization of investment securities premiums/discounts 148,644 221,081 Provision for loan losses 168,000 142,876 (Gain) loss on other investments (42,547) 234,628 Gain on sales of SBA loans (2,114,554) (682,500) Gain on sale of other real estate owned (35,415) (84,738) Gain on sales of securities available-for-sale, net (1,306) (90,594) Earnings on bank owned life insurance (92,725) (97,879) Changes in operating assets and liabilities:

Accrued interest receivable and other assists (585,747) (1,675,010) Accrued post retirement benefits (94,127) (11,006) Accrued pension benefit obligation 151,759 (683,536) Accrued interest payable and other liabilities (251,702) (1,219,776)

Net cash used in operating activities (686,537) (2,961,553)

Cash flows from investing activities:Activity in securities available-for-sale:

Purchases (224,021,208) (103,997,724) Maturities, calls, and principal payments 17,644,703 7,680,252 Sales 200,336,299 106,076,549

Net loans originated (9,383,551) (19,942,969) Net proceeds from sales of SBA loans 12,511,029 15,068,304 Net proceeds from sales of other real estate owned 97,351 274,738 Net additions of bank premises and equipment (182,076) (557,090)

Net cash (used in) provided by investing activities (2,997,453) 4,602,060

Cash flows from financing activities:Proceeds from sale of common stock - 750,000 Net change in FHLB Advances (6,000,000) 4,500,000 Net change in deposits 26,405,491 (3,059,336) Cash dividends paid (500,000) -

Net cash provided by financing activities 19,905,491 2,190,664

Net increase in cash and cash equivalents 16,221,501 3,831,171 Cash and cash equivalents at beginning of year 16,195,227 12,364,056

Cash and cash equivalents at end of year 32,416,728$ 16,195,227$

Supplemental Disclosures of Cash Flow Information:Cash paid for interest 853,333$ 2,041,184$ Cash paid for income taxes 2,609$ 2,157$

Supplemental Disclosures of Non-Cash Investing Activities:Transfers of loans to other real estate owned -$ 236,935$ Change in accumulated unrecognized pension loss (191,911)$ (139,644)$


CONSOLIDATED STATEMENT OF CASH FLOWS

For The Years Ended December 31,


545


Notes to Consolidated Financial Statements


6

1. Summary of Significant Accounting Policies

A summary of the significant accounting policies of TransPecos Financial Corporation and Subsidiary (collectively the “Company”) applied in the preparation of its consolidated financial statements follows. The accounting policies followed by the Company and the methods of applying them are in conformity with both U.S. generally accepted accounting principles (“GAAP”) and prevailing practices of the banking industry.

Basis of Presentation

The accompanying consolidated financial statements include the accounts TransPecos Financial Corporation (“TFPC”) and its wholly-owned subsidiary, TransPecos Banks, S.S.B. (the “Bank”). All significant intercompany transactions and balances have been eliminated in consolidation. Certain amounts previously reported may have been reclassified to conform to the current presentation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The allowance for loan losses, the fair values of financial instruments, and the status of contingencies are particularly susceptible to significant change in the near term.

Variable Interest Entities

The Corporation determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity under accounting principles generally accepted in the United States of America. Voting interest entities are entities in which the total equity investment at risk is sufficient to enable the entity to finance itself independently and provides the equity holders with the obligation to absorb losses, the right to receive residual returns, and the right to make decisions about the entity’s activities. The Corporation consolidates voting interest entities in which it has all the voting interest. As defined in applicable accounting standards, variable interest entities (“VIEs”) are entities that lack one or more of the characteristics of a voting interest entity. A controlling financial interest in a VIE is present when an enterprise has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and an obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The enterprise with a controlling financial interest, known as the primary beneficiary, consolidates the VIE.

The Company has identified TransPecos Capital Trust I and TransPecos Statutory Trust II (“Trusts”) as variable interest entities. The Trusts issued preferred securities to outside investors and loaned the proceeds to the Company in the form of a junior subordinated debenture under similar terms as the preferred securities. The Trusts are structured so that the outside preferred securities investors bear the majority of the potential gains or losses of the Trusts; accordingly the Company has not consolidated these entities. The subordinated debt is reflected as a liability of the Company. The Company's investment in the Trusts are included in other assets and accounted for using the equity method.

46


Notes to Consolidated Financial Statements (continued)


7

1. Summary of Significant Accounting Policies – continued

Cash and Cash Equivalents

Cash equivalents, for the purposes of reporting cash flows, include cash on hand, amounts due from banks, interest bearing demand deposits in other banks and federal funds sold. The Company considers all highly liquid investments with original maturities of ninety days or less are considered to be cash equivalents.

The Company maintains deposits with other financial institutions in amounts that exceed federal deposit insurance coverage. Furthermore, federal funds sold are essentially uncollateralized loans to other financial institutions. Management regularly evaluates the credit risk associated with the counterparties to these transactions and believes that the Company is not exposed to any significant credit risks on cash and cash equivalents. Uninsured deposits at other financial institutions were $982,250 and $2,213,560 at December 31, 2017 and 2016, respectively.

Regulations of the Federal Reserve System require reserves to be maintained by all banking institutions according to the types and amounts of certain deposit liabilities. These requirements restrict a portion of the amounts shown as consolidated cash and due from banks from everyday usage in operation of the banks. The Company did not have minimum reserve requirements at December 31, 2017 or 2016.

Investment Securities Available-for-Sale

Investment securities available-for-sale consist of bonds, notes and debentures that are not classified as trading securities or held to maturity securities. Investment securities available-for-sale are held for indefinite periods of time and carried at fair value, adjusted for amortization of premiums and accretion of discounts, with the unrealized holding gains and losses reported as a component of other comprehensive income (loss), net of tax. Management determines the appropriate classification of investment securities at the time of purchase.

When the fair value of a security is below its amortized cost, and depending on the length of time the condition exists and the extent the fair market value is below amortized cost, additional analysis is performed to determine whether an other than temporary impairment condition exists. Available-for-sale and held-to-maturity securities are analyzed quarterly for possible other than temporary impairment. The analysis considers (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. Often, the information available to conduct these assessments is limited and rapidly changing, making estimates of fair value subject to judgment. If actual information or conditions are different than estimated, the extent of the impairment of the security may be different than previously estimated, which could have a material effect on the Company’s results of operations and financial condition.

Small Business Administration Loans and Servicing Assets

Certain Small Business Administration (“SBA”) loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated market value in the aggregate. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income. Gains or losses recognized upon the sale of loans are determined on a specific identification basis and are included in non-interest income. SBA loan transfers are accounted for as sales when control over the loan has been surrendered. Control over such loans is deemed to be surrendered when (i) the assets have been isolated from the Company, (ii) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (iii) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

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8


The Company has adopted guidance issued by the FASB that clarifies the accounting and reporting standards for transfers and servicing of financial assets and extinguishments of liabilities, in which, after a transfer of financial assets, an entity recognizes the financial and servicing assets it controls and liabilities it has incurred, derecognizes financial assets when control has been surrendered, and derecognizes liabilities when extinguished. To calculate the gain or loss on sale of loans, the Company’s investment in the loan is allocated among the retained portion of the loan, the servicing retained the interest-only strip and the sold portion of the loan, based on the relative fair market value of each portion. The gain or loss on the sold portion of the loan is recognized based on the difference between the sale proceeds and the allocated investment. As a result of the relative fair value allocation, the carrying value of the retained portion is discounted, with the discount accreted to interest income over the estimated life of the loan.

The Company also services loans that it originates and sells the guaranteed portions in the Small Business Administration (“SBA”) Secondary Market. The Company normally receives servicing fees of 1% for SBA guaranteed loans. Servicing assets are amortized over an estimated life using a method that is in proportion to the estimated future servicing income or estimated life of the loan. In the event future prepayments exceed management’s estimates and future cash flows are inadequate to cover the servicing asset, additional amortization would be recognized. At December 31, 2017 and 2016, the Company was servicing loans previously sold of $51,434,431 and $30,121,785, respectively. The related servicing asset at December 31, 2017 was approximately $847,000 and included in other assets in the accompanying consolidated balance sheet. The related servicing asset was not material to the consolidated financial statements at December 31, 2016.

Loans and Allowance for Loan Losses

The Company grants mortgage, commercial, agricultural, and consumer loans to customers. Loans are stated at the amount of unpaid principal, reduced by unearned income and an allowance for loan losses. Interest on loans is calculated by using the simple interest method on daily balances of the principal amounts outstanding. The allowance for loan losses is established through a provision for loan losses charged to expense. Loans are charged against the allowance for loan losses when management believes the collectability of the principal is unlikely.

Fees and costs associated with originating loans are recognized as income and expense, generally in the period in which fees are received and costs are incurred. Under GAAP, such net fees or costs generally are deferred and recognized over the life of the loan as an adjustment of yield. For the years ended December 31, 2017 and 2016, management believes that not deferring such costs and amortizing them over the life of the related loans does not materially affect the financial position or results of operations of the Company.

The allowance is an amount management believes will be adequate to absorb estimated inherent losses on existing loans that are deemed uncollectible based upon management’s review and evaluation of the loan portfolio. The allowance for loan losses is comprised of three elements: (i) specific reserves determined in accordance with current authoritative accounting guidance based on probable losses on specific classified loans; (ii) general reserve determined in accordance with current authoritative accounting guidance that considerhistorical loss rates; and (iii) qualitative reserves determined in accordance with current authoritative accountingguidance based upon general economic conditions and other qualitative risk factors both internal and external tothe Company. The allowance for loan losses is increased by charges to income and decreased by charge-offs(net of recoveries). Management’s periodic evaluation of the adequacy of the allowance is based on generaleconomic conditions, the financial condition of borrowers, the value and liquidity of collateral, delinquency, priorloan loss experience, and the results of periodic reviews of the portfolio.

48




9


For purposes of determining the general reserve, the loan portfolio, less cash secured loans, government guaranteed loans, and classified loans, is multiplied by the Company’s historical loss rate. The Company’s methodology is constructed so that specific allocations are increased in accordance with deterioration in credit quality and a corresponding increase in risk of loss. In addition, the Company adjusts its allowance for qualitative factors such as current local economic conditions and trends, including unemployment, changes in lending staff, policies and procedures, changes in credit concentrations, changes in the trends and severity of problem loans and changes in trends in volume, and terms of loans. This additional allocation based on qualitative factors serves to compensate for additional areas of uncertainty inherent in the Company’s portfolio that are not reflected in the Company’s historic loss factors.

Accrual of interest is discontinued on a loan and payments applied to principal when management believes, after considering economic and business conditions and collection efforts, the borrower’s financial condition is such that collection of interest is doubtful. Generally all loans past due greater than 90 days, based on contractual terms, are placed on non-accrual.

Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Consumer loans are generally charged-off when a loan becomes past due 90 days. For other loans in the portfolio, facts and circumstances are evaluated in making charge-off decisions.

Loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. If a loan is impaired, a specific valuation allowance is allocated, if necessary. Impaired loans, or portions thereof, are charged off when deemed uncollectible.

The Company’s policy requires measurement of the allowance for an impaired collateral dependent loan based on the fair value of the collateral. Other loan impairments are measured based on the present value of expected future cash flows or the loan’s observable market price. At December 31, 2017 and 2016, all significant impaired loans have been determined to be collateral dependent and the allowance for loss has been measured utilizing the estimated fair value of the collateral.

From time to time, the Company modifies its loan agreement with a borrower. A modified loan is considered a troubled debt restructuring when two conditions are met: (i) the borrower is experiencing financial difficulty and (ii) concessions are made by the Company that would not otherwise be considered for a borrower with similarcredit risk characteristics. Modifications to loan terms may include a lower interest rate, a reduction of principal,or a longer term to maturity.

To date, these troubled debt restructurings have been such that, after considering economic and business conditions and collection efforts, the collection of interest is doubtful and therefore the loan has been placed on non-accrual. Each of these loans is evaluated for impairment and a specific reserve is recorded based on probable losses, taking into consideration the related collateral and modified loan terms and cash flow. As of December 31, 2017 and 2016, the total of troubled debt restructured loans was $215,269 and $338,371, respectively.

The Company has certain lending policies and procedures in place that are designed to maximize loan income with an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis and makes changes as appropriate. Management receives frequent reports related to loan originations, quality, concentrations, delinquencies, non-performing, and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions, both by type of loan and geography.

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10


Real estate loans are also subject to underwriting standards and processes similar to commercial loans. These loans are underwritten primarily based on projected cash flows and, secondarily, as loans secured by real estate. The repayment of real estate loans is generally largely dependent on the successful operation of the property securing the loans or the business conducted on the property securing the loan. Real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. As a general rule, the Company avoids financing special use projects unless strong secondary support is present to help mitigate risk. Generally, real estate loans are owner occupied, which further reduces the Company’s risk.

Agricultural and ranching loans are subject to underwriting standards and processes similar to commercial loans. Agricultural loans are primarily made based on the identified cash flows of the borrower and, secondarily, on the underlying collateral provided by the borrower. Most agricultural loans are secured by the agriculture related assets being financed, such as farm land, cattle, or equipment, and include personal guarantees.

The Company utilizes methodical credit standards and analysis to supplement its policies and procedures in underwriting consumer loans. The Company’s loan policy addresses types of consumer loans that may be originated and the collateral, if secured, must be perfected. The relatively smaller individual dollar amounts of consumer loans that are spread over numerous individual borrowers also minimize the Company’s risk.

Bank Premises and Equipment

Premises and equipment are stated at cost less accumulated depreciation. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets as follows:

Building and improvements 10 - 39 yearsFurniture, fixtures and equipment 5 - 10 yearsComputer equipment 3 - 5 yearsSoftware 3 years

Major replacements and betterments are capitalized while maintenance and repairs are charged to expense when incurred. Gains or losses on dispositions are reflected in operations as incurred.

Other Real Estate Owned

Other real estate owned (“OREO”) is foreclosed property held pending disposition and is valued at fair value, less estimated costs to sell, or the recorded investment in the related loan. At foreclosure, if the fair value, less estimated costs to sell, of the real estate acquired is less than the Company’s recorded investment in the related loan, a write-down is recognized through a charge to the allowance for loan losses. Any subsequent reduction in value is recognized by a charge to income. Operating and holding expenses of such properties, net of related income, are included in loan operations and other real estate owned expense on the accompanying consolidated statement of income and comprehensive income. Gains or losses on dispositions are reflected in income as incurred. At December 31, 2017 and 2016, the Company had other real estate owned of $26,000 and $112,529, respectively.

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Goodwill

Goodwill represents the excess of the cost of business acquired over the fair value of the net assets acquired. Goodwill is assessed for impairment annually, or on an interim basis if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value. As of December 31, 2017 and 2016, goodwill was $1,856,600 which relates to the purchase of the Company’s bank in Pecos.

Pension Plan Accounting and Funding Policies

The Company has a pension plan that covers certain current and former employees of TransPecos Banks. Pension cost includes prior service costs which are amortized over the life expectancy of the plan participants. The Plan was frozen when TransPecos Banks was acquired by the Company in 1999.

Comprehensive Income

Comprehensive income includes all changes in stockholders’ equity during a period, except those resulting from transactions with stockholders.

In addition to net income, comprehensive income includes the net effect of changes in the fair value of securities available for sale and the change in pension benefit obligation and related plan assets. Comprehensive income is reported in the accompanying consolidated statement of income and comprehensive income.

Other Investments

The Company has interests in partnerships and does not have the ability to influence operating and financial policies of these partnerships, which are accounted for on the equity method and the balance included in other assets was $1,395,702 and $1,333,302 as of December 31, 2017 and 2016, respectively.

Bank-Owned Life Insurance

The Company has purchased life insurance policies on certain employees. These bank-owned life insurance (“BOLI”) policies are recorded in the accompanying consolidated balance sheet at their cash surrender values. Income from these policies and changes in the cash surrender values are reported in the accompanying consolidated statement of income and comprehensive income.

Income Taxes

The Company elected to be an S corporation under the Internal Revenue Code (the “Code”). Earnings and losses of the Company are included in the personal income tax returns of the stockholders and taxed depending on their personal tax rates. The Company does not anticipate that it will incur future additional income tax obligations. Because the Company’s stockholders are obligated to pay federal income taxes on the earnings of the Company, the Company generally expects to declare cash dividends (to the extent permitted by bank regulations) sufficient to fund stockholders’ tax payments as they come due.

Accounting principles generally accepted in the United States of America require the Company’s management to evaluate tax positions taken by the Company. Management evaluated the Company’s tax positions and concluded that they had maintained its S Corporation status and had taken no uncertain tax positions that require recognition or disclosure in the consolidated financial statements. Therefore, no liability for tax penalties has been included in the consolidated financial statements.

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The Company is subject to state franchise taxes, which are considered income taxes on the consolidated statement of income.

Share-Based Compensation

Compensation expense for stock options is based on the fair value of the award on the measurement date, which, for the Company, is the date of the grant and is recognized ratably over the service period of the award. The fair value of stock options is estimated using the Black-Scholes option-pricing model.

Financial Instruments

In the ordinary course of business the Bank has entered into certain off-balance sheet financial instruments consisting of commitments to extend credit, commercial letters of credit, and standby letters of credit. Such financial instruments are recorded in the consolidated financial statements when they are funded or related fees are incurred or received.

Advertising

The Company expenses advertising costs as incurred. Advertising expense was $82,939 and $58,883 for the years ended December 31, 2017 and 2016, respectively.

Subscription Receivable

During 2010, 20,000 shares were sold for $16.00 per share for a total of $320,000 with two note receivables of $160,000 each. Each note bears interest at a rate of 4.25% and matures on January 11, 2020. Principal and interest payments are due annually. No payments were made in 2017 and 2016 and the outstanding balance for each year totaled $277,649.

2. Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses - Measurement of Credit Losses on Financial Instruments (Topic 326),” ASU 2016-13 is intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit. ASU 2016-13 is effective for fiscal years beginning after December 15, 2020. The Company has not yet evaluated the potential effects of adopting ASU 2016-13 on the Company’s consolidated results of operations, financial position, or cash flows.

In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606); Narrow-Scope Improvements and Practical Expedients.” ASU 2016-12 is intended to address certain specific issues identified by the FASB-IASB Joint Transition Resource Group for Revenue Recognition with respect to ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU 2016-12 is effective on a retrospective basis for the annual periods, and interim periods within those annual periods, beginning after December 15, 2018. Early adoption is not permitted. The Company expects the adoption of ASU 2016-12 will have no material effect on the Company's consolidated results of operations, financial position, or cash flows.

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2. Recent Accounting Pronouncements – continued

In September 2016, the FASB issued ASU 2016-09 “Compensation – Stock Compensation” (Topic 718). ASU 2016-09 states that all excess tax benefits and tax deficiencies related to share-based payment awards should be recognized as income tax expense or benefit in the income statement during the period in which they occur. Previously, such amounts were recorded in the pool of excess tax benefits included in additional paid-in capital if such pool was available. Because excess tax benefits included in additional paid-in capital, the assumed proceeds from applying the treasury stock method when computing earnings per share should exclude the amount of excess tax benefits that would have previously been recognized in additional paid-in capital. Additionally, excess tax benefits should be classified along with other income tax cash flows as an operating activity rather than a financing activity, as was previously the case. ASU 2016-09 also provides that an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur. ASU 2016-09 changes the threshold to qualify for equity classification (rather than as a liability) to permit withholding up to the maximum statutory tax rates (rather than the minimum as was previously the case) in the applicable jurisdictions. The amendments will be effective for annual periods beginning after December 31, 2017 and are not expected to have a significant impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02 - "Leases” (Topic 842). ASU 2016-02 is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 is effective for the annual periods beginning after December 15, 2019. Early adoption is permitted. The Company has not yet evaluated the impact of the adoption of ASU 2016-02 on the Company's results of operations, financial position, or cash flows.

In January 2016, the FASB issued ASU 2016-01 - "Recognition and Measurement of Financial Assets and Financial Liabilities” (Subtopic 825-10). ASU 2016-01 is intended to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 is effective for the annual periods beginning after December 15, 2018. Early adoption is not permitted, except for certain provisions of ASU 2016-01, which removes the requirement to disclose fair values of financial instruments recorded at amortized cost. These provisions were early adopted by the Company on January 1, 2018. The Company expects the adoption of the remaining pending provisions ASU 2016-01 to have no material effect on the Company's results of operations, financial position, or cash flows.

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3. Investment Securities

The amortized cost, estimated fair values, and gross unrealized gains and losses are classified as follows:

Amortized Cost

Gross Unrealized

Gains

Gross Unrealized

LossesEstimated Fair

Value

Investment securities available-for-sale:Municipal securities 8,190,644$ 284,679$ -$ 8,475,323$ U.S. treasury securities 4,999,621 - (379) 4,999,242 Mortgage-backed securities 8,489,847 5,760 (53,174) 8,442,433 Collateralized mortgage obligations 1,722,304 1,606 (16,769) 1,707,141

23,402,416$ 292,045$ (70,322)$ 23,624,139$

December 31, 2017

Amortized Cost

Gross Unrealized

Gains

Gross Unrealized

LossesEstimated Fair

Value

Investment securities available-for-sale:Municipal securities 8,031,535$ 26,479$ (65,787)$ 7,992,227$ Mortgage-backed securities 9,478,013 304,432 (881) 9,781,564

17,509,548$ 330,911$ (66,668)$ 17,773,791$

December 31, 2016

The amortized cost and estimated fair value of securities are presented below by contractual maturity. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Mortgage-backed securities and collateralized mortgage obligations are presented in total by category due to the fact that these securities typically are issued with stated principal amounts, and are backed by pools of mortgages that have loans with varying maturities. The characteristics of the underlying pool of mortgages, such as prepayment risk, are passed on to the certificate holder. Accordingly, the term of mortgage-backed securities and collateralized mortgage obligations approximates the term of the underlying mortgages and can vary significantly due to repayments.

Amortized CostEstimated Fair

ValueDue in one year or less 5,716,021$ 5,722,117$ Due after one year through five years 1,764,534 1,811,055 Due after five years through ten years 1,111,896 1,161,391 Due after ten years 4,597,814 4,780,002

13,190,265 13,474,565

Mortgage-backed securities 1,722,304 1,707,141 Collateralized mortgage obligations 8,489,847 8,442,433

Total 23,402,416$ 23,624,139$

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3. Investment Securities – continued

The following tables discloses the Company’s securities available-for-sale that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 or more months:

As of December 31, 2017: Fair ValueUnrealized

Losses Fair ValueUnrealized


LossesAvailable-for-sale

U.S. treasury securities 4,999,242$ (379)$ -$ -$ 4,999,242$ (379)$ Mortgage-backed securities 3,311,350 (25,260) 1,637,198 (27,914) 4,948,548 (53,174) Collateralized mortgage

obligations 1,532,567 (16,769) - - 1,532,567 (16,769)

9,843,159$ (42,408)$ 1,637,198$ (27,914)$ 11,480,357$ (70,322)$

Less Than 12 Months Greater Than 12 Months Total

As of December 31, 2016: Fair ValueUnrealized



LossesAvailable-for-sale

Municipal securities 718,925$ (881)$ -$ -$ 718,925$ (881)$ Mortgage-backed securities 4,485,289 (39,859) 1,012,669 (25,928) 5,497,958$ (65,787)

5,204,214$ (40,740)$ 1,012,669$ (25,928)$ 6,216,883$ (66,668)$

Less Than 12 Months Greater Than 12 Months Total

The number of investment positions in an unrealized loss position at December 31, 2017, totaled 16. The Company does not believe these unrealized losses are “other than temporary” as (i) the Company does not have the intent to sell the securities prior to recovery and/or maturity; and (ii) it is more likely than not that the Company will not have to sell these securities prior to recovery and/or maturity. The Company has reviewed the ratings of the issuers and has not identified any issues related to the ultimate repayment of principal as a result of credit concerns on these securities.

Investment securities, with amortized costs of $11,586,831 and $10,668,212 and fair values of $11,785,515 and $10,808,749 at December 31, 2017 and 2016, respectively, were pledged as collateral for public deposits and for other purposes required or permitted by law.

Sales of investment securities available-for-sale were as follows:

2017 2016

Proceeds from sales 200,336,299$ 106,076,549$ Gross realized gains 2,607 93,630 Gross realized losses (1,301) (3,036)

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4. Loans and Allowance for Loan Losses

Loans in the accompanying consolidated balance sheet are classified as follows:

2017 2016

Real estate 79,241,576$ 81,599,374$ Commercial 18,741,304 17,148,839 Agricultural 5,116,830 4,539,775 Consumer and other 3,695,870 4,280,462

106,795,580 107,568,450

Net discount (489,252) (198,677) Allowance for loan losses (1,250,735) (1,133,256)

Loans, net 105,055,593$ 106,236,517$

December 31,

Non-Accrual and Past Due Loans

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on non-accrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. Loans may be placed on non-accrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due.

Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Non-accrual loans, segregated by class of loans, are classified as follows:

2017 2016

Real estate 891,428$ -$ Commercial 66,034 - Agriculture - - Consumer and other 38,669

Total 996,131$ -$

December 31,

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4. Loans and Allowance for Loan Losses – continued

An age analysis of past due loans, aggregated by class of loans, is as follows:

Total 90 DaysPast Due

30 to 59 60 to 89 90 Days Total and StillDecember 31, 2017 Days Days or Greater Past Due Accruing

Real estate -$ -$ 891,428$ 891,428$ -$ Commercial - - 54,283 54,283 - Agricultural - - - - - Consumer and other 199,103 - 38,669 237,772 -

Total 199,103$ -$ 984,380$ 1,183,483$ -$

Total 90 DaysPast Due

30 to 59 60 to 89 90 Days Total and StillDecember 31, 2016 Days Days or Greater Past Due Accruing

Real estate -$ 90,280$ -$ 90,280$ -$ Commercial - 157,673 - 157,673 - Agricultural 150,000 - - 150,000 - Consumer and other 4,920 - - 4,920 -

Total 154,920$ 247,953$ -$ 402,873$ -$

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Impaired Loans

Loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. If a loan is impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Impaired loans, or portions thereof, are charged off when deemed uncollectible. Impaired loans are summarized in the following table:

Unpaid Recorded Recorded AverageContractual Investment Investment Total Recorded

Principal with No With Recorded Related InvestmentDecember 31, 2017 Balance Allowance Allowance Investment Allowance During Year

Real estate 967,176$ 909,428$ -$ 909,428$ -$ 454,714$ Commercial 113,354 66,033 - 66,033 - 33,017Agricultural - - - - - -Consumer and other 38,669 38,669 - 38,669 - 19,335

Total 1,119,199$ 1,014,130$ -$ 1,014,130$ -$ 507,066$

Unpaid Recorded Recorded AverageContractual Investment Investment Total Recorded

Principal with No With Recorded Related InvestmentDecember 31, 2016 Balance Allowance Allowance Investment Allowance During Year

Real estate -$ -$ -$ -$ -$ 109,152$ Commercial - - - - - 65,091Agricultural - - - - - 9,323Consumer and other - - - - - -

Total -$ -$ -$ -$ -$ 183,566$

Interest payments received on impaired loans are recorded as interest income unless collections of the remaining recorded investment are doubtful, at which time payments received are recorded as reductions of principal. During the years ended December 31, 2017 and 2016, the amount of interest income recognized on impaired loans was not material.

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Troubled Debt Restructuring

During the year ended December 31, 2017, the terms of certain loans were modified as troubled debt restructurings. The following table presents modifications of loans that the Company considers to be troubled debt restructured loans:

Combined rateNumber Adjusted Payment and paymentof Loans Interset Rate Deferral deferral

December 31, 2017:Real estate - -$ -$ -$ Commercial 3 - 215,269 - Agricultural - - - - Consumer and other - - - -

Total 3 -$ 215,269$ -$

Loan modifications

There were no loans modified as troubled debt restructurings during the year ended December 31, 2016.

During the year ended December 31, 2017, defaults on loans restructured during the previous 12 months were not significant and such defaults did not significantly impact the Company’s determination of the allowance for loan losses. A default for purposes of this disclosure is a troubled debt restructured loan in which the borrower is 90 days past due or results in the foreclosure and repossession of the applicable collateral. These loans have no unfunded commitments.

Credit Quality Indicators

From a credit risk standpoint, the Company classifies its loans in one of four categories: (i) pass, (ii) special mention, (iii) substandard, or (iv) doubtful. Loans classified as loss are charged-off. The classifications of loans reflect a judgment about the risks of default and loss associated with the loan. The Company reviews the ratings on credits monthly. Ratings are adjusted to reflect the degree of risk and loss that is felt to be inherent in each credit as of each monthly reporting period. The Company’s methodology is structured so that specific allocations are increased in accordance with deterioration in credit quality (and a corresponding increase in risk and loss) or decreased in accordance with improvement in credit quality (and a corresponding decrease in risk and loss).

(i) The Company has several pass credit grades that are assigned to loans based on varying levels of credits,ranging from credits that are secured by cash or marketable securities, to watch credits which have all thecharacteristics of an acceptable credit risk but warrant more than the normal level of supervision.

(ii) Special mention credits are loans that still show sufficient cash flow to service their debt, but show a decliningfinancial trend with potential cash flow shortages if trends continue. This category should be treated as atemporary grade. If cash flow deteriorates further to become negative, then a substandard grade should begiven. If cash flow trends begin to improve, then an upgrade back to pass would be justified. Non-financialreasons for rating a credit special mention may include management problems, pending litigation, an ineffectiveloan agreement, or other material structure weakness.

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(iii) A substandard loan has material weakness in the primary repayment source such as insufficient cash flowfrom operations to service the debt. However, other weaknesses such as limited paying capacity of the obligor orthe collateral pledged could justify a substandard grade. Substandard loans must have a well-defined weakness,or weaknesses that jeopardize the liquidation of the debt.

(iv) A loan classified as doubtful has all the weaknesses of a substandard loan with the added characteristic thatthe weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, andvalues, highly questionable and improbable. A doubtful loan has a high probability of total or substantial loss, butbecause of specific pending events that may strengthen the asset, recognition of a loss is deferred. Doubtfulborrowers are usually in default, lack adequate liquidity or capital, and lack the resources necessary to remain anoperating entity. Because of high probability of loss, nonaccrual status is required on doubtful loans.

The following summarizes the Company’s internal ratings of its loans:

Special Sub- December 31, 2017 Pass Mention standard Doubtful Total

Real estate 75,628,261$ 136,189$ 3,477,127$ -$ 79,241,576$ Commercial 13,909,418 1,498,464 3,333,421 - 18,741,304 Agricultural 5,116,830 - - - 5,116,830 Consumer and other 3,466,036 - 229,834 - 3,695,870

Total 98,120,545$ 1,634,653$ 7,040,382$ -$ 106,795,580$

Special Sub- December 31, 2016 Pass Mention standard Doubtful Total

Real estate 77,958,872$ 1,407,228$ 2,233,274$ -$ 81,599,374$ Commercial 14,578,130 1,249,900 1,320,809 - 17,148,839 Agricultural 4,539,775 - - - 4,539,775 Consumer and other 4,275,542 4,920 - - 4,280,462

Total 101,352,319$ 2,662,048$ 3,554,083$ -$ 107,568,450$

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Allowance for Loan Losses

The majority of the loan portfolio is comprised of loans to businesses and individuals primarily in the state of Texas. This geographic concentration subjects the loan portfolio to the general economic conditions within this area. The risks created by this concentration have been considered by management in the determination of the adequacy of the allowance for loan losses. Management believes the allowance for loan losses is adequate to cover estimated losses on loans at each balance sheet date.

The following table summarizes the activity in the allowance for loan losses by portfolio segment for the years ended December 31, 2017 and 2016, respectively:

ConsumerDecember 31, 2017 Real Estate Commercial Agricultural and other Unallocated Total

Beginning balance 841,221$ 49,581$ 199,607$ 45,234$ (2,387)$ 1,133,256$ Provision for loan losses 155,502 196,149 (239,251) 48,578 7,022 168,000 Charge-offs (112,016) (47,640) - (74,564) - (234,220)Recoveries 28,987 1,347 121,578 31,787 - 183,699

Ending balance 913,694$ 199,437$ 81,934$ 51,035$ 4,635$ 1,250,735$

ConsumerDecember 31, 2016 Real Estate Commercial Agricultural and other Unallocated Total

Beginning balance 680,614$ 232,253$ 11,637$ 54,117$ 262,176$ 1,240,797$ Provision for loan losses 162,572 (211,562) 406,851 50,350 (265,335) 142,876 Charge-offs (74,025) (618) (247,246) (84,444) - (406,333)Recoveries 72,060 29,508 28,365 25,211 772 155,916

Ending balance 841,221$ 49,581$ 199,607$ 45,234$ (2,387)$ 1,133,256$

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The following table summarizes the allocation of the allowance for loan losses by loans individually and collectively evaluated for impairment:

December 31, 2017 Individually Collectively Total

Real estate -$ 913,694$ 913,694$ Commercial - 199,437 199,437 Agricultural - 81,934 81,934 Consumer and other - 51,035 51,035 Unallocated - 4,635 4,635

-$ 1,250,735$ 1,250,735$

Year end amounts allocated to loans evaluated for impairment:

December 31, 2016 Individually Collectively Total

Real estate -$ 841,221$ 841,221$ Commercial 30,000 19,581 49,581 Agricultural - 199,607 199,607 Consumer and other - 45,234 45,234 Unallocated - (2,387) (2,387)

30,000$ 1,103,256$ 1,133,256$

Year end amounts allocated to loans evaluated for impairment:

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Credit Quality Indicators

The Company’s recorded investment in loans related to the balance in the allowance for loan losses on the basis of the Company’s impairment methodology is as follows:

December 31, 2017

Loans individually evaluated for impairment

Loans collectively evaluated for impairment Total

Real estate 909,428$ 78,332,148$ 79,241,576$ Commercial 66,033 18,675,271 18,741,304 Agricultural - 5,116,830 5,116,830 Consumer and other 38,669 3,657,201 3,695,870

Total 1,014,130$ 105,781,450$ 106,795,580$

December 31, 2016

Loans individually evaluated for impairment

Loans collectively evaluated for impairment Total

Real estate -$ 81,599,374$ 81,599,374$ Commercial 90,281 17,058,558 17,148,839 Agricultural - 4,539,775 4,539,775 Consumer and other - 4,280,462 4,280,462

Total 90,281$ 107,478,169$ 107,568,450$

5. Bank Premises and Equipment

Bank premises and equipment in the accompanying consolidated balance sheet consisted of the following:

2017 2016

Land 302,536$ 302,536$ Buildings and improvements 6,057,257 5,911,094 Furniture, fixtures, and equipment 3,088,812 3,105,324 Construction in progress 12,591 -

9,461,196 9,318,954

Accumulated depreciation (6,439,808) (6,146,412)

Bank premises and equipment, net 3,021,388$ 3,172,542$

December 31,

Depreciation and amortization expense of premises and equipment was $347,618 and $393,859 for the years ended December 31, 2017 and 2016, respectively.

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6. Deposits

Deposits in the accompanying consolidated balance sheet consisted of the following:

2017 2016

Noninterest bearing demand deposits 40,596,578$ 30,797,039$ Interest bearing demand deposits 47,628,672 37,862,248 Money market accounts 30,001,764 22,190,028 Savings deposits 13,542,281 12,365,271 Certificate of deposits 24,002,576 26,151,794

155,771,871$ 129,366,380$

December 31,

The aggregate amount of time deposits greater than $250,000 was $1,262,636 and $1,255,858 at December 31, 2017 and 2016, respectively.

The scheduled maturities of time deposits at December 31, 2017, are as follows:

Year Amount

2018 18,225,044$ 2019 3,823,018 2020 296,605 2021 1,465,988 2022 191,921

24,002,576$

The aggregate amount of demand deposit overdrafts that have been reclassified as loans were $34,824 and $30,561 at December 31, 2017 and 2016, respectively.

7. Debentures Payable

The Company has two junior subordinated deferrable interest debentures which were issued to fund two trusts with the total aggregate issuance outstanding of $8,000,000 in trust preferred securities. The debentures outstanding at December 31, 2017 and 2016 were as follows:

2017 2016

Capital Trust I, LIBOR plus 3.65%Maturity June 30, 2032 4,124,000$ 4,124,000$

Statutory Trust II, LIBOR plus 1.65%Maturity June 15, 2036 4,124,000 4,124,000

Total 8,248,000$ 8,248,000$

December 31,

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7. Debentures Payable – continued

The trust preferred securities under both trusts are subject to mandatory redemption if the debentures are repaid by the Company. The debentures may be repaid if certain events occur, including a change in tax status or regulatory capital treatment of trust preferred securities. Early redemption will be made at par, plus the accrued and unpaid distributions thereon through the redemption dates. Payments upon liquidation or redemption with respect to trust preferred securities are guaranteed by the Company to the extent of funds held by the Trusts. The preferred securities guarantee, when taken together with the Company's obligations including its obligations under the debentures, will constitute a full and unconditional guarantee, on a subordinated basis, by the Company of payments due on the trust preferred securities. The Company issued trust preferred securities as a method of increasing regulatory capital though it has no specific regulatory guidance for the capital requirements, as its assets do not exceed $1 billion. The trust preferred securities are includable in regulatory capital as allowed by the Federal Reserve Board. Under the BASEL III Capital Rules, the trust preferred securities are grandfathered in Tier 1 capital subject to specific limits, as these capital instruments were issued prior to May 19, 2010 and the Company had less than $15 billion in consolidated assets as of December 31, 2009. BASEL III Capital rules still limit the aggregate amount of restricted core capital elements (which includes trust preferred securities, among other things) that may be included in the Tier 1 capital to 25% of all core capital elements, including restricted core capital elements, net of goodwill less any associated deferred tax liability. Amounts of restricted core capital elements in excess of these limits generally may be included in Tier 2 capital. Under GAAP, trust preferred securities are recorded as debt.

8. Other Borrowings

The Company has five credit facilities with unrelated banks which provide availability to borrow an amount up to $33,564,630 at December 31, 2017. The Company has three credit facilities with lines of $4,000,000, one credit facility with a line of $20,844,630, and one credit facility with a line of $720,000, that require the principal and accrued interest to be paid in full on the subsequent business day and may require security prior to funding, in the event the credit is drawn upon. As of December 31, 2017 and 2016, there were no amounts outstanding on these credit facilities. Below is a schedule of available credit facilities as of December 31, 2017:

Amount Exipiration Date

City Bank 4,000,000$ NoneFederal Reserve 720,000 NoneTIB 4,000,000 NoneNexBank 4,000,000 November 2018FHLB 20,844,630 March 2018

Total 33,564,630$

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9. Financial Instruments with Off-Balance Sheet Risk

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit which involve varying degrees of credit risk in excess of the amount recognized in the consolidated balance sheet. The Company’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of these instruments.

The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. The amount of collateral obtained, if deemed necessary, is based on management’s credit evaluation of the borrower.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s credit-worthiness on a case-by-case basis.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company’s policy for obtaining collateral and the nature of such collateral is essentially the same as that involved in making commitments to extend credit.

Although the maximum exposure to loss is the amount of such commitments, management currently anticipates no material losses from such activities. The following financial instruments were outstanding whose contract amounts represent credit risk

2017 2016

Commitments to extend credit 14,491,000$ 8,522,000$ Standby letters of credit - -

Total 14,491,000$ 8,522,000$

December 31,

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10. Commitments and Contingencies

Leases

The Company leases office space used in performance of its business under an operating lease. Total rent expense was $202,573 and $174,140 for the years ended December 31, 2017 and 2016, respectively, and included in occupancy and equipment expense in the accompanying consolidated statement of income. The future minimum lease payments due under all non-cancelable operating leases at December 31, 2017, were as follows:

Year Amount

2018 231,376$ 2019 231,376 2020 221,476 2021 218,176 2022 218,176 Thereafter 399,989

1,520,569$

The Company sub-leases a portion of their facilities. Total rental income was $90,399 and $119,811 for the years ended December 31, 2017 and 2016, respectively, and included in other income in the accompanying consolidated statement of income. Minimum future rental income related to leased space within the Company buildings on non-cancelable operating lease agreements are as follows:

Year ending December 31,

2018 6,048$ 2019 1,008

Total 7,056$

Litigation

The Company may from time to time be involved in legal actions arising from normal business activities. Management believes that these actions are without merit or that the ultimate liability, if any, resulting from them will not materially affect the financial position or results of operations of the Company.

11. Fair Value Disclosures

The authoritative guidance for fair value measurements defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs.

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28

11. Fair Value Disclosures – continued

An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.

The authoritative guidance requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement costs).

Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, the authoritative guidance establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1 Inputs. Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 Inputs. Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (for example, interest rates, volatilities, prepayment speeds, loss severities, credit risks, and default rates) or inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 2 investments consist primarily of obligations of U.S. government sponsored enterprises and agencies, obligations of state and municipal subdivisions, corporate bonds and mortgage backed securities.

Level 3 Inputs. Significant unobservable inputs that reflect an entity’s own assumptions that market participants would use in pricing the assets or liabilities.

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters.

Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

68




29

11. Fair Value Disclosures – continued Financial Assets and Financial Liabilities Financial assets and financial liabilities measured at fair value on a recurring basis include the following: Securities available-for-sale. Securities classified as available-for-sale are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U. S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayments speeds, credit information, and the security’s terms and conditions, among other items. There were no transfers between Level 2 and Level 3 during the year ended December 31, 2017 or 2016, respectively. The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of December 31, 2017 and 2016, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

Level 1 Inputs

Level 2 Inputs

Level 3 Inputs

At December 31, 2017:Securities available-for-sale $ 4,999,242 $18,624,897 $ - 23,624,139$

At December 31, 2016:Securities available-for-sale $ - $17,773,791 $ - 17,773,791$

Fair Value Measurements Using

Total Fair Value

Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis, that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). Financial assets and financial liabilities measured at fair value on a non-recurring basis include the following: Impaired loans. Impaired loans are reported at the fair value of the underlying collateral if repayment is expected solely from the collateral. Collateral values are estimated using Level 3 inputs based on the discounting of the collateral measured by appraisals. At December 31, 2017, impaired loans had a carrying value of $1,014,130 with no specific valuation allowance. There were no impaired loans as of December 31, 2016. Certain non-financial assets and non-financial liabilities measured at fair value on a recurring and non-recurring basis include other real estate owned and other non-financial long-lived assets. Non-financial assets and liabilities measured at fair value on a non-recurring basis during the years ended December 31, 2017 and 2016, include the following:

69




30

11. Fair Value Disclosures – continued

Other Real Estate Owned. Foreclosed assets, including other real estate owned, upon initial recognition, were remeasured and reported at fair value through a charge-off to the allowance for loan losses and certain other foreclosed assets which, subsequent to their initial recognition, were remeasured at fair value through a write-down included in noninterest expense. The fair value of foreclosed assets is estimated using Level 2 inputs based on observable market data (including recent, independent third party appraisals) or Level 3 inputs based on customized discounting criteria. Such assets and liabilities were not material at December 31, 2017 and 2016.

Fair value of other real estate owned is measured generally annually or more often as warranted by market and economic conditions. Fair values were based on third party appraisals less costs to sell, however, based on current economic conditions; comparative sales data typically used in the appraisals may be unavailable or more subjective due to the lack of real estate market activity.

12. Related Party Transactions

At December 31, 2017 and 2016, the Company had loans outstanding to executive officers, directors, significant shareholders and their affiliates (related parties) totaling $1,060,879 and $996,653, respectively. During the year ended December 31, 2017, loan originations totaled $322,500 and repayments totaled $258,274. Related party unfunded commitments at December 31, 2017, were $380,856. In management’s opinion, such loans and other extensions of credit and were made in the ordinary course of business and were made on substantially the same terms (including interest rates and collateral) as those prevailing at the time for comparable transactions with other persons. Further, in management’s opinion, these loans did not involve more than normal risk of collectability or present other unfavorable features.

Deposits received from related parties at December 31, 2017 and 2016, totaled $1,506,322 and $1,098,595, respectively.

During the year ended December 31, 2017, the Company paid $250,000 for management services to a Company which is equally owned by three active directors.

13. Significant Group Concentrations of Credit Risk

The Company grants commercial, retail, and residential real estate loans to customers primarily in the state of Texas. Most of the Company's banking activities are with customers located within West and South Central Texas and the surrounding areas. Although the Company has a diversified loan portfolio, a significant portion of the loans are collateralized by real estate. The Bank's loan portfolio, as well as existing commitments, reflect the diversity of its primary market area, however, a substantial portion of its debtors’ ability to honor their contracts is dependent upon the economic stability of the area. In addition, the Company holds mortgage-backed securities which are backed by GNMA, FNMA, or FHLMC. The Company does not have any significant concentrations to any one industry or customer.

14. 401(k) Profit Sharing Plan

The Company has a 401(k) profit sharing plan for the benefit of substantially all employees. Employees are allowed to make contributions to the plan. The Company’s contribution is determined annually by the Board of Directors. Contributions to the 401(k) profit sharing plan were $69,495 and $57,779 for the years ended December 31, 2017 and 2016, respectively.

70




31

15. Pension Cost and Post-Retirement Benefits The Company has a defined benefit pension plan (the “Plan”). The Plan covers certain current and former Company employees. Benefits received at retirement are 1.75% of average monthly salary multiplied by years of service. The Plan was frozen in 1999 and no further benefits have accrued. The following table presents a reconciliation of beginning and ending balances of the pension plan’s benefit obligation and the fair value of plan assets as of December 31, 2017 and 2016:

2017 2016

Change in pension benefit obligation: Balance, beginning of year 1,289,573$ 1,373,642$

Interest cost 35,186 33,273 Actuarial loss 211,910 99,772 Benefits paid (216,494) (217,114)

Benefit obligation at end of year 1,320,175$ 1,289,573$

Change in plan assets: Balance, beginning of year 1,270,312$ 703,471$

Return on plan assets 112,286 41,883 Employer contributions - 757,117 Plan expenses (16,949) (15,045) Benefits paid (216,494) (217,114)

Fair value of plan assets at end of year 1,149,155$ 1,270,312$

Funded status at end of year (171,020)$ (19,261)$

December 31,

At December 31 2017 and 2016, the actuarial assumptions used to determine the benefit obligations are as follows:

2017 2016

Discount rate 2.88% 2.90%Expected long-term rate on plan assets 8.00% 8.00%Rate of compensation increase N/A N/A

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32

15. Pension Cost and Post-Retirement Benefits – continued

The net periodic benefit cost for the years ended December 31, 2017 and 2016, the following components:

2017 2016Components of net periodic benefit cost: Expected return on plan assets, net of expenses (92,948)$ (68,274)$

Interest cost on projected benefit obligations 35,433 33,273Service costs 15,000 15,000Amortization of net loss 109,806 107,018

Net periodic benefit cost 67,291$ 87,017$

December 31,

The Company's defined benefit pension plan's weighted average asset allocations at December 31, 2017 and 2016, by asset category were as follows:

2017 2016

Asset category:Mutual funds:

Equity securities 29% 30%Debt securities 64% 64%Real estate 4% 2%

Cash and cash equivalents 3% 4%

December 31,

Management employs a total return investment approach whereby a mix of equities and fixed income investments are used to maximize the long-term return of plan assets for a prudent level of risk. Risk tolerance is established through careful consideration of plan liabilities, plan funded status, and corporate financial condition. The investment portfolio contains a diversified blend of equity and fixed income investments. Furthermore, equity investments are diversified across U. S. and non-U. S. stocks, as well as growth, value and small and large capitalizations. Management's long-term investment objective for the Company's defined benefit plans is to achieve long-term growth.

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33

15. Pension Cost and Post-Retirement Benefits – continued The major categories of assets in the Company's Retirement Plan as of year-end are presented in the following table. Assets are segregated by the level of the valuation inputs within the fair value hierarchy established by ASC Topic 820 "Fair Value Measurements and Disclosures," utilized to measure fair value (see Note 12 - Fair Value Disclosures).

Level 1 Inputs

Level 2 Inputs

Level 3 Inputs

Total Fair Value

At December 31, 2017:Cash and cash equivalents $ 34,475 $ - $ - 34,475$ Mutual funds 1,114,681 - - 1,114,681

At December 31, 2016:Cash and cash equivalents $ 54,168 $ - $ - 54,168$ Mutual funds 1,216,144 - - 1,216,144

The following illustrates the estimated pension benefit payments that are projected to be paid.

2018 $ 189,516 2019 170,292 2020 151,095 2021 147,042 2022 114,499 thereafter, 2023-2026 351,616

Total 1,124,060$

The Company provides medical insurance and life insurance benefits to certain retired employees. The accumulated post-retirement benefits as of December 31, 2017 and 2016 were $119,363 and $138,106, respectively and payments made in 2017 and 2016 were $12,021 and $19,099, respectively. 16. Stock Based Compensation Effective July 1, 2017 the Company adopted the TransPecos Financial Corporation 2017 Stock Option Plan (the “Plan”). The Plan allows the Company to grant up to 150,000 shares of incentive or non-qualified stock options. Options granted may be exercisable for a period of up to 10 years from the date of grant. The vesting provisions of individual options may vary. During 2017, an incentive stock option for 9,400 shares was granted to one director who has been actively involved in providing management services to the Company. The option has an exercise price of $12.00 per share and vests in equal annual installments over a 10 year exercise period. The fair value of each option award is estimated on the grant date using the Black-Scholes option-pricing model with the following assumptions used for the 2017 options granted: risk-free interest rate of 2.35%, dividend yield of 0.00%; estimated volatility of 10.00%, and expected option life of 10 years.

73




34

16. Stock Based Compensation – continued

The following schedule summarizes the pertinent information with regard to options outstanding for the years ended December 31, 2017 and 2016:

Number of Weighted AverageOption Exercise Price

Balance at January 1, 2016 - -$ Granted - - Exercised - - Terminated - -

Balance at December 31, 2016 - - Granted 9,400 12.00 Exercised - - Terminated - -

Balance at December 31, 2017 9,400 13.60$

As of December 31, 2017 and 2016, there were no vested shares outstanding. No shares were vested or forfeited during the years ended December 31, 2017 and 2016.

Total stock-based compensation costs related to stock options granted and modified that has been included in current earnings was not material to the financial statements for the years ended December 31, 2017 and 2016. As of December 31, 2017, there was approximately $14,000 of unrecognized compensation costs related to non-vested stock options that is expected to be recognized over the remaining vesting periods.

The weighted average remaining contractual life of stock options outstanding at December 31, 2017, was 9.5 years.

17. Regulatory Matters

The Bank is subject to various regulatory capital requirements administered by federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements.

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table on the following page) of total, common Tier I capital and Tier I capital (as defined in the regulations) to risk weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined). Management believes, as of December 31, 2017, that the Bank meets all capital adequacy requirements to which it is subject.

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35

17. Regulatory Matters – continued

Financial institutions are categorized as well capitalized (or adequately capitalized), based on minimum total risk-based, common Tier 1 risk-based, Tier I risk-based and Tier I leverage ratios as set forth in the tables below.

As shown in the following table, the Bank’s capital ratios exceed the regulatory definition of well capitalized as of December 31, 2017 and 2016. There have been no conditions or events since the notification that management believes have changed the Bank’s category. Based upon the information in its most recently filed call report, the Bank continues to meet the capital ratios necessary to be well capitalized under the regulatory framework for prompt corrective action. A comparison of the Bank’s actual capital amounts and ratios to required capital amounts and ratios is presented in the following table (in thousands of dollars):

Amount Ratio Amount Ratio Amount Ratio

As of December 31, 2017:Common equity tier 1 capital

(to risk-weighted assets) 16,744$ 15.03% 5,014$ ≥ 4.5% 7,243$ 6.5%Tier I capital

(to risk-weighted assets) 16,744$ 15.03% 6,686$ ≥ 6.0% 8,914$ 8.0%Total capital

(to risk-weighted assets) 17,955$ 16.15% 8,914$ ≥ 8.0% 11,143$ 10.0%Tier I capital

(to average assets) 16,744$ 9.81% 6,830$ ≥ 4.0% 8,537$ 5.0%

As of December 31, 2016:Common equity tier 1 capital

(to risk-weighted assets) 15,736$ 14.61% ≥ 4,848$ ≥ 4.5% ≥ 7,001$ ≥ 6.5%Tier I capital

(to risk-weighted assets) 15,736$ 14.61% ≥ 6,464$ ≥ 6.0% ≥ 8,617$ ≥ 8.0%Total capital

(to risk-weighted assets) 16,870$ 15.66% ≥ 8,617$ ≥ 8.0% ≥ 10,773$ ≥ 10.0%Tier I capital

(to average assets) 15,736$ 10.57% ≥ 5,955$ ≥ 4.0% ≥ 7,444$ ≥ 5.0%

ActualFor Capital Adequacy

Purposes

To Be Well Capitalized Under Prompt Corrective

Action Provisions

In July 2013, the Federal Reserve published final rules for the adoption of the Basel III regulatory capital framework (the “Basel III Capital Rules”). The Basel III Capital Rules, among other things, (i) introduce a new capital measure called “Common Equity Tier 1”, (ii) specify that Tier 1 capital consist of Common Equity Tier 1 and “Additional Tier 1 Capital” instruments meeting specified requirements, (iii) define Common Equity Tier 1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to Common Equity Tier 1 and not to the other components of capital, and (iv) expand the scope of the deductions/adjustments as compared to existing regulations. The Basel III Capital Rules became effective for the Bank on January 1, 2015, with certain transition provisions fully phased in on January 1, 2019. Based on the initial assessment of the Basel III Capital Rules, the Company does not believe they will have a material impact on the Bank.

18. Subsequent events

Subsequent events have been evaluated for potential recognition and disclosure through May 30, 2018, which is the date the financial statements were issued.

75

TransPecosTransPecos TransPecos Eliminations Financial Corp.

Financial Corp. Banks Ref Dr (Cr) & SubsidiaryAssetsCash and cash equivalents:

Cash and due from banks - non-interest bearing -$ 25,617,923$ -$ 25,617,923$ Interest-bearing deposits in other banks 82,856 6,705,949 - 6,788,805 Federal funds sold - 10,000 - 10,000

Total cash and cash equivalents 82,856 32,333,872 - 32,416,728

Investment securities available-for-sale - 23,624,139 - 23,624,139 Loans, net of allowance for loan losses - 105,055,593 - 105,055,593 Accrued interest receivable - 665,006 - 665,006 Other real estate owned - 26,000 - 26,000 Premise and equipment, net - 3,021,388 - 3,021,388 Goodwill - 1,856,617 - 1,856,617 Bank-owned life insurance, at cash surrender value - 3,271,804 - 3,271,804 Investment in TransPecos Banks 17,680,406 - [1] (17,680,406) - Other assets 250,924 4,203,464 - 4,454,388

Total assets 18,014,186$ 174,057,883$ (17,680,406)$ 174,391,663$

Liabilities and Stockholders' EquityDeposits:

Noninterest bearing -$ 40,596,578$ -$ 40,596,578$ Interest bearing - 115,175,293 - 115,175,293

Total deposits - 155,771,871 - 155,771,871

Accrued interest payable - 59,134 - 59,134 Accumulated post retirement benefits - 126,084 - 126,084 Accrued pension benefit obligation - 171,020 - 171,020 Debentures payable 8,248,000 - - 8,248,000 Other liabilities 354 249,368 - 249,722

Total liabilities 8,248,354 156,377,477 - 164,625,831

Stockholders' equity:Common stock 940,492 1,500,000 [1] (1,500,000) 940,492 Stock subscription receivable (277,649) - [1] - (277,649) Additional paid-in capital 9,058,623 15,387,728 [1] (15,387,728) 9,058,623 Retained earnings 1,239,374 1,987,686 [1] (1,987,686) 1,239,374 Accumulated other comprehensive loss (1,195,008) (1,195,008) [1] 1,195,008 (1,195,008)

Total stockholders' equity 9,765,832 17,680,406 (17,680,406) 9,765,832

Total liabilities and stockholders' equity 18,014,186$ 174,057,883$ (17,680,406)$ 174,391,663$

[1] To eliminate the Company’s investment in the Bank account against the stockholders’ equity accounts of the Bank.


CONSOLIDATING BALANCE SHEET

December 31, 2017


3676

TransPecosTransPecos TransPecos Eliminations Financial Corp.

Financial Corp. Banks Ref Dr (Cr) & Subsidiary

Interest income:Loans, including fees -$ 6,806,712$ -$ 6,806,712$ Investment securities - 494,619 - 494,619 Federal funds sold and interest bearing deposits - 289,630 - 289,630

Total interest income - 7,590,961 - 7,590,961

Interest expense:Other borrowings 319,676 367 - 320,043Deposits - 564,823 - 564,823

Total interest expense 319,676 565,190 - 884,866

Net interest income (319,676) 7,025,771 - 6,706,095

Provision for loan losses - 168,000 - 168,000

Net interest income after provision for loan losses (319,676) 6,857,771 - 6,538,095

Noninterest income:Equity in undistributed income 1,295,311 - [1] (1,295,311) - Dividend income 1,000,000 - [1] (1,000,000) - Gain on sale of other real estate - 35,415 - 35,415 Gain on sale of available-for-sales securities - 1,306 - 1,306 Gain on sale of SBA loans - 2,114,554 - 2,114,554 Gain on disposal of assets - 14,388 - 14,388 Gain on other investments - 42,547 - 42,547 Service charges on deposit accounts - 640,930 - 640,930 Other 2,780 744,812 - 747,592

Total noninterest income 2,298,091 3,593,952 (2,295,311) 3,596,732

Noninterest expense:Salaries, wages and benefits - 3,780,954 - 3,780,954 Occupancy and equipment - 829,989 - 829,989 Amortization of servicing rights - 358,146 - 358,146 Regulatory assessments 10,923 92,016 - 102,939 Legal and professional - 301,226 - 301,226 Information technology - 1,263,750 - 1,263,750 Other 262,132 1,527,935 - 1,790,067

Total noninterest expense 273,055 8,154,016 - 8,427,071

Income before income taxes 1,705,360 2,297,707 (2,295,311) 1,707,756

Income taxes deficit - state - 2,396 - 2,396

Net Income 1,705,360$ 2,295,311$ (2,295,311)$ 1,705,360$

[1] To eliminate the dividend income and equity in undistributed earnings from the Bank.

December 31, 2017

CONSOLIDATING STATEMENT OF INCOME



3777

Transpecos Banks SSBPecos, TX

(FDIC Cert.#11178)

BauerFinancial.com

Bank Summary

Report

Rated 5-Stars as of 9/7/2018 based on financial data as of 06/30/2018

Copyright BauerFinancial, Inc. Reproduction, in whole or in part, without permission is prohibited.

Exhibit B

78

http://www.bauerfinancial.com

BauerFinancial Inc. P.O. Box 143520

Coral Gables, Florida 33114-3520 800.388.6686 * FAX 800.230.9569

[email protected]

Star Ratings:BauerFinancial star ratings classify each institution based upon a complex formula factoring in current and historical data. The first level of evaluation is the capital level of the institution followed by other relevant data including, but not limited to: profitability, historical trends, loan delinquencies, repossessed assets, reserves, regulatory compliance, proposed regulations and asset quality. Negative trends are projected forward to compensate for the lag time in the data. BauerFinancial employs conservative measures when assigning these ratings and consequently our analysis may be lower than those supplied by other analysts or the institutions themselves. More than thirty years of experience has shown this to be a prudent course of action. As a general guideline, however, the following groupings were used:

5-Stars4-Stars3½-Stars3-Stars

2-Stars1-StarZero-StarsStart-up

FDIC

Superior. These institutions are recommended by Bauer.Excellent. These institutions are recommended by Bauer.Good.Adequate.

Problematic.Troubled.Our lowest rating.Institution is too new to rate. (Obsolete beginning with June 30, 2018 financial data.)

Institution has failed or is operating under FDIC conservatorship.

BauerFinancial.com

Stars

Leverage Capital Ratio

Total Assets

Return on Equity (ROE)Delinquent Loans

Nonperforming Assets % Tangible Assets

BauerFinancial's proprietary rating. (See below.)Anything of value owned by the bank.

Tier 1 Capital divided by tangible assets. (Minimum regulatory requirement is 4%.)

Annualized net income as a percent of average equity.Loans past due 90 days or more plus nonaccrual loans.

Delinquent loans and other real estate owned as a percent of tangible assets.

Average Tangible AssetsTier 1 Capital

Total average assets less intangible assets.Net worth (also known as capital or equity) less intangible assets.

Other Real Estate Owned (Repos)

Real estate owned but not being used by the bank. Usually acquired via foreclosure.

Delinquent loans and other real estate owned as a percent of Tier 1 Capital.Nonperforming Assets % Tier 1 Capital

This Summary Report was compiled from financial data as reported to federal regulators. Although the financial data obtained from these sources is consistently reliable, the accuracy and completeness of the data cannot be guaranteed by BauerFinancial Inc.

Definitions:

Return on Assets (ROA) Annualized net income as a percent of average assets.

CET 1 Ratio Common Equity Tier 1 Capital divided by risk-weighted assets. (Minimum regulatory requirement is 4.5%.)

Total Risk-based Ratio Total net worth divided by risk-weighted assets. (Minimum regulatory requirement is 8%.)

Profit (Loss) Profit or loss for the period noted.

79


06/30/201709/30/201712/31/201703/31/201806/30/2018

5-Stars5-Stars5-Stars5-Stars5-Stars

$169.914$191.986$174.097$195.669$194.082

$0.638$0.778$0.433$0.563$0.445

$0.889$1.667$2.100$0.563$1.008

0.80% 0.97% 0.91% 0.86% 0.88%

7.57% 9.18% 8.65% 9.10% 9.49%

10.30% 10.15% 9.81% 9.13% 9.00%

Recommended for 18 consecutive quarters.

Data as of:

Bauer's Star Rating:

Total Assets:

Current Quarter's Profit (Loss):

Year-to-date Profit (Loss):

Profit (Loss) Previous Calendar Year

Return on Assets (annualized):

(Tax equivalent for Sub S corporations.)

Leverage Capital Ratio:

Return on Equity (annualized): (Tax equivalent for Sub S corporations.)

Average Tangible Assets:

Tier 1 Capital:

CET 1 Ratio:

Total Risk-based Capital Ratio:

Profit (Loss) 2 Calendar Years Ago:

Delinquent Loans:

Other Real Estate Owned:

Nonperforming Assets

% of Tangible Assets:

Nonperforming Assets

% of Tier 1 Capital:

$192.458

$17.318

$0.174

$0.781

$184.508

$0.000

$0.994

$170.743

$16.744$16.841

$0.996

$0.025

$164.561

$16.708

$0.981

$0.113

$158.437

$16.312

$0.115

$0.113

13.24%

14.19%

0.50%

5.51%

13.57%

14.56%

0.54%

5.90%

15.03%

16.15%

0.60%

6.10%

14.52%

15.63%

0.67%

6.55%

15.17%

16.34%

0.14%

1.40%

Number of Employees 51 50 50 46 49

BauerFinancial.com

Bank and Credit Union data compiled from financial data for the period noted, as reported to federal regulators. The financial data obtained from these sources is consistently reliable, although; the accuracy and completeness of the data cannot be guaranteed by BauerFinancial, Inc. BauerFinancial relies upon this data in its judgment and in rendering its opinion (e.g. determination of star ratings) as well as supplying the data fields incorporated herein. BauerFinancial, Inc. is not a financial advisor; it is an independent bank research firm. BauerFinancial is a registered trademark. Any unauthorized use of its content, logos, name, and/or Star-ratings is forbidden.

Copyright BauerFinancial, Inc. Coral Gables, FL 33114. 800.388.6686.Reproduction, in whole or in part, without permission is prohibited.

$2.100

$0.957

CRA Rating: Satisfactory

BauerFinancial, Inc.Bank Summary Report

Transpecos Banks SSB - Pecos, TX (FDIC Cert.#11178)

Transpecos Banks SSB was established in 1924 and has 3 branch(es).

(432)445-9000www.transpecosbanks.com

80


9.00

11.62

9.13

11.48

9.81

11.35

10.15

11.41

10.30

11.29

Leverage Capital RatioMin. for Adequately Capi tal ized is 4%

Bank and Credit Union data compiled from financial data for the period noted, as reported to federal regulators. The financial data obtained from these sources is consistently reliable, although; the accuracy and completeness of the data cannot be guaranteed by BauerFinancial, Inc. BauerFinancial relies upon this data in its judgment and in rendering its opinion (e.g. determination of star ratings) as well as supplying the data fields incorporated herein. BauerFinancial, Inc. is not a financial advisor; it is an independent bank research firm. BauerFinancial is a registered trademark. Any unauthorized use of its content, logos, name, and/or Star-ratings is forbidden.

Copyright BauerFinancial, Inc. Coral Gables, FL 33114. 800.388.6686. Reproduction, in whole or in part, without permission is prohibited.

0.88

1.15

0.86

1.04

0.91 0.900.97 0.99

0.80

0.96

Return on Assets (annualized)(Tax equivalent for Sub S corporations.)

06/2018 03/2018 12/2017 09/2017 06/2017 06/2018 03/2018 12/2017 09/2017 06/2017This Bank Peer Group This Bank Peer Group

Dollar amounts are in millions. For example, $12,345.678 represents $12 billion, 345 million, 678 thousand.

BauerFinancial.com

Peer Groups:

Group 1Group 2Group 3Group 4Group 5Group 6

Banks with foreign and domestic officesAssets >= $3 billionAssets >= $1 billion and < $3 billionAssets >= $300 million and < $1 billionAssets >= $100 million and < $300 millionAssets < $100 million

0.50

0.92

0.54

0.94

0.60

0.93

0.67

1.00

0.14

1.01

Nonperforming Asset % of Tangible Assets

06/2018 03/2018 12/2017 09/2017 06/2017This Bank Peer Group

14.19

17.64

14.56

17.56

16.15

17.42

15.63

17.48

16.3417.40

Risk-based Capital Ratio

06/2018 03/2018 12/2017 09/2017 06/2017This Bank Peer Group

BauerFinancial, Inc.Bank Summary Report

Transpecos Banks SSB - Pecos, TX (FDIC Cert.#11178)

Transpecos Banks SSB was established in 1924 and has 3 branch(es).

(432)445-9000www.transpecosbanks.com

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TransPecos Banks SSB p. 1 of 29 ACH Services Agreement

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AUTOMATED CLEARING HOUSE (“ACH”) SERVICES

Customer wishes to initiate electronic fund transfer credit and/or debit entries by means of the Automated Clearing House (“ACH”) Network pursuant to the terms of the Agreement and the Operating Rules and Operating Guidelines (collectively, the “Rules”) that have been adopted by the National Automated Clearing House Association (“NACHA”), and TransPecos Banks SSB (the “Bank”) is willing to act as an Originating Depository Financial Institution (“ODFI”) with respect to such Entries.

Unless otherwise defined herein, capitalized terms shall have the meanings provided in the Rules. The term Entry or Entries shall have the meaning provided in the Rules and shall also mean the data received from Customer hereunder from which the Bank prepares Entries.

1. ACCOUNTS.

(a) Generally. The Customer agrees to maintain a minimum of at least one (1)commercial checking account ("Demand Deposit Account") with the Bank with funds sufficient to cover the transactions initiated pursuant to the Agreement, and to cover fees required to pay for Services provided thereunder.

(b) Business Purpose. The Customer agrees that only Demand Deposit Accounts,or other deposit accounts, or other asset accounts (individually, a "Deposit Account"; collectively, "Deposit Accounts") established exclusively for business purposes will be used for transactions pursuant to the Agreement, and that in no event will transactions hereunder be conducted using Deposit Accounts of the Customer or its employees, officers, directors, members, or owners that were established primarily for personal, family or household purposes. 2. THE AGREEMENT.

(a) Generally. The terms and conditions of the Agreement, including all attachments,authorizations, schedules and exhibits, together with all amendments or modifications thereto, are cumulative with and in addition to any terms of the Deposit Account Agreements and related Deposit Account signature cards and authorizations, Funds Transfer Agreements, Loan Account Agreements, the applicable Deposit and Loan Account disclosures, the Bank’s service schedule, the Bank’s Schedule of Funds Availability, any credit account agreements relating to any credit accounts the Customer may have with the Bank (together, the "Bank Agreements, Schedules and Disclosures"), the rules and regulations of any federal or state agency that supervises the Bank’s activities or insures accounts at the Bank, and any applicable clearinghouse operating rules and guidelines, including, but not limited to those of the National Automated Clearing House Association ("NACHA"), and any other applicable local clearing house association, all as may be amended from time to time.

(b) Inconsistencies. To the extent expressly provided for otherwise herein, shouldany inconsistency exist or arise between the terms of the Agreement, as relates to any Service or Services, and the terms of any other Bank Agreements, Schedules and Disclosures, the terms of the Agreement shall control, but only to the extent of the inconsistency. Furthermore, to the extent expressly provided for otherwise herein, should any inconsistency exist or arise between the General Provisions of the Agreement and the applicable Service specific provisions, the terms of the Service specific provisions shall control, but only to the extent of the inconsistency.

EXHIBIT C

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3. ACH SERVICES APPROVAL AND UNDERWRITING PROCESS.(a) Bank Approval and Monitoring of Customer’s ACH Operations Risk. The

Customer agrees and acknowledges the Bank shall provide ACH Services to the Customer subject to the Bank’s prior approval. To obtain approval from the Bank, the Customer is required to undergo the Bank’s screening and risk analysis process regarding the Customer’s proposed ACH operations. In addition, after any initial approval for ACH Services by the Bank, the Bank shall also, from time-to-time and in its sole discretion (including the occurrence of certain events described in subsection (c) below), undertake additional ACH operations credit and risk analysis monitoring activities that are deemed necessary, in the Bank’s sole and absolute discretion, while the Bank is providing ACH Services to an approved Customer. The Customer agrees to cooperate with the Bank regarding any ongoing risk analysis activities by the Bank, including providing financial or other documents in a timely manner upon the Bank’s request, and taking any risk mitigation or other ACH Entry origination procedures as required by the Bank.

(b) ACH Operations Credit and Risk Criteria. The Bank’s ACH operations creditand risk analysis shall be based on certain factors deemed relevant by the Bank in its sole discretion, including, but not limited to, the following factors: (i) the credit worthiness, condition and performance of the Customer, particularly the Customer’s capital adequacy relative to the Customer’s ACH activity volume; (ii) the nature, conduct and geographic location of the Customer’s business, including whether the Customer engages in certain high-risk ACH activities or transaction environments, or whether certain "Standard Entry Class" ("SEC") codes that the Bank either deems to be high-risk or does not allow, are present in the Customer’s ACH transactions; (iii) the historic level and dollar amounts of the Customer’s ACH returns, including any return levels or dollar amounts in excess of generally acceptable ACH return parameters (as determined by the Bank in its sole discretion), or a sudden increase in the Customer’s ACH return levels; and (iv) whether the Customer adheres to all authorization requirements set forth herein.

(c) Material Change in Credit and Risk Analysis Criteria. In the event aCustomer approved for ACH Services either fails to maintain the minimum risk analysis criteria as required by the Bank, or if, in the opinion of the Bank, the Customer undergoes a material change in its operations that the Bank believes increases the risk of the Customer’s ACH operations, then the Bank may, in its sole discretion, take any and all of the following actions: require the Customer to pre-fund their ACH activities; require the Customer to establish a Reserve Account; or terminate ACH Services to the Customer, generally upon prior written notice from the Bank, or immediately if the Bank deems immediate termination necessary, in the Bank’s sole discretion, to comply with the Rules. Events that constitute a material change in a Customer’s business operations include, but are not limited to: (i) levels of ACH returns that exceed generally acceptable return levels (as determined by the Bank); (ii) a significant or sudden increase in the Customer’s ACH return levels as compared to the Customer’s historic ACH return levels; (iii) significant changes in the nature of the Customer’s business, including its product and services lines or transaction environments; or (iv) the occurrence of any other event that the Bank believes represents a material change in the Customer’s performance or condition. Upon learning of any such material change, the Bank will inform the Customer of the issue, and the Bank may exercise its right to temporarily suspend the Customer’s ACH Services in order to investigate the issue.

(d) Reserve Account. Upon written notification by the Bank, the Customer shallimmediately establish a separate account funded with an amount required to protect the Bank against the risks associated with the Customer’s ACH operations (the "Reserve Account"). Such Reserve Account must be established by the date requested by the Bank, and the required

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Reserve Account amount expressly includes any existing, anticipated, or possible or potential future Customer-related ACH returns, including all fees, costs, fines and penalties assessed against either the Customer or the Bank associated with such Customer-related ACH returns. The Bank may require the Customer to hold such additional amounts as the Bank, in its sole discretion, deems necessary to protect itself against the risks associated with the Customer’s ACH operations. The Reserve Account will not bear interest, and the Customer will not have any right or interest in the Reserve Account funds; provided that upon satisfaction of all of the Customer’s obligations under this Agreement, the Bank will pay to the Customer any funds remaining in the Reserve account no sooner than ninety (90) days after the effective date of termination of the Customer’s ACH Services pursuant to the Rules and Federal Reserve Board’s Regulation E. Effective upon the establishment of any Reserve Account, the Customer irrevocably grants the Bank a security interest in the Reserve Account and any and all funds in the Account, together with the proceeds thereof. The Customer also agrees to execute and deliver to the Bank such instruments and documents that the Bank may reasonably request to perfect and confirm the security interest and the Bank’s right of setoff in the Reserve Account. The Customer understands and acknowledges that the Customer’s failure to establish and fund a Reserve Account immediately upon the Bank’s request shall be grounds for immediate termination of the Customer’s ACH Services provided by the Bank, with such termination in the Bank’s sole discretion. 4. REQUIRED PREFUNDING OF ACH CREDIT ENTRIES.

The Bank, in its sole discretion, based upon the Bank’s analysis of the Customer’s credit and risk criteria or upon any other basis, the Bank may require the Customer to use the ACH Services on a pre-funded basis ("Prefunding"). The Bank can also exercise its rights under Section 3, ACH Services Approval and Underwriting Process to require a Customer approved for ACH services to begin Prefunding its ACH Services. If the Bank exercises its rights to require Prefunding under this Section 4 and the Customer does not immediately comply with the Bank’s request, then such non-compliance shall be grounds for the Bank, in its sole discretion, to immediately suspend or terminate its provision of ACH Services to the Customer. If the Customer is required to use Prefunding for ACH Services, the Customer is required to submit each ACH Credit Entry file two (2) Business Days in advance of the desired settlement date. If, on the Business Day in whichthe file is deemed received by this Agreement, the Customer’s account has funds that are at leastequal to the amount of the ACH Credit Entry file, then the ACH Credit Entry file will be processedas normal on the desired settlement date. If the ACH credit Entry file is not funded or approvedbefore the Business Day in which the file is deemed received by this Agreement, the Entry filewill not be processed and will be deleted from the Bank’s system.

5. TRANSMITTAL OF ENTRIES BY CUSTOMER.

The Customer shall deliver or transmit Entries to the Bank to be processed in accordance with the provisions of Schedules ACH-1 and ACH-2 attached hereto and incorporated herein by reference. The total dollar amount of Entries transmitted by the Customer to the Bank on any day, shall not exceed the amount specified in the limit section on Schedules ACH-1 and ACH-2.

6. SECURITY PROCEDURES.(a) The Customer and the Bank will comply with the security procedure requirements

described in Schedule ACH - 2 with respect to Entries delivered/transmitted by the Customer to the Bank. The Customer acknowledges that the purpose of such security procedures is for verification of authenticity and not to detect an error in the transmission or content of an Entry.

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No security procedures for the detection of any such error has been agreed upon between the Bank and the Customer.

(b) The Customer is strictly responsible to establish and maintain the procedures tosafeguard against unauthorized transmissions. The Customer warrants that no individual will be allowed to initiate transfers in the absence of proper supervision and safeguards, and agrees to take reasonable steps to maintain the confidentiality of the security procedures and any passwords, codes, security devices and related instructions provided by the Bank in connection with the security procedures described in Schedule ACH - 2. If the Customer believes or suspects that any such information or instructions have been known or accessed by unauthorized persons, the Customer agrees to notify the Bank immediately followed by written confirmation. The occurrence of unauthorized access will not affect any transfers made in good faith by the Bank prior to receipt of such notification and within a reasonable time period to prevent unauthorized transfers.

(c) The Bank may change, add, or delete any procedures established pursuant to thisAgreement, from time to time, upon notice to the Customer. 7. COMPLIANCE WITH SECURITY PROCEDURES.

(a) If an Entry (or a request for cancellation or amendment of an Entry) received byThe Bank purports to have been transmitted or authorized by the Customer, it will be deemed effective as the Customer’s Entry (or request) and the Customer shall be obligated to pay the Bank the amount of such Entry even though the Entry (or request) was not authorized by the Customer, provided the Bank accepted the Entry in good faith and acted in compliance with the security procedures referred to in Schedule ACH - 2 with respect to such entry.

(b) If an Entry (or request for cancellation or amendment of an Entry) received by theBank was transmitted or authorized by the Customer, the Customer shall pay the Bank the amount of the Entry, whether or not the Bank complied with the security procedures referred to in Schedule ACH - 2 with respect to that Entry and whether or not that Entry was erroneous in any respect or that error would have been detected if the Bank had complied with such procedures. 8. RECORDING AND USE OF COMMUNICATIONS.

The Customer and the Bank agree that all telephone conversations or data transmissions between them or their agents made in connection with this Agreement may be electronically recorded and retained by either party by use of any reasonable means.

9. PROCESSING, TRANSMITTAL, AND SETTLEMENT BY THE BANK.(a) “Effective Date” means a date specified in an Entry on which the Customer, as the

originator of the transaction, instructs that the payment is to be made. (b) Except as provided in Section 10, On-Us Entries and Section 11, Rejection of

Entries, Bank shall: Process Entries received from the Customer to conform with the file

specification set forth in the Rules; Process and/or transmit such Entries as an ODFI to a receiving account

(“Receiver”) or an ACH Processor for further processing; and Settle for such Entries as provided in the Rules

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(c) The Bank shall transmit any Entries requiring further processing to the ACHProcessor by the deadline (as outlined in Schedules ACH-1 and ACH-2) of the ACH Processor prior to the Effective Entry Date shown in such Entries, provided that each of the following are satisfied:

Such Entries are received before the Bank’s related cut-off time The Effective Date follows receipt by the Bank of such Entries by at least the

number of days required in the Operating Instructions. The Bank will provideCustomer with cut-off deadlines and acceptable file delivery methods asindicated in Operating Instructions, which may be amended from time to time.Entries will be deemed received by the Bank when the Customer has compliedwith the Rules for delivery of Entries and all security procedures in SchedulesACH-1 and ACH 2.

10. ON-US ENTRIES.

Except as provided in Section 11, Rejection of Entries, of this Agreement, in the case of any Entry received for credit/debit to an account maintained with the Bank (“On-Us Entry”), the Bank will credit/debit the Receiver’s account in the amount of such Entry on the Effective Entry Date contained in such Entry, provided the requirement set forth in Section 9, Processing, Transmittal, and Settlement by the Bank of this Agreement is met. If that requirement is not met, the Bank will use reasonable efforts to credit/debit the Receiver’s account for the Entry on the next business day following such Effective Entry Date. For purposes of this Agreement, a “business day” is a day on which the Bank is open to the public for carrying on substantially all of its business other than a Saturday or Sunday and excluding Bank holidays. 11. REJECTION OF ENTRIES.

The Bank will reject any Entry that does not comply with the requirements of Section 5, Transmittal of Entries by Customer, or Section 6, Security Procedures, of this Agreement. The Bank will have the right to reject an On-Us Entry for any reason for which an Entry may be returned under the Rules. The Bank may reject any Entry if the Customer has failed to comply with its account balance obligations under Section 15, The Account. The Bank will notify the Customer by phone, email, or electronic transmission of such rejection no later than the business day such Entry would otherwise have been transmitted by the Bank to the ACH Processor or, in the case of an On-Us Entry, its Effective Entry Date. Notices of rejection shall be effective when given. The Bank shall have no liability to the Customer due to the rejection of any such Entry or Entries; provided, however, the Bank agrees to correct and therefore reprocess the Entry or Entries rejected due to errors of the Bank, provided that the Customer provides the Bank with adequate data to correct and reprocess rejected Entry or Entries. 12. CANCELLATION OR AMENDMENT BY CUSTOMER.

The Customer will have no right to cancel or amend any Entry after its receipt by the Bank. However, the Bank may, but is not obligated to, use reasonable efforts to act on a request by the Customer for cancellation of an Entry file if such request is received by the Bank at a time and in a manner affording the Bank a reasonable opportunity to act on the request, and provided the request complies with security procedures for cancellation set forth in Schedule ACH-2. Cancellation will result in the deletion of the entire ACH file submitted by the Customer. The Bank cannot edit or delete individual Entries. The Bank cannot process a cancellation after the Bank

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begins processing the file for submission to the ACH operator. In the event the Customer wishes to cancel or amend an entry, the Customer is encouraged to use the Online Banking system to delete and recreate the ACH file prior to contacting the Bank. Notwithstanding the above, the Bank has no obligation to give effect to cancellation or reversal requests and shall not have any liability if such cancellation is not effected. The Customer shall reimburse the Bank for any expenses, losses, or damages the Bank may incur in effecting or attempting to effect the cancellation or amendment of an Entry. 13. NOTICE OF RETURNED ENTRIES AND NOTIFICATIONS OF CHANGE.

The Bank shall notify an authorized individual of the Customer by phone, email, or electronic transmission of the receipt of a returned Entry from the ACH Processor if the Bank complied with the terms of this Agreement with respect to the original Entry. The Bank shall have no liability to the Customer by reason or reasons of a returned Entry or Entries. The Bank shall provide the Customer all information, as required by the Rules, with respect to each Notification of Change (“NOC”) Entry or Corrected Notification of Change (“Corrected NOC”) Entry received by the Bank relating to Entries transmitted by the Customer. The Bank must provide such information to the Customer within two banking days of the Settlement Date of each NOC or Corrected NOC Entry. However, the Bank, where possible, will make a good faith effort to provide each NOC to the Customer at an earlier time. The Customer shall ensure that changes requested by the NOC or Corrected NOC are made within six (6) banking days of the Customer’s receipt of the NOC information from the Bank or prior to initiating another Entry to the Receiver’s account, whichever is later. 14. PAYMENT.

(a) The Customer shall pay the Bank the amount of each originated credit Entry, andthe Bank will pay the Customer the amount of each originated debit Entry transmitted by the Bank pursuant to this Agreement at such time on or before the Effective Entry Date as the Bank, in its discretion, may determine.

(b) The Customer shall promptly pay the Bank the amount of each debit entry returnedby a Receiving Depository Financial Institution (“RDFI”) that was transmitted by the Bank pursuant to this Agreement, and the Bank shall promptly pay the Customer the amount of each credit Entry returned by an RDFI that was transmitted by the Bank pursuant to this Agreement.

15. THE ACCOUNT.

The Bank may, without notice or demand, obtain payment of any amount due and payable to it under this Agreement by debiting the account(s) of the Customer identified in this Agreement (“Account”) and shall credit the Account for any amount received by the Bank by reason of the return of an Entry transmitted by the Bank for which the Bank has previously received payment from the Customer. Such credit shall be made as of the day of such receipt by the Bank. The Customer shall at all times maintain a balance of available funds in the Account sufficient to cover its payment obligations under this Agreement. In the event there are not sufficient available funds in the Account to cover the Customer’s obligations under this Agreement, the Customer agrees that the Bank may, in its discretion, refuse to process Entries, require the Customer to deposit additional funds before the Entries are processed, and/or debit or place a hold on funds in any account maintained by the Customer with the Bank and that the Bank may off-set against any amount it owes to the Customer, in order to obtain payment of the Customer’s obligations

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under this Agreement. Upon the request of the Bank, the Customer agrees to promptly provide to the Bank such information pertaining to the Customer’s financial condition as the Bank may reasonably request.

The Customer may only initiate credit and debit entries which will be effected by debits or credits made to the Account held by the Customer at the Bank. The Customer may not initiate credit and debit entries which will be settled solely by entries to accounts that are not held by the Bank (“Outside Settlement”). Outside Settlements are prohibited. In the event the Customer causes an Outside Settlement, the Bank may immediately suspend or terminate this ACH Agreement. In addition, the Bank may, in its sole discretion, charge an additional fee to be set by the Bank for each Outside Settlement, may require the Customer prefund all ACH requests at the time it submits a file, and may suspend, delay processing of, refuse to accept, or refuse to process any ACH file submitted by the Customer which contains an Entry that may cause an Outside Settlement. The Customer shall hold harmless and indemnify the Bank against any and all loss, costs, damages or expenses suffered or incurred by the Bank or the Customer arising out of the submission, suspension, deletion, non-acceptance, or refusal to process any such ACH file. 16. SETTLEMENT LIMITS.

The Bank may establish maximum dollar amounts for total daily ACH file transmissions (“Settlement Limits”) for the Customer, by giving the Customer either oral or written notification of the amount of said Settlement Limit, and the Bank may refuse to transmit files which are in excess of the Customer’s Settlement Limit. Bank may change the Customer’s Settlement Limit from time to time by giving the Customer either oral or written notice provided, however, that said Settlement Limit may be changed immediately upon giving telephone notice to the Customer in the event the Customer:

Files or has filed against it a petition in bankruptcy or other laws relating to the reliefof debtors;

Suspends the transaction of its usual business, dissolves, or transfers to another partya significant portion of its assets; or

Is declared to be in default under any other obligation to the Bank.

17. IAT-INTERNATIONAL ACH TRANSACTIONS.

The Customer is not permitted to originate IAT Entries to either consumer or corporate accounts residing in financial institutions outside of the territorial jurisdiction of the United States. In the event that the Customer submits an IAT Entry to the Bank, the Bank shall reject the Entry. Third party reporting may also be obtained for extended due diligence with the Federal Reserve Bank supporting of correspondent bank ACH handling.

18. ACCOUNT RECONCILIATION: RESPONSIBILITY TO REPORT DISCREPANCIES.

Entries debited or credited to the Customer’s Account maintained with the Bank will be reflected on the Customer’s periodic statement issued by the Bank with respect to the Account. Not more than ten (10) days after the mailing, emailing, or delivery of such periodic statement, the Customer shall examine the periodic statement and shall immediately notify the Bank of any discrepancy or error therein, and failure of the Customer to notify the Bank of any discrepancy within such time will relieve the Bank of any interest liability with respect to any Entries reflected

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on such periodic statement for which no notice was given or received. Failure of the Customer to notify the Bank of any discrepancies within thirty (30) days of the mailing, emailing, or delivery of such periodic statement will relieve the Bank of any liability for any Entries reflected on such periodic statement for which no notice was given or received. Generally, the more quickly a discrepancy or unauthorized transaction is reported, the more likely it will be correctable or recoverable. 19. CUSTOMER REPRESENTATIONS AND AGREEMENTS: NOTICE OF PROVISIONAL

PAYMENT.

With respect to each and every Entry transmitted by the Customer, the Customer represents and warrants to the Bank and agrees that (a) each person shown as the Receiver on an Entry received by the Bank from the Customer has authorized the initiation of such Entry and the crediting or debiting of its account in the amount and on the Effective Entry Date shown on such Entry, (b) such authorization is operative at the time of transmittal or crediting or debiting by the Bank as provided herein, (c) Entries transmitted to the Bank by the Customer are limited to those types of credit and debit Entries set forth in Schedules ACH-1 and ACH-2, (d) the Customer shall perform its obligations under this Agreement in accordance with all applicable laws, regulations, and orders, including, but not limited to, the sanctions laws, regulations, and orders administered by OFAC; laws, regulations, and orders administered by FinCEN; and any state laws, regulations, or orders applicable to the providers of ACH payment services, and (e) the Customer shall be bound by and comply with the provision of the Rules (among other provisions of the Rules) making payment of an entry by the RDFI to the Receiver provisional until receipt by the RDFI of final settlement for such entry. The Customer specifically acknowledges that it has received notice of the rule regarding provisional payment and of the fact that, if such settlement is not received, the RDFI shall be entitled to a refund from the Receiver of the amount credited and the Customer shall not be deemed to have paid the Receiver the amount of the entry. 20. OFAC COMPLIANCE.It shall be the responsibility of THE Customer that the use of the Services and all related transactions complies with U.S. Law. This includes, but is not limited to sanctions enforced by the Office of Foreign Assets Control (OFAC). It shall further be the responsibility of THE Customer to obtain information regarding such OFAC enforced sanctions. (This information may be obtained directly from the OFAC Compliance Hotline at 800-540-OFAC.) 21. VERIFICATION OF ENTRIES AND RIGHT TO AUDIT RECORDS.

The Bank shall be entitled, at its sole discretion, to seek verification or authentication of any file of Entries by contacting the Customer by telephone or by any other means that is either set forth in any regulations or publications made available to the Customer by the Bank or otherwise deemed reasonable by the Bank; provided however, that so long as the Bank complies with the security procedures in Schedule ACH-2. The Bank will have no obligation to seek verification or authentication. If the Bank is unable to obtain any verification or authentication sought by it, the Bank may, in its sole discretion, either effect or refuse to affect the Entries. Customer agrees the Bank reserves the right to perform on-site inspection and/or audit the Customer’s ACH Origination records and/or operations as needed by the Bank. 22. INCONSISTENCY OF NAME AND ACCOUNT NUMBER.

The Customer acknowledges and agrees that, if any Entry describes the Receiver, RDFI, or any Intermediary Bank inconsistently by name and account number, payment of such Entry might be

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TransPecos Banks SSB p. 9 of 29 ACH Services Agreement updated 10/17

made by the Intermediary or RDFI on the basis of the number supplied by the Customer even if the number identifies a person or the Bank, as the case may be, different from the Receiver or the Bank named in the Entry, and that the Customer’s obligation to pay the amount of the Entry is not excused in such circumstances. 23. PAYMENT FOR SERVICES.

The Customer will pay the Bank the charges for the services provided for herein in accordance with the Bank’s price schedule for such service, as amended from time to time. The Bank is hereby authorized to automatically deduct from the Account, on any payment due date, the amount necessary to pay the fees and charges due for the services provided to the Customer pursuant to this Agreement. Such charges do not include, and the Customer shall be responsible for payment of, any sales, use, excise, value added, utility or other similar taxes relating to such services, and any fees or charges provided for in the Commercial Account Agreement or Online Banking Services Agreement. 24. COOPERATION IN LOSS RECOVERY EFFORTS.

In the event of any damages for which the Bank or the Customer may be liable to each other or to a third party pursuant to the services provided under this Agreement, the Bank and the Customer will undertake reasonable efforts to cooperate with each other, as permitted by applicable law, in performing loss recovery efforts. 25. DATA RETENTION.

The Customer will retain data on file adequate to permit remaking of Entries for one hundred twenty (120) days after midnight of the Effective Entry Date and will provide such data to the Bank upon request. The Customer specifically agrees to be bound by and comply with all applicable provisions of the Rules regarding the retention of documents or any record, including, without limitation, the Customer’s responsibilities to retain all items, source documents, and records of authorization in accordance with the Rules. All magnetic tapes, Entries, security procedures and related records used by the Bank for transactions contemplated by this Agreement shall be and remain the Bank’s property. The Bank may, at its sole discretion, make available such information upon the Customer’s request. Any expenses incurred by the Bank in making such information available to the Customer shall be paid by the Customer. The Bank’s records, kept in the ordinary course of business, will be presumed to accurately reflect the contents of the Customer’s instructions to the Bank and, in the absence of manifest error, will be binding and conclusive.

26. NOTICES AND INSTRUCTIONS.

(a) Generally. Unless otherwise stated in the Agreement, all notices required pursuant to the Agreement and the Services shall be in writing. The Bank shall be entitled to rely on any written notice or other written, electronic or telephone communication believed by it in good faith to be genuine and to have been initiated by an authorized representative of the Customer to the Bank. Any such communication will be deemed to have been authorized by the Customer. The parties agree that the Bank’s records of telephonic or electronic instructions shall be conclusive evidence of the actual notice or instructions given by the Customer and recorded by the Bank.

(b) Data Recording. The Customer consents to the Bank’s recording and monitoring of any telephone conversations and online transmissions or communications including, but not

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limited to, requests or instructions. The Bank, however, has no duty to record or monitor such telephone conversations or online transmissions and communications, and the election to record and/or monitor is within the Bank’s sole discretion.

(c) Delivery of Notices, Disclosures, Amendments or Other Communicationsby the Bank. The Customer acknowledges and agrees that, to the extent permitted by applicable law, the Bank may deliver all notices, disclosures, amendments or other communications required hereunder to the Customer by e-mail at the Customer’s e-mail address as provided to the Bank. To the extent permitted by applicable law, the Customer agrees that each such communication will be binding and enforceable to the same extent as if it were delivered to the Customer in writing by regular mail, branch posting, or in person.

(d) Electronic Mail Communication. The Customer may send e-mail to the Bankand receive e-mail from the Bank. (i) Communications sent to the Bank over the Internet are considered unsecured unless the information is encrypted with the equivalent of 128-bit encryption technology, or transmitted via a secure session using a commercial reasonable security technology that provides a level of security that is equivalent to 128-bit RC4 encryption technology. (ii) The Customer agrees that unsecured e-mail will not be used to deliver sensitive personal or private information that includes, but is not limited to bank routing numbers, account numbers, Social Security numbers, Business ATM numbers, personal identification numbers ("PIN"s), home addresses, User IDs, Passwords, ACH entries, or to provide required notices to the Bank pursuant to any agreement the Customer has with the Bank, unless such agreement expressly provides for e-mail notification. (iii) THE CUSTOMER ACKNOWLEDGES AND AGREES THAT ANY REQUEST(S) SENT TO THE BANK THROUGH AN UNSECURED ELECTRONIC NETWORK ARE IN VIOLATION OF BANK AND NACHA POLICY AND PROCEDURES. THE CUSTOMER UNDERSTANDS AND AGREES THAT THE BANK IS NOT LIABLE FOR ANY LOSS OR DAMAGE INCURRED BY THE CUSTOMER WHEN AN UNAUTHORIZED PERSON GAINS ACCESS TO ANY SUCH E-MAIL. THE CUSTOMER AGREES TO INDEMNIFY AND HOLD THE BANK HARMLESS IF THE BANK ACTS WITH ORDINARY CARE IN GOOD FAITH BY RESPONDING TO ANY E-MAIL PURPORTED TO BE SENT BY THE CUSTOMER. THE BANK'S IMPLEMENTATION OF ITS NORMAL PROCEDURES REGARDING RECEIPT AND MAINTENANCE OF CONFIDENTIAL INFORMATION CONSTITUTES ITS EXERCISE OF DUE CARE. (iv) E-mail transmitted by the Customer to the Bank may not be delivered to the Bank immediately. If the Customer needs to contact the Bank immediately to stop a payment, to report an unauthorized use of the Customer’s User ID, to report unauthorized access to an account, or for any other reason, the Customer shall contact the Bank by telephone at the telephone number provided herein, or in person. The Bank will not be responsible for acting on or responding to any e-mail request made until the Bank actually receives the Customer’s e-mail message and the Bank has a reasonable opportunity to act. (v) The Customer should check its e-mail regularly as the Bank may attempt to notify the Customer by e-mail in the event of any technical difficulties or other occurrence that may affect the Bank’s online Services.

(e) Address for Notification. All notices to be delivered by the Customer to theBank pursuant to the Agreement can be made to the physical address, postal address, or telephone number indicated below, as applicable pursuant to the terms of the Agreement and the requirements of the notice:

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TransPecos Banks, SSB Attn: ACH Department 112 E Pecan St. Ste.800 San Antonio, Texas 78205 Fax: 210-270-0317 All notices to be delivered by the Bank to the Customer pursuant to the Agreement can be made to the postal address, e-mail address, or telephone number indicated in the attached Resolution or Authorization to Obtain Treasury Management Services (the "Authorization"), such notification information as may be amended in writing by the Customer from time to time. 27. SUBMISSION OF INFORMATION AND DOCUMENTS.

(a) Delivery of Documents. The Customer agrees to deliver, in a form and content satisfactory to the Bank, such additional executed, or as the case may be, certified, documents required by the Bank from time to time to obtain and to continue to receive the ACH Services requested by the Customer, including Deposit Account signature cards, declarations, authorizations, resolutions, implementation documents and updated financial statements.

(i) THE CUSTOMER AGREES THAT IN THE EVENT THE CUSTOMER DESIRES TO APPOINT OR CHANGE AUTHORIZED INDIVIDUALS OR REMOVE THE AUTHORITY OF AN EXISTING AUTHORIZED INDIVIDUAL, THE CUSTOMER MUST PROVIDE THE BANK WITH WRITTEN INSTRUCTIONS ADVISING THE BANK OF THE CHANGE IN AUTHORITY SIGNED BY A PERSON NAMED AS AN AUTHORIZED SIGNER ON THE MOST CURRENT AUTHORIZATION. THE CUSTOMER AGREES THAT THE BANK WILL RELY ON THE MOST CURRENT AUTHORIZATION SUPPLIED BY THE CUSTOMER AND, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE BANK SHALL HAVE NO LIABILITY FOR UNAUTHORIZED ACTIONS TAKEN OR TRANSACTIONS PERFORMED BY THOSE INDIVIDUALS NAMED AS AUTHORIZED PARTIES ON THE CURRENT AUTHORIZATION.

(ii) The Customer understands and agrees that any employees or applicants for employment with the Customer who are or may become Authorized Signers, Authorized Individuals, Contacts, Access Managers, Security Officers or Transactional Users, or may otherwise have any responsibility for handling the Customer’s financial affairs has been asked specifically whether they have ever been convicted of a felony, that a thorough background check of such employee or applicant has been conducted, that a system of reasonable financial controls is in place and that the Customer has instituted a program that encourages the Customer’s employees to report fraudulent or dishonest activities to the Customer’s management. (b) Credit Check and Audit. The Customer authorizes the Bank to check its credit

background and history. The Bank has the right to audit the Customer’s compliance with this Agreement and the NACHA Rules. If it is determined that the Customer has breached this Agreement or the NACHA Rules, the Bank has the right to terminate or suspend this Agreement. 28. SECURITY PROCEDURES; CUSTOMER’S DATA SECURITY OBLIGATIONS; LIMITATION ON LIABILITY; RESPONSIBILITY FOR LOSS.

(a) Security Procedures under the Agreement. The Bank and the Customer agree to comply with the Security Procedures described in Schedules ACH-1 and ACH-2.

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(b) Customer’s Data Security Obligations. The Customer must comply with theComputer (as defined herein) hardware, software, and Security Procedures requirements as set forth herein or any supplemental information and/or instructions provided by the Bank. The Bank reserves the right as encryption technology develops to impose further reasonable requirements to maintain the appropriate level of security for the transactions contemplated hereunder and the Customer agrees to abide by such requirements. Furthermore, the Customer understands and acknowledges that if the Customer does not follow commercially reasonable hardware, software, physical access and physical storage security procedures regarding any Customer-owned Data (defined herein), including such data containing the sensitive personally identifiable information ("PII") of any individual, the security of the Customer’s transactions and/or Customer-owned Data (including sensitive PII) may be compromised. The Customer understands, acknowledges and agrees that installation, maintenance and operation of the Customer’s Computer (hardware and software) and related security procedures, including, but not limited to, data security protection, firewalls and anti-virus software, is the Customer’s sole responsibility, and that the Customer is solely responsible for securing, encrypting, protecting and otherwise safeguarding the Customer-owned Data.

(c) Anti-Virus and Malware Protection; Notification to the Bank;Responsibility for Loss. The Customer acknowledges and agrees that the threat of fraud resulting from theft of electronic data is a serious potential threat to the Customer’s business and, accordingly, the Customer will take all reasonable steps to make certain that its computers and data security systems are protected from unauthorized access or use, and in an event of any unauthorized access or use, the Customer will take all reasonable steps to immediately inform the Bank of such data security breach. THE CUSTOMER UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT THE BANK IS NOT RESPONSIBLE FOR ANY LOSS OR DAMAGES RESULTING FROM ANY ERRORS OR FAILURES OF THE CUSTOMER’S COMPUTER OR DATA PROCESSING SYSTEMS, INCLUDING, BUT NOT LIMITED TO ANY COMPUTER VIRUS OR MALWARE ATTACK (SUCH AS A KEYSTROKE LOGGING PROGRAM OR SIMILAR MALWARE), ANY ATTACK BY A PERSON ATTEMPTING OR ACTUALLY GAINING UNAUTHORIZED ACCESS TO CUSTOMER-OWNED DATA, OR ANY INTERNET-RELATED PROBLEMS THAT MAY BE ASSOCIATED WITH THE CUSTOMER’S ACCESS AND USE OF THE SERVICES. If, despite the Customer efforts, the Customer suffers any damage or loss as a result of the Customer’s failure to comply with its data security obligations, and regardless of whether such damage or loss results from the activities of the Customer’s employees, agents, subcontractors or any unaffiliated third party, any such loss or damage shall be the sole responsibility of the Customer.

(d) Serious Potential Threat to the Customer’s Business; Notification to theBank. The Customer acknowledges and agrees that the threat of fraud resulting from theft of electronic data is a serious potential threat to the Customer’s business and, accordingly, the Customer will take all reasonable steps to make certain that its Computers and data security systems are protected from unauthorized access or use, and in an event of any unauthorized access or use, the Customer will take all reasonable steps to immediately inform the Bank of the security breach.

(e) Responsibility for Loss. If, despite the Customer efforts, the Customer suffersany damage or loss as a result of the Customer’s failure to comply with this Agreement, including but not limited to the security procedures specified in the Agreement and the Customer’s data security obligations hereunder, and regardless of whether such damage or loss results from the

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activities of the Customer’s employees, agents, subcontractors, service providers, or any unaffiliated third party, any such loss or damage shall be the sole responsibility of the Customer. The Customer will not hold the Bank liable for any negligence associated any use of Services under this Agreement by any of the Customer’s employees, agents, subcontractors, service providers, or any unaffiliated third parties. 29. BUSINESS DAYS; POSTING; FUNDS AVAILABILITY.

(a) Business Days. Any day on which a majority of the Bank’s offices are open tothe public for conducting substantially all business functions shall be a "Business Day"; provided, however, that Saturdays, Sundays and federal holidays are not Business Days even if a majority of the Bank’s offices are open.

(b) Posting. Transactions will be posted to the applicable Deposit Account asprovided for in the Bank’s then current Schedule of Funds Availability. The Bank may change any cutoff deadline at any time by giving notice, as required by law, of the change to the Customer. 30. HONORING TRANSACTIONS AND INSTRUCTIONS; FURNISHINGINFORMATION.

(a) Generally. The Bank will honor the Customer’s transactions and instructions(including adjustments and cancellations) only when the Customer has complied with the Agreement. The Bank will be under no obligation to complete any transaction or instruction that: (i) exceeds the Customer’s collected or available funds on deposit with the Bank, even if the Bankhas done so in the past; (ii) is not in accordance with any condition requested by the Customerand agreed to by the Bank; (iii) the Bank has reason to believe the agent may not be authorizedby the Customer; (iv) involves funds subject to a hold, dispute or legal process preventing theirwithdrawal; (v) violates, in the opinion of the Bank, any provision of any present or future riskcontrol program of the Federal Reserve or any other applicable federal or state law; (vi) does notcomply with any other requirement stated in the Agreement or any Bank policy, procedure orpractice; and/or (vii) for the protection of the Bank or the Customer, the Bank has reasonablecause not to honor.31. ORAL INSTRUCTIONS.At the Bank’s option, the Bank may honor the Customer’s oral instructions regarding Service. The Customer agrees that the Bank may in good faith rely on any such oral instructions, which purport to come from the Customer (including any Authorized Party, Contact or Transactional User) or the Customer’s agent without independent verification by the Bank unless Security Procedures require otherwise. 32. ERRONEOUS INSTRUCTIONS.THE CUSTOMER AGREES THAT TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE BANK WILL NOT BE LIABLE FOR ANY INSTRUCTION, AMENDMENT OR CANCELLATION, OR ANY LOSS ARISING THEREFROM, ERRONEOUSLY TRANSMITTED BY THE CUSTOMER OR ANYONE AUTHORIZED BY THE CUSTOMER HEREUNDER OR CONTAINING AN ERROR IN CONTENT AS PROVIDED BY THE CUSTOMER OR ANYONE AUTHORIZED BY THE CUSTOMER HEREUNDER, REGARDLESS OF WHETHER THE BANK FOLLOWED THE SECURITY PROCEDURES AGREED UPON HEREIN OR ANY APPLICATION HERETO. 33. USE OF THIRD PARTIES.

(a) The Bank’s Use of Third Parties. The Bank’s ability to provide certain Services

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depends on its ability to provide access to third-party networks and other third-party services. In the event the Bank determines, in its sole discretion, that it is unable to provide third-party network or services access, the Bank may discontinue the related Service or may provide the Service through an alternate third-party network or service, and shall have no liability for the unavailability of such Service.

(b) The Customer’s Use of Third Parties. The Customer shall notify the Bank in writing of the name of any third party whom it hires, employs, or to whom it delegates its duties or responsibilities under the Agreement, before that third party initiates any transaction or performs an obligation authorized or required under the Agreement. The Customer agrees that it shall be solely responsible for all acts of any such third party. The Customer shall provide information including financial information which the Bank may, in its sole discretion, require from time to time regarding any third-party vendor which the Customer hires, employs, or retains in any manner, to initiate transactions or assume any of the Customer’s duties under the Agreement. The Customer understands and agrees that because of the risks involved in the Services that the Customer utilizes, the Bank may refuse, in its sole discretion, to provide such Services to the Customer if the third party retained by the Customer does not meet the Bank’s qualification criteria. The Bank’s acceptance of any third party retained by the Customer based on the Bank’s qualification criteria is not a representation or warranty by the Bank regarding the fitness of the third party’s capabilities or financial condition, nor is such acceptance by the Bank an endorsement of any third party’s ability to perform the third-party services for the Customer. The Customer agrees that it shall not allow any third party to use any Service hereunder or to process any third-party’s transactions pursuant to the Services hereunder through the Customer or its accounts without the Bank’s prior written consent. 34. CONFIDENTIALITY. The Customer and the Bank each agree that all information concerning the other party or parties which comes into its possession in connection with any Service and/or the performance of the Agreement including, but not limited to, software licensed to the Customer by the Bank, user guides, and Security Procedures including security access codes, keys, PINs, or template numbers, will be maintained as confidential and shall not be used or divulged to any other party except as may be appropriate to enable the Bank to provide the Service or as required by applicable law. The Customer agrees that the Bank may share any information concerning the Customer’s accounts and account transactions with any of the Bank’s affiliates or service providers and to the extent the Bank determines necessary, with the Customer’s third-party processor(s), and state or federal regulators. 35. CUSTOMER RECORDS; OWNERSHIP OF DATA; RESPONSE TO DATA SECURITY BREACH INCIDENTS; RESPONSIBILITY FOR LOSS.

(a) Ownership of Data. The parties understand, acknowledge and agree that all data provided by the Customer to the Bank, and all data produced, compiled or otherwise provided by the Bank to the Customer, in any form or format, is the sole and exclusive property of the Customer and copies thereof shall be provided to the Customer at the Customer’s request from time to time and at any time ("Customer-Owned Data"). Once Customer-Owned Data is delivered by the Bank to the Customer, retrieved by the Customer from the Bank, or otherwise created as a by-product of a transaction between the Customer and the Bank and retained by the Customer, such Customer-Owned Data is solely within the Customer’s possession and control.

(b) Response to Data Security Breach Incidents. The Customer has the sole responsibility for security and protection of Customer-Owned Data. In the event of any security

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breach incident involving any potential or actual unauthorized access or acquisition of Customer-Owned Data (e.g. computer hacking, virus attack, or theft or loss of any equipment containing Customer-Owned Data), it is the Customer’s sole responsibility to determine whether the Customer has the obligation, under applicable law, to notify potentially affected individuals whose sensitive PII may have been compromised by the security breach incident. The Customer must conduct, at its sole cost and expense, any audit and forensic investigation of such security breach incident. The Customer bears the sole responsibility for any and all costs of complying with required data breach notifications to individuals, credit bureaus and/or governmental entities as required by applicable law, and any and all costs for credit report monitoring or fraud monitoring associated with such security breach incident.

(c) Responsibility for Loss. If, despite the Customer efforts, the Customer suffersany damage or loss as a result of any unauthorized access or data security breach (e.g. computer hacking, virus attack, or theft or loss of equipment or other information containing Customer-Owned Data), and regardless of whether such unauthorized access or breach results from the activities of the Customer’s employees, agents, subcontractors, or any unaffiliated third party, any such loss or damage shall be the sole responsibility of the Customer. 36. REPRESENTATIONS AND WARRANTIES BY CUSTOMER.

(a) Definitions. For purposes of this Section and the Agreement, the followingdefinitions apply:

"Affiliate" means a person who controls, is controlled by, or is under common control with another person. "Organization" includes, but is not limited to, a corporation, limited or general partnership, limited liability partnership or limited liability limited partnership, limited liability company, business trust, real estate investment trust, cooperative, association, or other organization, regardless of whether the organization is for-profit, nonprofit, domestic or foreign. "Parent" means an organization that, directly or indirectly through or with one or more of its subsidiaries: (i) owns at least 50 percent of the outstanding ownership or membership interests of another organization; or (ii) possesses at least 50 percent of the voting power of the owners or members of another organization. "Person" includes a corporation, organization, government or governmental subdivision or agency, business trust, estate, trust partnership, association and any other legal entity. "Related Entity" means either (i) a Parent, (ii) a Subsidiary, or (iii) an Affiliate of the Customer. "Subsidiary" means an organization for which another organization, either directly or indirectly through or with one or more of its other subsidiaries: (i) owns at least 50 percent of the outstanding ownership or membership interests of the organization; or (ii) possesses at least 50 percent of the voting power of the owners or members of the organization. (b) Customer Authority. The Customer represents, warrants and agrees that (i) the

execution, delivery and performance by the Customer under the Agreement are within the Customer’s powers, have been duly authorized by all necessary action and do not contravene the Customer’s governing documents (if any) or any law or contractual restrictions; (ii) no

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authorization, approval or other act, and no notice to or filing with any governmental authority or regulatory body is required for the execution, delivery and performance by the Customer of the Agreement; (iii) the Agreement constitutes the legal, valid and binding obligation of the Customer and that the Agreement is enforceable against the Customer in accordance with the terms of the Agreement; (iv) no information furnished by the Customer to the Bank in connection with the Agreement is inaccurate in any material respect, contains any material misstatement of fact, or omits any fact necessary to make such statements not misleading, as of the date it is dated, or if not dated, the date it is given to the Bank; and (v) the Customer has not been induced to enter into the Agreement by any representations or statements, oral or written that have not been expressly incorporated herein by reference. The Customer agrees to deliver to the Bank, upon execution of the Agreement and at any time upon the Bank’s request, a certified copy of a duly adopted resolution, unanimous consent or other similar corporate document or official record authorizing the execution of the Authorization and Agreement and the granting of authority to the person(s) identified therein. 37. LIMITATIONS OF LIABILITY.

(a) Generally. To the extent permitted by law, and except for the remedies providedexpressly herein for breach of the Agreement, the Customer agrees that the Bank will have no liability whatsoever for any loss, damage, or claim (collectively, a "Claim") arising out of the performance of or non-performance of any Service in accordance with the terms of the Agreement, EVEN IF SUCH CLAIM ARISES, IN WHOLE OR IN PART, FROM THE BANK’S NEGLIGENCE, but excluding any claim arising from the Bank’s gross negligence or willful misconduct. The Bank’s duties and responsibilities to the Customer are strictly limited to those described in the Agreement, except with respect to any provisions of the law which cannot be varied or waived by agreement. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE BANK WILL NOT BE LIABLE FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, EXEMPLARY, SPECIAL, OR PUNITIVE DAMAGES (INCLUDING WITHOUT LIMITATION, LOSS OF REVENUE OR ANTICIPATED PROFITS) OR FOR ANY INDIRECT LOSS THAT THE CUSTOMER MAY INCUR OR SUFFER IN CONNECTION WITH THE SERVICES PROVIDED HEREUNDER (EVEN IF THE BANK HAS BEEN INFORMED OF THE POSSIBILITY OF SUCH DAMAGES), INCLUDING WITHOUT LIMITATION, ATTORNEYS’ FEES. Any third-party service provider used by the Bank is an independent contractor and not the Bank’s agent. No clearing house, financial institution, or other instrumentality used in connection with the Services or used to effectuate the Customer’s requests or orders shall be deemed the Bank’s agent. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE BANK AND ITS AFFILIATES AND SUPPLIERS MAKE NO WARRANTIES OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, ABOUT ANY OF THE SERVICES, ANY PROCESSING EQUIPMENT OR ANY PROCESSING SOFTWARE DESCRIBED IN THIS AGREEMENT, AND HEREBY DISCLAIM ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE OR NON-INFRINGEMENT. To the fullest extent permitted by applicable law, and without limiting the generality of the foregoing, the Bank shall not be liable at any time to the Customer or any other person or entity for loss, charge, fee, penalty, expense or other damage resulting from any failure or delay of the performance of the Bank’s responsibilities under the Agreement which is caused or occasioned by any act or thing beyond the Bank’s reasonable control, including, without limitation, legal or regulatory restraint, interruption of transmission or communication facilities, equipment failure, electrical or computer failure, war, civil unrest, emergency conditions, acts of God, fire, storm, or other catastrophe or

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natural disaster, or inability to obtain or delay in obtaining wire services, Internet access, electronic transfers, or electronic file exchange, or refusal or delay by a service provider or another bank or financial institution. In addition, the Bank shall be excused from any failure or delay in executing a transaction hereunder, if such execution would result in the violation of any applicable state or federal law, rule, regulation, guideline, or risk control program or if such execution would result in the Bank exceeding any limitation upon its intra-day net funds position established pursuant to present or future Federal Reserve guidelines. To the fullest extent permitted by applicable law, the Customer agrees that the Bank shall not have any liability whatsoever for any loss caused by the act, error, or omission of the Customer or any other person, including, without limitation, any service provider, any Internet access service provider, any federal reserve bank or transmission or communications facility or any intermediary or receiving financial institution, and no such person shall be deemed the Bank’s agent. The Customer understands and agrees that the fees charged for the performance of the Service(s) have been established in contemplation of these limitations on liability.

(b) Notification in the Event of Claim. The Customer agrees to immediately notifythe Bank of any Claim by the Customer, or any Claim that is made to the Customer by a third party, where an act or omission by the Bank in connection with any Service is alleged to have caused the Customer or such third party to sustain any damages.

(c) Other Limitations. The Customer agrees that any Deposit Account(s) it mayhave at the Bank may be subject to additional liability limitations that are described in the Deposit Account Agreement for any such account(s).

(d) General Limitation of Liability. Subject to the foregoing limitations, the Bank’sliability for loss shall be limited to general monetary damages not to exceed the total amount paid by the Customer for the affected Services, as performed by the Bank under this Agreement for the preceding 30 calendar days.

(e) Reporting of Errors. The Customer acknowledges that it is not possible forServices provided by the Bank hereunder to be free of operator, program or equipment error, and that errors in processing and compiling account data may occasionally occur, requiring adjustments. As such, the Customer agrees to review and verify all results and to maintain adequate controls for insuring both the accuracy of data transmissions and the detection of errors. Unless otherwise required by law, the Bank’s sole responsibility for reporting errors caused by it will be to reprocess information and reports for the applicable period in question and to submit corrected reports at its own expense to the Customer.

(f) In the performance of the services required by this Agreement, the Bank shall beentitled to rely solely on the information, representations, and warranties provided by the Customer pursuant to this Agreement, and shall not be responsible for the accuracy or completeness thereof. The Bank shall be responsible only for performing the services expressly provided for in this Agreement, and will not be liable, except as provided by applicable law, for any error or delay so long as the Bank has acted in accordance with the terms and conditions hereof. Without limiting the foregoing, the Bank will not be liable for any decision to reject Entries or not to process Entries for the reasons provided herein, or if the Customer is in breach of any obligation hereunder, or if the Bank reasonably believes or has actual notice of commencement of bankruptcy or similar proceedings against the Customer; or if such processing involves funds, the ownership of which or the right to make withdrawals from which may be subject to dispute. To the extent provided for herein, the Bank will not be liable if the Customer fails to report any error or discrepancy reflected in a periodic statement or if the Customer fails to report a breach

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of confidentiality of security procedures. The Bank will not be liable to the extent the Customer received the benefit of any Entry, even if such Entry is otherwise erroneous. Further, the Bank shall be liable only for the Customer’s actual damages; in no event shall the Bank be liable for any consequential, special, incidental, punitive or indirect loss or damage which the Customer may incur or suffer in connection with this Agreement, whether or not the likelihood or such damages was known or contemplated by the Bank and regardless of the legal or equitable theory of liability which the Customer may assert, including, without limitation, loss or damage from subsequent wrongful dishonor resulting from the Bank’s acts or omissions pursuant to this Agreement. Without limiting the generality of the foregoing provisions, the Bank shall be excused from failing to act or delay in acting if such failure or delay is caused by legal constraint, interruption of transmission or communication facilities, equipment failure, war, emergency conditions, acts of terrorism or other circumstances beyond the Bank’s control. In addition, the Bank shall be excused from failing to transmit or delay in transmitting an Entry if such transmittal would result in the Bank exceeding any limitation upon its intra-day net funds position established pursuant to present or future Federal Reserve guidelines or in the Bank’s reasonable judgment would otherwise violate any provision of any present or future risk control program of the Federal Reserve or any rule or regulation or any other U.S. governmental regulatory authority.

(g) No Agency. The Bank shall not be responsible for acts or omissions of any thirdparty, including without limitation, any Federal Reserve Bank, courier service, National Automated Clearing House Association (“NACHA”), any transmission or communications facility, or any other party involved with processing of the Entry, any Receiver or RDFI (including without limitation the return of an Entry by such Receiver or RDFI), and no such third party will be deemed the Bank’s agent.

(h) Customer’s Agents. In the event the Customer authorized any third party, suchas a payroll processing service, to perform obligations of or services to the Customer hereunder, the Bank will have no additional liability to the Customer as a result of such agency so long as the Bank acted in accordance with instructions hereunder. The Customer agrees to assume responsibility for any errors or wrongdoing by such third party or any of its employees.

(i) Subject to the foregoing limitations, any damages or other compensation due tothe Customer resulting from the Bank’s performance hereunder will be limited to interest on the funds at issue at the “federal funds rate” at the close of business on each day the error or delay remains uncorrected; provided, however, that if the Bank is unable to recover funds at issue as a result of the Bank’s negligence, the Bank will be liable for the Customer’s actual loss, not to exceed the amount of funds that the Bank is unable to recover, plus interest. In no event will the Bank be liable to the Customer for indirect, consequential, special, punitive, or exemplary damages. 38. INDEMNIFICATION.TO THE EXTENT PERMITTED BY LAW, THE CUSTOMER AGREES TO INDEMNIFY, DEFEND, RELEASE AND HOLD HARMLESS THE BANK AND ITS AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS, INDIVIDUALLY AND COLLECTIVELY, FROM AND AGAINST ANY DAMAGE, LOSS, OR LIABILITY, INCLUDING WITHOUT LIMITATION FINES, PENALTIES, REASONABLE ATTORNEYS’ FEES, INVESTIGATION FEES AND COSTS, AND COURT COSTS, WHETHER AT TRIAL OR ON APPEAL (COLLECTIVELY, A "LOSS") WHICH RESULT, DIRECTLY OR INDIRECTLY, FROM THE BANK’S PROVIDING SERVICES TO THE CUSTOMER HEREUNDER, EVEN IF SUCH LOSS ARISES, IN WHOLE OR IN PART, FROM THE BANK’S NEGLIGENCE, BUT

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EXCLUDING ANY LOSS ARISING FROM THE BANK’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, UNLESS OTHERWISE EXPRESSLY PROVIDED IN THE AGREEMENT OR THE APPLICABLE DEPOSIT ACCOUNT AGREEMENT.

In consideration for the Bank’s making available to the Customer the services hereunder, the Customer agrees to indemnify and hold the Bank harmless from and against all damages, costs, and expenses (including reasonable attorneys’ fees and costs of investigation) arising from or in any manner related to Entries processing or related actions taken back by the Bank in accordance with certain instructions provided by the Customer, including but not limited to:

Actions taken by the Bank to cancel Entries; Any decision by the Bank not to effect a transfer for any specified reason herein; A breach of the Customer’s representations under 19, Customer Representations and

Agreements; A circumstance that would relieve the Bank of liability to the Customer pursuant to

Section 18, Account Reconciliation, or Section 20, Liability: Limitation of Liability; and Otherwise, so long as the Bank acts in compliance with this Agreement.

39. SPECIFIC PERFORMANCE.The Customer agrees that money damages may not be sufficient remedy for any breach of the Agreement and that the Bank shall be entitled to specific performance in addition to any other remedies, at law or in equity, as a remedy for any breach. 40. TERMINATION.

(a) By the Bank With Cause. The Bank may, in its sole discretion, terminate theAgreement in its entirety effective immediately if: (i) the Customer fails to maintain adequate collected and available balances to cover all transactions, costs and expenses; (ii) there is an occurrence of a material change in the Customer’s credit and/or risk analysis criteria as determined by the Bank in its sole and absolute discretion; (iii) the Bank at any time determines that the Customer or the Customer’s third-party vendor does not meet the Bank’s risk or other qualification requirements; (iv) the Bank discovers any willful misconduct (including but not limited to writing or knowingly passing bad checks, or types of fraudulent activity) on the part of the Customer or any other party with respect to originated electronic entries. In any of these events, the Bank’s sole obligation shall be to provide notice of its termination of the Agreement to the Customer as soon as is commercially reasonable.

(b) By Either Party for Any Reason. Either party may terminate the Agreement,with or without cause, upon ten (10) days’ written notice to the other of its intent to do so.

(c) Rights and Responsibilities Upon Termination. In the event of terminationof the Agreement, the rights and responsibilities of the parties shall continue through any applicable settlement period including the Customer’s responsibility to pay the Bank for Service(s), and to maintain a Reserve Account as otherwise stated in this Agreement, with respect to transactions processed prior to the effective date of termination. If this Agreement, or any Service, is terminated by the Bank, the Bank may accelerate all amounts due and to become due under this Agreement, and the Customer shall promptly make full payment to the Bank of all amounts due and amounts incurred under this Agreement. The Bank shall not be liable to the Customer for any losses or damages the Customer may incur as a result of termination of this

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Agreement or any Service. 41. AMENDMENTS

From time to time, the Bank may amend any of the terms and conditions contained in this Agreement, including without limitation, any part of the Schedule(s) attached hereto. Such amendments will become effective upon receipt of notice by the Customer or such later date as may be stated in the Bank’s notice to the Customer. Any use of services provided hereunder after the date the Customer receives notice of amendment will constitute acceptance of the terms of said amendment. The Customer may add or delete instructions and authorizations by submitting a revised Origination Agreement and Schedule(s) properly signed by authorized Customer representatives. Such amendments will be effective after the Bank has received and had a reasonable opportunity to act upon them. 42. GOVERNING LAW; DISPUTE RESOLUTION; JURY TRIAL WAIVER. The Customer and the Bank agree that any controversy or Claim between the Customer and the Bank, or between the Customer and any of the officers, employees, agents, or affiliated companies of the Bank, arising out of or relating to the Agreement, or any of the transactions contemplated under the Agreement, or any of the Services provided pursuant to the Agreement, or any of the discussions or negotiations leading up to the making of the Agreement, or any relationship that results from any of the foregoing, whether based in contract, or an alleged tort, or on any other legal theory, and whether asserted as an original or amended claim, counterclaim, cross claim, or otherwise, shall be governed by federal law and all applicable substantive laws of the State of Texas without regard to its conflict of laws principles and the NACHA Rules. Venue for any such dispute or action shall be in the state and federal courts located in Bexar County. The Bank is located in Texas and that is where the Customer opens the Customer account(s). In addition, the Bank is subject to certain federal and state regulations, as well as national and local clearing house rules regarding some of the matters addressed in this Agreement, and the Bank must comply with these laws, regulations and rules. The Customer agrees that if there is any inconsistency between the terms of this Agreement and any applicable law, regulation or rule, the terms of this Agreement will prevail to the extent any such law, regulation or rule may be modified by agreement. THE CUSTOMER AND THE BANK, FOR THEMSELVES AND EACH OF THEIR RELATED ENTITIES, SUCCESSORS AND ASSIGNS, HEREBY IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY OF ALL DISPUTES, CONTROVERSIES AND CLAIMS BY, BETWEEN OR AGAINST EITHER THE CUSTOMER OR THE BANK WHEN THE DISPUTE, CONTROVERSY OR CLAIM IS TO BE DECIDED BY A COURT. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, no action, regardless of form, arising out of this Agreement may be brought by either party more than two (2) years after the claiming the party knew or should have known of the cause of action. 43. ASSIGNMENT.The Customer may not assign all or any part of its rights or obligations under the Agreement without the Bank’s prior express written consent, which may be withheld in the Bank’s sole discretion. The Bank may assign or delegate all or any part of its rights or obligations under the Agreement, including, without limitation, the performance of the Services described herein. The Agreement will be binding on and inure to the benefit of the successors and permitted assigns of

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either party. 44. NO THIRD-PARTY BENEFICIARIES.The Agreement is for the benefit of the Customer and the Bank and is not intended to grant, and shall not be construed as granting, any rights to or otherwise benefiting any other person, except as expressly otherwise provided for in the Agreement. 45. OTHER AGREEMENTS; SEVERABILITY; CONSTRUCTION.If any provision of the Agreement or of any writing used in connection with the Agreement is unlawful or unenforceable, each such provision or writing will be without force and effect without thereby affecting any other provision hereof. No waiver of the provisions herein shall be effective unless in writing and signed by the party to be charged with such waiver. No waiver shall be deemed a continuing waiver unless expressly so stated in writing. The headings in the Agreement are for convenience or reference only and will not govern the interpretation of the provisions. Unless it would be inconsistent to do so, words and phrases used in the Agreement should be construed so the singular includes the plural and the plural includes the singular. In addition, any dispute arising from or related to the Customer’s accounts with the Bank or the Services provided hereunder shall be governed by applicable federal laws and regulations, Federal Reserve Bank Rules and Operating Circulars, and general commercial bank practices applicable to accounts such as those held by the Customer and Services such as those offered hereunder. Any provision that by its terms or operation is designed to survive termination, expiration or cancellation of this Service shall so survive. This Agreement (including the Schedules attached hereto), together with the other Bank Agreements, Schedules and Disclosures, is the complete and exclusive statement of the agreement the Bank and the Customer with respect to the subject matter hereof and supersedes any prior agreement(s) between the Bank and the Customer with respect to such subject matter. In the event of any inconsistency between the terms of this Agreement and the other Bank Agreements, Schedules and Disclosures, the terms of this Agreement shall govern. In the event performance of the Services provided herein in accordance with the terms of this Agreement would result in a violation of any present or future statute, regulation, or government policy to which the Bank is subject and which governs or affects the transactions contemplated by this Agreement, then this Agreement shall be deemed amended to the extent necessary to comply with such statute, regulation, or policy, and the Bank shall incur no liability to the Customer as a result of such violation or amendment.

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Authorization to Obtain ACH Services

Customer Name Address City, State Zip Phone # Fax #

Authorization to Act for Customer Each of the undersigned is an officer, owner, principal, member, manager, general partner or other authorized individual of the Customer and warrants that the Customer has taken all action required by its governing documents to authorize each of the undersigned to act as Authorized Signers to:

A. Execute the ACH Agreement;B. Accept on behalf of the Customer and Related Entities the terms and conditions

governing the use of such Services, including acceptance of Security Procedures;C. Perform any transactions pursuant to the Agreement;D. Appoint and remove Authorized Administrators and Authorized Individuals.

This authorization shall be binding and the authority shall remain in force until written notice of the revocation or modification authorization is delivered to the Bank. This authorization replaces any and all previous resolutions or authorizations. Authorized Signers:

Name: Title: Business Address: Telephone \ Fax Number: E-mail Address:

Signature:

Delegation of Authority (optional) By signing below, you authorize each person listed below to be an Authorized Administrator with the authority to:

A. Enroll the Customer and Related Entities in any Treasury Management Service throughthe execution of a Treasury Management Services Request;

B. Appoint and remove authorized Contacts or Transactional Users as those terms aredefined in the Treasury Management Services Agreement - Procedures Terms andConditions) to perform authorized transactions under the Agreement and any applicableTreasury Management Services Request; and

C. To perform any transactions pursuant to the Agreement and Treasury ManagementServices Request.

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The Authorized Administrators listed below do not have the authority to execute the Treasury Management Services Agreement or appoint or remove any Authorized Administrators.

Name: Title: Business Address: Telephone \ Fax Number: Email Address:

Signature:

Name: Title: Business Address: Telephone \ Fax Number: Email Address:

Signature:

This delegation shall be binding and the authority shall remain in force until written notice of any revocation or modification is delivered to the Bank.

Date Signature of Authorized Signer

Name (Print) Certification The undersigned represents and warrants to the Bank on behalf of the Customer that the signatures appearing above are the true and authentic signatures of the Authorized Signers and further certifies that the Customer and Related Entities have taken all action required by their governing documents to appoint the Authorized Signers to act on behalf of the Customer and Related Entities and that the undersigned has full authority to execute this Agreement. Note: For a corporation, this Schedule must be signed by the secretary or assistant secretary. For a partnership, limited partnership, limited liability partnership, limited liability company or association, one of the general partners or members must sign. For trusts, the trustee, agent or account signer must sign. For a government institution, an authorized signer must sign. Sole proprietors are not required to complete this certification.

Date Signature Name: Title: Telephone:

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Schedule ACH-1 ACH Services Agreement

(Account Information/Authorized Individuals/Third Party Processing)

The following corporate information is required for ACH Origination account(s) and user setup in accordance with the ACH Services Agreement and between the Customer and TransPecos Banks SSB (“Bank”) is effective as of: ______________ 20_____. Capitalized terms not defined herein shall have the meanings ascribed to them in the ACH Services Agreement and Cash Management Services Agreement.

Customer Name: Customer Address: Telephone: Email Address:

1. Authorized Accounts. The Customer represents and warrants that the accounts listedbelow in this section, which are held with TransPecos Banks SSB (“Bank”), are owned entirelyby the Customer, and the Customer hereby authorizes the Bank to make debit and creditentries to the authorized accounts listed below pursuant to ACH Entry requests submited tothe Bank by the Customer. The Customer authorizes the bank to charge fees related to ACHServices to any or all of the following accounts:

Account Number Account Title

The authorized accounts listed above are collectively known as the Account, further described in Section 15 of this ACH Services Agreement.

2. Authorized Individuals. The following person(s) is(are) hereby authorized to make ACHtransfers on behalf of the Customer. The Customer understands and agrees that the Bankshall dishonor any request for transfer not specifically authorized hereby. THE CUSTOMERAND THE BANK AGREE THAT THIS SCHEDULE ACH-1 REPLACES AND SUPERSEDES ANYPREVIOUS AUTHORIZATION(S) PROVIDED TO THE BANK.

Authorized Individual Name

Phone Number

Email Address Emergency Phone Number

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3. Transfer Limitations.

Each Authorized Individual may initiate or approve an ACH file as indicated in the table below. An individual may have both initiation and approval authority if so indicated. Each Authorized Individual may initiate an ACH file only up to the maximum limit indicated. Each Authorized Individual may only initiate an ACH file from the account or accounts indicated.

Authorized Individual

Name

Authorized Account

Aggregate Per Day

Limit

Aggregate Per Month Limit

Dual Control Required (Yes/No)

Where indicated in the immediately preceding table, Authorized Individuals will be subject to Dual Control. Dual Control requires two Authorized Individuals working together to successfully submit an ACH file to the Bank. One Authorized Individual is required to create and approve the ACH file and the other Authorized Individual must approve and submit the file. Even if an Authorized Individual is entitled to create, approve, and submit an ACH file, that single Authorized Individual will not be able to approve and release the same transfer request if the Authorized Individual is designated by the Customer as being subject to Dual Control in the immediately preceding table. Shall the Customer desire to change the dual control designations, the Customer shall submit a new Schedule ACH-1 to the Bank and give the Bank a reasonable time to update the Customer’s dual control designations.

Notwithstanding the transfer limitations listed in the table above, in no event shall the Customer be allowed to initiate or approve ACH files which, if processed and settled, would exceed either of the following two limitations for settlement on a single Business Day:

1) the available collected balance in an authorized account; or2) $_________________, which is an amount set by the Bank.

[Signature Page Follows]

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Customer Name: TransPecos Banks SSB

By: By: Customer’s Authorized Signature Bank Officer’s Authorized Signature

Name: Name:

Date: Date:

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Schedule ACH-2 ACH File Submission and Security Procedures

1. Delivery Instructions:

All ACH originating files containing Entries must be approved by the Bank before being processed by the Bank’s ACH originating processing system. The Bank will accept and process a file that passes the Bank’s validation process and will reject a file that does not pass the Bank’s validation process. The Customer agrees that an initiated file that passes the Bank’s validation process and all Entries thereon will be deemed to be authorized by the Customer. The Customer may set up and submit ACH files on the Bank’s Online Banking System. The Customer may also submit complete ACH files in an Excel, comma separated value, tab delimited, or fixed position file format. All files must be submitted through the Bank’s Online Banking System. The Customer is encouraged to submit a test record to the Bank to verify that the file formatting is correct prior to submitting records to be processed.

The Customer must complete the batch approval process, or deliver a properly formatted file in order to provide sufficient time for TransPecos Banks SSB to process the ACH Entry or Entries within the NACHA deadlines. All entries must be submitted prior to 3:00 p.m. CST of the Bank’s business day within the following timeframe:

a) Credit Entries: 2 business days prior to the “Effective Date” b) Debit Entries: 1 business days prior to the “Effective Date”

Entries submitted after 3:00 p.m. CST on a business day will be deemed received on the Bank’s following business day.

2. Written Authorizations for Consumer Entries:

The Customer shall obtain written authorizations pursuant to the Rules for consumer entries and shall retain the consumer authorizations (or a reasonable facsimile of the original items) for a period of no less than two (2) years after the revocation or cessation of the authorization. The Customer shall, upon request within two (2) business days, provide the Bank an original or copy of the Receiver’s authorization for consumer debit entries.

3. Pre-notifications:a. The Customer must send pre-notification (zero-dollar) entries at least six (6)

Business Days prior to initiating the first live (dollar) entry to a particular account.b. If a prenotification is returned by either the ACH Operator or the RDFI, the

Customer should make any necessary corrections before transmitting anotherentry

c. If a prenotification results in a Notification of Change, then the Customer shouldmake the required change within six banking days of receipt of the NOCinformation or prior to initiating another entry, whichever is later.

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1 ICS DPA-RPI/DS-T3 - Version 2015-07

Deposit Placement Agreement

You, the undersigned, enter into this ICS Deposit Placement Agreement (this “Agreement”) with (“we” or “us”). This Agreement states the terms and conditions on which we (as your “Relationship Institution”) will endeavor to place funds into deposit accounts at receiving depository institutions (each a “Destination Institution”) from a transaction account with us into which you (the “Depositor”) have deposited funds for such placement (the “Transaction Account”). The Destination Institutions will be depository institutions at which deposit accounts are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to maximum deposit insurance amounts.

We will endeavor to place your funds at Destination Institutions using ICS®, the Insured Cash Sweep® service of Promontory Interfinancial Network, LLC (“Promontory”). The amount of your funds that we place in the deposit accounts that have been established for the placement of your funds at Destination Institutions (each a “Deposit Account”) will not exceed the FDIC standard maximum deposit insurance amount (“SMDIA”), currently $250,000, at any one Destination Institution.

We offer placement of funds through ICS to businesses, nonprofit entities, and, subject to applicable law, public entities. We may also choose to place funds through ICS for individuals with a demonstrated need to maintain large cash balances (e.g., $500,000 or more) over a 12-month period. You must be capable of using, and you agree to use, the ICS Depositor Control Panel (“DCP”), an online tool described in this Agreement, to review proposed placements and for other purposes. You also agree to receive notices concerning ICS deposits that may be posted on the DCP or sent by email.

Funds in your Deposit Accounts will be “deposits,” as defined by federal law, at the Destination Institutions. We offer both the ICS demand option and the ICS savings option. Each Deposit Account at a Destination Institution in which your funds will be placed using the ICS demand option will be a demand deposit account (“DDA”). Each Deposit Account at a Destination Institution in which your funds will be placed using the ICS savings option will be a money market deposit account (“MMDA”). With the ICS demand option, you are permitted unlimited withdrawals. With the ICS savings option, you are permitted up to six withdrawals per month.

1. Your Relationship With Us

1.1. Agency and Custodial Relationship

(a) We will act as your agent in placing your funds in DepositAccounts through ICS and, under our separate custodial agreement with you (the “Custodial Agreement”), as your custodian for the Deposit Accounts. We will not act as your investment adviser, and we will have no obligation to advise you of alternative investments. The Bank of New York Mellon (“BNY Mellon”) will act as our sub-custodian, settlement agent, reconciliation agent, and recordkeeper. BNY Mellon will also act as recordkeeper for Destination Institutions at which your Deposit

Accounts are established, maintaining certain deposit account records for those Destination Institutions.

(b) Each Deposit Account (i) will be recorded on the records ofthe Destination Institution in the name of BNY Mellon, as our sub-custodian, (ii) will be recorded on the records of BNY Mellon in our name, as your custodian, and (iii) will be recorded on our records in your name, all in a manner that will permit the Deposit Account to be FDIC-insured to the same extent as if you held it directly with the Destination Institution. For purposes of Article 8 of the Uniform Commercial Code, we will act as your securities intermediary for, and will treat as financial assets, your Deposit Accounts and all your security entitlements and other related interests and assets with respect to your Deposit Accounts, and we will treat you as entitled to exercise the rights that comprise your Deposit Accounts. All interests that we hold with respect to your Deposit Accounts are held by us solely as your securities intermediary and are not our property. You are and will remain the owner of all funds of yours that we place for you through the ICS service and any interest on those funds.

(c) As further described below, on each day that is not aSaturday, a Sunday, or another day on which banks in New York, New York, are authorized or required by law or regulation to close (a “Business Day”), our proposed allocation of your funds to Destination Institutions will be available to you in advance on the DCP to approve or reject. We have entered into an agreement with Promontory to use the ICS service in connection with such allocations. In using ICS, we will adhere to Promontory’s policies and procedures. Promontory is not your agent or custodian, however, and it is not responsible for placement of your funds or custody of your Deposit Accounts.

1.2. Termination of Custodial Relationship

(a) Either you or we may terminate the custodial relationshipbetween you and us at any time. You may not transfer your Deposit Accounts to another custodian, but you may dismiss us as your custodian for a Deposit Account and request that your ownership of the Deposit Account will be recorded in your name on the books of the Destination Institution. We will endeavor to cause any such request that we receive from you to be promptly forwarded to the Destination Institution. Each Destination Institution at which your funds may be placed has agreed that it will promptly fulfill any such requests, subject to its customer identification policies and other standard account opening terms and conditions.

(b) If a Deposit Account has been recorded in your name onthe books of a Destination Institution pursuant to Section 1.2(a), (i) you will be able to enforce your rights in the Deposit Account directly against the Destination Institution, but we will no longer have any custodial responsibility with respect to the Deposit Account and you will no longer be able to enforce your rights in the Deposit Account against the Destination Institution through us, and (ii) the interest rate applicable to the Deposit Account will be the interest rate that the Destination Institution establishes, which may be lower than an interest rate that we might have established.

EXHIBIT D

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2. Your Deposits at Destination Institutions

2.1. The Deposit Accounts and the Interest Rate

(a) Each of your Deposit Accounts, including the principal balance and the accrued interest, will be a deposit obligation of the Destination Institution at which the Deposit Account has been established and will not be an obligation of Promontory, BNY Mellon, or us. We, as your custodian, will maintain on our books and records, either directly or with the assistance of BNY Mellon, a custodial account in which we will hold your interests with respect to the Deposit Accounts (an “ICS Custodial Account”). We will establish for you separate ICS Custodial Accounts for funds placed using the ICS demand option and for funds placed using the ICS savings option. In addition, we may permit you to have multiple ICS Custodial Accounts for your business purposes with either option, and we may also permit you to have multiple Transaction Accounts associated with an ICS Custodial Account. Having multiple ICS Custodial Accounts or multiple Transaction Accounts will not expand the FDIC insurance coverage available to you in a single insurable capacity.

(b) The interest rate for your Deposit Accounts at Destination Institutions on any day will be the then-current rate we establish for them, which may be any rate (including zero) and which we may modify at any time (the “Interest Rate”). We may establish different Interest Rates for your use of the ICS demand option and the ICS savings option. We do not offer or promise you any particular Interest Rate. In particular, we do not promise you that an Interest Rate will be any particular rate or that an Interest Rate that may be effective at a given time will be effective at a later time. Through your continued participation in ICS, you accept each applicable Interest Rate.

(c) The Destination Institutions have agreed that interest on your Deposit Accounts will accrue and compound daily at the applicable Interest Rate and will be credited to principal at least once each month. Payment of the full amount of all accrued interest with respect to a Deposit Account at a Destination Institution will be solely the responsibility of, and solely enforceable against, that Destination Institution. We will have no indebtedness to you for any such amount.

(d) In accordance with federal regulations, for funds placed using the ICS savings option, each Destination Institution reserves the right to require written notice of an intended withdrawal from an MMDA not less than seven days before the withdrawal is made. The Destination Institutions have indicated that they do not currently intend to exercise this right.

2.2. Balances and Statements

(a) On any day, you may confirm through the DCP the aggregate principal balance in your Deposit Accounts (your “Program Balance”) for each ICS Custodial Account, and your principal balance and accrued interest at each Destination Institution for each ICS Custodial Account, as of the settlement of payments to and from ICS participating institutions through BNY Mellon (“ICS Settlement”) for the preceding Business Day or, after completion of ICS Settlement on a Business Day, for that Business Day.

(b) For each ICS Custodial Account, we will provide you with periodic account statements that include your Program Balance as of the end of the statement period, the total interest you have earned on

your Deposit Accounts during the period, the rate of return you have earned on the daily average closing principal balance in your Deposit Accounts for the period (which will be referred to as the “Statement Period Yield”), and your principal balance at each Destination Institution in which your funds are deposited as of the end of the period. You should retain these account statements.

(c) The account information available on the DCP as described in Section 2.2(a), and the periodic statements described in Section 2.2(b), will be your record of your Deposit Accounts.

3. Program Deposits and Program Withdrawals

3.1. Triggering Events

(a) Schedule 1 to this Agreement sets forth events that will trigger a transfer of funds at ICS Settlement from the Transaction Account to the Deposit Accounts (a “Program Deposit”) or a transfer of funds at ICS Settlement from the Deposit Accounts to the Transaction Account (a “Program Withdrawal”).

(b) Depending on the terms of Schedule 1, an event that triggers a Program Deposit or a Program Withdrawal (a “Triggering Event”) may be a specified change in the Transaction Account balance, a request by you that we accept, or another event described in Schedule 1.

(c) If we permit you to have multiple Transaction Accounts associated with a single ICS Custodial Account, Schedule 1 may specify separate sets of Triggering Events for each Transaction Account or one set of Triggering Events for all Transaction Accounts.

3.2. Program Deposits

(a) The occurrence of a Triggering Event for a Program Deposit does not result in a transfer of funds to your Deposit Accounts until the applicable ICS Settlement occurs. Schedule 2 to this Agreement contains important information regarding the status of funds in the Transaction Account.

(b) Subject to the other terms and conditions of this Agreement, and except as provided in the next subsection, a Triggering Event for a Program Deposit under Schedule 1 will result in a transfer of funds to your Deposit Accounts at ICS Settlement the next Business Day (a “Regular Program Deposit”).

(c) Schedule 1 states whether a transfer of funds to your Deposit Accounts at ICS Settlement on the same Business Day (a “Same-Day Program Deposit”) is available and, if so, the cutoff time for you to request a Same-Day Program Deposit (the “Same-Day Deposit Cutoff Time”). To the extent Schedule 1 so provides, and subject to the other terms and conditions of this Agreement, a request that we receive and accept before the Same-Day Deposit Cutoff Time will be a Triggering Event that results in a Same-Day Program Deposit.

(d) We may impose a maximum Program Balance amount for your deposits placed through ICS and will inform you of any maximum Program Balance we impose. Even if a Triggering Event for a Program Deposit occurs, we may choose not to transfer the amount to your Deposit Accounts to the extent it would cause the Program Balance to exceed the maximum amount. In addition, we may choose not to

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transfer to the Deposit Accounts an amount that we have credited to the Transaction Account, but have not yet collected from a third party.

(e) There is no per-month limit on the number of permitted Program Deposits.

3.3. Program Withdrawals

(a) Subject to the other terms and conditions of this Agreement, a Triggering Event for a Program Withdrawal under Schedule 1 will result in a transfer of funds from your Deposit Accounts at ICS Settlement the next Business Day (a “Regular Program Withdrawal”). If the Triggering Event occurs on the last Business Day of a month, the Program Withdrawal will occur on the first Business Day of the following month for purposes of the Program Withdrawal limit that applies in connection with the ICS savings option.

(b) Schedule 1 states whether the transfer of funds from your Deposit Accounts at ICS Settlement on the same Business Day (a “Same-Day Program Withdrawal”) is available and, if so, the cutoff time for you to request a Same-Day Program Withdrawal (the “Same-Day Withdrawal Cutoff Time”). To the extent Schedule 1 so provides, and subject to the other terms and conditions of this Agreement, a request that we receive and accept before the Same-Day Withdrawal Cutoff Time will be a Triggering Event that results in a Same-Day Program Deposit.

(c) With the ICS demand option, there is no per-month limit on the number of permitted Program Withdrawals.

(d) With the ICS savings option:

(i) You are permitted up to six Program Withdrawals per month for an ICS Custodial Account. To remain within this limit, you should satisfy yourself that the Triggering Events for Program Deposits and Program Withdrawals under Schedule 1 are appropriate in light of your anticipated day-to-day activity in any Transaction Account associated with the ICS Custodial Account.

(ii) In addition to applying the Program Withdrawal limit, we will allocate funds so that, in accordance with federal regulations, your funds are not withdrawn from an MMDA at any one Destination Institution more than six times in a month.

(iii) Although we may permit you to have more than one ICS Custodial Account for your business purposes, you may not have more than one ICS Custodial Account for the purpose of avoiding the effects of the Program Withdrawal limit.

(iv) If Triggering Events on the same Business Day result in both a Same-Day Program Withdrawal, on that Business Day, and a Regular Program Withdrawal, on the next Business Day, the Triggering Events will have resulted in your use of two of your six Program Withdrawals for the month.

3.4. Program Withdrawal Advances; Security Interest

(a) If Schedule 1 provides that we will advance funds to you in anticipation of a Program Withdrawal, or if we otherwise decide in our discretion to advance funds to you in anticipation of a Program Withdrawal, you will owe the amount of these funds to us and we will

retain from the funds we receive at ICS Settlement the amount we have advanced to you.

(b) With respect to any amount that you owe to us pursuant to Section 3.4(a):

(i) you grant us, and acknowledge that we have, a security interest in, and a lien on, your Deposit Accounts, related security entitlements, and other related interests and assets that we may hold for you as custodian and securities intermediary pursuant to the Custodial Agreement for the amount you owe to us,

(ii) if a Destination Institution fails before a Program Withdrawal is completed, we may retain the amount of the Program Withdrawal from the proceeds of your FDIC insurance claim to satisfy the amount you owe to us, and

(iii) to the extent the amount you owe to us is not satisfied from the interests and assets we are holding for you pursuant to the Custodial Agreement, or from the proceeds of any FDIC insurance claim, the amount remains owed by you to us and is payable on demand.

(c) If, in a separate agreement, you have granted us a security interest in your Deposit Accounts or in any security entitlements or other interests or assets relating to your Deposit Accounts as collateral for a loan to you or otherwise, we may decline to honor a request for a Program Withdrawal, or decline to honor a debit transaction in the Transaction Account that would trigger a Program Withdrawal or be funded by a Program Withdrawal, to the extent the Program Withdrawal would cause your Program Balance to fall below the loan amount or other amount that you have agreed to maintain in your Deposit Accounts or to which the security interest applies. If, in a separate agreement, you have granted us a security interest in the Transaction Account, we also may decline to honor debit transactions in the Transaction Account in accordance with the separate agreement.

3.5. Excess Program Withdrawals

(a) With the ICS savings option, the consequences of exceeding the limit of six Program Withdrawals depend on whether you give us, in Schedule 1, an advance instruction to endeavor to reallocate your funds from the ICS savings option to the ICS demand option in the circumstances described in Section 3.5(b) (a “Reallocation Instruction”).

(b) If you give us a Reallocation Instruction in Schedule 1, the following provisions will apply:

(i) So long as you have not exceeded the limit of six Program Withdrawals for the ICS savings option in any two previous months:

(A) you may use all six permitted Program Withdrawals in a month, and

(B) if an excess (seventh) Program Withdrawal occurs before the last Business Day of the month, we will endeavor to reallocate all the remaining funds in your MMDAs at Destination Institutions to DDAs at Destination Institutions, and we will transfer to the Transaction Account any such funds not so reallocated.

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(ii) If you have exceeded the limit of six Program Withdrawals for the ICS savings option in any two previous months and a sixth Program Withdrawal occurs in a month, (A) we will endeavor to reallocate all the remaining funds in your MMDAs at Destination Institutions to DDAs at Destination Institutions, and we will transfer to the Transaction Account any such funds not so reallocated, and (B) the ICS Custodial Account will be ineligible for the ICS savingsoption for the remainder of the month and for the next six fullmonths. Your eligibility to use the ICS demand option will not beaffected.

(c) If you do not give us a Reallocation Instruction inSchedule 1, the following provisions will apply:

(i) If you have not exceeded the limit of six ProgramWithdrawals for the ICS savings option in any two previous months:

(A) you may use all six permitted Program Withdrawals in a month, and

(B) if an excess (seventh) Program Withdrawal occursbefore the last Business Day of the month, we will transfer all the remaining funds in your MMDAs at Destination Institutions to the Transaction Account.

(ii) If you have exceeded the limit of six Program Withdrawals for the ICS savings option in any two previous months and a sixth Program Withdrawal occurs in a month, (A) we will transfer all the remaining funds in your MMDAs at Destination Institutions to the Transaction Account, and (B) the ICS Custodial Account will be ineligible for Program Deposits for the remainder of the month and for the next six full months. Your eligibility to use the ICS demand option will not be affected.

(d) If all the funds in MMDAs for an ICS Custodial Account havebeen returned to the Transaction Account pursuant to Section 3.5(b) or Section 3.5(c), no Program Deposits for the ICS savings option will occur before the end of the month. If, in addition, the ICS Custodial Account has become ineligible for Program Deposits, no Program Deposits for the ICS Custodial Account will occur during the period of ineligibility.

4. Daily Allocation and Depositor Control

4.1. Daily Allocation; Review and Consent

(a) In addition to allocating your funds to each DestinationInstitution in an amount that is under the FDIC insurance limit, the ICS process for allocating Program Deposits, Program Withdrawals, and funds already on deposit reflects various considerations, including the need for certain Destination Institutions to receive deposits in amounts they have placed for their own customers and possible limits on the amounts a Relationship Institution is authorized to place or a Destination Institution has agreed to receive. Applicable deposit amounts may change from day to day. Accordingly, the allocation of funds takes place each Business Day.

(b) As a result of the daily allocation of funds in ICS and theallocation objectives outlined in Section 4.1(a), the set of Destination Institutions to which your funds on deposit are allocated on a Business Day, and the amount allocated to each Destination Institution, may differ from a previous Business Day’s allocation. A different allocation may

involve the movement of funds from one Destination Institution to another Destination Institution, even though you do not have a Program Deposit or a Program Withdrawal. Such movements of funds will not affect any Interest Rate.

(c) You exercise control over the allocation of your fundsthrough direct contact with us and through the DCP. You are responsible for reviewing the important information we provide you through the DCP, including information regarding proposed allocations that we provide each Business Day. In addition, on request at any time, we will provide you with a list of all Destination Institutions.

(d) Although we will not allocate your funds to DestinationInstitutions that you exclude or reject as set forth below, you authorize and consent to the allocation of your funds at Destination Institutions that you approve, or do not exclude or reject, as set forth below.

4.2. Destination Institution Exclusions

(a) We will not allocate your funds to any Destination Institutionthat is on your then-effective list of exclusions from eligibility to receive your funds through ICS (your “List of Exclusions”).

(b) You may enter the name of any depository institution onyour List of Exclusions in Schedule 4 to this Agreement. An exclusion in Schedule 4 is effective when we have signed the Agreement. You may later add exclusions to your List of Exclusions, or subtract exclusions from your List of Exclusions, by contacting us in a manner we specify. If you add an exclusion in this manner, the new exclusion will be effective within one Business Day after the first Business Day on which we have received the notice from you.

(c) If, on a Business Day, you have outstanding deposits thatwe have placed for you using Promontory’s CDARS® service, and you have provided the same taxpayer identification number to us for purposes of CDARS and ICS, our allocation of your funds at Destination Institutions for that Business Day in ICS:

(i) will not include allocation to a Destination Institution thatis the subject of a then-effective designation by you as ineligible to receive your funds through CDARS, and

(ii) will not cause the balance in your Deposit Accounts at aDestination Institution, together with the outstanding deposits, if any, that we have placed for you at that Destination Institution through CDARS, to exceed the SMDIA.

4.3. Depositor Control Panel

(a) Promontory will assist us in providing the DCP to you.Schedule 3 to this Agreement provides access information for the DCP. When you first log in to the DCP using the login credentials described in Schedule 3, you will be required to change your DCP user name and password.

(b) You represent that you have a computer with Internetaccess, an e-mail address, the ability to download and print information from the DCP for your records, and the knowledge and experience to use an online tool for the DCP functionality. In addition, you acknowledge that you will be required to obtain and maintain all equipment and services necessary for access to the DCP.

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4.4. Depositor Placement Review

(a) Each Business Day, your aggregate principal balance that will be in Deposit Accounts at Destination Institutions after that day’s ICS Settlement will be provisionally allocated to Destination Institutions. The amount allocated will reflect your Program Balance as of the last ICS Settlement, plus any Program Deposit that will occur at the day’s ICS Settlement, minus any Program Withdrawal that will occur at the day’s ICS Settlement. The allocation may provide that previously-deposited funds will be removed from one or more Destination Institutions and deposited in one or more other Destination Institutions.

(b) After the provisional allocation occurs on a Business Day, but before it becomes final at the day’s ICS Settlement, Depositor Placement Review (“DPR”) will occur through the DCP. Even if a Destination Institution is not on your List of Exclusions, the final allocation that day will not allocate your funds to a Destination Institution at ICS Settlement if you reject it during DPR through the DCP. The initial DPR time period is set forth in Schedule 3. We may change the DPR period by posting advance notice of the change on the DCP. Your rejection of a Destination Institution will be effective only if you submit it, as specified in the DCP, before DPR ends.

(c) In DPR, you will see a list of Destination Institutions to which your funds are proposed to be allocated at ICS Settlement later that day (the “Proposed Placement List”), reflecting the provisional allocation of all your funds, including funds that will be moved from one Destination Institution to another Destination Institution. The Proposed Placement List will include the principal balance allocated to each Destination Institution. If you review the Proposed Placement List, and you click the approval button or you do not reject any of the Destination Institutions on the list, you will be approving the proposed allocation and your funds will be allocated in accordance with the list.

(d) If you reject any of the Destination Institutions on the Proposed Placement List, you will be approving allocation to Destination Institutions on the list that you do not reject. After entering rejections, if sufficient time remains in DPR, you will have the opportunity to review a list of other Destination Institutions to which your funds could be allocated (the “Alternate Placement List”). If you click the approval button for the Alternate Placement List, or you do not reject any of the Destination Institutions on it, you will be approving the allocation of your funds to any of the listed Destination Institutions. If you reject any of the Destination Institutions on the Alternate Placement List, you will be approving allocation to listed Destination Institutions that you do not reject. Your funds may be allocated to any combination of Destination Institutions on the Proposed Placement List and the Alternate Placement List that you do not reject.

(e) If the provisional allocation on a Business Day would result in funds of yours currently at one Destination Institution being moved to another Destination Institution and you reject the other Destination Institution in DPR that Business Day, the funds will not necessarily remain at the first Destination Institution. The funds will be allocated to a Destination Institution that you do not reject or returned to the Transaction Account.

(f) A Destination Institution that you reject in DPR will also be added to your List of Exclusions, for purposes of future allocations, within one Business Day after the Business Day on which you submit the rejection.

(g) We do not guarantee that all your funds will be allocated to Destination Institutions on any particular day, even if they were allocated to Destination Institutions on a previous day. Exclusions of Destination Institutions, and rejections of Destination Institutions in DPR, may increase the chance that funds will not be allocated. If funds not yet transferred to your Deposit Accounts are not allocated to a Destination Institution on a Business Day, the funds will remain in the Transaction Account. If funds previously transferred to the Deposit Accounts are not allocated to a Destination Institution on a Business Day, the funds will be returned to the Transaction Account.

5. FDIC Insurance Considerations

5.1. Deposit Insurance Coverage

(a) You may obtain information about FDIC deposit insurance coverage by visiting the FDIC website at www.fdic.gov or by contacting the FDIC by letter, email, or telephone. All your deposits at a Destination Institution in the same insurable capacity (whether you are acting directly or through an intermediary) will be aggregated for purposes of the SMDIA. You should add to your List of Exclusions any FDIC-insured depository institution at which you have other deposits in the same insurable capacity. Insurable capacities include individual accounts, joint accounts, and individual retirement accounts. Separate divisions within a corporate entity are not eligible for separate insurance coverage, and a separate taxpayer identification number (“TIN”) does not necessarily evidence or establish a separate insurable capacity. It is your obligation to determine whether funds we are placing for you through ICS are maintained in separate insurable capacities. We may use your TIN to identify you, and we place your funds on the understanding that you are not depositing funds for placement under more than one TIN in the same insurable capacity.

(b) Your deposits in the Transaction Account, alone or when aggregated with your other deposits with us in the same insurable capacity, may exceed the SMDIA. Schedule 2 describes measures you should take if you cannot accept risks associated with uninsured deposits in the Transaction Account.

(c) The requirements for FDIC deposit insurance coverage of the deposits of the United States government, state, county, and municipal governments and their political subdivisions, the District of Columbia, and the Commonwealth of Puerto Rico are set forth in FDIC regulations. If you are a governmental unit, you are responsible for determining whether the requirements for deposit insurance have been met. We are not responsible for uninsured losses resulting from the placement of deposits that are not eligible for deposit insurance.

(d) The records maintained for us by BNY Mellon regarding ownership of your Deposit Accounts will be used to establish your eligibility for deposit insurance coverage. Accordingly, you must immediately report to us any changes in ownership information. We will inform BNY Mellon of any such changes so that it will have accurate information to provide to the FDIC if a Destination Institution fails. The FDIC could also require you to provide additional documentation.

5.2. Deposit Insurance Payments

(a) If deposit insurance payments become necessary for one of your Deposit Accounts, the FDIC is required to pay the principal amount plus accrued interest to the date of the closing of the Destination

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Institution, as prescribed by law, subject to the SMDIA. No interest is earned on deposits from the time a Destination Institution closes until insurance payments are received. As an alternative to making a direct insurance payment, the FDIC may transfer the deposits of an insolvent institution to a solvent institution. The solvent institution may change the interest rate on a deposit, subject to your right to withdraw the funds.

(b) We will notify you if we receive a deposit insurance payment from the FDIC with respect to your Deposit Account at a failed Destination Institution. Should we receive a deposit insurance payment with respect to your Deposit Account at a failed Destination Institution, we will place the amount of the payment in one or more Deposit Accounts at Destination Institutions pursuant to the deposit placement procedures set forth in this Agreement, subject to the other terms and conditions of this Agreement, including Section 3.4.

(c) In general, if an insured depository institution is closed, theFDIC is required by law to pay the insured deposits “as soon as possible,” either by cash or by transferring the deposit to a new insured depository institution. It is possible, however, that an insurance payment could be delayed. We will not be obligated to make any payment to you in satisfaction of a loss you might incur as a result of a delay in an insurance payment, and we will not be obligated to advance funds with respect to any such payment.

5.3. Responsibility to Monitor Deposits; Publicly Available Information

(a) You are responsible for monitoring the total amount of funds in your Deposit Accounts at each Destination Institution in each insurable capacity to determine the extent of FDIC deposit insurance coverage available to you for deposits at that Destination Institution. You should confirm that each allocation of your funds to Destination Institutions is consistent with your exclusions and rejections by visiting the DCP and viewing the allocation, recognizing that the funds could be allocated to different Destination Institutions on any Business Day.

(b) Publicly available financial information concerning theDestination Institutions can be obtained by you at the website of the National Information Center of the Federal Reserve System at www.ffiec.gov/nicpubweb/nicweb/nichome.aspx.

6. Additional Considerations

6.1. Reciprocal and One-Way

(a) We may participate in the ICS service through one or bothof two different forms of the service. When we place your funds using ICS® ReciprocalSM, we will receive matching funds placed by other participating institutions for their customers and pay a fee to Promontory. When we place your funds using ICS® One-WaySM, we will not receive matching funds placed by other participating institutions for their customers or pay a fee to Promontory, but we and Promontory may receive fees from Destination Institutions in connection with funds placed. The fees may be different for different Destination Institutions.

(b) The interest you receive on your Deposit Accounts will beearned at the applicable Interest Rate, whether we use ICS Reciprocal or ICS One-Way in placing your funds. The Interest Rate may be different depending on which form of ICS we use. In ICS Reciprocal, the fee we pay to Promontory may affect the applicable Interest Rate. In ICS One-Way, fees paid by Destination Institutions to us or to

Promontory, or cost-of-funds rates at which Destination Institutions may request funds, may affect the Interest Rate. We will not collect a fee from you for the placement of your funds through ICS.

(c) Schedule 4 includes two boxes relating to which form of the ICS service we may use in connection with the placement of your funds. If you check the first of these two boxes, we may use ICS Reciprocal, ICS One-Way, or both. We will not be obligated to inform you of the Interest Rate that might be available using the other form, and we may select a form of ICS that provides greater benefits to us. If you check the second of these two boxes, we may use only ICS Reciprocal in connection with the placement of your funds.

(d) If you are subject to restrictions on the placement of yourfunds at depository institutions, you are responsible for determining whether the placement of your funds through ICS, in accordance with Schedule 4, satisfies the restrictions.

6.2. Compare Rates

(a) We are not advising you regarding alternative investments,and you are responsible for comparing the rates of return and other features of your Deposit Accounts to other available deposit accounts, and other kinds of investments, before deciding to have us place your funds using ICS.

(b) An applicable Interest Rate for your Deposit Accounts maybe higher or lower than interest rates on comparable deposits available directly from us, from the Destination Institutions that establish your Deposit Accounts, from other Destination Institutions, or from insured depository institutions that are not Destination Institutions. Without limiting the foregoing, an Interest Rate may be lower than an interest rate established for another customer for which funds are being placed or a cost-of-funds rate for a Destination Institution.

(c) Promontory may offer us and our employees non-cashincentives of insignificant monetary value, such as plaques, in connection with our placement of funds.

6.3. Allocation Considerations and Compensatory Payments

(a) The ICS allocation process is subject to applicable law andmay be affected by our objectives, Promontory’s objectives, or both, including administrative convenience, reduction of costs, and enhancement of profits.

(b) Participating institutions in the ICS service may makecompensatory payments resulting in payments to other participating institutions, or receive compensatory payments resulting from payments by other participating institutions, reflecting the difference between an interest rate for a placing institution’s customers and a rate at which the receiving institution would otherwise pay interest.

(c) If we were to become insolvent, the FDIC could transfercustody of your Deposit Accounts to a new custodian that participates in ICS. Alternatively, you could elect to establish your Deposit Accounts directly with the Destination Institutions or you could elect to have the funds in your Deposit Accounts returned to you.

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6.4. Mutual Institution Voting and Subscription Rights

(a) Your funds may be placed in a Deposit Account at a Destination Institution that is in the mutual form of organization. Such a Deposit Account will be identified on the books of the mutual institution in the name of the sub-custodian and not in your name. The sub-custodian will not attend or vote at any meeting of the depositor members of a mutual institution, or exercise any subscription rights in a mutual institution’s mutual-to-stock conversion, either on its own behalf or on your behalf. You hereby waive any right you may have to attend or vote at any meeting of the depositor members, or to receive or exercise any subscription rights you may have in the event that the mutual institution converts from mutual to stock form, even if you held a Deposit Account as of an applicable record date.

(b) If we receive from the sub-custodian notice of a meeting of depositor members of a mutual institution or other materials or information relating to a mutual institution’s mutual-to-stock conversion, we may forward such notice, materials, or information to you. If you wish to receive such notice, materials, or information directly from the mutual institution, attend or vote at any meeting of the depositor members of the mutual institution, or receive subscription rights in the event the mutual institution converts from mutual to stock form, you must dismiss us as custodian before the applicable record date (a date that is usually at least one year in advance of the date the mutual institution’s board of directors adopts a plan of conversion) and have your ownership of the Deposit Account recorded in your name directly on the books of the mutual institution.

7. Other Provisions

7.1. Release and Use of Identifying Information

(a) You consent to our providing your name, TIN or other alphanumeric identifier, and other identifying information (“Identifying Information”) to BNY Mellon, Promontory, and other parties providing services in connection with ICS (each a “Service Provider”). A Service Provider may use the Identifying Information only in connection with its provision of services relating to ICS. We or a Service Provider may also provide Identifying Information to a Destination Institution, but will do so only to the extent necessary to comply with a request by you or your agent or to comply with applicable law. In addition, we or a Service Provider may provide Identifying Information to the FDIC in connection with a deposit insurance claim.

(b) We will not provide Identifying Information to any other party unless we determine that (i) we are required by applicable law to do so or (ii) we are permitted by applicable law to do so and have reasonable grounds to do so to protect our own legal or business interests or the legal or business interests of Promontory or BNY Mellon. Promontory may use and disclose information regarding aggregated activity of ICS depositors, provided it does not use or disclose any Identifying Information in a manner contrary to this Section 7.1.

7.2. Liability and Dispute Resolution

(a) We are responsible for maintaining, directly or through a Service Provider, appropriate records of our placements for you. We are also responsible for not placing your funds through ICS at any Destination Institution that is the subject of a then-effective exclusion on your List of Exclusions, at any Destination Institution that is the subject

of an effective rejection by you at the time of the applicable ICS Settlement, in an ICS placement at a Destination Institution under a single TIN in an amount that exceeds the SMDIA, or in a manner that violates Section 4.2(c). IF ALL OR PART OF YOUR DEPOSIT AT A

DESTINATION INSTITUTION IS UNINSURED BECAUSE OF OUR FAILURE TO

FULFILL THESE RESPONSIBILITIES, AND IF THE DESTINATION INSTITUTION

FAILS AND YOU DO NOT OTHERWISE RECOVER THE UNINSURED PORTION, WE

WILL REIMBURSE YOU FOR YOUR DOCUMENTED LOSS OF THE UNINSURED PORTION.

(b) SUBJECT TO OUR REIMBURSEMENT OBLIGATION IN THE

PRECEDING SUBSECTION, AND EXCEPT AS MAY BE OTHERWISE REQUIRED BY

APPLICABLE LAW, WE WILL NOT BE LIABLE, AND IN NO EVENT WILL

PROMONTORY OR BNY MELLON BE LIABLE, TO YOU OR TO ANY THIRD PARTY

FOR ANY LOSS OR DAMAGES INCURRED OR ALLEGEDLY INCURRED IN

CONNECTION WITH THIS AGREEMENT. WITHOUT LIMITING THE FOREGOING, WE, PROMONTORY, AND BNY MELLON WILL NOT HAVE ANY LIABILITY TO YOU

OR ANY THIRD PARTY FOR: (I) ANY LOSS ARISING OUT OF OR RELATING TO A

CAUSE OVER WHICH WE DO NOT HAVE DIRECT CONTROL, INCLUDING THE

FAILURE OF ELECTRONIC OR MECHANICAL EQUIPMENT OR COMMUNICATION

LINES, TELEPHONE OR OTHER INTERCONNECT PROBLEMS, UNAUTHORIZED

ACCESS, THEFT, OPERATOR ERRORS, GOVERNMENT RESTRICTIONS, OR

FORCE MAJEURE (E.G., EARTHQUAKE, FLOOD, SEVERE OR EXTRAORDINARY

WEATHER CONDITIONS, NATURAL DISASTERS OR OTHER ACT OF GOD, FIRE, ACTS OF WAR, TERRORIST ATTACKS, INSURRECTION, RIOT, STRIKES, LABOR

DISPUTES OR SIMILAR PROBLEMS, ACCIDENT, ACTION OF GOVERNMENT, COMMUNICATIONS, SYSTEM OR POWER FAILURES, OR EQUIPMENT OR

SOFTWARE MALFUNCTION), (II) DELAY IN ANY FDIC INSURANCE PAYMENT, (III) THE FINANCIAL CONDITION OF ANY DESTINATION INSTITUTION OR THE

ACCURACY OF ANY FINANCIAL INFORMATION ABOUT ANY DESTINATION

INSTITUTION, OR (IV) ANY SPECIAL, INDIRECT, PUNITIVE, INCIDENTAL, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS).

(c) ANY DISPUTES ARISING OUT OF OR IN CONNECTION WITH THIS

AGREEMENT WILL BE GOVERNED BY THE DISPUTE RESOLUTION, ARBITRATION, CHOICE OF LAW, VENUE, WAIVER OF JURY TRIAL, AND COSTS

RELATED TO DISPUTES PROVISIONS, IF ANY, CONTAINED IN YOUR CUSTODIAL AGREEMENT.

7.3. Miscellaneous

(a) This Agreement constitutes the entire agreement between you and us relating to the placement of deposits through ICS and any other matter herein, supersedes prior agreements, understandings, negotiations, representations, and proposals, written or oral, relating to any matter herein, and may not be amended by any oral representation made or oral agreement reached after the execution of this Agreement.

(b) Either party may terminate this Agreement on written notice to the other, but the obligations of both parties will survive with respect to any funds deposited at the time of termination. In addition, the provisions of this Section 7 will survive termination.

(c) Schedules 1, 2, 3, and 4 (each a “Schedule”) are incorporated into and made part of this Agreement. We may amend this Agreement, including any Schedule, prospectively by giving you written notice of the amendment at least fourteen (14) days before the effective date of the amendment, which will be specified in the amendment. We may provide written notice of the amendment by means of a posting on the DCP, an entry on your account statement, an email message, or a printed letter.

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(d) This Agreement may not be assigned, in whole or in part, by either party except by operation of law or as required by applicable law, and any purported assignment in violation hereof is void.

(e) The headings in this Agreement are not intended to describe, interpret, define, or limit the scope or intent of this Agreement

or any clause hereof. The term “applicable law” refers to all applicable statutes, rules, regulations, and judicial orders, whether federal, state, or local. The term “including” does not imply exclusion. The term “month” refers to the calendar month.

By signing below, you (as Depositor) and we (as Relationship Institution) agree to be legally bound by this ICS Deposit Placement Agreement, effective when you and we have signed it. If the Transaction Account is a joint account, each owner of the Transaction Account must sign this Agreement, and funds in your Deposit Accounts will be held in the same joint ownership capacity.

RELATIONSHIP INSTITUTION SOLE OR PRIMARY DEPOSITOR

Institution name:

Signature:

Name and title of authorized signatory:

Date signed:

Depositor name:

Signature:

Name and title of authorized signatory (if not individual):

Depositor TIN or other alphanumeric identifier (and type):

Email address: @

Date signed:

ADDITIONAL DEPOSITOR IF JOINT ACCOUNT

Depositor name:

Signature:


Email address: @

Date signed:


Depositor name:

Signature:


Email address: @

Date signed:

(Add signature lines as needed.)

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S1 1 (T3) ICS DPA-RPI/DS-T3 – Version 2015-07

SCHEDULE 1 TO ICS DEPOSIT PLACEMENT AGREEMENT

Program Deposits and Program Withdrawals

1. Specified Terms (a) The Same-Day Deposit Cutoff Time and the Same-Day Withdrawal Cutoff Time are as follows:

: A.M. Eastern Central Mountain Pacific (check one)

(b) Reallocation Instruction:

If you check this box, you are giving us a Reallocation Instruction as specified in Section 3.5.

If you check this box, you are not giving us a Reallocation Instruction.

2. Program Deposits

(a) The Triggering Event for a Regular Program Deposit is a Regular Program Deposit request by you that we receive and accept. Subject to

the other terms and conditions of this Agreement, if such a Triggering Event occurs, we will transfer the requested amount to your Deposit Accounts at ICS Settlement on the next Business Day.

(b) The Triggering Event for a Same-Day Program Deposit is a Same-Day Program Deposit request by you that we receive and accept before the Same-Day Deposit Cutoff Time on a Business Day. Subject to the other terms and conditions of this Agreement, if such a Triggering Event occurs, we will transfer the requested amount to your Deposit Accounts at ICS Settlement later the same Business Day.

(c) If a Triggering Event for a Program Deposit occurs, we may debit the Transaction Account and credit a holding account before the transfer of funds to your Deposit Accounts occurs at ICS Settlement. 3. Program Withdrawals

(a) The Triggering Event for a Regular Program Withdrawal is a Regular Program Withdrawal request by you that we receive and accept.

Subject to the other terms and conditions of this Agreement, if such a Triggering Event occurs, we will transfer the requested amount from your Deposit Accounts at ICS Settlement on the next Business Day.

(b) The Triggering Event for a Same-Day Program Withdrawal is a Same-Day Program Withdrawal request by you that we receive and accept

before the Same-Day Withdrawal Cutoff Time on a Business Day. Subject to the other terms and conditions of this Agreement, if such a Triggering Event occurs, we will transfer the requested amount from your Deposit Accounts at ICS Settlement later the same Business Day.

(c) Subject to the other terms and conditions of this Agreement, including Section 3.4, and subject to the rules and cutoff times that otherwise apply to Transaction Accounts with us, after we have received and accepted your Program Withdrawal request, we may in our discretion advance funds to you in anticipation of a Program Withdrawal to honor your debit transactions in the Transaction Account so long as the sum of your funds in the Transaction Account and your funds in your Deposit Accounts of the applicable type, after taking into account any pending Program Deposits and any pending Program Withdrawals, is not less than zero. We may do so even if the amount of the debit transaction exceeds the Transaction Account balance. As set forth in Section 3.4, you will owe us any amounts that we credit as advances in anticipation of a Program Deposit and we will retain those amounts from the funds we receive at ICS Settlement.

(d) If a Triggering Event for a Program Withdrawal occurs, we may credit the Transaction Account and debit a holding account before the transfer

of funds from your Deposit Accounts occurs at ICS Settlement.

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S2 1 ICS DPA-RPI/DS-T3 - Version 2015-07


Transaction Account

Although we will not place your funds through ICS at any one Destination Institution in an amount that exceeds the FDIC standard maximum deposit insurance amount (“SMDIA”) of $250,000, balances in your Transaction Account, separately or together with your other balances with us in the same insurable capacity, may exceed the SMDIA. For example, your balances may exceed the SMDIA until ICS Settlement for a pending large Program Deposit or if all funds in your Deposit Accounts are returned to your Transaction Account for the remainder of a month as a result of the application of the Program Withdrawal limit. If you cannot accept the risk associated with uninsured deposits in these or other circumstances, it will be your responsibility to make arrangements with us to have such funds collateralized, protected by a properly-executed repo sweep arrangement, or otherwise adequately protected, in a manner consistent with applicable law. You should consult your legal advisor to determine whether a particular collateralization arrangement is consistent with applicable law.

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Depositor Control Panel and Depositor Placement Review

1. Depositor Control Panel The address of the Depositor Control Panel is https://www.depositorcontrol.com. Your initial login credentials for the Depositor Control Panel will be as follows:

User name: The account number for the Transaction Account

Password: The last four characters of the TIN or other alphanumeric identifier entered for the sole or primary Depositor on the signature page of this Agreement

You will also be required to enter the email address you have provided to us. We will separately advise you of any additional steps required of you by additional security controls.

2. Depositor Placement Review

The DPR period each Business Day will be as follows:

12:00 noon to 12:30 P.M. Eastern time

We may change the DPR period by posting notice on the DCP in advance of the change.

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Service Form and Exclusions

1. Reciprocal and One-Way

If you check this box, we may use ICS Reciprocal, ICS One-Way, or both in connection with our placement of your funds.

If you check this box, we will use only ICS Reciprocal in connection with our placement of your funds.

2. List of Exclusions

Each depository institution entered on your List of Exclusions below will be ineligible, as of the date you and we have signed the Agreement, to receive your funds through ICS as a Destination Institution. You may subsequently change your List of Exclusions as provided in the Agreement. The List of Exclusions should include the city and state of the institution’s main office (rather than the city and state of a branch location). The List of Exclusions may also include the institution’s FDIC certificate number or transit routing number. Attach additional pages as necessary. If you do not list any exclusions, you should enter “none” under Name of Institution on the first line (but your signature after a blank list will constitute your acknowledgment that you have not listed any exclusions whether or not you enter “none”).

Name of Institution

City and State

FDIC Certificate Number or Routing Number (optional)

Signature of sole or primary Depositor:

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1 Custodial Agreement T-RPI - Version 2015-07

Custodial Agreement

You, the undersigned, enter into this Custodial Agreement (this “Agreement”) with (“we” or “us”).

1. Pursuant to this Agreement, you authorize us (as your “Relationship Institution”) to hold and act as your custodian with respect to all deposit accounts, including all time deposits, money market deposit accounts, and demand deposit accounts, issued or established at other participating institutions pursuant to the CDARS Deposit Placement Agreement or the ICS Deposit Placement Agreement for funds of yours placed through CDARS®, the Certificate of Deposit Account Registry Service®, or ICS®, the Insured Cash Sweep® service (collectively, the “Deposit Accounts”) and all your security entitlements and other related interests and assets with respect to your Deposit Accounts (collectively, the “Related Entitlements”). The custodial account in which we will hold your Deposit Accounts and Related Entitlements (the “Custodial Account”) comprises all the CDARS and ICS custodial accounts that we maintain for you.

2. As your custodian, we may (i) cause your Deposit Accounts to be titled in our name or in the name of our sub-custodian, (ii) collect for your account all interest and other payments of income or principal pertaining to your Deposit Accounts, (iii) endorse on your behalf any check or other instrument received for your account that requires endorsement, (iv) deposit your funds in, or withdraw your funds from, your Deposit Accounts in accordance with your instructions, (v) deliver or transfer funds from another account with us to your Deposit Accounts or deliver or transfer funds from your Deposit Accounts to another account with us in accordance with your instructions, (vi) for Deposit Accounts that are time deposits, surrender for payment for your account maturing Deposit Accounts and those for which early withdrawal is requested, (vii) execute and deliver or file on your behalf all appropriate receipts and releases and other instruments, including whatever certificates may be required from custodians or may be necessary to obtain exemption from taxes and to name you when required for the purpose of the instrument, and (viii) take such other actions as are customary or necessary to effectuate the purposes of this Agreement.

3. For purposes of Article 8 of the Uniform Commercial Code as adopted in (the “UCC”), we will act as your securities intermediary for, and will treat as financial assets, any Deposit Accounts and Related Entitlements that we hold for you pursuant to this Agreement. The Custodial Account will constitute a securities account, as defined in the UCC.

4. We may comply with any writ of attachment, execution, garnishment, tax levy, restraining order, subpoena, warrant, or other legal process that we believe (correctly or otherwise) to be valid. We may notify you of such process by telephone, electronically, or in writing. If we are not fully reimbursed for records research, imaging, photocopying, and handling costs by the party that served the process, we may charge such costs to your account, in addition to any minimum fee we charge for complying with legal processes.

5. We may honor any legal process that is served personally, by mail, or by electronic mail or facsimile transmission at any of our offices or an office of our agent (including locations other than where the funds, records, or property sought is held), even if the law requires personal delivery at the office where your account or records are maintained.

6. We will have no liability to you for any good-faith act or omission by us in connection with this Agreement. You agree to indemnify us and our sub-custodian, and to hold us and our sub-custodian harmless from, all expenses (including counsel fees), liabilities, and claims arising out of any good-faith act or omission by us in connection with this Agreement or compliance with any legal process relating to the Custodial Account that we believe (correctly or otherwise) to be valid. You agree to pay any service charges that we impose on the Custodial Account.

7. You may be an individual in an individual capacity, more than one individual in a joint capacity, or a trust, partnership, corporation, or other legal entity. We may accept instructions on your behalf from any individual who signs this Agreement as or on behalf of a Depositor and from any of the following individuals:

Name Title or Legal Capacity

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2 Custodial Agreement T-RPI - Version 2015-07

By signing below, you and we agree to be legally bound by this Custodial Agreement.

RELATIONSHIP INSTITUTION SOLE OR PRIMARY DEPOSITOR

Institution name:

Signature:

Name and title of authorized signatory:

Date signed:

Depositor name:

Signature:

Name and title of authorized signatory (if not individual):


Email address: @

Date signed:


Depositor name:

Signature:


Email address: @

Date signed:


Depositor name:

Signature:


Email address: @

Date signed:

(Add signature lines as needed.)

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CDARS® Deposit Placement Agreement

You, the undersigned, and ______________________________________ (referred to in this agreement as “we” and “us”) are entering into this agreement to set forth the terms and conditions under which we will assist you from time to time in placing your funds in time deposits with depository institutions (each an “Insured Institution”) whose accounts are insured by the Federal Deposit Insurance Corporation (“FDIC”). Through an arrangement with Promontory Interfinancial Network, LLC (“Promontory”), we will endeavor to place your funds in time deposits (“CDs”) issued by Insured Institutions through Promontory’s Certificate of Deposit Account Registry Service®, or CDARS®. These CDs will be issued only in principal amounts that, when aggregated with interest to accrue over the term of the CD, will not exceed the Standard Maximum Deposit Insurance Amount (“SMDIA”) for deposits of one depositor at one Insured Institution ($250,000). We also will act as the custodian with respect to your CDs pursuant to the custodial agreement that we have separately entered into with you (“Custodial Agreement”). The terms of our custodial relationship with you are set forth in the Custodial Agreement. Funds held in accounts with us pending placement through CDARS or resulting from payments on CDs may be subject to the FDIC insurance limits applicable to those deposits and therefore may not be fully insured by the FDIC1. CDARS is a proprietary process owned by Promontory that reviews requests submitted by participating financial institutions (e.g., banks and registered broker-dealers) on behalf of their customers to allocate the customers’ funds to Insured Institutions for placement by the participating financial institution in CDs at those Insured Institutions (“Orders”). Orders must be submitted by a specified date (“Order Date”), and Promontory will process the Orders and propose allocations of funds to Insured Institutions that are willing to accept deposits on a specified “Order Allocation Date,” which currently is the same as the Order Date. Your funds will be placed, and CDs will be issued to you, on the “Settlement Date,” which is the day after the Order Allocation Date. CDARS offers different types of transactions through which we may place your funds with Insured Institutions. In a “CDARS ReciprocalSM Transaction,” we receive funds for deposit from other participating financial institutions in an amount equal to the amount of funds that we have placed for you using CDARS on a Settlement Date, and we do not receive a fee. In a “CDARS One-WaySM Transaction,” we do not receive funds for deposit, but we may receive a fee from one or more Insured Institutions that received deposits using CDARS on that Settlement Date. Funds that we place for you through a CDARS transaction may be placed at an Insured Institution without regard to whether the Insured Institution is participating in CDARS on that Order Date through a CDARS Reciprocal Transaction or through a CDARS One-Way Transaction or otherwise. We will place your funds through a CDARS Reciprocal Transaction unless we notify you that we will place your funds through a CDARS One-Way Transaction and you consent to our doing so. If you wish to have us place your funds only through a CDARS Reciprocal Transaction, you may check a box provided for this purpose at the end of this Agreement. If you do not check this box we will not place your funds through a CDARS One-Way Transaction without your consent. This agreement sets forth important information about the placement process. By signing this agreement you agree to be bound by its terms each time that you submit funds to us for placement. Please read it carefully. Some of the features of the CDs and the placement process are: • When we place your funds, you will be issued CDs by Insured Institutions that have

entered into agreements with Promontory. • We will act as your custodian with respect to those CDs. • The CDs issued to you by Insured Institutions will have the interest rates and annual

percentage yields (“APY”) you have agreed to with us. • You will not be charged a fee in connection with CD placements. • You select the maturities and payment terms of your CDs from those that are available

through CDARS at the time that you submit your funds for placement. • You may designate any Insured Institution as ineligible to receive your funds. • No secondary market for the CDs currently exists, but early withdrawal of any CD you

purchase will be available, subject to penalties that may be substantial.

1 See Section 4(b) below for a description of FDIC insurance coverage of funds held in accounts with

us pending placement using CDARS or resulting from payments on CDs previously placed using CDARS.

Section 1. Your Relationship With Us (a) Agency and Custodial Relationship We have entered into a contract with Promontory pursuant to which we will use CDARS to assist us in endeavoring to place your funds at other Insured Institutions that have also entered into contracts with Promontory. Pursuant to our contract with Promontory, we will adhere to Promontory’s policies and procedures in placing your funds. We will act as your agent in connection with the placement of your funds in CDs. As set forth above, we will place your funds through a CDARS Reciprocal Transaction unless you agree to having your funds placed through a CDARS One-Way Transaction. Although we will act as your agent in connection with the placement of your funds, we are not acting as your investment adviser and have no obligation to advise you of alternative investments available through CDARS or otherwise. Further, we make no representations with respect to the interest rates on deposits available on an Order Date through us or through CDARS, and we may receive greater benefits when we place your funds through one type of CDARS transaction than when we do so through another type of CDARS transaction or than we would if you instructed us to make a deposit other than through a CDARS transaction. We will act as your custodian with respect to your CDs acquired through CDARS. We have entered into an agreement with The Bank of New York Mellon to act as our sub-custodian with respect to the CDs for which we are acting as your custodian. No physical certificates evidencing the CDs will be issued. Each CD for which we act as your custodian (i) will be recorded on the records of the Insured Institution that issues the CD in the name of our sub-custodian, (ii) will be recorded on the records of the sub-custodian in our name, and (iii) will be recorded on our records in your name, all in a manner that will permit your CD to be FDIC insured to the same extent as if you held it directly with the Insured Institution. The records of the sub-custodian will also identify you as the owner of the CDs based on information provided to The Bank of New York Mellon by us. You will receive from us a written confirmation of the issuance of your CDs and periodic account statements that will reflect your ownership of your CDs. The confirmation of CD issuance and the account statement(s) will be the only evidence that you will receive of your ownership of the CDs. You should retain the confirmation and the account statement(s) for your records. While we are acting as your custodian, (i) all payments with respect to the CDs by the Insured Institutions that issue the CDs will be made to us, and we will credit the funds to an account or accounts you maintain with us or disburse the funds pursuant to your instructions, and (ii) you can enforce your rights in the CDs through us. You may not transfer the CDs directly to another custodian. At your election, you may dismiss us as custodian, and your ownership of a CD may be recorded in your name on the books of the Insured Institution that issued the CD. If you choose to have the CD maintained in your name on the books of the Insured Institution that issued the CD, you will be able to enforce your rights in the CD directly against that Insured Institution. (b) Fees You will not pay a fee in connection with your placement of funds. If we place your funds through a CDARS Reciprocal Transaction, we will pay a fee to Promontory for using the CDARS order allocation services and certain other services. If we place your funds through a CDARS One-Way Transaction, we and Promontory will receive fees from one or more Insured Institutions receiving deposits through CDARS in respect of that Order Date. We may, in our discretion, waive some or all of our fee, and Promontory may, in its discretion, waive some or all of its fee. We and Promontory may receive different fees from different Insured Institutions in connection with the same transaction.

(c) Limits on Placements Although we, through our arrangement with Promontory, will endeavor to place your funds, Promontory is not obligated to allocate Orders in a way that results in the placement of some or any of your funds. If any of your funds are not placed, the unplaced funds will be returned to you. You may ask us to submit a new Order for the placement of unplaced funds on another Order Date. Please review Section 2(b) concerning limitations in the CDARS allocation process.

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(d) Each CD Will Be an Obligation of the Issuer Each CD will be a deposit obligation of the Insured Institution that issued the CD and will not be, either directly or indirectly, our obligation or an obligation of Promontory. Your CD will not be issued until the issuing Insured Institution receives and accepts your funds. (e) APY If you are not a “consumer” for purposes of the Truth-in-Savings Act (“TSA”), or if our communication with you in connection with your placement of funds through CDARS is not an “advertisement” for purposes of TSA, we are not obligated to provide you with an APY on your CDs. (f) Mutual Institution Voting and Subscription Rights If a CD is issued to you by an Insured Institution that is formed as a mutual organization (i.e., the depositors have an ownership interest in the organization) (“Mutual Institution”) for funds placed for you through CDARS, you may receive through us a notice of a meeting of the depositor members of that mutual institution. Because your CD will be identified on the books of the Mutual Institution in the name of the sub-custodian and not in your name, you will not be entitled to attend the meeting or vote by proxy. Under our agreement with the sub-custodian, the sub-custodian will forward meeting notices to us (for delivery to you) but it will not attend the meeting or vote by proxy. It is possible that the Mutual Institution also may send notice of its intention to convert to a stock institution, and provide for priority, nontransferable subscription rights for depositor members of the Mutual Institution to purchase stock in the conversion. Because your CD will be identified on the books of the Mutual Institution in the name of the sub-custodian and not in your name, you will not be entitled to exercise any subscription right to purchase the stock, or to vote on the conversion. The sub-custodian will not purchase any stock in the conversion. Accordingly, if you wish to receive meeting notices directly, attend meetings and vote (to convert from the mutual to stock form of ownership, form a mutual holding company or otherwise) with respect to a CD you have acquired from a Mutual Institution through CDARS, or if you wish to receive subscription rights in the event the Mutual Institution converts from mutual to stock form, you will have to dismiss us as custodian prior to the applicable record date (a date usually at least a year in advance from the date the Mutual Institution’s board of directors adopts a plan of conversion) and have your ownership of the CD recorded in your name directly on the books of the Mutual Institution that issued the CD. Section 2. Promontory (a) General Promontory is not your agent and is responsible solely to us for performing the services for which we have retained it. Promontory uses the proprietary process included in CDARS to allocate Orders submitted on a specified Order Date by Insured Institutions to other Insured Institutions that are willing to accept deposits through CDARS. On an Order Allocation Date, Promontory uses the CDARS allocation process to propose placements of funds with Insured Institutions wishing to receive funds, subject to your approval as set forth in the procedures described in Section 3 of this agreement (“Placement Procedures”). CDs for funds placed through CDARS will be issued to you on the business day immediately following the Order Allocation Date (the “Settlement Date”). A “business day” means any day other than a Saturday, a Sunday or a day on which banks in New York, New York, are authorized or required by law or regulation to close. In addition to the fees payable to it in connection with CDARS Reciprocal Transactions and CDARS One-Way Transactions, Promontory may realize profits or incur losses in connection with the placement of your funds at one or more Insured Institutions on the terms you have selected. (b) Factors Affecting the CDARS Allocation Process Promontory is not obligated to allocate Orders. Furthermore, the allocation process utilized by Promontory may reflect considerations of federal and state law, funding needs of Insured Institutions, general economic conditions, Promontory’s objectives, or other factors determined by Promontory in its sole discretion. Promontory may allocate the placement of your funds in a manner that enhances Promontory’s profits without increasing the interest rate available to you.

(c) CDARS Reciprocal Transaction When we notify Promontory that we wish to submit your funds for placement through a CDARS Reciprocal Transaction on an Order Date, we will agree to accept for deposit an equal or greater amount of deposits through CDARS. On the Settlement Date, CDs will be issued to you and we will accept deposits placed by other participating institutions. Your funds may be placed at Insured Institutions that are submitting funds for placement through a CDARS Reciprocal Transaction or at Insured Institutions that have requested deposits through CDARS with respect to the same Order Date. When your funds are placed through a CDARS Reciprocal Transaction, we may make or receive payments based upon the difference between the interest rate we have agreed upon with you for your CDs and the interest rate we pay on CDs that we issue to customers of other Insured Institutions. These payments will be calculated pursuant to a formula that uses the projected volume-weighted average interest rate for deposits placed through CDARS Reciprocal Transactions on the same day your funds are placed. These payments are intended to provide us with the same interest cost on the CDs we issue to depositors of other Insured Institutions through a CDARS Reciprocal Transaction as we would have incurred had we issued the CDs directly to you. Any payments made or received by us, or fees received by Promontory, will not change the terms we have agreed upon with you for your CDs. (d) CDARS One-Way Transaction On any Order Date, Promontory may receive commitments from Insured Institutions wishing to receive funds through a CDARS One-Way Transaction. Based on these commitments, Promontory communicates to us the maximum amount of funds that can be submitted for placement through CDARS One-Way Transactions in each CD maturity on that Order Date. Within the CDARS allocation procedures One-Way Transaction funds and Reciprocal Transaction funds are fungible, and One-Way Transaction funds may be placed at Insured Institutions that are submitting funds for placement through CDARS Reciprocal Transactions or that have requested funds for deposit on that Order Date. If we place your funds through a CDARS One-Way Transaction, we will not receive deposits on the Settlement Date, and we will not make or receive payments as described under “CDARS Reciprocal Transactions” above. Your funds may be placed at Insured Institutions that are submitting funds for placement through CDARS Reciprocal Transactions or that have requested funds for deposit on that Order Date. As set forth above, we and Promontory each will receive a fee when we place your funds through a CDARS One-Way Transaction, and we or Promontory may waive all or part of this fee. Any fees received by us or Promontory will not change the terms we have agreed to with you for your CDs. Section 3. Placement Procedures (a) Order Dates and Terms of CDs Each time you notify us that you wish to place funds through CDARS, we will inform you of (i) the available Order Dates, (ii) the CD maturities and payment terms available on each Order Date, (iii) the penalties that will be imposed on you for early withdrawal, (iv) any limits with respect to placing funds, and (v) whether we intend to submit the funds for placement through a CDARS One-Way Transaction. The terms and conditions available for CDs may change from time to time. Each CD issued by an Insured Institution will have a principal amount that, when aggregated with interest to accrue during the term of the CD, will not exceed the SMDIA. You may obtain information about the terms of the CDs made available through CDARS on an Order Date at www.CDARS.com/products. The interest rates and APYs for the CDs we offer to obtain for you through CDARS will be agreed upon by you and us. For placements through CDARS Reciprocal Transactions, the interest rate and APY we agree upon with you will reflect the interest rate and APY we are willing to pay, after paying a fee to Promontory. For placements through CDARS One-Way Transactions, the interest rate and APY we agree upon with you will reflect the interest rate and APY that Insured Institutions requesting funds through CDARS One-Way Transactions for that Order Date are willing to pay after paying fees to Promontory and us. Interest on your CDs will compound daily. Payment options may vary based on the maturity of the CD. You may have the option with some CDs to choose between monthly

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payments of interest and payment of interest at maturity, or other available interest payment terms. In addition, depending on the terms and conditions of a particular CD, you may be able to change the payment terms of the CD during the term of the CD. If you choose to have interest paid to you during the term of the CD, you may not be able to re-invest the interest you are paid at an interest rate as favorable to you as the interest rate paid on the CD. Each CD will earn interest from the day your funds are deposited at the Insured Institution that issues the CD up to, but not including, the day your CD matures. If the date on which a payment with respect to a CD is due is not a business day, that payment will be made on the previous business day. (b) Presumption of CDARS Reciprocal Transaction We will submit an Order for a CDARS Reciprocal Transaction unless we inform you that we will place your funds through a CDARS One-Way Transaction and you agree to our doing so. If you are a public funds depositor or a nonprofit institution submitting funds for placement and wish your funds to be placed only in a CDARS Reciprocal Transaction, please inform us by checking the box at the end of this agreement. (c) List of Insured Institutions Each time you notify us that you desire to place funds through CDARS, you may obtain from us a list of Insured Institutions at which your funds may be placed. Not all of these Insured Institutions may be available to issue CDs with respect to an Order Date, and, before the list is provided to you, we may have designated some Insured Institutions as ineligible to receive funds from our depositors. You should review the list provided to you and inform us of the name(s) of any Insured Institution(s) at which you do not want to make a deposit, for any reason. At your option, you may also provide us with the names of Insured Institutions not then on the list at which you do not want to make a deposit. Once you have informed us of the name of an Insured Institution at which you do not want to make a deposit, your funds – whether submitted for placement through CDARS at the time you sign this agreement or in the future – will not be placed at that Insured Institution until you notify us in writing that funds may be placed in the Insured Institution. (For your convenience, at the time you sign this agreement you may indicate to us on Schedule 1 the names of Insured Institutions at which you do not want to make a deposit.) Upon your request, we will obtain from Promontory the list it maintains of Insured Institutions at which you do not wish to make a deposit. As set forth below, you are responsible for monitoring your deposits at each Insured Institution for purposes of FDIC insurance coverage. (d) Request for Placement of Funds When you request that we place your funds using CDARS, we will submit an Order to Promontory, which will include the type of CDARS transaction, the Order Date, the amount of funds to be placed, and the terms (including interest rate and APY) of the CDs you are seeking. The Order will be in a form established by Promontory. In order for us to submit an Order, you must provide us with all information required by Promontory no later than the time specified in paragraph 1 of Schedule 2. (e) Approval of Proposed Placements We will not know the name(s) of Insured Institution(s) at which your funds will be placed at the time we submit an Order. On each Order Allocation Date for which we submitted an Order, we will make available to you a list of the names of Insured Institutions at which your funds are proposed to be placed, the proposed deposit amount at each Insured Institution and the names of proposed alternate Insured Institutions at which your funds may be placed. You may obtain that list from us on the Order Allocation Date at or after the time specified in paragraph 3 of Schedule 2, and at any time prior to the time specified in paragraph 4 of Schedule 2, you may notify us of the name or names of any of the proposed or proposed alternate Insured Institutions at which you do not want to make a deposit. Although you may direct us not to place funds at a proposed or alternate proposed Insured Institution, you cannot direct us to place funds at a specific Insured Institution or specify the amount to be placed at any Insured Institution. If you eliminate one or more of the proposed or proposed alternate Insured Institutions from the list, or if one or more of them becomes unavailable for placement for any reason, your funds will be placed at the Insured Institutions that were not eliminated. If a sufficient number of proposed and proposed alternate Insured Institutions are eliminated or become unavailable so that not all of your funds can be placed, only as much of your funds will be placed as can be deposited at the remaining Insured Institutions in CDs with principal amounts that, when aggregated with interest to accrue during the term of the CDs, will not

exceed the SMDIA. Your remaining funds will not be allocated on the Order Allocation Date. In such case, we will inform you of the amount of your funds that will not be placed, and you may request that we resubmit an Order for your unplaced funds on another Order Date by repeating the procedure outlined above. If in connection with any placement of your funds using CDARS, you eliminate a proposed or proposed alternate Insured Institution in accordance with the above procedures, funds that you subsequently submit for placement will not be placed in that Insured Institution until you notify us otherwise in writing. (f) Your Consent to Placement Your funds will not be placed unless you have consented to their placement. You will be deemed to have consented to the placement of your funds at the proposed or proposed alternate Insured Institutions as of the time specified in paragraph 4 of Schedule 2 if by that time you:

(i) communicate your approval to us; (ii) do not request the list of proposed and proposed alternate Insured Institutions

from us; (iii) request the list of proposed and proposed alternate Insured Institutions from us,

but do not respond to the proposed list; or (iv) respond to the list of proposed and proposed alternate Insured Institutions by

eliminating one or more of the Insured Institutions, in which case you will be deemed to have consented to the placement of your funds at those Insured Institutions that you have not eliminated.

(g) Time by Which We Must Have Your Funds; Settlement of Transactions Unless we have made other arrangements, each time that you agree to a placement of funds under this agreement you also agree that, by the time specified in paragraph 5 of Schedule 2, you will have in a deposit account with us immediately available funds, which under applicable law are irreversible and are not subject to any lien, claim or encumbrance, equal to the amount of funds you have informed us that you are seeking to place. On the Settlement Date, your funds will be deposited at Insured Institutions, payments to be made in connection with the placement of CDs will be made, and the CDs will be issued. (h) Additions and Early Withdrawal No additions or amendments may be made to any CD. Insured Institutions impose a penalty on withdrawal of a CD prior to its maturity. However, no penalty will be charged for early withdrawal upon the death of an individual who is the sole account holder or joint account holder of the CD. This exception applies to an individual who is the named account holder as well as an individual who is the sole current mandatory or discretionary income beneficiary of a trust, including the sole current beneficiary of a unitrust or annuity trust. Written verification acceptable to the Insured Institution that issued the CD may be required in such an event. We will inform you of the early withdrawal penalties applicable to your CDs when you submit funds for placement. For a CD with a term of 4 or 13 weeks, the early withdrawal penalty is equal to 28 or 90 days, respectively, of simple interest calculated at the CD rate. The penalties for early withdrawal of 4 or 13 week CDs are equivalent to substantially all of the interest that would have been earned over the full term and will invade principal. For a CD with a term of 26 weeks or longer, the early withdrawal penalty is equal to simple interest calculated at the CD rate for approximately half the number of days in the full term. The penalties for early withdrawal of CDs with a term of 26 weeks and longer are equivalent to half of the interest that would have been earned over the full term and may invade principal. The current schedule of products available and applicable early withdrawal penalties may be viewed at www.CDARS.com/products. Pursuant to the Internal Revenue Code of 1986, as amended, the beneficiary of an Individual Retirement Account (“IRA”) (but not a Roth IRA) may incur a penalty if the beneficiary does not begin making withdrawals from the IRA after age 70-1/2. A CD held in an IRA is not eligible for early withdrawal without penalty simply because the beneficiary must withdraw the CD to avoid a tax penalty. Early withdrawal of a CD may be made only in whole, not in part. You may request early withdrawal by contacting us, at which time you may specify which of your CDs you would like us to withdraw. If you choose not to specify which of your CDs to withdraw, early withdrawals will be made using an automated process that generates random selections based on amount. In general, early withdrawal proceeds will be available to you two business days after we receive your early withdrawal request.

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Neither we nor Promontory will advance funds in connection with early withdrawals, and early withdrawal proceeds will not be available to you until they are paid to us by the Insured Institution that issued the CD being withdrawn. (i) No Automatic Renewal or Rollover The CDs will mature on the date shown on the confirmation of CD issuance. Upon maturity, the principal amount of, and unpaid accrued interest on, the CD will be paid to you. The CDs will not be automatically renewed or rolled over, and interest on the CDs will not continue to accrue after the maturity date. If upon maturity you wish to re-deposit your funds in CDs through CDARS, you must instruct us to re-submit the funds as a new placement or you must take advantage of our preauthorized re-submission process as described in Section 3(j). (j) Preauthorized Re-submission At the time you submit funds to us for placement through CDARS, you may enter into a written agreement with us to preauthorize terms for re-submission of those funds for placement through CDARS upon the maturity of your CDs. Unless we have entered into such a written re-submission arrangement with you, if you wish to re-submit your funds upon maturity of your CDs you must contact us before we re-submit your funds through CDARS to establish the new terms (including interest rate and APY) and the other specifics of your Order for your re-submitted funds. (k) No Physical Certificates As set forth in Section 1, no physical certificate evidencing a CD will be issued. You should not purchase a CD through CDARS if you need to take physical possession of a certificate. Section 4. Important Considerations (a) Compare Features You should compare the rates of return and other features of a CD to other available deposit accounts before deciding to purchase CDs using CDARS. Although the CDs are issued by other Insured Institutions, the rates of interest paid on the CDs are determined by us based on (i) the interest rates and APYs we are willing to pay on deposits that we accept through CDARS on the Settlement Date (if your funds are placed by us through a CDARS Reciprocal Transaction) or (ii) the interest rate and APY that Insured Institutions that have requested funds through CDARS One-Way Transactions for that Settlement Date are willing to pay after paying fees to Promontory and us (if your funds are placed by us through a CDARS One-Way Transaction). These rates may be higher or lower than the rates on CDs available through a CDARS One-Way Transaction (if we are placing your funds using a CDARS Reciprocal Transaction) or a CDARS Reciprocal Transaction (if we are placing your funds using a CDARS One-Way Transaction) or on comparable deposits available directly from us, from Insured Institutions that issue the CDs using CDARS, from other Insured Institutions, or from insured depository institutions not participating in CDARS. (b) Uninsured Deposits With Us

(i) Except for funds you hold in certain noninterest-bearing transaction accounts as explained in paragraph (ii) below, funds you hold in one or more deposit accounts with us before placement using CDARS, or as a result of payments of interest or principal on CDs previously placed using CDARS, will be aggregated for FDIC insurance purposes with all other deposits you hold in deposit accounts with us in the same insurable capacity. As a result, the FDIC may not fully insure such funds if the aggregate amount exceeds the SMDIA. You should discuss with us the options for holding your funds before placement and for having the payments on the CDs deposited with us or elsewhere. See Section 5 below, “FDIC Insurance Information.” If you cannot accept the risk associated with uninsured deposits in these or other circumstances, it will be your responsibility to make arrangements with us to have such funds collateralized, protected by a properly executed repo sweep arrangement, or otherwise adequately protected, in a manner consistent with applicable law. You should consult your legal advisor to determine whether a particular collateralization arrangement is consistent with applicable law.

(ii) From December 31, 2010, through December 31, 2012, the FDIC will fully insure funds you hold in a noninterest-bearing transaction account with us, without regard to the SMDIA, if (A) interest is neither accrued nor paid on the account, (B) the account is one from which we permit you to make withdrawals for the purpose of making payments or transfers to third parties, and (C) we do not reserve the right to require advance notice of an intended withdrawal from the account.

(c) Insolvency of an Insured Institution In the event an Insured Institution approaches insolvency or becomes insolvent, the Insured Institution may be placed in a regulatory conservatorship or receivership in which the FDIC is typically appointed as conservator or receiver. The FDIC may thereafter pay off the CDs issued by that Insured Institution prior to maturity or transfer the CDs to another insured depository institution. See Section 5 below, “FDIC Insurance Information.” (d) Reinvestment Risk If your CD is paid prior to maturity as a result of the issuing Insured Institution’s insolvency or a voluntary early withdrawal (see Section 3(h) above, “Additions and Early Withdrawal”), you may not be able to reinvest your funds at the same interest rate that you received on the original CD. Neither we nor Promontory is responsible to you for any losses you may incur as a result of a lower interest rate on an investment replacing your CD. (e) Investment Restrictions If you are subject to restrictions with respect to the placement of funds in depository institutions, it is your responsibility to determine whether the placement of your funds by us using CDARS satisfies those restrictions. For example, when placing funds for deposit using CDARS, some governmental unit depositors may be required by law or policy to place funds only using a CDARS Reciprocal Transaction, in which the institution placing the funds for deposit using CDARS receives funds for deposit in an amount equal to the amount of funds that was placed by the depositor using CDARS with respect to the corresponding Order Date. When we place funds for deposit using a CDARS One-Way Transaction, we will not receive matching funds using CDARS. Section 5. FDIC Insurance Information (a) Deposit Insurance Coverage In general, and except as explained in Section 4(b) above, all accounts and deposits that you maintain with an Insured Institution in the same insurable capacity (whether you are acting directly or through an intermediary) would be aggregated for purposes of the SMDIA. Insurable capacities include individual accounts, joint accounts and individual retirement accounts. A tax identification number is not evidence of, and does not establish, an insurable capacity that is separate from another tax identification number used by the same person or entity. Upon request, we will provide you with a copy of the FDIC brochure “Your Insured Deposits – FDIC’s Guide to Deposit Insurance Coverage.” You may also obtain information about deposit insurance coverage by contacting the FDIC, Office of Consumer Affairs, by letter (550 17th Street, N.W., Washington, D.C. 20429), by telephone (877-275-3342, 800-925-4618 (TDD) or 202-942-3100), or by e-mail ([email protected]), or by visiting the FDIC website at www.fdic.gov. You may wish to seek advice from your own attorney concerning FDIC insurance coverage of deposits held in more than one capacity. FDIC deposit insurance coverage applies to the principal and accrued interest on all CDs and other deposit accounts maintained by you in the same insurable capacity at a single Insured Institution. The records maintained by the Insured Institution, us and our sub-custodian regarding ownership of CDs will be used to establish your eligibility for federal deposit insurance payments in respect of CDs issued through CDARS. Accordingly, it is necessary that you immediately report to us any changes in the CD ownership information that you originally provided to us in connection with the submission of your Order. We will inform the sub-custodian of any changes in ownership of the CD, thereby assuring that the sub-custodian will have accurate information to provide to the FDIC in the event of the closure of the Insured Institution that issued the CD. However, the FDIC could require you to provide additional documentation before insurance payments would be released to you. (b) Government Unit Deposits The requirements for deposit insurance coverage of the deposits of the United States government, state, county and municipal governments and their political subdivisions; the District of Columbia and the Commonwealth of Puerto Rico are specifically set forth in regulations of the FDIC (12 C.F.R. 330.15). In general, and except as explained in Section 4(b) above, such deposits will be insured up to the SMDIA, and individual departments and political subdivisions within a governmental unit may be eligible for separate insurance if certain requirements are met. The use of separate tax identification numbers by different departments or political subdivisions of the same governmental unit will not by itself cause the deposits of such departments or political subdivisions to be eligible for separate FDIC insurance.

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It is the obligation of each governmental entity to determine whether the requirements for deposit insurance have been met. Neither we, Promontory, nor the Insured Institutions issuing CDs to you are responsible for uninsured losses resulting from placement of funds that are not eligible for deposit insurance.

(c) Deposit Insurance Payments In the event that deposit insurance payments become necessary for your CDs, the FDIC is required to pay the original principal amount plus accrued interest to the date of the closing of the relevant Insured Institution, as prescribed by law, subject to the limits on FDIC deposit insurance coverage. No interest is earned on deposits from the time an Insured Institution is closed until insurance payments are received. We will notify you if we receive any payments from the FDIC with respect to your CDs. As an alternative to a direct deposit insurance payment from the FDIC, the FDIC may transfer the insured deposits of an insolvent institution to a healthy institution. At that time you may be permitted to withdraw your funds from the transferred account without an early withdrawal penalty. Subject to insurance verification requirements and the limits on FDIC deposit insurance coverage, the healthy institution may assume your CD under its original terms or offer you a choice between either receiving early payment of the CD without penalty or maintaining the CD at a different rate. If you choose to accept a new interest rate on the CD you must terminate your custodial relationship with us with respect to that CD and establish the CD directly with the acquiring institution. Thereafter, you will have no relationship with us with respect to the CD and will receive payments on the CD directly from the acquiring institution. We will advise you of your options in the event of a deposit transfer. As with all federally insured deposits, if it becomes necessary for federal deposit insurance payments to be made on the CDs, there is no specific time period during which the FDIC must make the insurance payments available. Neither we nor Promontory will be obligated to make any payments to you in satisfaction of a loss you might incur as a result of (i) a delay in insurance payouts applicable to a CD, (ii) your receipt of a decreased interest rate on an investment replacing a CD that is repaid prior to its scheduled maturity, or (iii) payment in cash of the principal and accrued interest of a CD prior to maturity in connection with the liquidation of an Insured Institution or the assumption of all or a portion of its deposit liabilities. Also, neither we nor Promontory will be obligated to advance funds to you prior to payment from the FDIC.

Section 6. Responsibility to Monitor Deposits at Insured Institutions; Publicly Available Information Funds we submit for placement on your behalf on any Settlement Date are placed in CDs at enough different Insured Institutions to prevent the principal amount and any interest to accrue over the term of each CD placed on that Settlement Date from exceeding the FDIC insurance limit. It is your responsibility, however, to monitor the total amount of deposits that you hold with each Insured Institution in order for you to determine the extent of FDIC deposit insurance coverage available to you on deposits at that Insured Institution, including the CDs issued through CDARS. See Section 5 above, “FDIC Insurance Information,” for more information on FDIC insurance coverage. The Insured Institution at which a deposit is made is responsible for the full amount deposited with it, and neither we nor Promontory is responsible for any insured or uninsured portion of any CD or any other deposit.

Publicly available financial information concerning the proposed and proposed alternate Insured Institutions can be obtained by you at the website of the National Information Center of the Federal Reserve System maintained at www.ffiec.gov/nic/. Neither we nor Promontory guarantees the financial condition of any Insured Institution or the accuracy of any publicly available financial information about the Insured Institution.

Section 7. Confidentiality of Information We will provide your name, tax identification number and other pertinent identifying information to Promontory, our sub-custodian, and other parties providing services in connection with the placement of your funds and the issuance and holding of your CDs. We may also release such information to (i) an Insured Institution that has issued a CD to you, but only to the extent necessary to comply with any applicable law, rule, regulation or a judicial order, and (ii) the FDIC in connection with a claim for deposit insurance on your CD. You hereby consent to the release of that information to and its use by (a) Promontory, our sub-custodian, and other parties providing services in connection with the placement of your funds and the issuance and custodying of your CDs, (b) Insured Institutions that have issued CDs to you to the extent necessary to comply with any

applicable law, rule, regulation or judicial order, and (c) the FDIC in connection with a claim for deposit insurance on your CDs. The information will not be disclosed to other Insured Institutions except as set forth herein and will not be used by Promontory, our sub-custodian, or any other parties to whom we release the information for any other purpose except as set forth herein or directed by you. Nothing in this section shall be deemed to prevent us from disclosing information to a third party if required by law.

Section 8. Disputes Any disputes arising out of or in connection with this agreement will be governed by the dispute resolution, arbitration, choice of law, venue, waiver of jury trial, and costs related to dispute provisions, if any, contained in your Custodial Agreement with us under which we act as custodian for your CDs.

Section 9. Miscellaneous Any information we are required to deliver to you pursuant to this agreement may be given to you by mail, facsimile or other electronic transmission. Except as otherwise provided herein, this agreement:

• constitutes the entire agreement between us relating to the placement of deposits through CDARS and the other matters contained herein,

• supersedes all prior contracts or agreements relating to the placement of funds through CDARS, whether oral or written, and

• may not be amended by any oral representation made or oral agreement reached after the execution of this agreement.

We may amend this agreement or any related document prospectively by modifying or rescinding any of its existing provisions or by adding any new provisions at any time by sending written notice of the amendment to you. As provided in Section 3(h), no additions or amendments may be made to any CD. We will provide written notice of an amendment to this agreement by means of a letter, an entry on your account statement or other means. Any amendment will be effective as of the date established by us in the written notice of the amendment, subject to applicable law, provided that any amendment may not become effective until ten days after the written notice has been sent by us. This agreement is not assignable, in whole or in part, by either party except by operation of law or as required by law.

The headings in this agreement are inserted for convenience and identification only, and are not intended to describe, interpret, define or limit the scope or intent of this agreement or any clause hereof.

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By signing below, you acknowledge that you have received this agreement, that the information you have provided us is correct, that you have read and understood this agreement and that you were given the opportunity to ask us any questions you may have had with respect to this agreement, the transactions contemplated by it, the CDs and FDIC insurance coverage of the CDs and deposits maintained with us.

� Check this box if you are a governmental unit or other depositor and wish

your funds to be placed only through CDARS Reciprocal Transactions.

DEPOSITOR(S) Name of Depositor: ____________________________________________________ By: ________________________________________________________________

Name: ___________________________________________________________ Title: _____________________________________________________________

Depositor U.S. Tax ID: _________________________________________________ Tax ID Type: _________________________________________________________ If you do not have a U.S. Tax ID, enter an alternate ID*: ________________________ Alternate ID Type: _____________________________________________________ Signed this ____________ day of ____________________________ , 20 _________ Name of Depositor: ____________________________________________________ By: ________________________________________________________________

Name: ___________________________________________________________ Title: _____________________________________________________________

Depositor U.S. Tax ID: _________________________________________________ Tax ID Type: _________________________________________________________ If you do not have a U.S. Tax ID, enter an alternate ID*: ________________________ Alternate ID Type: _____________________________________________________ Signed this ____________day of ____________________________ , 20 _________ DEPOSITORY INSTITUTION ___________________________________________________________________ (Print Name of Institution) By: ________________________________________________________________

Name: ___________________________________________________________ Title: _____________________________________________________________

Acknowledged this ______day of ____________________________ , 20 _________ * If you do not have a U.S. Tax ID you must use this same alternate ID for all CDARS transactions with all institutions. If you subsequently obtain a U.S. Tax ID you must promptly inform us and other institutions so that your correct information can be recorded for tax reporting, CDARS document tracking and FDIC purposes.

SCHEDULE 1 INITIAL LIST OF INSURED INSTITUTIONS AT WHICH YOU DO NOT WANT TO MAKE A DEPOSIT (ATTACH ADDITIONAL PAGES AS NECESSARY) Please include the city and state of the institution’s main office (rather than the city and state of a branch location). You may include the institution’s routing number and/or FDIC certificate number, if you have this information. ___________________________________________________________________ Name of Institution City and State ___________________________________________________________________ Name of Institution City and State ___________________________________________________________________ Name of Institution City and State ___________________________________________________________________ Name of Institution City and State ___________________________________________________________________ Name of Institution City and State ___________________________________________________________________ Name of Institution City and State ___________________________________________________________________ Name of Institution City and State ___________________________________________________________________ Name of Institution City and State ___________________________________________________________________ Name of Institution City and State ___________________________________________________________________ Name of Institution City and State SCHEDULE 2 IMPORTANT TIMES AND DEADLINES IN CONNECTION WITH THE PLACEMENT OF YOUR FUNDS This schedule contains important times and deadlines with respect to the placement of your funds. These times may change from time to time or on any particular Order Date or Order Allocation Date (which are currently the same business day), and we will inform you of any change in times, as applicable, before you submit your funds for placement. You may also obtain information about any changes to times set forth in paragraphs 2, 3 and 4 below or about any scheduling change resulting in the Order Allocation Date taking place on the business day immediately following an Order Date at www.CDARS.com/products.

1. Time and day by which your request to have your funds placed must be submitted:

_______________ on _____________________. 2. Time and day by which we must submit your Order to Promontory:

1:00 p.m. ET on the Order Date. 3. Time and day at or after which you may obtain the list of names of the Insured

Institutions at which your funds are proposed to be placed: 3:00 p.m. ET on the Order Allocation Date.

4. Time and day by which you must inform us of the name or names of any proposed

Insured Institution at which you do not want to make a deposit: 4:00 p.m. ET on the Order Allocation Date.

5. Time and day by which we must have your available funds on account:

_______________ on ________________________.

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CDARS and Certificate of Deposit Account Registry Service are registered service marks and One-Way and Reciprocal are service marks of Promontory Interfinancial Network, LLC. 12/10b DI A-1

Custodial AgreementGENERAL AGREEMENT FOR CUSTODY OF CERTIFICATES OF DEPOSIT FOR INDIVIDUAL(S), TRUSTS, BUSINESS ENTITIES AND OTHERS To: [Depository Institution] __________________________________________________ __________________________________________________ __________________________________________________ Please hold in safekeeping, and act as custodian with respect to, all time deposits including, but not limited to, certificates of deposit (all such time deposits will be referred to herein as “CDs”) issued pursuant to the CDARS Deposit Placement Agreement between you and the undersigned for funds of the undersigned placed through the Certificate of Deposit Account Registry Service®. It is agreed between us as follows: For purposes of Article 8 of the Uniform Commercial Code as adopted in ____________, you will act as the undersigned’s securities intermediary with respect to, and will treat as financial assets, any CDs you hold for the undersigned. You are authorized to collect for account of the undersigned all interest and other payments of income or principal pertaining to the CDs unless they are payable directly to the undersigned; to surrender for payment maturing CDs and those called for redemption; to endorse on behalf of the undersigned for the above purposes all checks and other instruments requiring endorsement; to cause the CDs to be registered in your name or in the name of your nominee if you consider it desirable; to deliver or transfer the CDs to another account with you as the undersigned may from time to time instruct; to receive the CDs for account of the undersigned; to place orders for the purchase of the CDs, on the instructions of the undersigned and to pay for the same provided the undersigned has funds on deposit with you or arranges to make funds available in advance for such purpose; and to execute and deliver or file on behalf of the undersigned all appropriate receipts and releases and other instruments, including whatever certificates may be required from custodians or may be necessary to obtain exemption from taxes and to name the undersigned when required for the purpose of the instrument. Instructions may be given orally or in writing. The following are authorized to give instructions on behalf of the undersigned. (Check all that apply.)

The undersigned (individual or partnership). Any of the following individuals. (List names and legal capacities.) Any ______ of the following officers and their respective successors in office. (List names and their titles.)

The undersigned, or the undersigned’s account, is one of the following: ________ Individual ________ Joint

________ Custody (including guardian, agent, nominee or conservator)

________ Sole Proprietorship ________ Payable Upon Death Account ________ Partnership ________ Irrevocable Trust ________ Corporation ________ Other_________________________ ________ Public Unit Depositor You may comply with any writ of attachment, execution, garnishment, tax levy, restraining order, subpoena, warrant or other legal process that you believe (correctly or otherwise) to be valid. You may notify the undersigned of such process by telephone, electronically or in writing. If you are not fully reimbursed for your records, research, photocopying and handling costs by the party that served the process, you may charge such costs to the undersigned’s account, in addition to any minimum fee you charge for complying with legal processes.

You may honor any legal process that is served personally, by mail, or by facsimile transmission at any of your offices or an office of your agent (including locations other than where the funds, records or property sought is held), even if the law requires

personal delivery at the office where the undersigned’s account or records are maintained. You shall have no liability to the undersigned for any action taken or omitted by you hereunder in good faith.

The undersigned agrees to indemnify you and your nominees against, and to hold you and them harmless from, all expenses (including counsel fees), liabilities and claims arising out of the holding, delivery or transfer of the CDs and compliance with any legal process that you believe (correctly or otherwise) to be valid. The undersigned agrees to pay any service charges imposed by you on this custodial account.

This agreement may be terminated at any time at the option of either party, provided, however, that any termination by you will not become effective until the end of the term of any CD in your safekeeping at the time you notify the undersigned of your intention to terminate this agreement. DEPOSITOR(S) Name of Depositor: ____________________________________________________ By: ________________________________________________________________

Name: ___________________________________________________________ Title: _____________________________________________________________

Signed this ____________day of ____________________________ , 20 _________ Name of Depositor: ____________________________________________________ By: ________________________________________________________________

Name: ___________________________________________________________ Title: _____________________________________________________________

Signed this ____________day of ____________________________ , 20 _________ DEPOSITORY INSTITUTION ___________________________________________________________________ (Print Name of Institution) By: ________________________________________________________________

Name: ___________________________________________________________ Title: _____________________________________________________________

Acknowledged this ______day of ____________________________ , 20 _________ [NOTE: If the depositor is a corporation, the following certificate should be signed by an appropriate officer of the depositor other than the one signing the form of custodial agreement.] ______________________________________________________________ [name], ___________________________________ [title of office] of the above named corporation signing the foregoing custodial agreement, hereby certify that: I am personally familiar with all instruments and records relating to the organization and operation of the corporation and the meetings and proceedings of its stockholders and all boards and committees entrusted with authority in the management of its affairs; by corporate action taken in conformity with such instruments and records and appearing from said records to be still in force, the foregoing custodial agreement was authorized to be signed and delivered on behalf of said corporation; and each of the persons signing on behalf of said corporation is the qualified holder of the office given opposite his/her signature and was authorized to sign the said custodial agreement in that capacity. Signature: __________________________________________________________

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ALL

TransPecos Banks, SSB

112 E Pecan Street, Ste 800

San Antonio, TX 78205

May 25, 2018

This disclosure contains information about terms, fees, and

interest rates for some of the accounts we offer.

CHECKING PLUS INTEREST

Rate Information: This Account is an interest bearing account.The interest rate and annual percentage yield will depend uponthe daily balance in the account as shown on the Rate Chart.The interest rate and annual percentage yield may change. Atour discretion, we may change the interest rate on the accountdaily. Interest begins to accrue on the business day you depositnoncash items (for example, checks). Interest will becompounded monthly and will be credited to the accountmonthly. If the account is closed before interest is credited,you will not receive the accrued interest.

Balance Information: We use the daily balance method tocalculate the interest on the account. This method applies adaily periodic rate to the principal in the account each day.

Limitations: You must deposit $2,500.00 to open this account.

Account Fees: If your balance is less than $1000.00 on anyday in the statement cycle, your account will be subject to a$10.00 service charge fee for that statement cycle. If yourbalance is at least $1000.00 on every day but less than$2500.00 on any day in the statement cycle, your account willbe subject to a $5.00 service charge fee for that statementcycle. If your balance is $2500.00 or more on every day in thestatement cycle, we will not charge the service charge fee forthat statement cycle..

KASASA CASH CHECKING

Rate Information: This Account is an interest bearing account.The interest rate and annual percentage yield will depend uponthe daily balance in the account as shown on the Rate Chart.The interest rate and annual percentage yield may change. Atour discretion, we may change the interest rate on the accountdaily. Interest begins to accrue on the business day you depositnoncash items (for example, checks). Interest will becompounded monthly and will be credited to the accountmonthly. If the account is closed before interest is credited,you will not receive the accrued interest.


Limitations: You must deposit $1.00 to open this account.

Account Fees: This is a tiered rate account that pays a higherrate of interest, if you meet certain qualification criteria.This account pays a lower rate of interest if you do not meetthe qualification criteria.

In order to receive the qualifying interest rate in your KasasaCash checking account and in your Kasasa Saver savingsaccount, and receive ATM fee reimbursements in your KasasaCash checking account, you must do the following transactionsand activities in your Kasasa Cash checking Account duringeach Monthly Qualification Cycle:

*Have at least ten signature-based debit card purchases postand settle;*Have at least one direct deposit, ACH credit, or bill paytransaction post and settle; and*Be enrolled in and agree to receive electronic statements(e-statements).

If you do not meet the above listed qualification criteria in yourKasasa Cash account, all balances in your Kasasa Cash accountwill earn 0.02% annual percentage yield (APY), all balances inyour Kasasa Saver account will earn 0.02% APY, and ATMfees will not be reimbursed.

Please note that transactions MUST post and settle to youraccount during the monthly qualification cycle. They may not bein a pending state to qualify as one of the qualifications.Transactions may take one or more banking days from the datethe transaction was made to post and settle to an account.

The Annual Percentage Yield (APY) disclosed on the KasasaCash account assumes that the interest earned in Kasasa Cashcompounds; however, by choosing to have Kasasa Saver link toKasasa Cash, you understand that the interest earned in yourKasasa Cash account is automatically transferred into yourKasasa Saver account at the end of the statement cycle andtherefore does not remain in your Kasasa Cash account anddoes not compound. Additionally, you understand that theinterest amount earned in the Kasasa Saver account may beless than the interest amount earned in the Kasasa Cashaccount.

ATM Fee Reimbursements: You will receive unlimitedreimbursements up to $4.99 per single transaction fornationwide ATM withdrawal fees incurred during the MonthlyQualification Cycle in which you qualified. An ATM receipt mustbe presented to a customer service representative forreimbursements of individual ATM withdrawal fees of $5.00 orhigher.

“Monthly Qualification Cycle" means a period beginning onebusiness Day prior to the first day of the current StatementCycle through one business Day prior to the close of the currentStatement Cycle.“Statement Cycle” means the period of time for whichTransPecos Banks, SSB provides a summary of the financialactivities and transactions that post and settle to theaccountholder’s account.

Additional Terms:Limit two Kasasa Cash accounts per household.You will automatically qualify for the qualifying interest rate and

the ATM withdrawal fee reimbursements for the first statementcycle after account opening.

CHOICE CHECKING


Account Fees: Monthly service charge $6.50

If either of the following criteria are met during the monthlyqualification cycle, you will receive the following reductions:$0.15 service charge reduction for each signature based debitcard transaction;$1.50 service charge reduction if you receive electronicstatements (e-statements) only;

Please note that transactions MUST post and settle to youraccount during the monthly qualification cycle. They may not bein pending state to qualify as one of the qualifications.Transactions may take one or more banking days from the datethe transactions was made to post to an account.

"Monthly Qualification Cycle" means a period beginning onebusiness day prior to the first day of the current StatementCycle through one business day prior to the close of the currentStatement Cycle."Statement Cycle" means the period of time for whichTransPecos Banks, SSB provides a summary of the financialactivities and transactions that post and settle to theaccountholder's account.

GOLD STAR CHECKING


Account Fees: Monthly service charge $12.00.

GOLD STAR CHECKING FAMILY PLAN



.

GOLD STAR CHECKING SENIOR



.

GOLD STAR CHECKING SENIOR FAMILY PLAN



.

KASASA SAVER

Rate Information: This Account is an interest bearing account.The interest rate and annual percentage yield will depend uponthe daily balance in the account as shown on the Rate Chart.The interest rate and annual percentage yield may change. Atour discretion, we may change the interest rate on the accountDaily. Interest begins to accrue on the business day youdeposit noncash items (for example, checks). Interest will be

EXHIBIT F

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compounded monthly and will be credited to the accountmonthly.


Limitations: You must deposit $1.00 to open this account.You may make six (6) transfers from your account each four (4)week or similar period, if by preauthorized or automatic transfer,or telephone (including data transmission) agreement, order orinstruction or by check, draft, debit card or similar order(including POS transactions), made by the depositor andpayable to third parties. Transfers and withdrawals made inperson, by messenger, by mail or at an ATM are unlimited.

Account Fees: This account can only be opened with a new orexisting Kasasa Cash checking account.

This is a tiered rate account that pays a higher rate of interest,if you meet certain qualification criteria.This account pays a lower rate of interest if you do not meetthe qualification criteria.

In order to receive the qualifying interest rate in your KasasaCash checking account and in your Kasasa Saver savingsaccount, and receive ATM fee reimbursements in your KasasaCash checking account, you must do the following transactionsand activities in your Kasasa Cash checking Account duringeach Monthly Qualification Cycle:

*Have at least ten signature-based debit card purchases postand settle;*Have at least one direct deposit, ACH credit, or bill paytransaction post and settle; and*Be enrolled in and agree to receive electronic statements(e-statements).

If you do not meet the above listed qualification criteria in yourKasasa Cash account, all balances in your Kasasa Cash accountwill earn 0.02% annual percentage yield (APY), all balances inyour Kasasa Saver account will earn 0.02% APY, and ATMfees will not be reimbursed.

Please note that transactions MUST post and settle to youraccount during the monthly qualification cycle. They may not bein a pending state to qualify as one of the qualifications.Transactions may take one or more banking days from the datethe transaction was made to post and settle to an account.

If you have met your qualifications in the attached Kasasa Cashaccount for the monthly qualification cycle, and have selectedthe option to link the Kasasa Saver to the Kasasa Checkingaccount, the interest earned on that account will be transferredto your Kasasa Saver account on the first business day of thefollowing statement cycle.

ATM Fee Reimbursements: You will receive unlimitedreimbursements up to $4.99 per single transaction fornationwide ATM withdrawal fees incurred during the MonthlyQualification Cycle in which you qualified. An ATM receipt mustbe presented to a customer service representative forreimbursements of individual ATM withdrawal fees of $5.00 orhigher.

“Monthly Qualification Cycle" means a period beginning onebusiness Day prior to the first day of the current StatementCycle through one business Day prior to the close of the currentStatement Cycle.“Statement Cycle” means the period of time for whichTransPecos Banks, SSB provides a summary of the financialactivities and transactions that post and settle to theaccountholder’s account.

Additional Terms:An excessive transaction fee of $10.00 will be charged for eachdebit transaction (withdrawal, automatic transfer or paymentout of this account) in excess of six during a calendar month. Ifyou continually exceed the six limited transfers or withdrawalsper month, we may change the account to a checking accountor even close the account.

Limit two Kasasa Saver accounts per household.The Kasasa Saver account is only offered in conjunction withthe Kasasa Cash account. In the event that you close yourKasasa Cash account, we reserve the right to close your KasasaSaver account.

PERSONAL SAVINGS

Rate Information: This Account is an interest bearing account.The interest rate and annual percentage yield are included in theRate Chart. The interest rate and annual percentage yield maychange. At our discretion, we may change the interest rate onthe account Daily. Interest begins to accrue on the businessday you deposit noncash items (for example, checks). Interestwill be compounded quarterly and will be credited to theaccount quarterly.


Limitations: You must deposit $100.00 to open this account.You may make six (6) transfers from your account each four (4)week or similar period, if by preauthorized or automatic transfer,or telephone (including data transmission) agreement, order orinstruction or by check, draft, debit card or similar order(including POS transactions), made by the depositor andpayable to third parties. Transfers and withdrawals made inperson, by messenger, by mail or at an ATM are unlimited.

Account Fees: If your balance falls below $100.00 on any dayin the statement cycle, your account will be subject to a servicecharge of $5.00 for that statement cycle.


PERSONAL MONEY MARKET

Rate Information: This Account is an interest bearing account.The interest rate and annual percentage yield will depend uponthe daily balance in the account as shown on the Rate Chart.The interest rate and annual percentage yield may change. Atour discretion, we may change the interest rate on the accountdaily. Interest begins to accrue on the business day you depositnoncash items (for example, checks). Interest will becompounded monthly and will be credited to the accountmonthly.


Limitations: You must deposit $2,500.00 to open this account.You may make six (6) transfers from your account each four (4)week or similar period, if by preauthorized or automatic transfer,or telephone (including data transmission) agreement, order orinstruction or by check, draft, debit card or similar order(including POS transactions), made by the depositor andpayable to third parties. Transfers and withdrawals made inperson, by messenger, by mail or at an ATM are unlimited.

Account Fees: If your balance falls below $2500.00 on anyday in the statement cycle, your account will be subject to aservice charge fee of $10.00 for that statement cycle.


BUSINESS MONEY MARKET

Rate Information: This Account is an interest bearing account.The interest rate and annual percentage yield will depend uponthe daily balance in the account as shown on the Rate Chart.The interest rate and annual percentage yield may change. Atour discretion, we may change the interest rate on the accountdaily. Interest begins to accrue on the business day you depositnoncash items (for example, checks). Interest will becompounded monthly and will be credited to the accountmonthly.


Limitations: You must deposit $2,500.00 to open this account.You may make six (6) transfers from your account each four (4)week or similar period, if by preauthorized or automatic transfer,or telephone (including data transmission) agreement, order orinstruction or by check, draft, debit card or similar order(including POS transactions), made by the depositor andpayable to third parties. Transfers and withdrawals made inperson, by messenger, by mail or at an ATM are unlimited.

Account Fees: If your balance falls below $2500.00 on anyday in the statement cycle, your account will be subject to a

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service charge fee of $10.00 for that statement cycle.


BUSINESS CHECKING


Account Fees: If your balance is less than $500.00 on any dayin the statement cycle, your account will be subject to a $8.00service charge fee for that statement cycle. If your balance is atleast $500.00 on every day but less than $1000.00 on any dayin the statement cycle, your account will be subject to a $6.00service charge fee for that statement cycle. If your balance is atleast $1000.00 on every day but less than $1500.00 on anyday in a statement cycle, your account will be subject to a$4.00 service charge fee for that statement cycle. If yourbalance is $1500.00 or more on every day in the statementcycle, we will not charge the service charge fee for thatstatement cycle.

INDIVIDUAL RETIREMENT ACCOUNTS

You may put your IRA funds in the following account: 1 YearCertificate of Deposit .

RATE CHART

Account Product Interest Annual PercentageName Rate Yield

Checking Plus InterestPortion of YourDaily Balance:$2,500.00-49,999.99 0.01% 0.01%$50,000.00-99,999.99 0.02% 0.01% to 0.02%$100,000.00 and up 0.05% 0.02% to 0.05%

Kasasa Cash CheckingPortion of YourDaily Balance:up to $9,999.99 1.35% 1.36%$10,000.00 and up 0.25% 1.36% to 0.25%

Kasasa SaverPortion of YourDaily Balance:up to $9,999.99 0.75% 0.75%$10,000.00 and up 0.03% 0.75% to 0.03%

Personal SavingsAll Balances 0.02% 0.02%

Personal Money MarketPortion of YourDaily Balance:up to $24,999.99 0.03% 0.03%

$25,000.00-49,999.99 0.05% 0.03% to 0.04%$50,000.00-99,999.99 0.15% 0.04% to 0.10%$100,000.00 and up 0.25% 0.10% to 0.25%

Business Money MarketPortion of YourDaily Balance:up to $24,999.99 0.03% 0.03%$25,000.00-49,999.99 0.05% 0.03% to 0.04%$50,000.00-99,999.99 0.15% 0.04% to 0.10%$100,000.00 and up 0.25% 0.10% to 0.25%

Interest Rates and Annual Percentage Yields are current as of05-25-2018.For current rate information call (210) 228-9960.

FUNDS AVAILABILITY POLICY DISCLOSURE

YOUR ABILITY TO WITHDRAW FUNDS AT TRANSPECOSBANKS, SSB. Our policy is to make funds from your cash andcheck deposits available to you on the first business day afterthe day we receive your deposit. However, funds fromelectronic direct deposits will be available on the day we receivethe deposit. Once the funds are available, you can withdrawthem in cash and/or we will use them to pay checks that youhave written. For determining the availability of your deposits,every day is a business day, except Saturdays, Sundays, andfederal holidays. If you make a deposit before end of businessday on a business day that we are open, we will consider thatday to be the day of your deposit. However, if you make adeposit after end of business day or on a day we are not open,we will consider that the deposit was made on the nextbusiness day we are open.

Reservation of Right to Hold. In some cases, we will not makeall of the funds that you deposit by check available to you onthe first business day after the day of your deposit. Dependingon the type of check that you deposit, funds may not beavailable until the second business day after the day of yourdeposit. The first $200 of your deposit, however, may beavailable on the first business day after the day of your deposit.If we are not going to make all of the funds from your depositavailable on the first business day, we will notify you at thetime you make your deposit. We will also tell you when thefunds will be available. If your deposit is not made directly toone of our employees, or if we decide to take this action afteryou have left the premises, we will mail you the notice by thebusiness day after we receive your deposit. If you need thefunds from a deposit right away, you should ask us when thefunds will be available.

Longer Delays May Apply. We may delay your ability towithdraw funds deposited by check into your account anadditional number of days for these reasons:

* You deposit checks totaling more than $5,000 on anyone day.

* You redeposit a check that has been returned unpaid.

* You have overdrawn your account repeatedly in the lastsix months.

* We believe a check you deposit will not be paid.

* There is an emergency, such as failure of computer orcommunications equipment.

We will notify you if we delay your ability to withdraw funds forany of these reasons, and we will tell you when the funds willbe available. They will generally be available no later than theseventh business day after the day of your deposit.

Holds On Other Funds. If we accept for deposit a check that isdrawn on another financial institution, we may make funds fromthe deposit available for withdrawal immediately but delay youravailability to withdraw a corresponding amount of funds thatyou have on deposit in another account with us. The funds inthe other account would then not be available for withdrawaluntil the time periods that are described elsewhere in thisdisclosure for the type of check that you deposited.

Special Rules For New Accounts. If you are a new customer,the following special rules will apply during the first 30 daysyour account is open:

Funds from electronic direct deposits to your account will beavailable on the day we receive the deposit. Funds fromdeposits of cash, wire transfers, and the first $5,000 of a day'stotal deposits of cashier's, certified, teller's, traveler's, andfederal, state and local government checks will be available onthe first business day after the day of your deposit if the depositmeets certain conditions. For example, the checks must bepayable to you. The excess over $5,000 will be available onthe second business day after the day of your deposit. If yourdeposit of these checks (other than a U.S. Treasury check) isnot made in person to one of our employees, the first $5,000will not be available until the second business day after the dayof your deposit.

Funds from deposits of checks drawn on TransPecos Banks,SSB will be available on the same business day as the day ofyour deposit.

Funds from all other check deposits will be available on theseventh business day after the day of your deposit.

ELECTRONIC FUNDS TRANSFER AGREEMENT ANDDISCLOSURES

This Agreement and Disclosure is made in compliance withfederal law regulating electronic funds transfer (EFT) services.Electronic funds transfers are electronically initiated transfers ofmoney involving an account at the Financial Institution. Thefollowing disclosures set forth your and our rights andresponsibilities concerning the electronic funds transfers. Inthis Agreement, the words "you" and "your" mean those whosign as applicants or any authorized user(s). The words "we","us" and "our" mean the Financial Institution. The abbreviation"PIN" or word "code" means a personal identification number.

Online Banking

Types of Transactions: You may access certain account(s) youmaintain with us by computer using your assigned user ID andpassword by accessing the online banking service. You mayuse the online banking service to perform the following

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functions:

* Transfer funds between eligible accounts.

* Obtain balance information on eligible accounts.

* Review transactions on eligible accounts.

* Make loan payments.

* Stop payment requests.

* Online bill payment.

* Obtain copy of statement.

* ACH origination.

* Wire transfers.

* EFT tax payments.

* Order checks.

* Allow export of transaction history to personal financemanager.

Fees and Charges for Online Service:

* There is no charge for banking online with us.

Preauthorized Credits

Types of Preauthorized Transfers: You may arrange for us tocomplete the following preauthorized transfers to your depositaccounts:

* Accept direct deposits from the U.S. TreasuryDepartment to your checking or savings account.

Fees and Charges:

* We do not charge for any preauthorized EFTs.

Preauthorized Credits

Types of Preauthorized Transfers: You may arrange for us tocomplete the following preauthorized transfers to your depositaccounts:

* Accept direct deposits from your employer or otherfinancial institutions to your checking or savings account.

Fees and Charges:


Preauthorized Payments

Types of Preauthorized Transfers: You may arrange for us tocomplete the following preauthorized transfers to or from yourdeposit accounts:

* Pay certain recurring bills from your checking or savingsaccount.

Fees and Charges:


ATM/POS/Debit Card

Types of Transactions/Transfers: You may use the card andPIN issued you to pay for purchases from merchants who have

agreed to accept the card at Point of Sale (POS) terminalswithin the networks identified on your card and such otherterminals as the Savings Bank may designate from time to time.Point of Sale (POS) transactions will be deducted from yourPrimary Account. Point of Sale (POS) transactions involving arefund will be credited to your Primary Account. You may alsouse the card to pay for purchases from merchants that acceptthe POS debit card with a MasterCard symbol. You may use theautomated teller machine (ATM) card and personal identificationnumber (PIN) issued to you to initiate transactions at ATMs ofours, ATMs within the networks identified on your card andsuch other facilities as we may designate from time to time.Unless you specify a different account during Automated TellerMachine (ATM) transactions, your Primary Account will be usedfor your transactions. Your Primary Account number andinformation may be obtained from the CombinedATM/POS/Debit Card Request Form. At present you may useyour card to (some of these services may not be available at allATMs):

* Withdraw cash from your checking account.

* Withdraw cash from your savings account.

* Transfer funds between your checking and savingsaccounts.

* Obtain balance information on your deposit accounts.

Limitations on Frequency and Amount:

* You may withdraw up to a maximum of $400.00 (if thereare sufficient funds in your account) per day.

* For security purposes, there are limits on the frequencyand amount of transfers you may make using ATMs.

* You may purchase up to a maximum of $1500.00 worthof goods and services per day, exclusive of ATMwithdrawals.

Fees and Charges:

* There is no charge for ATM withdrawals at machinesowned by us.

* There is a $1.50 charge for each ATM withdrawal atmachines we do not own.

* There is a Replacement Card Fee of $5.00 per card.

* We do not charge for any POS transactions.

ATM Fees. When you use an ATM not owned by us, you maybe charged a fee by the ATM operator or any network used(and you may be charged a fee for a balance inquiry even if youdo not complete a fund transfer).

Phone Banking

Types of Audio Response Services: You may access yourdeposit accounts by using a separate personal identificationnumber (PIN) assigned to you and your account number in our

audio response system. At the present time you may use thesystem to:

* Transfer funds between your deposit accounts.

* Obtain balance information on your deposit accounts.

* Determine if a particular check has cleared your account.

Limitations on Frequency and Amount:

* There are no limits on the number or dollar amount ofinquiries, transfers or withdrawals you may make perday.

Fees and Charges for Audio Response Transactions:

* We do not charge for any Audio Response Transactions.

Other EFT Transactions. You may access certain account(s)you maintain with us by other EFT transaction types asdescribed below.

Electronic Check Conversion. You may authorize a merchantor other payee to make a one-time electronic payment fromyour account using information from your check to pay forpurchases or pay bills. Electronic check conversion is apayment process in which a merchant or other payee (afterobtaining your authorization) uses your check to gatherrouting, account, and check number information to initiate aone-time EFT. When information from your check is used tomake an electronic fund transfer, funds may be withdrawnfrom your account as soon as the same day you make yourpayment. This type of EFT transaction involving a consumeraccount is covered by the Electronic Funds Transfer Act andthis disclosure. A description of the transaction will appearon your statement.

Re-presented Check Transactions and Fees. You mayauthorize a merchant to electronically collect a feeassociated with the re-presentment of a check that isreturned due to insufficient or unavailable funds. Theresulting fee transaction if debited as an EFT from aconsumer account is covered by the Electronic FundsTransfer Act and this disclosure. When a merchantre-presents a check electronically, that transaction is notcovered by the Electronic Funds Transfer Act or thisdisclosure. A description of the transaction will appear onyour statement.

The following limitations may be applicable to your accounts,except as provided by law:

Liability for Unauthorized MasterCard Debit Card Transactionson Cards Issued to Certain Consumers and Small Businesses.The zero liability limit described below only applies to a UnitedStates-issued MasterCard branded debit card issued to: (i) anatural person, or (ii) a business or other entity only if the cardis issued under a "small business" program described onMasterCard's website at www.mastercardbusiness.com. Thezero liability limit described below does not apply if you are abusiness or an entity of any sort (corporation, limited liabilitycompany, partnership, etc.) unless the card issued to you is a"small business" card described above. The zero liability limitdescribed below does not apply until your identity is registered

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by or on behalf of the card issuer. Under MasterCard's zeroliability policy as described in the MasterCard Rules (as may beamended from time to time), the zero liability limitationdescribed below may not apply for other reasons.

Tell us AT ONCE if you believe your MasterCard debit card hasbeen lost or stolen or if you believe any unauthorizedtransactions have been made using your MasterCard debit card.Your liability for unauthorized use of your debit card with theMasterCard logo will not exceed zero dollars ($0.00) if thefollowing conditions have been met: (i) you have exercisedreasonable care in safeguarding your card from risk of loss ortheft; and (ii) upon becoming aware of such loss or theft youpromptly reported the loss or theft to us. If the conditions setforth above have not been met, you may be liable forunauthorized transactions to the extent allowed under applicablelaw (for example, see Liability for Unauthorized Transfersparagraph below). To notify us of lost or stolen cards, or ofunauthorized transactions, call or write to us at the telephonenumber or address set forth in the Liability for UnauthorizedTransfers paragraph below. This will help prevent unauthorizedaccess to your account and minimize any inconvenience.

Currency Conversion and Cross-Border Transactions Fee. If youeffect a transaction with your debit card in a currency otherthan US dollars, MasterCard will convert the charge into a USDollar amount. The MasterCard currency conversion procedureincludes use of either a government-mandated exchange rate, ora wholesale exchange rate selected by MasterCard. Theexchange rate MasterCard uses will be a rate in effect on theday the transaction is processed. This rate may differ from therate in effect on the date of purchase or the date thetransaction was posted to your account.

MasterCard is a registered trademark of MasterCard Worldwideor its subsidiaries in the United States.

In addition to the limitations set forth above, the followinglimitations may be applicable to your accounts:

Liability for Unauthorized Transfers. Tell us AT ONCE if youbelieve your card, ATM PIN, POS card or PIN, AudioResponse PIN, or online banking PIN has been lost or stolen or ifyou believe that an electronic fund transfer has been madewithout your permission using information from your check.Telephoning is the best way of keeping your possible lossesdown. You could lose all the money in your account (plus yourmaximum overdraft line of credit). If you tell us within two (2)business days after you learn of the loss or theft of your card orcode, you can lose no more than $50.00 if someone used yourcard or code without your permission. If you do NOT tell uswithin two (2) business days after you learn of the loss or theftof your card or code, and we can prove that we could havestopped someone from using your card or code without yourpermission if you had told us, you could lose as much as$500.00. Also, if your statement shows transfers that you didnot make, including those made by card code or other suchmeans, tell us at once. If you do not tell us within sixty (60)days after the statement was mailed to you, you may not getback any money lost after the sixty (60) days if we can provethat we could have stopped someone from taking the money ifyou had told us in time. If a good reason (such as a long trip or

a hospital stay) kept you from telling us, we will extend the timeperiods. If you believe that your card or code has been lost orstolen or that someone has transferred or may transfer moneyfrom your account without your permission, call (432)445-9000, or write us at TRANSPECOS BANKS, Pecos , 115W. Third St, Pecos, TX 79772. You should also call thenumber or write this address if you believe a transfer has beenmade using the information from your check without yourpermission.

Illegal Transactions. You may not use your ATM, POS, or DebitCard, or other access device for any illegal or unlawfultransaction, and we may decline to authorize any transactionthat we believe poses an undue risk of illegality orunlawfulness. Notwithstanding the foregoing, we may collecton any debt arising out of any illegal or unlawful transaction.

Business Days. For purposes of these electronic funds transferdisclosures, our business days are Monday through Friday.Holidays are not included.

Stop Payments on ATM, POS, or Debit Card Transactions. Youmay not place a stop payment order on any ATM, POS, or debitcard transaction.

Documentation.

Periodic Statement. You will get a monthly accountstatement from us, unless there are no transactions in aparticular month. In any case you will get a statementquarterly. You will get a quarterly statement from us onyour savings account if this is the only account you maintainand the only possible electronic transfer to or from theaccount is a preauthorized deposit.

Terminal Receipt. You can get a receipt at the time youmake a transfer to or from your account using an ATM or aPOS terminal. However, receipts for transactions of $15.00or less may not always be available.

Direct Deposits. If you have arranged to have directdeposits made to your account at least once every sixty (60)days from the same person or company, you can call us at(877) 445-9550 to find out whether or not the deposit hasbeen made.

Our Liability for Failure to Make Transfers. If we do notcomplete a transfer to or from your account on time or in thecorrect amount according to our agreement with you, we willbe liable for your losses or damages. However, there are someexceptions. We will NOT be liable for instance:

* If, through no fault of ours, you do not have enoughmoney in your account to make the transfer.

* If the money in your account is subject to legal processor other claim restricting such transfer.

* If the transfer would go over the credit limit on youroverdraft line.

* If the ATM where you are making the transfer does nothave enough cash.

* If the terminal or system was not working properly andyou knew about the breakdown when you started the

transfer.

* If circumstances beyond our control (such as fire or flood)prevent the transaction, despite reasonable precautionsthat we have taken.

* There may be other exceptions stated in our agreementwith you.

In Case of Errors or Questions About Your Electronic Transfers.Telephone us at (432) 445-9000, or write us at TRANSPECOSBANKS, Pecos, 115 W. Third St, Pecos, TX 79772 as soon asyou can, if you think your statement or receipt is wrong or ifyou need more information about a transfer listed on thestatement or receipt. We must hear from you no later thansixty (60) days after we sent the FIRST statement on which theproblem or error appeared.

* Tell us your name and account number (if any).

* Describe the error or the transfer you are unsure about,and explain as clearly as you can why you believe it is anerror or why you need more information.

* Tell us the dollar amount of the suspected error.

If you tell us orally, we may require that you send us yourcomplaint or question in writing within ten (10) business days.

We will determine whether an error occurred within ten (10)business days after we hear from you and will correct any errorpromptly. If we need more time, however, we may take up toforty five (45) days to investigate your complaint or question. Ifwe decide to do this, we will credit your account within ten(10) business days for the amount you think is in error, so thatyou will have the use of the money during the time it takes usto complete our investigation. If we ask you to put yourcomplaint or question in writing and we do not receive it withinten (10) business days, we may not credit your account.

If a notice of error involves an electronic fund transfer thatoccurred within thirty (30) days after the first deposit to theaccount was made, the error involves a new account. Forerrors involving new accounts, point of sale debit cardtransactions, or foreign-initiated transactions, we may take upto ninety (90) days to investigate your complaint or question.For new accounts, we may take up to twenty (20) businessdays to credit your account for the amount you think is in error.

We will tell you the results within three (3) business days aftercompleting our investigation. If we decide that there was noerror, we will send you a written explanation. You may ask forcopies of the documents that we used in our investigation.

Confidentiality. We will disclose information to third partiesabout your account or the transfers you make:

* To complete transfers as necessary;

* To verify the existence and condition of your accountupon the request of a third party, such as a credit bureauor merchant; or

* To comply with government agency or court orders; or

* If you give us your written permission.

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Personal Identification Number (PIN). The ATM PIN, POS PIN orAudio Response PIN issued to you is for your security purposes.The numbers are confidential and should not be disclosed tothird parties or recorded on the card. You are responsible forsafekeeping your PIN(s). You agree not to disclose or otherwisemake your ATM PIN, POS PIN or Audio Response PIN availableto anyone not authorized to sign on your accounts.

Notices. All notices from us will be effective when we havemailed them or delivered them to your last known address onour records. Notices from you will be effective when receivedby us at the telephone number or the address specified in thisAgreement. We reserve the right to change the terms andconditions upon which this service is offered. We will mailnotice to you at least twenty one (21) days before the effectivedate of any change, as required by law. Use of this service issubject to existing regulations governing your account and anyfuture changes to those regulations.

Enforcement. In the event either party brings a legal action toenforce this Agreement or collect amounts owing as a result ofany Account transaction, the prevailing party shall be entitled toreasonable attorneys' fees and costs, including fees on anyappeal, subject to any limits under applicable law.

Termination of ATM, POS and Audio Response Services. Youagree that we may terminate this Agreement and your use ofthe ATM Card, POS or Audio Response services, if:

* You or any authorized user of your ATM PIN, POS card orPIN or Audio Response PIN breach this or any otheragreement with us;

* We have reason to believe that there has been anunauthorized use of your ATM PIN, POS card or PIN orAudio Response PIN;

* We notify you or any other party to your account that wehave cancelled or will cancel this Agreement. You or anyother party to your account can terminate this Agreementby notifying us in writing.

Termination of service will be effective the first business dayfollowing receipt of your written notice. Termination of thisAgreement will not affect the rights and responsibilities of theparties under this Agreement for transactions initiated beforetermination.

Preauthorized Electronic Fund Transfers.

Stop Payment Rights. If you have told us in advance tomake regular electronic fund transfers out of youraccount(s), you can stop any of these payments. Here'show: Call us or write to us at the telephone number oraddress set forth above, in time for us to receive yourrequest three (3) business days or more before the paymentis scheduled to be made. If you call, we may also requireyou to put your request in writing and get it to us withinfourteen (14) days after you call. We will charge you $25.00 for each stop payment order you give.

Notice of Varying Amounts. If these regular payments mayvary in amount, the person you are going to pay will tell you,ten (10) days before each payment, when it will be made

and how much it will be. You may choose instead to getthis notice only when the payment would differ by more thana certain amount from the previous payment, or when theamount would fall outside certain limits that you set.

Liability for Failure to Stop Payment of PreauthorizedTransfers. If you order us to stop one of these paymentsthree (3) business days or more before the transfer isscheduled, and we do not do so, we will be liable for yourlosses or damages.

Other Provisions. There may be a delay between the time adeposit is made and when it will be available for withdrawal.You should review our Funds Availability Policy to determine theavailability of the funds deposited at ATMs. We reserve theright to refuse any transaction which would draw uponinsufficient funds, exceed a credit limit, lower an account belowa required balance, or otherwise require us to increase ourrequired reserve on the account.

ATM SAFETY PRECAUTIONS

As issuers of Automated Teller Machine (ATM) access devices,we have provided for your information a list of safetyprecautions regarding the use of automated teller machines.Please read the following safety precautions:

* When using walk-up or drive-up unmanned automatedteller machines (ATMs) -

*Remain aware of surroundings, particularly at night, and exercisecaution when withdrawing funds;

*Inspect an ATM before use for possible tampering, or for thepresence of an unauthorized attachment that could captureinformation from the access device or your Personal IdentificationNumber (PIN);

*Refrain from displaying cash and put it away as soon as thetransaction is completed; and

*Wait to count cash until you are in the safety of a locked enclosure,such as your car or home.

* Do not reveal your personal identification number (PIN) toothers. Avoid allowing others to view your PIN entry intoan ATM. Memorize your PIN and do not write yourpersonal identification number or code on your ATMaccess device.

* Safeguard and protect your access device. Treat it as ifit were cash, and if it has an embedded chip, keep thedevice in a safety envelope to avoid undetected andunauthorized scanning.

* Promptly report a lost or stolen access device and reportall crimes to law enforcement officials immediately.

* If you observe suspicious persons or circumstances whileapproaching or using an ATM, do not use the machine or,if you are in the middle of a transaction, cancel thetransaction, take the access device, leave the area, andcome back another time or use an ATM at anotherlocation.

* Safeguard and securely dispose of ATM receipts.

* Do not surrender information about your access deviceover the telephone or over the Internet, unless to atrusted merchant in a call or transaction initiated by you.

* Promptly review your monthly statement and compareATM receipts against your statement to protect againstATM fraud.

* If purchasing online with the access device, endtransactions by logging out of websites rather thansimply closing the web browser to protect againstInternet fraud.

SUBSTITUTE CHECK POLICY DISCLOSURE

Substitute Checks and Your Rights

What is a substitute check?

To make check processing faster, federal law permits creditunions and banks to replace original checks with "substitutechecks". These checks are similar in size to original checkswith a slightly reduced image of the front and back of theoriginal check. The front of a substitute check states: "This is alegal copy of your check. You can use it the same way youwould use the original check." You may use a substitute checkas proof of payment just like the original check.

Some or all of the checks that you receive back from us may besubstitute checks. This notice describes rights you have whenyou receive substitute checks from us. The rights in this noticedo not apply to original checks or to electronic debits to youraccount. However, you have rights under other law withrespect to those transactions.

What are my rights regarding substitute checks?

In certain cases, federal law provides a special procedure thatallows you to request a refund for losses you suffer if asubstitute check is posted to your account (for example, if youthink that we withdrew the wrong amount from your account orthat we withdrew money from your account more than once forthe same check). The losses you may attempt to recover underthis procedure may include the amount that was withdrawnfrom your account and fees that were charged as a result of thewithdrawal (for example, bounced check fees).

The amount of your refund under this procedure is limited to theamount of your loss or the amount of the substitute check,whichever is less. You also are entitled to interest on theamount of your refund if your account is an interest-bearingaccount. If your loss exceeds the amount of the substitutecheck, you may be able to recover additional amounts underother law.

If you use this procedure, you may receive up to $2,500.00 ofyour refund (plus interest if your account earns interest) within10 business days after we received your claim and theremainder of your refund (plus interest if your account earnsinterest) not later than 45 calendar days after we received yourclaim.

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We may reverse the refund (including any interest on therefund) if we later are able to demonstrate that the substitutecheck was correctly posted to your account.

How do I make a claim for a refund?

If you believe that you have suffered a loss relating to asubstitute check that you received and that was posted to youraccount, please contact us at TransPecos Banks, SSBAccounting Department, 112 E Pecan Street, San Antonio, TX,78205, (877) 445-9550. You must contact us within 40calendar days of the date that we mailed (or otherwise deliveredby a means to which you agreed) the substitute check inquestion or the account statement showing that the substitutecheck was posted to your account, whichever is later. We willextend this time period if you were not able to make a timelyclaim because of extraordinary circumstances.

Your claim must include--

* A description of why you have suffered a loss(for example, you think the amount withdrawnwas incorrect);

* An estimate of the amount of your loss;

* An explanation of why the substitute check youreceived is insufficient to confirm that yousuffered a loss; and

* Both a copy of the Substitute Check and thefollowing information: the check number, theamount of the check, and the name of the personto whom you wrote the check.

DEPOSIT ACCOUNT AGREEMENT AND DISCLOSURE

INTRODUCTION. In this Deposit Account Agreement andDisclosure, each and all of the depositors are referred to as"Account Holder", "you", and "your." The Financial Institutionis referred to as "we," "our," and "us." This Deposit AccountAgreement contains the terms and conditions governing certainof your deposit accounts with us. As used in this document,the term "Agreement" means this document, the signaturecard, a rate and fee schedule (which may be in the form of aRate and Fee Schedule, Time Certificate of Deposit, orConfirmation of Time Deposit, hereinafter called the"Schedule"), Truth in Savings disclosures, a Funds AvailabilityPolicy Disclosure, and an Electronic Funds Transfer Agreementand Disclosure, if applicable. Each of you signing the signaturecard for a deposit account acknowledges receipt of thisAgreement, and agrees to the terms set forth in the Agreement,as amended from time to time. You agree that we may waive,in our sole discretion, any fee, charge, term, or condition setforth in this Agreement at the time the Account is opened orsubsequent thereto, on a one-time basis or for any period orduration, without changing the terms of the Agreement or yourobligation to be bound by the Agreement, and we are notobligated to provide similar waivers in the future or waive ourrights to enforce the terms of this Agreement.

DEPOSIT ACCOUNTS. From time to time, we may offer or youmay open a variety of deposit accounts. Each such account(the "Account") is subject to the general terms and conditionsand any specific terms and conditions relating to that type ofaccount that may be set forth in this Agreement. If you openmultiple Accounts, you may receive Schedule information foreach Account, but this Agreement will cover all your Accountswith us. Each of you will be jointly and severally liable to us fordebit balances in the Account, including without limitationoverdrafts and Account charges, and jointly and severallypromise to pay, upon demand, any and all debit balances, allfees and charges, and our reasonable attorneys' fees and costsand expenses of collection, including but not limited to thoseincurred at trial and on any appeal.

INTEREST. If your Account earns interest, the followinginformation applies: (A) Payment of Interest. We will payinterest at the annual rate specified on the Schedule, whichdoes not reflect compounding ("Interest Rate"). The Schedulealso sets forth the frequency of interest payments, thefrequency of any compounding and crediting, the interestaccrual basis, the balance on which interest will be paid, andany minimum balance requirements. (B) Minimum BalanceRequirements. The Schedule may specify a minimum balancethat you are required to maintain in your Account. If theminimum balance is not maintained during a specified period,we, at our option, may not pay interest on your Account and/ormay charge a fee for that period. You should review anyminimum balance requirements on the Schedule. (C) InitialInterest Rate. The initial interest rate is the current annual rateof interest that we will pay on the specified balance in yourAccount. We may pay interest at different rates, depending onthe amount deposited and the type of depositor (individual,business, non-profit organization, etc.). (D) InterestCompounding and Crediting. The Schedule will indicate theinterest compounding and crediting frequency for your Account(if any). Compounding generally means that interest is beingaccrued on earned interest. Interest may be compounded morefrequently than interest is credited to your Account. (E)Interest Accrual. We may accrue interest on your Accountmore frequently than we pay or credit interest. The interestthat has been calculated, but not paid to the Account, is calledaccrued unpaid interest. (F) Changes. We have the right tochange the rates and fees in accordance with the terms of theSchedule. We also reserve the right to change any other termof this Agreement at our sole discretion.

FEES AND CHARGES. Subject to applicable law, you agree topay us the fees and charges shown in the Schedules as areapplicable to your Account or for other services performed byus. You agree the fees and charges may be changed by usfrom time to time and authorize us to charge your account fortheir payment whether or not each charge results in anoverdraft of your account. Existing and future charges may bebased upon the overall costs of providing account services andmay or may not be based upon the direct cost or expenseassociated with providing the particular service involved. Thecharges may be based on consideration of profit, competitiveposition, deterrence of misuse of account privileges bycustomers, and the safety and soundness of the financial

institution. We will notify you of the changes, to the extentrequired by law.

BALANCE METHODS. As used in this Agreement, the "averagedaily balance" method means "the application of a periodic rateto the average daily balance in the account for the period,determined by adding the full amount of principal in the accountfor each day of the period and dividing that figure by thenumber of days in the period." The "daily balance" methodmeans "the application of a daily periodic rate to the full amountof principal in the account each day."

DEPOSIT RULES. The following terms apply to deposits madeto your Account: (A) Endorsements. You authorize us toaccept transfers, checks, and other items for deposit to yourAccount if they are made payable to, or to the order of, any oneor more of you, whether or not they are endorsed by you. Youauthorize us to supply missing endorsements, and you warrantthat all endorsements are genuine. All checks and other itemsdeposited to your Account should be endorsed payable to theorder of us for deposit only, followed by your signature andAccount number. All endorsements must appear on the back ofthe check or other item within the first 1-1/2 inches from theleft side of the item when looking at it from the front.Endorsements should be in black ink. While we may acceptnon-conforming endorsements, you will be responsible for anyloss incurred by us due to the delay in processing or returningthe item for payment. (B) Final Payment. All non-cash items(for example, checks) deposited to your Account are postedsubject to our receipt of final payment by the payor bank. Uponreceipt of final payment, the item becomes a collected item. Iffinal payment is not received or if any item you have depositedor cashed is charged back to us for any reason, you authorizeus to charge any of your Accounts, without prior notice and atany time, for the amount of the returned item, our returned itemfee, any interest paid on that item, and any other fee we pay orincur. If an item to be charged back is lost in the process ofcollection or unavailable for return, we may rely upon aphotocopy of the item or upon any other generally acceptednotification of return of the item, in charging you or any of yourAccounts for the amount of the returned item. We reserve theright to refuse any item for deposit into your Account. (C)Direct Deposits. If we offer direct deposit services forautomatic preauthorized deposits to your Account of SocialSecurity payments or automatic transfers from your otheraccounts with us, you must notify us at least 30 days prior tothe next scheduled direct deposit or preauthorized transfer ifyou wish to cancel the direct deposit or transfer service. If anyamount deposited must be returned to the government for anyreason, you authorize us to deduct the amount from yourAccount as provided in the Final Payment paragraph above. (D)Crediting of Deposits. The Funds Availability Policy Disclosureprovided to you reflects our policies relating to the availability ofdeposited funds. (E) Substitute Checks and Electronic FilesPertaining to Original Checks. If you deposit a "substitutecheck" (as defined in Regulation CC § Section 229.2(aaa)) or apurported substitute check into your Account, you agree toreimburse us for losses, costs and expenses we may pay orincur associated with the item not meeting applicable substitutecheck standards and/or from duplicate payments associated

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with the item. If you provide us with an electronicrepresentation of a substitute check for deposit into youraccount instead of an original check, you agree to reimburse usfor losses, costs and expenses we may pay or incur associatedwith the substitute check resulting from the electronicrepresentation not meeting applicable substitute checkstandards and/or from duplicate payments associated with theitem. (F) Deposit Discrepancies. When you make a deposit toyour account, we will credit your account for the amount statedon your deposit slip and we may provide you with a depositreceipt. We reserve the right to review the deposit and confirmthe amount of funds you deposited but are not required to doso. If after any review we determine that the amount credited toyour account is incorrect, we may adjust your account for theamount of the discrepancy but reserve the right not to do so ifthe discrepancy would not be a disadvantage to you. This maybe the case, for example, if the amount credited to youraccount was more than the amount actually deposited by you.Notwithstanding the foregoing, we are not required to adjustyour account unless within one year of the date of your accountstatement that shows the deposit either you notify us of thediscrepancy or we discover it on our own. If you do not notifyus of the error or we do not discover it on our own during thisnotice period, the amount credited to the account will beconsidered final.

WITHDRAWAL RULES. The following terms apply towithdrawals from your Account: (A) Manner of Withdrawal.You may make withdrawals from your Account in any mannerthat is permitted by us for the type of Account that you haveopened. Withdrawals by mail will be posted to your Account asof the day the transaction is processed by us. We may refuseto accept any check other than standard checks provided by us,or approved by us in advance. Withdrawals and transfers fromyour Account may be restricted as provided in the Agreement,or in the Schedule, or by applicable law. (B) WithdrawalRestrictions and Overdrafts. We do not have to allow you tomake a withdrawal from your Account if you don't havesufficient available funds in the Account to cover the fullamount of the withdrawal. If there are available funds to coversome, but not all, of the withdrawals or other debits to yourAccount on a single business day, we will post the checks forwhich there are sufficient available funds in the order in whichthe checks are received by us. We may pay other withdrawalsor debit items (such as charges) prior to paying any checks, andwe may post those other withdrawals or debit items in anyorder we may choose at our sole discretion. If there areinsufficient funds available in your Account to cover awithdrawal or debit presented against your Account, this iscalled an "overdraft". We will handle each overdraft inaccordance with our Standard Overdraft Policy (describedbelow) or in accordance with any other agreement you mayhave with us (such as an overdraft protection agreement). Evenif we choose to pay one or more overdrafts, we are notobligated to cover any future overdrafts. When we determinewhether payment of an item will create an overdraft, we maydetermine the balance of your account at any time between thetime we receive the item and the deadline for us to take actionon the item. We are not required to determine your accountbalance more than one (1) time during this period. (C)

Standard Overdraft Policy. Unless we have agreed to aseparate overdraft protection agreement with you, the followingrules apply. We are not obligated to pay any overdraft. Subjectto the special rules discussed below for transactions at an ATMand one-time debit card transactions, we may assess a servicecharge on any withdrawal created by check, in-personwithdrawal, ATM withdrawal, or other electronic means thatresults in an overdraft, whether we pay the overdraft or not. Ifwe pay the overdraft, you agree, immediately upon notice fromus, to deposit funds sufficient to cover the overdraft plus anyservice charge we impose. We may not impose a servicecharge in connection with an overdraft that results from atransaction at an ATM or a one-time debit card transactionunless you have given us your consent to pay service charges inconnection with overdrafts that result from these transactionsand we have sent written confirmation of that consent to you.You may revoke that consent at any time. (D) NoticeRequirements. Federal regulations require us to retain the rightto require you to give at least seven (7) days notice in writingprior to any intended withdrawal from a savings, negotiableorder of withdrawal ("NOW"), or money market account.Although we usually pay withdrawals or checks without noticeon these accounts, doing so does not mean that we give up thisright. (E) Postdated Items. You agree that when you write acheck, you will not date the check in the future. If you do andthe check is presented for payment before the date of thecheck, we may pay it or return it unpaid. You agree that if wepay the check, the check will be posted to your Account on thedate we pay the check, even though the posting date is prior tothe date of the check. You further agree that we are notresponsible for any loss to you in doing so. If we are requiredby state law not to honor a postdated check after advancenotice from you, you agree to give us advance notice earlyenough for us to act on it, to do so in writing, and to specifythe date, exact amount, and number of the check, along withthe name of the payee. You agree that we may return apostdated check to the presenter. (F) Power of Attorney. Theperson executing a power of attorney will be referred to as theprincipal and the person acting for the principal as the agent.We may refuse to comply with a power of attorney forreasonable cause, or until we receive an affidavit from the agentstating that the Power of Attorney presented is a true copy andthat, to the best of the agent's knowledge, the principal is aliveand that the relevant powers of the agent have not been alteredor terminated. (G) Signatures. You recognize that we haveadopted automated collection and payment procedures so thatwe can process the greatest volume of items at the lowestpossible cost to our customers. In light of this, you agree thatwe do not fail to exercise ordinary care in paying an item solelybecause our procedures do not provide for the sightexamination of items with a face amount below an amountspecified by us from time to time. You authorize us to storeand use Signature Card information in any reasonable form wedeem necessary, including any digitized signature captureprocess. If you use a facsimile signature or other form ofmechanically reproduced signature (such as, but not limited to,desktop publishing, digitized, or computer software generatedsignature), you agree you shall have the sole responsibility formaintaining security of the facsimile or mechanically reproduced

signature and the device by which the facsimile or mechanicallyreproduced signature is affixed and you shall bear the entire riskfor unauthorized use thereof whether or not you are negligent.You agree that no facsimile or mechanically reproducedsignature we have been authorized to honor may be considereda forgery or an unauthorized signature, but that such facsimileor mechanically reproduced signature shall be effective as yoursignature or endorsement whether or not you have beennegligent. You further agree to indemnify and hold us harmlessfrom and against any and all loss, costs, damage, liability, orexposure (including reasonable attorney's fees) we or you maysuffer or incur as a result of the unlawful use, unauthorized use,or misuse by any person of any such facsimile or mechanicallyreproduced signature or the device by which it is affixed. If youuse any form of facsimile or mechanically reproduced signaturedevice, you agree to deliver a sample to us if we request it. (H)Preauthorized Drafts. If we are unable to enforce presentmentand transfer warranties on remotely created checks underRegulation CC, then if you voluntarily give information aboutyour Account (such as our routing number and your accountnumber) to a party who is seeking to sell you goods or services,and you do not physically deliver a check to the party, any debitto your account initiated by the party to whom you gave theinformation is deemed authorized by you. (I) Electronic CheckConversion. You may authorize a merchant or other payee tomake a one-time electronic payment from your account usinginformation from your check to pay for purchases or pay bills.The merchant or other payee uses the check information, alongwith the transaction amount, to initiate an ACH debittransaction. The transaction is electronically transferred throughthe ACH system and the funds will be debited directly from youraccount and deposited automatically into the merchant orpayee's account. When information from your check is used tomake an electronic fund transfer, funds may be withdrawn fromyour account as soon as the same day you make your payment.A description of the transaction will appear on your statementfrom us. Checks used in these types of transactions will not bereturned with your statement. This type of electronic fundstransfer from a consumer account is governed by the ElectronicFunds Transfer Act and subject to the Electronic Funds TransferAgreement and Disclosure(s). (J) Re-presented Checks. If amerchant electronically re-presents a check returned due toinsufficient or uncollected funds, that transaction is not coveredby the Electronic Funds Transfer Act. Checks involved in thistype of transaction will not be included with your statement.You may authorize a merchant to electronically collect a feeassociated with the re-presentment of a check. If a merchantelectronically collects a fee associated with the re-presentmentof a check, the fee transaction is covered by the ElectronicFunds Transfer Act and subject to the Electronic Funds TransferAgreement and Disclosures if the fee is debited as an electronicfunds transfer from a consumer account. A description of thetransaction will appear on your statement. (K) Check Legends.We may disregard information on any check or item other thanthe signature of the drawer, the identification of the draweefinancial institution and payee, the amount, the endorsements,and any other information that appears on the MICR line. Inaddition, we are not responsible to take action on, or for failureto notify you of restrictive language placed on checks or other

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items, including but not limited to terms such as, "Void after 90Days," "Paid in Full," "Two Signatures Required," "Void Over$100" or similar statements. In accordance with reasonablebanking standards, most checks and other items are processedthrough automated processing and, except in limitedcircumstances and in our discretion, most items are notindividually examined. You agree that we act within reasonablebanking standards by processing most checks and other itemsthrough automated processing systems. We may agree toadhere to extraneous legends if you notify us of such legendsand we have agreed in writing to honor such legends. (L)Non-Customer Check Cashing Fee. If a person who is not acustomer of ours presents a check drawn against one of youraccounts for payment over the counter, we may charge theperson a service charge for cashing the check. You agree thatif the person refuses to pay the service charge, we may notcash the check and we have no liability to you for refusing tocash the check.

STALE CHECKS. We reserve the right to pay or dishonor acheck more than six (6) months old without prior notice to you.

CHECKING ACCOUNTS. If your account is a checking account,the following terms may apply. If we offer NOW accounts, theaccount must consist solely of funds in which the entirebeneficial interest is held by one or more individuals in anindividual capacity, a sole proprietor, or a governmental unit,but not professional corporations or business partnerships. ANOW account may also be held by a for profit organizationserving in a fiduciary or trustee capacity for an entity that isitself permitted to hold a NOW account. Otherwise, anorganization may hold a NOW account only if it is operatedprimarily for religious, philanthropic, charitable, educational, orother similar purpose.

SAVINGS ACCOUNTS. If your account is an interest bearingaccount and is not a NOW account or time deposit, thefollowing terms may apply. (A) Transfers and Withdrawals. Ifyour Account is a savings or money market deposit account,federal law requires that an Account Holder may make no morethan six (6) transfers and/or withdrawals during any one (1)calendar month or statement cycle (the period from onestatement to the next) or similar period of at least four weeks,to another of your accounts with us or to a third party bymeans of a preauthorized or automatic transfer, or telephonic(including data transmission) agreement, order or instruction orby check, draft, debit card, or similar order made by you andpayable to third parties. A "preauthorized transfer" includesany arrangement by us to pay a third party from your accountupon written or oral instruction (including an order receivedthrough an automated clearing house (ACH) or any arrangementby us to pay a third party from your account at a predeterminedtime or on a fixed schedule.)(B) Excess Transactions. Inaccordance with federal law, if you have more than theallowable preauthorized transfers or preauthorized checks ordrafts (for money market accounts) in any one period, yourAccount may be subject to closure by us and the funds placedin another account that you are eligible to maintain, or we maytake away the transfer and draft capabilities of the account. Inaddition to the above preauthorized transfers, you may makeunlimited withdrawals (payments directly to you or transfers of

funds from your Account to any of your other deposit accountsor loan accounts with us), either in person at our locations, bymail, messenger, telephone (via check mailed to you), or use ofan ATM card (if applicable).

TIME DEPOSITS. If your Account is a time deposit, you haveagreed to keep the funds on deposit until the maturity of yourAccount. If your Account has not matured, any withdrawal ofall or part of the funds from your Account may result in an earlywithdrawal penalty. We will consider requests for earlywithdrawal and, if granted, the penalty provided in the Schedulewill apply. (A) Penalty. The early withdrawal penalty iscalculated as a forfeiture of part of the accrued interest that hasor would be earned on the Account. If your Account has notyet earned enough interest so that the penalty can be deductedfrom earned interest, or if the interest already has been paid,the difference will be deducted from the principal amount ofyour Account. For fixed rate Accounts, we will use the rate ineffect for your deposit. (B) Exceptions. We may let youwithdraw money from your Account before the maturity datewithout an early withdrawal penalty: (1) when one or more ofyou dies or is determined legally incompetent by a court orother administrative body of competent jurisdiction; or (2)when the Account is an Individual Retirement Account (IRA)established in accordance with 26 USC 408 and the money ispaid within seven (7) days after the Account is opened; or (3)when the Account is a Keogh Plan (Keogh), if you forfeit atleast the interest earned on the withdrawn funds; or (4) if thetime deposit is an IRA or Keogh Plan established pursuant to 26USC 408 or 26 USC 401, when you reach age 59 1/2 orbecome disabled; or (5) within an applicable grace period (ifany).

STOP PAYMENT ORDERS. Subject to certain limitations, youmay order us to stop payment on any check, automatedclearing house/pre-authorized electronic funds transfer("ACH/EFT"), or other item payable from your Account, whetherdrawn or authorized by you or any other account holder, asfollows:

Stop Payment Against a Check or Other Item. A stoppayment request against a check or other item payablefrom your Account will be effective if we receive the orderat such time and in such manner as to afford us areasonable opportunity to act upon the order. Stoppayment orders must be received in writing to be effective.A stop payment order against a check or other itempayable from your Account is effective for six (6) months.A stop payment order against a check or other itempayable from your Account may be renewed for additionalsix (6) month periods if renewed during a period withinwhich the stop payment order is effective.

Stop Payment Against an ACH/EFT. A stop payment orderagainst an ACH/EFT may be honored if received at leastthree (3) banking days before the scheduled date of thetransfer. Stop payment orders must be received in writingto be effective. If we honor a stop payment requestagainst an ACH/EFT received on or within three (3) bankingdays of the scheduled transfer, we do so without anyliability or responsibility to any party having any interest in

the entry. A stop payment order against an ACH/EFT iseffective until the earlier of: (i) you withdraw the stoppayment order, or (ii) the debit entry is returned, or, wherea stop payment order is applied to more than one debitentry under a specific authorization involving a specificparty, all such debit entries are returned. Additionally, ifyou request us to stop all future payments pursuant to aspecific ACH/EFT authorization involving a particular party,we may require you to confirm in writing that you haverevoked such authorization.

All stop payment order requests will require you to provide thedate, the amount, and the number of the item or authorization,together with the name of the payee. If you give us incorrectinformation, we will not be liable for failing to stop payment onthe item or authorization. Our acceptance of a stop paymentorder will not constitute a representation that the item orauthorization has not already been paid or that we have areasonable opportunity to act upon the order. You may notstop payment on an official, certified, cashier's, or teller's checkissued by us, or request us to stop payment if we haveotherwise become accountable for the item or authorization. Inaddition, you may not stop payment on checks governed by aseparate agreement, such as a check guaranty agreement.Further you may not stop payment on an item or authorizationafter acceptance of the same by us.

Based upon the type of account ownership that you havedesignated, the following terms and conditions apply.

NOTICE: THE TYPE OF ACCOUNT YOU SELECT MAYDETERMINE HOW PROPERTY PASSES ON YOUR DEATH.YOUR WILL MAY NOT CONTROL THE DISPOSITION OF FUNDSHELD IN SOME OF THE FOLLOWING ACCOUNTS. You mayselect some of the following accounts by placing your initialsnext to the account you select on the Texas Uniform Single orMultiple-Party Account Selection Form.

INDIVIDUAL ACCOUNTS. An Individual ("Single-Party")Account is an account in the name of one depositor only.

Single-Party Account Without P.O.D. (Payable on Death)Designation. The party to the account owns the account. Onthe death of the party, ownership of the account passes as apart of the party's estate under the party's will or by intestacy.

Single-Party Account With P.O.D. (Payable on Death)Designation. The party to the account owns the account. Onthe death of the party, ownership of the account passes to theP.O.D. beneficiaries of the account. The account is not a partof the party's estate. Note, a sole proprietorship may beconsidered a Single-Party Account and may contain a payableon death (P.O.D.) designation.

MULTIPLE-PARTY ACCOUNTS. Our rights and liabilities forpayment of any sums on deposit in this account shall begoverned by the Texas Estates Code, as amended from time totime.

This section pertains to multiple-party accounts:

(A) Joint Account Ownership. An account with two or moreAccount Holders is a joint ("multiple-party") account.

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Multiple-Party Account Without Right of Survivorship. Theparties to the account own the account in proportion to theparties' net contributions to the account. The financialinstitution may pay any sum in the account to a party at anytime. On the death of a party, the party's ownership of theaccount passes as a part of the party's estate under the party'swill or by intestacy.

Community Property Without Right of Survivorship. If you havedesignated your Account as a community property accountwithout right of survivorship, the money in your Account is thecommunity property of the named parties who are husband andwife. You will need to select the Multiple-Party AccountWithout Right of Survivorship designation on the Texas UniformSingle or Multiple-Party Account Selection Form according toSection 113.052 of the Texas Estates Code. The ownership ofthe community property account during the lifetime and afterdeath of a spouse is determined by state law and may beaffected by a will.

Multiple-Party Account With Right of Survivorship. The partiesto the account own the account in proportion to the parties' netcontributions to the account. The financial institution may payany sum in the account to a party at any time. On the death ofa party, the party's ownership of the account passes to thesurviving parties.

Community Property With Right of Survivorship. Texas lawallows a husband and wife to agree in writing that communityproperty funds in an account shall become the property of thesurviving spouse on the death of either spouse. If the parties tothe account have community property funds and desire to haveright of survivorship in those funds, they will not only need tochoose the Multiple-Party Account With Right of Survivorshipdesignation on the Texas Uniform Single or Multiple-PartyAccount Selection Form according to Section 113.052 of theTexas Estates Code, but will also need to execute an additionalagreement signed by both the husband and wife regarding thedisposition of the community property funds. We will furnish awritten survivorship agreement to be placed on file with us forcommunity property accounts with right of survivorship,however, you should consult your own attorney if you have anyquestions regarding community property laws and the divisionof property at the death of either spouse.

Multiple-Party Account With Right of Survivorship and P.O.D.(Payable on Death) Designation. The parties to the accountown the account in proportion to the parties' net contributionsto the account. The financial institution may pay any sum inthe account to a party at any time. On the death of the lastsurviving party, the ownership of the account passes to theP.O.D. beneficiaries.

(B) Convenience Account. The parties to the account own theaccount. One or more convenience signers to the account maymake account transactions for a party. A convenience signerdoes not own the account. On the death of the last survivingparty, ownership of the account passes as a part of the lastsurviving party's estate under the last surviving party's will orby intestacy. The financial institution may pay funds in theaccount to a convenience signer before the financial institutionreceives notice of the death of the last surviving party. The

payment to a convenience signer does not affect the parties'ownership of the account.

(C) Totten Trust Account. The party or parties namedtrustee(s) to the account own the account in proportion to theparty's or parties' net contributions to the account. A trusteemay withdraw funds from the account. A beneficiary may notwithdraw funds from the account before all trustees aredeceased. On the death of the last surviving trustee, theownership of the account passes to the beneficiary. The trustaccount is not part of a trustee's estate and does not passunder the trustee's will or by intestacy, unless the trusteesurvives all of the beneficiaries and all other trustees.

Each joint ("multiple-party") Account Holder, without theconsent of any other Account Holder, may, and hereby isauthorized by every other joint Account Holder, to make anytransaction permitted under the Agreement, including withoutlimitation: to withdraw all or any part of the account funds; topledge the account funds as collateral to us for any obligation,whether that of one or more Account Holders or of a thirdparty; to endorse and deposit checks and other items payableto any joint Account Holder; to give stop payment orders onany check or item, whether drawn by that Account Holder ornot; to consent to or revoke consent to payment of servicecharges on overdrafts that result from ATM transactions orone-time debit card transactions under the Standard OverdraftPolicy; and, to close the account, with the disbursement ofaccount proceeds as instructed by the joint Account Holder.Each joint Account Holder is authorized to act for the otherAccount Holder(s) and we may accept orders and instructionsregarding the account from any joint Account Holder. If webelieve there to be a dispute between joint Account Holders orwe receive inconsistent instructions from the Account Holders,we may suspend or close the account, require a court order toact, and/or require that all joint Account Holders agree in writingto any transaction concerning the account.

Your obligations under the Agreement are joint and several.This means that each joint Account Holder is fully andpersonally obligated under the terms of the Agreement,including liability for overdrafts and debit balances as set forthabove, irrespective of which joint Account Holder benefitedfrom the withdrawal. If you establish a joint account withoutthe signature of the other joint Account Holder(s), you agree tohold us harmless for our reliance upon your designation of theother joint Account Holder(s) listed on our documents. Further,the Account is subject to the right of setoff as set forth below.

ADDITIONAL ACCOUNT TYPES. This section applies to otherdeposit account types:

(A) Formal Trust Account. A Formal Trust Account is anaccount held by one or more trustees for the benefit of one ormore beneficiaries according to a written trust agreement.Upon our request, the trustee(s) will supply to us a copy of anytrust agreement covering the account. We act only ascustodian of the trust funds and are under no obligation to actas a trustee or to inquire as to the powers or duties of thetrustee(s). The trustee(s) and/or any person opening theAccount, in their individual capacity and jointly and severally,agree to indemnify and hold us harmless from and against any

and all loss, costs, damage, liability, or exposure, includingreasonable attorney's fees, we may suffer or incur arising out ofany action or claim by any beneficiary or other trustee withrespect to the authority or actions taken by the trustee(s) inhandling or dealing with the Account.

(B) Uniform Transfer to Minors. If you have established theaccount as a custodian for a minor beneficiary under our stateversion of the Uniform Transfers to Minors Act or the UniformGifts to Minors Act, your rights and duties are governed by theAct. You will not be allowed to pledge the account as collateralfor any loan to you. Deposits in the account will be held by usfor the exclusive right and benefit of the minor. The custodianand/or any person opening the Account, in their individualcapacity, agree to indemnify and hold us harmless from andagainst any and all loss, costs, damage, liability, or exposure,including reasonable attorney's fees, we may suffer or incurarising out of any action or claim by any beneficiary or othercustodian with respect to the authority or actions taken by thecustodian in handling or dealing with the Account.

(C) Representative Payee Accounts. Subject to applicable law,a Representative Payee Account is a type of fiduciary accountin which a representative payee (appointed by the SocialSecurity Administration) manages Social Security andSupplemental Security funds received on behalf of a beneficiary.Upon our request, the representative payee will providesufficient documentation from the Social SecurityAdministration indicating his or her appointment as arepresentative payee for the Account Holder. We may requireadditional documentation from the representative payeeindicating his or her authority to act on behalf of the AccountHolder. The representative payee does not have an ownershipinterest in funds in the Account. The representative payee doesnot have a right of survivorship in the Account on the death ofthe Account Holder. We act only as custodian of the funds andare under no obligation to act as a trustee or to inquire as to thepowers or duties of the representative payee. Therepresentative payee agrees to indemnify, and hold us harmlessfrom and against any and all loss, cost, damage, liability, orexposure, including reasonable attorneys' fees, we may sufferor incur arising out of any action or claim by the beneficiary, agovernment entity or by any other party regarding the authorityor actions taken by the representative payee in handling ordealing with the Account.

(D) Agency Account. An Agency Account is an account towhich funds may be deposited and withdrawals made by anAgent designated by the owner of the funds. An Agent has fullauthority with regard to the Account but does not have anownership interest in the account. An Agency Account isrevocable at any time by notifying us in writing. An Agencydesignation may be combined with one of the other forms ofaccount ownership.

(E) Business Accounts. If the Account is not owned by anatural person (for example, it is owned by a corporation,partnership, limited liability company, sole proprietorship,unincorporated association, etc.), then the Account Holder mustprovide us with a copy of the business entity's certificate ofincorporation or other comparable organizational document, and

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evidence to our satisfaction of the authority of the individualswho sign the signature card to act on behalf of the AccountHolder. On any transactions involving the Account, we may acton the instructions of the person(s) authorized in theresolutions, banking agreement, or certificate of authority to acton behalf of the Account Holder. If you operate as a soleproprietorship, you agree to notify us at least annually of anychange in the name of the business owner, in the physicaladdress of the business, in the home address of the businessowner, in the driver's license number of the business owner, orin the business owner's personal identification card numberissued by the Department of Public Safety. You further agreeto notify us in writing of any changes in the person(s)authorized to act on behalf of the Account Holder, any changein the business entity's certificate of incorporation or otherorganizational document, or the form of ownership. If wereceive conflicting instructions or a dispute arises as toauthorization with regard to the handling of the Account, youagree we may place a hold on the Account until such conflict ordispute is resolved to our satisfaction and we will not be liablefor dishonored items as a result of such hold.

(F) Fiduciary Accounts. With respect to all fiduciary accounts,including but not limited to estate accounts, guardianshipaccounts, representative payee accounts, and conservatorshipaccounts, and any Formal Trust Account, Uniform Transfers toMinors Act Account, or Agency Account, we reserve the rightto require such documents and authorizations as we may deemnecessary or appropriate to satisfy that the person(s) requestingor directing the withdrawal of funds held in the Account havethe authority to withdraw such funds. This applies at the timeof account opening and at all times thereafter.

(G) Attorney Client Trust Subject to applicable law, anAttorney Client Trust or IOLTA Trust Account is an account setup by an attorney or law firm to hold client or third party fundsin trust, separate from the attorney's or law firm's funds. Uponour request, the authorized signers for an Attorney Client Trustor IOLTA Trust Account will provide documentation required byapplicable state law and applicable bar association (or similarentity) rules. We act only as custodian of the trust funds andare under no obligation to act as a trustee or to inquire as to thepowers or duties of the attorney or law firm as trustee(s). Theattorney, law firm, or any authorized individual on the accountagrees to indemnify and hold us harmless from and against anyand all loss, costs, damage, liability, or exposure, includingreasonable attorney's fees, we may suffer or incur arising out ofany action or claim by any beneficiary or third party withrespect to the authority, actions, or inaction taken by thetrustee(s) or authorized individuals in handling or dealing withthe account. Additional account terms are governed by aseparate agreement. If this is an IOLTA Trust Account, we willnot permit the lawyer or law firm to receive the interest. Theinterest (minus applicable fees) on an IOLTA Trust Account willbe remitted to the Texas Access to Justice Foundation,pursuant to your instructions and at your request. IOLTA TrustAccounts are used to hold an attorney's or law firm's clientfunds that are nominal in amount or held for short periods oftime.

(H) Real Estate Broker Client Trust Accounts Subject to

applicable law, a real estate broker may open account(s) to holdclient or third party funds in trust, separate from the broker'sfunds. We act only as custodian of the funds. We are under noobligation to act as a trustee or to inquire as to the powers orduties of the broker or other authorized signer(s) as trustee(s).The broker and any authorized individual on the account in theirindividual capacity and jointly and severally, agree to indemnifyand hold us harmless from and against any and all loss, costs,damage, liability, or exposure, including reasonable attorney'sfees, we may suffer or incur arising out of any action or claimby any client or third party with respect to the authority, actionsor inaction taken by the broker or authorized signer(s) inhandling or dealing with the Account. Upon our request, theauthorized signer(s) for this type of account will provide to usany documents required by applicable law and /or real estateprofessional rules.

(I) Government/Municipal/Public Funds Accounts. This type ofaccount is owned by a government or public entity. For thistype of account, you agree to provide us with authorizationdocument(s) (in a form acceptable to us) stating that we aredesignated as a depository for the funds of the government orpublic entity and such documentation shall state theindividual(s) authorized to act on behalf of the government orpublic entity and the extent of their authority. We may relyupon such documentation until we receive written notice of achange and new authorization documents. We are notresponsible for any transaction conducted by a previouslyauthorized individual until we actually receive written notice thatthe authorized individual's authority has been revoked. Unlessspecifically stated otherwise in the authorization document(s),we can rely on one authorization for all accounts owned by thegovernment or public entity. If required by law, you agree toenter into a Collateral Security Agreement regarding this type ofaccount.

ASSIGNABILITY. The account established under thisAgreement is not assignable or transferable except with ourconsent. We must approve any pledge of the Account and anysuch pledge remains subject to any right we have under theAgreement and applicable state and federal law. If ownership isproposed to be transferred, we may require the Account beclosed and a new account opened in the name of the transfereeor pledgee.

FINANCIAL INSTITUTION LIABILITY. You agree that if we donot properly complete a transaction according to theAgreement, we will not be liable in any event for losses ordamages in excess of the amount of the transaction, and wewill not be liable if circumstances beyond our control preventthe transaction, or the funds in your Account are or may besubject to legal process or other claim. In no event will we beliable for consequential damages. In receiving items from youfor withdrawal or deposit, we act only as your agent. You areresponsible for the condition of a check or item when you issueit. If a check or item is returned or payment is delayed as aresult of any writing or marking that you or a prior endorserplaced on the front or back of the check or item, you will beresponsible for any cost and liabilities associated with suchreturn or delay. We reserve the right to refuse any item fordeposit or to reverse credit for any deposited items or to charge

your Account for items should they become lost in thecollection process.

RIGHT OF SETOFF. Subject to applicable law, we may exerciseour right of setoff or security interest against any and all of yourAccounts (except IRA, HSA, Keogh plan and Trust Accounts)without notice, for any liability or debt of any of you, whetherjoint or individual, whether direct or contingent, whether now orhereafter existing, and whether arising from overdrafts,endorsements, guarantees, loans, attachments, garnishments,levies, attorneys' fees, or other obligations. However, underArticle XVI, Section 50(a)(6)(H) of the Texas Constitution, wemay not setoff against any of your accounts for a liability arisingfrom a home equity loan secured by Texas Homestead Property.If the Account is a joint or multiple-party account, each joint ormultiple-party account holder authorizes us to exercise our rightof setoff against any and all Accounts of each Account Holder.We may not exercise our right of setoff or security interest ifprohibited by the Military Lending Act.

DORMANT ACCOUNTS. If you have not made a withdrawalfrom, or a deposit to, your Account for an extended period oftime and we have been unable to contact you, your Accountmay be classified by us as dormant. Subject to applicable law,we may charge a dormant account fee on the Account, and theAccount will be presumed to be abandoned. In accordancewith state law, funds in abandoned accounts will be remitted tothe custody of the applicable state agency, and we will have nofurther liability to you for such funds. We reserve the right notto send statements on accounts we consider dormant, subjectto applicable law.

ACCOUNT STATEMENTS. You are responsible for promptlyexamining your statement each statement period and reportingany irregularities to us. Each account statement will beconsidered to correctly reflect your transactions, such asdeposits, withdrawals, credits, refunds, imposition of fees,interest or dividends, and other additions and subtractions toyour Account, unless you notify us in writing within certain timelimits after the statement that incorrectly reflects yourtransactions is made available to you. We will not be liable forany check that is altered or any signature that is forged unlessyou notify us within Thirty (30) calendar days after thestatement and the altered or forged item(s) are made available.Also, we will not be liable for any subsequent items paid, ingood faith, containing an unauthorized signature or alteration bythe same wrongdoer unless you notify us within Ten (10)calendar days after the statement and first altered or forgeditems were made available. You must report any other Accountproblem including encoding errors, and errors involving additionsor subtractions (debits and credits) not otherwise coveredherein, including electronic transactions not covered by theElectronic Fund Transfer Act, within Sixty (60) calendar days.If the suspected account problem involves a substitute checkthat you receive, you may (under some circumstances) beentitled to make a claim for an expedited refund. Such a claimmay be subject to different notification timeframes. See theSubstitute Check Policy Disclosure (if applicable) for furtherinformation. If you have requested us to hold your Accountstatements, we have the right to mail your statements if youhave not claimed them within Thirty (30) calendar days. If we

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truncate your checks, you understand that your original checkswill not be returned to you with your statement. You agree thatour retention of checks does not alter or waive yourresponsibility to examine your statements or change the timelimits for notifying us of any errors.

WHOLESALE WIRE AND ACH TRANSACTIONS. With respectto wire transfers or other transfers of funds not governed by theElectronic Funds Transfer Act, you agree to enter into andcomply with our wire transfer (if applicable) agreement and tocomply with our security procedures and this section. Weadvise you that any receiving financial institution (including us)is entitled to rely on any account or savings bank number youhave provided even though that account or savings banknumber may identify a party different from the person or entityyou have described by name in any transfer order.

(A) Provisional Payment. Credit given by us to you withrespect to an ACH credit or wholesale (wire) funds transferentry is provisional until we receive final settlement for suchentry through a Federal Reserve Bank. If we do not receive finalsettlement, you are hereby notified and agree that we areentitled to a refund of the amount credited to your Account inconnection with such entry, and the party (the originator of theentry) making payment to you via such entry shall not bedeemed to have paid you the amount of such entry.

(B) Notice of Receipt. We will notify you of the receipt ofpayments in the periodic account statements we provide to you.You acknowledge that we will not give next day notice to youof receipt of an ACH or wholesale (wire) funds transfer item.

UNLAWFUL INTERNET GAMBLING TRANSACTIONSPROHIBITED. If you are a commercial customer, you certifythat you are not now engaged in, and during the life of thisAgreement will not engage in, any activity or business that isunlawful under the Unlawful Internet Gambling Enforcement Actof 2006, 31 USC 5361, et seq., (the “UIGEA”). You may notuse your Account or any other service we offer to receive anyfunds, transfer, credit, instrument or proceeds that arise out ofa business that is unlawful under the UIGEA. You agree that ifanyone asks us to process a transaction that we believe isrestricted under the UIGEA, we may block the transaction andtake any other action we deem to be reasonable under theUIGEA and this Agreement.

NOTICES. The following terms apply to notices relating to yourAccount. (A) Notice of Amendments. You agree that theterms and conditions of the Agreement, including withoutlimitation all rates, fees, and charges, may be amended by usfrom time to time. We will notify you of amendments asrequired by applicable law. Your continued use of the Accountevidences your agreement to any amendment. Notices will besent to the most recent address shown on our records for yourAccount. Only one notice will be given in the case of jointaccount holders. (B) Account Changes. Any account holderor person authorized to sign on an account is required to notifyus in writing if any account holder or other person authorized tosign on an account dies or is declared incompetent by a court.It is your responsibility to notify us of any change in youraddress or name. We are required to honor items drawn onlyon the listed Account name. Further, we are required to

attempt to communicate with you only at the most recentaddress provided to us.

ACCOUNT TERMINATION. You and we agree that either of usmay close your Account and terminate this Agreement at anytime with or without cause. We will provide written notice toyou in advance if we decide to terminate your Accountrelationship for any reason other than abuse of the accountrelationship or to prevent a loss. You agree that advancewritten notice from us will be reasonable if it is mailed to yourstatement mailing address immediately upon account closure.You agree that in instances of account abuse or to prevent aloss, notice is reasonably given by us if mailed immediatelyupon account closure. You may close any of your accounts bynotifying us in writing. When an interest bearing account isclosed, there may be accrued interest that has not beencredited to the account. In that case, we will pay you theinterest UNLESS we have told you otherwise. Further, forsecurity reasons, we may require you to close your Accountand to open a new account if: there is a change in authorizedsigners; there has been a forgery or fraud reported orcommitted involving your Account; any Account checks arelost or stolen; you have too many transfers from your Account;or, any other provision of our Agreement with you is violated.After the Account is closed, we have no obligation to acceptdeposits or pay any outstanding checks. You agree to hold usharmless for refusing to honor any check drawn on a closedaccount. In the event that we close your Account, we may mailyou a Cashier's Check for the applicable remaining Accountbalance. The termination of this Agreement and closing of anaccount will not release you from any fees or other obligationsincurred prior to the date upon which this Agreement isterminated and an account closed, any fees assessed by us inthe process of closing an account, or from your responsibility tomaintain sufficient funds in an account to cover any outstandingchecks or other debit items.

GOVERNING LAW. This Agreement shall be governed by andconstrued in accordance with all applicable federal laws and allapplicable substantive laws of the State of Texas in which weare located and where you opened your account. In addition,we are subject to certain federal and state regulations and localclearing house rules governing the subject matter of theAgreement. You understand that we must comply with theselaws, regulations, and rules. You agree that if there is anyinconsistency between the terms of the Agreement and anyapplicable law, regulation, or rule, the terms of the Agreementwill prevail to the extent any such law, regulation, or rule maybe modified by agreement.

SYSTEMS AND SOFTWARE. We shall not be responsible toyou for any loss or damages suffered by you as a result of thefailure of systems and software used by you to interface withour systems or systems and software utilized by you to initiateor process banking transactions whether such transactions areinitiated or processed directly with our systems or through athird party service provider. You acknowledge that you aresolely responsible for the adequacy of systems and softwareutilized by you to process banking transactions and the ability ofsuch systems and software to do so accurately.

IMPORTANT INFORMATION ABOUT PROCEDURES FOROPENING A NEW ACCOUNT. To help the government fight thefunding of terrorism and money laundering activities, Federallaw requires all financial institutions to obtain, verify, and recordinformation that identifies each person who opens an account.What this means for you: When you open an account, we willask for your name, address, date of birth, and other informationthat will allow us to identify you. We may also ask to see yourdriver's license or other identifying documents.

CREDIT VERIFICATION. You authorize us to request and obtainone or more credit reports about you from one or more creditreporting agencies for the purposes of considering yourapplication for the Account, reviewing or collecting any Accountopened for you, or for any other legitimate business purpose.You authorize us to disclose information about your account toa credit reporting agency if your Account was closed becauseyou have abused it.

MISCELLANEOUS PROVISIONS. If you or your Accountbecomes involved in any legal proceedings, your use of theAccount may be restricted. You agree not to use the Accountin any illegal activity. We shall be entitled to act upon any legalprocess served upon us which we reasonably believe to bebinding, with no liability to you for doing so. You understandthat supervisory personnel may randomly monitor customerservice telephone conversations to ensure that you receiveaccurate, courteous, and fair treatment. If you ask us to followinstructions that we believe might expose us to any claim,liability, or damages, we may refuse to follow your instructionsor may require a bond or other protection, including youragreement to indemnify us. You agree to be liable to us, to theextent permitted by law, for any loss, costs, or expenses thatwe may incur as a result of any dispute or legal proceedinginvolving your Account. You authorize us to deduct any suchloss, costs, or expenses from your Account without prior noticeto you or to bill you separately. This obligation includesdisputes between you and us involving your Account andsituations where we become involved in disputes between youand an authorized signer, a joint owner, or a third party claimingan interest in your Account. It also includes situations whereany action taken on your Account by you, an authorized signer,a joint owner, or a third party causes us to seek the advice ofan attorney, whether or not we actually become involved in adispute. Any action by us for reimbursement from you for anycosts or expenses may also be made against your estate, heirsand legal representatives, who shall be liable for any claimsmade against and expenses incurred by us. If a court finds anyprovision of the Agreement to be invalid or unenforceable, suchfinding shall not make the rest of the Agreement invalid orunenforceable. If feasible, any such offending provision shall bedeemed to be modified to be within the limits of enforceabilityor validity; however, if the offending provision cannot be somodified, it shall be stricken and all other provisions of theAgreement in all other respects shall remain valid andenforceable.

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Rev. 07/2016

FACTS WHAT DOES TRANSPECOS BANKS, SSBDO WITH YOUR PERSONAL INFORMATION?

Why? Financial companies choose how they share your personal information. Federal law givesconsumers the right to limit some but not all sharing. Federal law also requires us to tell youhow we collect, share, and protect your personal information. Please read this notice carefullyto understand what we do.

What? The types of personal information we collect and share depend on the product or service youhave with us. This information can include:

Social Security number and incomecredit history and credit scoreschecking account information and employment information

When you are no longer our customer, we continue to share your information as described inthis notice.

How? All financial companies need to share customers' personal information to run their everydaybusiness. In the section below, we list the reasons financial companies can share theircustomers' personal information; the reasons TRANSPECOS BANKS, SSB chooses to share;and whether you can limit this sharing.

Reasons we can share your personalinformation

Does TRANSPECOS BANKS,SSB share? Can you limit this sharing?

For our everyday business purposes–such as to process your transactions, maintainyour account(s), respond to court orders andlegal investigations, or report to credit bureaus

Yes No

For our marketing purposes–to offer our products and services to you Yes No

For joint marketing with other financialcompanies Yes No

For our affiliates' everyday business purposes–information about your transactions andexperiences

No We don't share

For our affiliates' everyday business purposes–information about your creditworthiness No We don't share

For our affiliates to market to you No We don't shareFor nonaffiliates to market to you No We don't share

Questions? Call 877-445-9550 or go to www.transpecosbanks.com

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What we do

How doesTRANSPECOSBANKS, SSB protectmy personalinformation?

To protect your personal information from unauthorized access and use, we use securitymeasures that comply with federal law. These measures include computer safeguards andsecured files and buildings.

How doesTRANSPECOSBANKS, SSB collectmy personalinformation?

We collect your personal information, for example, when you

open an account or deposit moneypay your bills or apply for a loanuse your credit or debit card

Why can't I limit allsharing?

Federal law gives you the right to limit only

sharing for affiliates' everyday business purposes – information about yourcreditworthinessaffiliates from using your information to market to yousharing for nonaffiliates to market to you

State laws and individual companies may give you additional rights to limit sharing. Seebelow for more on your rights under state law.

Definitions

Affiliates Companies related by common ownership or control. They can be financial andnonfinancial companies.

TRANSPECOS BANKS, SSB has no affiliates.

Nonaffiliates Companies not related by common ownership or control. They can be financial andnonfinancial companies.

TRANSPECOS BANKS, SSB does not share with nonaffiliates so they can market toyou.

Joint marketing A formal agreement between nonaffiliated financial companies that together marketfinancial products or services to you.

Our joint marketing partners include insurance companies.

Other important information

The TransPecos Banks, SSB is chartered under the laws of the State of Texas and by state law is subject toregulatory oversight by the Texas Department of Savings and Mortgage Lending. Any consumer wishing to file acomplaint against the TransPecos Banks, SSB should contact the Texas Department of Savings and MortgageLending through one of the means indicated below: In person, or by U.S. Mail: 2601 North Lamar Boulevard,Suite 201, Austin, Texas 78705-4294; Telephone No. (877) 276-5550; Fax No. (512) 475-1505; or viaelectronic submission via the Department's website:http://www.sml.texas.gov/consumerinformation/tdsml_consumer_complaints.html

DEPOSIT PRO, Ver. 18.1.0.025 Copr. Finastra USA Corporation 1996, 2018. All Rights Reserved. TX - TX - L:\CFI\TIS\TISDISC

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REMOTE DEPOSIT CAPTURE SERVICE AGREEMENT This Remote Deposit Capture Service Agreement (“Agreement”) amends and supplements the disclosure provided to you at the opening of your deposit account entitled “Terms and Conditions of Your Account” (hereinafter, referred to as “Terms and Conditions”), as amended periodically. Capitalized terms not otherwise defined in this Agreement have the meanings ascribed to them in the Terms and Conditions. In the event of a conflict between the terms of this Agreement and the terms of the Terms and Conditions, with respect solely to Remote Deposit Capture Services, the terms of this Agreement shall prevail.

FINANCIAL INSTITUTION: TransPecos Banks

FINANCIAL INSTITUTION INFORMATION:

Address: 112 E. Pecan St Ste 800 SATX 78205

Phone Number:

Fax Number:

Email:

COMPANY:

COMPANY INFORMATION:

Address:

Phone Number:

Fax Number:

Email:

Primary Account #:

Other Account #s:

Remote Deposit Users:

1. SERVICECompany subscribes to, and Financial Institution agrees to provide, as part of its banking services, aremote deposit capture service (the “Remote Deposit Capture Service”) as described herein. The RemoteDeposit Capture Service enables Company to submit to Financial Institution for deposit to Company'saccount(s), as listed in the section above and amended periodically, electronic check images andassociated information (“Check Images”) in lieu of the original checks from which such Check Imageswere obtained. The generated Check Image will be the legal equivalent of the original check. The dollaramount, as well as the amount of deposit transactions transmitted by Company on any single businessday, shall not exceed limits set forth in Schedule A for each account, as determined, amended or

EXHIBIT G

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supplemented from time to time by Financial Institution at its sole discretion.

2. EQUIPMENT In order to use the Remote Deposit Capture Service, Company is required to use certain equipment, computer software, office equipment, and telecommunication services as Financial Institution may provide or specify from time to time. Company agrees that the equipment may not be used to make deposits at another financial Institution. Company is solely responsible for the operation, performance, and adequacy of the equipment, software, and services. Company agrees that the equipment shall be kept and maintained in a safe and secure environment. Financial Institution makes no representations or warranties and has no responsibility or liability for such equipment, software, or services even if specified as necessary by Financial Institution. Company agrees to complete any changes and/or upgrades to the system as required by Financial Institution within thirty (30) days of such request. Company acknowledges that any equipment, including the Remote Deposit Capture scanner, provided by Financial Institution to Company as part of the Remote Deposit Capture Service is and shall remain property of Financial Institution. In the event Company or Financial Institution terminates Company’s Remote Deposit Capture Service, Company shall immediately make arrangements with Financial Institution to return the Remote Deposit Capture scanner.

If Financial Institution provides any software to Company in connection with the Remote Deposit Capture Service, Company may use that software on any Company owned and operated machine. The software may not be provided to any agent of Company without the prior written consent of Financial Institution. The release of software to agent will be dependent upon the agent's agreement to contractual terms deemed acceptable by Financial Institution.

3. TRANSMITTAL OF ENTRIES BY COMPANY Company shall submit Check Images to Financial Institution in such format, and with such associated check information, as Financial Institution may require periodically, utilizing Accredited Standards Committee X9's Specifications for Electronic Exchange of Check and Image Data (DSTU X9.37-2003). Company agrees to inspect and verify the quality of the Check Images, ensuring that the Check Images of the front and back of the original check are legible. Specifically, Company warrants the following: (i) the Check Image is an accurate representation of the information contained in the original check, and the Check Image includes all endorsements from the original check; (ii) each Check Image contains a record of all MICR line information required for a substitute check, and the Check Image satisfies all of the requirements of Check 21 and Regulation CC; (iii) the original check, a duplicate Check Image, or any copy of the original check or Check Image will not be deposited by Company with the Bank; and (iv) the original check, a duplicate Check Image, or any copy of the original check or Check Image will not be presented, transferred or returned such that the Bank or any other person will be asked to make a payment based on a check or Check Image that has already been paid. Pursuant to the Deposit Account Agreement, Financial Institution reserves the right to reject any single Check Image or group of Check Images for any reason, before or after it/they appear on Financial Institution’s system. Bank is not liable for any loss or failure to collect a Check Image that results from an inaccurate or illegible Check Image or failure to provide full and correct MICR date or dollar amount for a Check Image.

Company agrees not to use the Remote Deposit Services to deposit or otherwise process: (i) non-cash items, (ii) Items for which Company is not a holder in due course, or (iii) substitute checks, except those which have been returned to Company for any reason.

4. SECURITY PROCEDURES (a) Company and Financial Institution shall comply with the security protocol requirements described in Schedule B attached hereto with respect to deposits transmitted by Company to Financial Institution. Company acknowledges that the purpose of such security procedure is for verification of authenticity and not to detect errors in transmission or content of a deposit. No security procedure for the detection of any such error has been established between Financial Institution and Company.

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(b) Company is strictly responsible to establish and maintain the security protocol to safeguard against unauthorized transmissions. Company warrants and guarantees that no individual will be allowed to initiate transfers in the absence of proper supervision and safeguards. Company also agrees to take reasonable steps to maintain confidentiality of the security procedures and any logons, passwords, codes, security devices, and related instructions provided by Financial Institution in connection with the security procedures described in Schedule B for the access rights granted under Schedule A.

(c) If Company believes or suspects that any such information or instructions are known or have been accessed by unauthorized persons, Company agrees to immediately notify Financial Institution through email, fax, or telephone by contacting any of the people identified on the first page of this Agreement under the Financial Institution Information heading. The occurrence of unauthorized access will not affect any transactions processed in good faith by Financial Institution as a result of a deposit made by Company prior to receipt of such notification and within a reasonable time period to prevent unauthorized transfers.

(d) Company agrees to have in place and in effect such software, procedures, and systems as comply with security best practices for transmission of sensitive data. These shall include, at a minimum, appropriate firewalls, anti- virus programs, spyware detection, anti-phishing and mal-ware programs.

5. COMPLIANCE WITH SECURITY PROCEDURES

(a) If a deposit received by Financial Institution alleges to have been transmitted or authorized by Company, it will be deemed effective as Company's deposit and Company shall be obligated to Financial Institution for the amount of the deposit. In the event the deposit was not authorized by Company, Company will be liable for the amount of the deposit, provided Financial Institution accepted the deposit in good faith and acted in compliance with the security procedures referred to in Schedule B with respect to such deposit.

(b) If a deposit received by a Financial Institution is erroneous in any manner and was transmitted or authorized by Company, Company shall reimburse Financial Institution in the amount of the deposit, whether or not Financial Institution complied with the security procedures referred to in Schedule B with respect to that deposit, and whether or not the error would have been detected if Financial Institution had complied with such procedures. Reimbursement may be accomplished by Financial Institution initiating a chargeback to Company’s account identified in Schedule A.

6. RECORDING AND USE OF COMMUNICATIONS Company and Financial Institution agree that all telephone conversations, email, or other forms of data transmissions between them or their agents, made in connection with this Agreement, may be electronically recorded and retained by either party by use of reasonable means.

7. PROCESSING, TRANSMITTAL, AND SETTLEMENT BY FINANCIAL INSTITUTION (a) Except as provided in Section 8, Rejection of Entries, Financial Institution shall (I) process deposits received from Company, (II) transmit such deposits to Financial Institution’s correspondent Federal Reserve Bank, (III) settle for such deposits as provided by Financial Institution in the procedures listed in Schedule B.

(b) Financial Institution shall transmit or complete the necessary batch authorization of such deposits by the delivery date deadline of the deposits as set forth in Schedule B attached hereto prior to the effective entry date provided (I) such deposits are received by Financial Institution’s deadline for processing time on a business day as set forth on Schedule B, (II) the effective entry date is at least one day after such business day, and (III) the Federal Reserve is open for business on such business day. For purposes of this Agreement, a "business day" is a day on which Financial Institution is open to the public for carrying on substantially all of its business (other than a Saturday, Sunday or legal holiday), and entries or deposits shall be deemed received by Financial Institution in the case of transmittal by electronic transmission, when the transmission (and compliance with any related security procedure provided for herein) is completed as provided in Schedule A.

(c) If any of the requirements of clause (I), (II), or (III) of Section 7(b) are not met, Financial Institution shall

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use reasonable efforts to transmit such deposits to the Federal Reserve by the next deposit deadline of the Federal Reserve following that specified in Schedule B which is a business day and a day on which the Federal Reserve is open for business.

(d) The processed time specified in Schedule B shall prevail over Financial Institution’s funds availability schedule cut-off time.

8. REJECTION OF ENTRIES OR DEPOSITS Financial Institution may reject any entry which does not comply with the requirements set forth in Section 3. or Section 4 of this Agreement. Financial Institution may reject any entry if Company has failed to comply with its account balance obligations under Section 12 of this Agreement. Financial Institution may reject any deposit of Company that does not adhere to security procedures as described in Schedule B. Financial Institution shall notify Company by phone or electronic transmission, including email and fax, of such rejection no later than the business day such deposit would otherwise have been transmitted by Financial Institution to the Federal Reserve.

Notices of rejection shall be effective when given. Financial Institution shall have no liability to Company by reason of the rejection of any such deposit or the fact that such notice is not given at an earlier time than that provided for herein.

9. CANCELLATION OF AMENDMENT BY COMPANY Company shall have no right to cancel or amend any deposit after its receipt by Financial Institution. However, if such request complies with the security procedures, Financial Institution shall use reasonable efforts to act on a request by Company for cancellation of a deposit prior to transmitting it to the Federal Reserve, but shall have no liability if such cancellation is not implemented. Company shall reimburse Financial Institution for any expenses, losses, or damages Financial Institution may incur in implementing or attempting to implement Company's request for the reversal of a deposit.

10. NOTICE OF RETURNED ENTRIES Financial Institution shall notify Company by phone or electronic transmission, including email and fax, of the receipt of a returned deposit from the Federal Reserve no later than one business day after the business day of such receipt.

Except for an entry retransmitted by Company in accordance with the requirements of Section 3 of this Agreement, Financial Institution shall have no obligation to retransmit or re-present a returned deposit to the Federal Reserve if Financial Institution complied with the terms of this Agreement with respect to the original deposit. Financial Institution may return items to company through transmission of an Image Replacement Document (“IRD”).

11. PAYMENT BY COMPANY FOR RETURNED DEPOSITS Company shall pay Financial Institution the amount of each returned deposit transmitted by Financial Institution pursuant to this Agreement at such time specified on Schedule B.

12. THE ACCOUNT: OFFSET RIGHTS Financial Institution may, without prior notice or demand, obtain payment of any account due and payable to it under this Agreement by debiting the account(s) of Company identified in on the first page of this Agreement, and shall credit or debit the Account for any amount received by Financial Institution by reason of the return of a deposit transmitted by Financial Institution for which Financial Institution has previously received payment or credit from Company. Such credit or debit shall be made as of the day of such receipt by Financial Institution.

Company shall at times maintain a balance of available funds in the account sufficient to cover any payment obligations under this Agreement. In the event there are not sufficient available funds in the account to cover Company's obligations under this Agreement, Company agrees that Financial Institution may debit any account maintained by Company with Financial Institution or any affiliate of Financial Institution or that or that Financial Institution may offset against any amount it owes to Company, in order

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to obtain payment of Company’s obligations under this Agreement.

13. ACCOUNT RECONCILIATION Deposits transmitted by Financial Institution will be reflected as part of Company's transaction activity, through online access via Financial Institution’s internet banking system, with respect to the account pursuant to the Deposit Account Agreement between Financial Institution and Company. Company agrees to notify Financial Institution promptly of any discrepancy between Company's records and the information shown as account history, online, or on a periodic statement. If Company fails to notify Financial Institution of any discrepancy after the account statement containing such discrepancy is mailed or otherwise made available to Company, Company agrees that Financial Institution shall not be liable for any losses resulting from Company's failure to give such notice or any loss of interest or any interest equivalent with respect to any deposit shown as transaction activity and shall be precluded from asserting such discrepancy against Financial Institution. (See Deposit Account Agreement)

14. COMPANY REPRESENTATIONS AND AGREEMENTS; INDEMNITY With respect to each and every deposit initiated by Company, Company represents and warrants to Financial Institution and agrees that to the best of Company's knowledge (i) each deposit is made payable to Company (ii) any necessary authorization is operative at the time of transmittal or crediting/debiting by Financial Institution as provided herein, and (iii) Company shall perform its obligations under this Agreement in accordance with all applicable laws and regulations, including the sanctions laws administered by OFAC.

Company shall indemnify Financial Institution against any loss, liability, or expense (including attorney's fees and expenses) resulting from or arising out of any breach of any of the foregoing representations or agreements.

15. FINANCIAL INSTITUTION RESPONSIBILITIES; LIABILITY; LIMITATIONS ON LIABILITY; INDEMNITY (a) In the performance of the services required by this Agreement, Financial Institution shall be entitled to rely solely on the information, representations, and warranties provided by Company pursuant to this Agreement, and shall not be responsible for the accuracy or completeness thereof. Financial Institution shall be responsible only for performing the services expressly provided for in this Agreement, and shall be liable only for its negligence or willful misconduct in performing those services.

Financial Institution shall not be responsible for Company's acts or omissions (including without limitation the amount, accuracy, timeliness of transmittal or authorization of any deposit received from Company) or those of any other person, including without limitation any Federal Reserve Bank, or transmission or communications facility, and no such person shall be deemed Financial Institution’s agent.

Company agrees to indemnify Financial Institution against any loss, liability, or expense (including attorney's fees and expenses) resulting from or arising out of any claim of any person that Financial Institution is responsible for any act or omission of Company or any other person described in this Section 15(a).

(b) Financial Institution shall be liable only for Company's actual damage; in no event shall Financial Institution be liable for any consequential, special, incidental, punitive, or indirect loss or damage which Company may incur or suffer in connection with this agreement, whether or not the likelihood of such damages was known or contemplated by Financial Institution and regardless of the legal or equitable theory of liability which Company may assert, including, without limitation, loss or damage from subsequent wrongful dishonor resulting from Financial Institution’s acts or omissions pursuant to this Agreement.

Liability shall not exceed the sum of the amount of any loss suffered by Company as a result of a breach of warranties under Regulation CC (12 CFR Part 229) up to the amount of any substitute check, interest and expenses (including cost and reasonable attorney fees and other expenses of presentation) related to the substitute check reduced by any amount that Company receives and retains as a re-credit. Furthermore,

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such liability shall be further reduced by the amount of any damages incurred as a result of the negligence or bad faith of Company.

(c) Without limiting the generality of the foregoing provisions, Financial Institution shall be excused from failing to act or delay in acting if such failure or delay is caused by legal constraint, interruption of transmission of communication facilities, equipment failure, war, emergency conditions, or other circumstances beyond Financial Institution’s control. In addition, Financial Institution shall be excused from failing to transmit or delay in transmitting a deposit if such transmittal would result in Financial Institution’s having exceeded any limitation upon its intra-day net funds position established pursuant to present or future Federal Reserve guidelines or in Financial Institution’s reasonable judgment otherwise violating any provision of any present or future risk control program of the Federal Reserve or any rule or regulation of any other U.S. governmental regulatory authority. In such event, Company shall be responsible for having a contingency plan in place including temporarily depositing original, paper items at any branch facility of Financial Institution.

(d) Subject to the foregoing limitations, Financial Institution’s liability for loss of interest resulting from its error or delay shall be calculated by using a rate equal to the average Federal Funds rate at the Federal Reserve Bank of Dallas for the period involved. At Financial Institution’s option, payment of such interest may be made by crediting the account resulting from or arising out of any claim of any person that Financial Institution is responsible for any act or omission of Company or any other person described in this Section 15(a).

16. PAYMENT FOR SERVICES Company shall pay Financial Institution the charges for the services provided in connection with this Agreement, as set forth in Financial Institution’s Commercial Services Fee Schedule. All fees and services are subject to change upon thirty (30) calendar day's prior written notice from Financial Institution to Company. Such charges do not include, and Company shall be responsible for payment of, any sales, use, excise, value added, utility, or other similar taxes relating to such services, and any fees or charges provided for in the Terms and Conditions.

17. AMENDMENTS From time to time, Financial Institution may amend any of the terms and conditions contained in this Agreement, including without limitation, any cut-off time, any business day, and any part of Schedules B attached hereto. Such amendments shall become effective upon receipt of notice by Company or such later date as may be stated in Financial Institution’s notice to Company.

18. NOTICES, INSTRUCTIONS, ETC. (a) Except as otherwise expressly provided herein, Financial Institution shall not be required to act upon any notice or instruction received from Company or any other person, or to provide any notice or advice to Company or any other person with respect to any matter.

(b) Financial Institution shall be entitled to rely on any written notice or other written communication believed by it in good faith to be genuine and to have been signed by an authorized representative, and any such communication shall be deemed to have been signed by such person. The names and signatures of authorized representatives are set forth in the account application and corresponding Company documentation as those individuals that are officers or employees authorized to individually sign for or bind the Corporation.

(c) Except as otherwise expressly provided herein, any written notice or other written communication required or permitted to be given under this Agreement shall be delivered, or sent by United States registered or certified mail, postage prepaid, or by express carrier, and if to Financial Institution, addressed to: Attn: Deposit Operations Department

19. DATA RETENTION Company shall retain physical checks that represent the deposit for at least fifteen (15) days following the date of their transmittal to Financial Institution and agrees to make the originals available to Financial

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Institution for fraud control purposes. Company is responsible for destroying all physical checks deposited through the Remote Deposit Capture Service within a maximum of 90 (90) days. Company shall be responsible for maintaining physical control over processed checks and agrees to indemnify and hold Financial Institution harmless for any losses resulting from physical loss, whether by theft or otherwise, of any check.

20. RECORDS All electronic media, security procedures, and related records used by Financial Institution for transactions contemplated by this Agreement shall be and remain Financial Institution’s property. Financial Institution may, at its sole discretion, make available such information upon Company's request. Any expense incurred by Financial Institution in making such information available to Company shall be paid by Company.

21. COOPERATION IN LOSS RECOVERY EFFORTS In the event of any damages for which Financial Institution or Company may be liable to each other or to a third party pursuant to the services provided under this Agreement, Financial Institution and Company will undertake reasonable efforts to cooperate with each other, as permitted by applicable law, in performing loss recovery efforts and in connection with any actions that the relevant party may be obligated to defend or elects to pursue against a third party.

22. TERMINATION Company may terminate this Agreement by providing Financial Institution with thirty (30) calendar days advance written notice. Such termination shall be effective on the date as is specified in that notice. Financial Institution reserves the right to terminate this Agreement immediately upon providing written notice of such termination to Company. Any termination of this Agreement shall not affect any of Financial Institution’s rights and Company's obligations with respect to deposits initiated by customer prior to such termination, or the payment obligations of Company with respect to services performed and equipment provided by Financial Institution prior to termination, or any other obligations that survive termination of this Agreement.

23. ENTIRE AGREEMENT This Agreement (including the Schedules attached hereto) together with the Terms and Conditions is the complete and exclusive statement of the agreement between Financial Institution and Company with respect to the subject matter hereof and supersedes any prior agreement(s) between Financial Institution and Company with respect to such subject matter.

In the event of any inconsistency between the terms of this Agreement and the Account Agreement, the terms of this Agreement shall govern. In the event performance of the services provided herein in accordance with the terms of this Agreement would result in a violation of any present or future statute, regulation, or government policy to which Financial Institution is subject, and which governs or affects the transactions contemplated by this Agreement, then this Agreement shall be deemed amended to the extent necessary to comply with such statute, regulation, or policy, and Financial Institution shall incur no liability to Company as a result of such violation or amendment. No course of dealing between Financial Institution and Company will constitute a modification of this Agreement or the security procedures or constitute an agreement between Financial Institution and Company regardless of whatever practices and procedures Financial Institution and Company may use.

24. NON-ASSIGNMENT Company may not assign this Agreement or any of the rights or duties hereunder to any person without Financial Institution’s prior written consent.

25. WAIVER Financial Institution may waive enforcement of any provision of this Agreement. Any such waiver shall not affect Financial Institution’s rights with respect to any other transaction or modify the terms of this

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Agreement.

26. BINDING AGREEMENT; BENEFIT This Agreement shall be binding upon and solely for the benefit of the parties hereto and their respective legal representatives, successors, and assigns. This Agreement is not for the benefit of any other person, and no other person shall have any right against Financial Institution or Company hereunder.

27. HEADINGS Headings are used for reference purposes only and shall not be deemed a part of this Agreement.

28. SEVERABILITY In the event that any provision of this Agreement shall be determined to be invalid, illegal, or unenforceable to any extent, the remainder of this Agreement shall not be impaired or otherwise affected and shall continue to be valid and enforceable to the fullest extent permitted by law.

29. ARBITRATION Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator[s] may be entered in any court having jurisdiction thereof

30. GOVERNING LAW This Agreement shall be construed in accordance with and governed by the laws of the State of Texas.

IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THIS AGREEMENT TO BE EXECUTED BY DULY AUTHORIZED OFFICERS.

Title _ Title _

Date _ Date _

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SCHEDULE A: AUTHORIZED BUSINESS BANKING SERVICES & ORIGINATION LIMITS This schedule will define Company's allowed transactions using Financial Institution’s Remote Deposit Capture Service to originate, create, and/or deliver deposits for further processing in accordance with the attached agreement. All deposits should be captured via equipment and software approved and authorized by Financial Institution. The allowed services granted to Company may consist of multiple features, such as web-enabled data entry screens, file transfers, and uploads. This Schedule itemizes the maximum per item and daily dollar limits for the Company.

AUTHORIZED LIMITS

ACCOUNT NUMBER

ACCOUNT NUMBER

DEPOSIT DAILY LIMIT

PER ITEM LIMIT

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SCHEDULE B:

SECURITY PROCEDURES AND TRANSACTION SETTLEMENT/DELIVERY DEADLINES

Financial Institution grants access to the Remote Deposit Capture Service to perform transactions as described in the Agreement and in the amounts authorized in Schedule A. Company agrees to establish prudent security standards and policies that include proper safeguards to protect the confidentiality of all login IDs and passwords that are assigned to Company for initiating transactions using this system. Any transaction initiated or authorized using a valid combination of a login ID and password will be considered authentic, valid, and binding by Company and Financial Institution.

Financial Institution agrees to provide reasonable assistance to establish login IDs and passwords, training, and support to Company for properly using services. If files or entries need to be delivered to Financial Institution, the information must be delivered to the address below. If Company suspects or believes any such information has been compromised, it shall immediately contact Financial Institution.

Transaction Settlement/ Delivery Timeframes

If the deposits are not received by 4pm Central time, then the Financial Institution cannot guarantee that deposits will be processed that day. Financial Institution may accept these deposits and they will be forwarded to the Federal Reserve no later than Financial Institution’s next regularly scheduled delivery time. The end-of-day cutoff time for deposits is shown below:

DEPOSITS MADE BY: 4 PM CENTRAL STANDARD TIME Customer Service will be available for assistance from 9am to 4pm Central Standard Time, Monday through Friday, except federal holidays. Provisional Settlement

Financial Institution shall give provisional credit as provided in this Schedule subject to revocation of credit for deposits as provided in Regulation CC and the Uniform Commercial Code as it applies to deposits.

Title___________________________

Date ___________________________

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THOUSANDS of Public Entities.

BILLIONS of Taxpayer Dollars.

Protected.

SAFE, SMART, FLEXIBLE Solutions for Managing Public FundsAcross the United States, local and state governmental organizations use the Insured Cash Sweep®, or ICS®, and CDARS® services to access multi-million-dollar FDIC insurance through a single bank relationship and to eliminate the burden of ongoing collateral tracking while earning a return.

Insured Cash Sweep and CDARS Are Trusted, Tested Services.

ICS and CDARS are endorsed by the American Bankers Association through its subsidiary, the Corporation for American Banking.

50 Stateshave laws that enable governmental entities to protect deposits through CDARS.

Thousandsof governmental entities across the United States utilized Insured Cash Sweep and/or CDARS to keep funds safe.

47 Stateshave laws that enable governmental entities to protect deposits through ICS.

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Why ICS and CDARS?Enjoy Peace of MindMake funds eligible for protection that is backed by the full faith and credit of the federal government. No one has ever lost a penny of an FDIC-insured deposit.

Earn a ReturnEarn interest on demand deposit accounts (through the ICS demand option), money market deposit accounts (through the ICS savings option), and/or CDs (through CDARS) at rates to which you agree with us.

Save TimeWork directly with us—a bank you know and trust—to access multi-million-dollar FDIC insurance and forego the need to use repo sweeps or to track collateral on an ongoing basis.

Access Funds

Make unlimited withdrawals from ICS funds placed into demand deposit accounts or up to six program withdrawals per month from ICS funds placed into money market deposit accounts, and enjoy daily liquidity from your transaction account at our bank. With CDARS, select from multiple term options to meet your liquidity needs.

Community InvestmentFeel good knowing that the full amount of your funds placed through ICS and/or CDARS can support local lending opportunities that build a stronger community.1

[1] When deposited funds are exchanged on a dollar-for-dollar basis with other banks in the ICS or CDARS Network, we can use the full amount of a deposit placed through ICS or CDARS for local lending, satisfying some depositors’ local investment goals or mandates. Alternatively, with a depositor’s consent to certain types of ICS or CDARS transactions, our bank may choose to receive fee income instead of deposits from other banks. Under these circumstances, deposited funds would not be available for local lending.

[2] Funds are placed into demand deposit accounts with the ICS demand option, into money market deposit accounts with the ICS savings option, and into CDs with CDARS.

How Do ICS and CDARS Work?Financial institutions that offer ICS and/or CDARS are members of the ICS Network and/or the CDARS Network. When your organization places a large deposit with our bank using ICS or CDARS, that deposit is divided into amounts under the standard FDIC insurance maximum of $250,000 and is placed in deposit accounts at other ICS Network or CDARS Network banks.2 By working directly with our bank, your public entity can access FDIC coverage from many and enjoy the convenience of receiving just one monthly statement per service or service option utilized.

Contact us today to learn more.

< $250,000 IN PRINCIPAL AND INTEREST

ICS /CDARS NETWORK BANKS

LARGE DEPOSIT WITH YOUR BANK

1


2


3


+

Placement of customer funds through the ICS service or CDARS service is subject to the terms, conditions, and disclosures set forth in the agreements that you enter into with us, including the applicable Deposit Placement Agreement. Limits apply, and customer eligibility criteria may apply. Program withdrawals are limited to six per month when using the ICS savings option. If a depositor is subject to restrictions with respect to the placement of funds in depository institutions, it is the responsibility of the depositor to determine whether the placement of the depositor’s funds through ICS or CDARS, or a particular ICS or CDARS transaction, satisfies those restrictions. ICS, Insured Cash Sweep, and CDARS are registered service marks of Promontory Interfinancial Network, LLC.

1016158

Public Funds Checking + In

CUSTOMER NAMEADDRESSTEXAS

------ STATEMENT PERIOD ------8/01/18 BALANCE $ 61,308.648/31/18 BALANCE $ 50,217.20

PAGE 1================================================================================

Public Funds Checking + In ================================================================================ DATE DESCRIPTION DEBITS CREDITS BALANCE

7/31 BALANCE LAST STATEMENT................................ 61,308.64250,000.00 311,308.64

206,440.63 104,868.0125.00 104,843.01

161,000.00 265,843.0158,837.50 207,005.517,000.00 200,005.51

211.69 200,217.20800,000.00 1,000,217.20

8/14 ICS MOVEMENT8/14 WIRE#123-456S8/14 STOP PAYMENT FEE 8/17 ICS MOVEMENT 8/17 CHECK # 24 8/27 ICS MOVEMENT 8/31 INTEREST PAID 8/31 DEPOSIT 8/31 ICS MOVEMENT 950,000.00 50,217.20 8/31 BALANCE THIS STATEMENT................................ 50,217.20

TOTAL CREDITS (4) 1,211,211.69TOTAL DEBITS (5) 1,222,303.13

================================================================================YOUR CHECKS SEQUENCED

================================================================================DATE CHECK # AMOUNT DATE CHECK # AMOUNT DATE CHECK # AMOUNT

8/17 24 58,837.50

(*) INDICATES A GAP IN CHECK NUMBER SEQUENCE

- - - - - - - - - - I N T E R E S T - - - - - - - - - -

CURRENT INTEREST PERIOD: 08/01/2018 to 08/31/2018AVERAGE LEDGER BALANCE: 130,059.22 INTEREST EARNED: 211.69AVERAGE AVAILABLE BALANCE: 130,052.39 DAYS IN PERIOD: 31INTEREST PAID 2018: 7,083.68 ANNUAL PERCENTAGE YIELD EARNED: 1.93%INTEREST PAID 2017: 9,364.26 CURRENT INTEREST RATE: 1.94%

* * * C O N T I N U E D * * *

EXHIBIT I

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Public Funds Checking + In

CUSTOMERS NAMEADDRESSTEXAS

------ STATEMENT PERIOD ------8/01/18 BALANCE $ 61,308.648/31/18 BALANCE $ 50,217.20

PAGE 2================================================================================

Public Funds Checking + In 233056================================================================================

- - - ITEMIZATION OF OVERDRAFT AND RETURNED ITEM FEES - - -+-----------------------------+-------------------+-----------------+| | TOTAL FOR | TOTAL || | THIS PERIOD | YEAR TO DATE |+-----------------------------+-------------------+-----------------+| TOTAL OVERDRAFT FEES: | $0.00 | $0.00 |+-----------------------------+-------------------+-----------------+| TOTAL RETURNED ITEM FEE: | $0.00 | $0.00 |+-----------------------------+-------------------+-----------------+

Our privacy notice is available on our website attranspecosbanks.com and it will be mailed to anycustomer who requests it by calling 877.445.9550.The information contained in the privacy noticehas not changed.----------------End-of-Statement-for-above-Account---------------

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Statement imagesStatement Date: 8/31/2018

Account: Page: 3

8/31/2018 109 800, 000.00

8/17/2018 * 58, 837.50

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