Consolidated Exception Processing Eastern Savings Bank fsb

Consolidated Exception Processing • Eastern Savings Bank, fsb – – – Converted to MISER in November 1989 Front-end software is Banker’s Window Asset size as of March 31, 2013 is $400 million 148 Employees – approximately 80 have access to MISER Corporate office and 4 branches In-house

Consolidated Exception Processing • History of Consolidated Inclearing & ACH Exception Processing q Introduced in Release 2006. 1 q Ability to review & mark Inclearing & ACH exception at the same time by account q Can still mark Inclearing & ACH separately based upon selection criteria entered in the MS ZZI transaction q AP-Comb-Exc-Opt (656) – set parm to 1 to use feature. (NOTE: Don’t have to clear all exceptions, just items in the warehouse, then change parm) q Set employee access level using Emp-Comb-Exc-Opt. This determines the employees access level to inquire/mark Inclearing & ACH exceptions. Ø 0 – no access, 1 – mark inclearing & ACH items, 2 – display inclearing & ACH items, 3 - mark inclearing items; display ACH items, 4 – display inclearing items mark ACH items

Consolidated Exception Processing • Eastern Savings Bank only marks Inclearing items using the Combined Exception Main Menu. Ø Branches mark Inclearing & Deposit Operations (back office) marks ACH Ø Inclearing default parms are set as follows: – WXP-ND-NSF-MARK-DEFLT (168) = 1 (absolutely pay & charge a fee) – WXP-ND-UCF-MARK-DEFLT (169) = 2 (absolutely pay & waive a fee) – WXP-ND-HF-MARK-DEFLT (235) = 4 (absolutely return & waive a fee)

Consolidated Exception Processing Here’s how our process runs… • • • Receive Check 21 file from Fed Process MSR 990 around 1: 30 pm • NDFP is run as part of nightly processing. NDD 092 is produced. NDD 092 is distributed to Deposit Operations for review the next morning. • • • Check copies are retrieved from Fed. For Accounts Not on File & Large Dollar Items (custom code). Accts Not on File are used by Deposit Operations for Paying Alternate to correct acct. Large Item cks are distributed to branches for second look. • TWD 001 & TWD 002 are run by 9 am so the ACH exceptions are included in MSR 175. Run 2 preliminary runs of MSR 175 • • 1 st run is for deposit branches only (inclearing & ach exceptions). Report is emailed to “Inclearing” group responsible for marking Inclearing exceptions. Each branch marks their own Inclearing exceptions. 2 nd run includes all deposit branches including our associate branch (br 17) (Inclearing & ACH exceptions). Report is emailed to Deposit Operations, responsible for marking associate Inclearing exceptions & accounts not on file. Accounts not on file have been coded to sort to branch 17 for Deposit Operations to manually review. Branches & Deposit Operations use the MS ZZM trans to mark their Inclearing.

Consolidated Exception Processing Process continued… • • • Deposit Operations marks ACH using the Warehouse Exception Marker All exception items need to be marked by 11 am. An e-mail is • sent to Deposit Operations from each branch once completed. Deposit Operations contacts IS • Operations when the exceptions are ready. IS Operations processes NDD 397, NDD 397 altin, and NDD 198, • A custom program is run to identify the return checks (shows cash letter, bundle, & item #) TWD 003 is run next. A 3 rd run of MSR 175 is run. This shows how all the items were marked. A 4 th run of MSR 175 is run to produce the consolidated notices for the Inclearing and ACH exceptions. The Check 21 return file is created and reviewed by Deposit Operations before IS Operations transmits to the Fed.

Consolidated Exception Processing MSR 175 Exception Abbreviations MISER ANO – Account Not Open ANF – Account Not on File FLG – Any Lock Flag HLD – Held Funds NSF – Non-sufficient UCF – Uncollected STP – Stop Payment Eastern Savings Bank Custom Exceptions SUS – Stop Suspect FLG – Multiple Signatures 10 K – Large Items $10, 000 & > (Household use accts) 35 K – Large Item $35, 000 & > (Business use accts) We custom coded additional exceptions in NDFP. These custom exceptions appear in the on-line inquiry, NDD 092, MSR 175, & NDD 397. We want the branches to take a second look at these exceptions.

Consolidated Exception Processing Examples of Account Not on File exceptions (prior to being marked)

Consolidated Exception Processing Examples of Non-sufficient Funds & Account Not Open exceptions (prior to being marked)

Consolidated Exception Processing Example of Non-sufficient inclearing notice from MSR 175

Consolidated Exception Processing Example of Non-sufficient ACH notice from MSR 175

Consolidated Exception Processing Why We Don’t Use Consolidated Exception for ACH ü Can’t generate unauthorized ACH return items through the Consolidated Exception Processing. ü Can’t generate treasury reclamations through the Consolidated Exception Processing. ü Like the display of the Warehouse Exception Browse inquiry. All data is on one screen. Old school…need to transition to new process.

Consolidated Exception Processing * Things to Consider * ü When marking an Inclearing exception item Pay Alternate and it rejects as a lockout, display the lockout and allow institution ability to continue to Pay Alternate. Currently the lock flag has to be removed, item marked, then lock flag replaced. ü Card option in MSR 175 to specify which branch associate accounts are housed in. Need to maintain confidentiality for associates from other branches.

THANK YOU Kristie Morrison Deposit Operations Information Systems Specialist Kmorrison@easternsavingsbank. com 410 -568 -6267