BASIC BANKING TERMS

A Accrual ACH ATM ATM Fees Auto Renew Available Balance

1. 2.

Accrual - Computed interest between the time it is earned and the time it is paid to the customer. ACH - (Automated Clearing House) - A nationwide electronic payment and collection network that provides financial institutions with an automated, low cost substitute for issuing and processing checks. It is used to transfer funds from one bank to another. ATM - (Automated Teller Machine) - An electronic terminal located on the bank's premises or in a remote location that allows customers to perform certain bank transactions around the clock. ATM Fees - Fees associated with using an Automated Teller Machine (ATM). Auto Renew - A notice is sent to the customer telling them that their CD is maturing and renewing according to the terms agreed on by the bank and the customer. After maturity, the customer has a "grace period" to decide what they would like to do with the funds. Available Balance - The balance that is currently available for use by the customer.

3.

4. 5.

6.

B Backup Withholding Balance Sheet Bank Secrecy Act Bankruptcy Bill Bond Brokerage

7.

Backup withholding - The practice of withholding interest earned, and paying it to the United States IRS (Internal Revenue Service) due to a customer's failure of providing a Tax Identification Number for that account. Balance sheet - A detailed listing of assets, liabilities, and equity (net worth), showing the financial condition of a bank or company as of a given date. A balance sheet illustrates the basic accounting equation: assets = liabilities + equity. The balance sheet is usually referred to as a Statement of Condition. Bank Secrecy Act - This U.S. banking regulation requires banks to disclose any "large" cash transactions to the Internal Revenue Service.

8.

9.

10. Bankruptcy

- Legal action taken under federal Bankruptcy Code by an insolvent debtor unable to pay off outstanding debt as it becomes due.

11. Bill - Money; paper currency. 12. Bond

- An instrument that evidences long-term debt. The issuer (a corporation, unit of government, or other legal entity) promises to repay the stated principal at a specified date. Bonds may be registered (identifying the holder) or bearer (not identifying the holder). - A firm or department hired for a fee to negotiate purchases, contracts,

13. Brokerage
or sales.

C Cash Management CD Check Card Club Account Collateral Collected Balance Compound Interest Conservatorship Constraints on Earnings Corporate Account Corporate Identity Documents Corporate Resolution Corporation Cost of Interest-bearing Liabilities Customer Verification

14. Cash

Management - A family of bank services for corporate customers, designed to generate new deposits, speed up collection of receivables, controls payments, provides information, and efficiently manage funds. These services often include lock boxes, depository transfer checks, payments, item reconciliation, and controlled disbursements. The depositor agrees to keep a certain amount on deposit for a specified period of time. The bank agrees to pay a certain interest rate, determined by the amount and term. The purpose of a check card is to serve as a bankcard for ATM transactions. They allow you to make credit card purchases and point-of-sale transactions that are deducted from your account balance. Account - A type of savings account that is used to save specific amounts of money on a regular basis for specific purposes, such as holidays, vacations, taxes, or education. The maturity date indicates when the funds will be disbursed to the customer. If the borrower defaults, the lender has the right to sell the collateral to liquidate the loan after acquiring the title.

15. CD - (Certificate of Deposit) - Deposit contracts between the bank and customer.

16. Check Card - An ATM card which is backed by a credit card company.

17. Club

18. Collateral - Specific property pledged by a borrower to secure a loan.

19. Collected
float.

Balance - The balance of only the actual collected funds; does not include

20. Compound

Interest - The bank accrues interest based on the sum of the account's principal balance and any interest accrued so far in the interest cycle. - In some states, the term Conservatorship is used instead of Guardianship. See guardianship. on Earnings - Refers to liquidity, interest rate, credit and capital risk. These risks can affect the stability of a financial organization's earnings over time, especially if they are not planned for and managed. An account opened in the name of a corporation (A legal entity or an artificial person created by state or national law. The corporation is owned by two or more stockholders and is an entity unto itself. The corporation has the right to perform actions, such as entering into contracts or owning accounts.). The corporation is named as the owner of the account. Identity Documents - Key background documents, which the bank requires a corporation to provide before being, allowed to open a commercial account.

21. Conservatorship 22. Constraints

23. Corporate Account -

24. Corporate

25. Corporate Resolution - A dated legal document that is drafted when the bank board
of directors approves a commercial account to be opened. It defines the authority given to the corporation's officers and specifies who may sign checks, borrow on behalf of the corporation and otherwise issue instructions to the bank and conduct the corporation's business.

26. Corporation

- A legal entity or an artificial person created by state or national law. The corporation is owned by two or more stockholders and is an entity unto itself. The corporation has the right to perform actions, such as entering into contracts or owning accounts. of Interest-bearing Liabilities - A figure that shows the bank the cost of maintaining interest-bearing liabilities. Verification - Customer Verification Banks require customers to provide various forms of proof to confirm their identity. D

27. Cost

28. Customer

Debit Card Depository Institutions Act of 1982 DDA

29. Debit

Card - Debit cards or check cards, are an ATM card to which a VISA or MasterCard logo has been added. These cards have a dual purpose; they can be used to access ATM functions, or they can be used like a credit card to purchase goods and services. Institutions Act of 1982 - The Depository Institutions Act, also known as the Garn-St. Germain Act, established provisions for banks and thrifts that included expanding deferral authority to rescue failing institutions, allowing banks to create new deposit instruments, removing some stringent lending restrictions and providing greater operating flexibility for credit unions.

30. Depository

31. DDA - (Demand Deposit Accounts) - Non-interest bearing checking accounts. They are
called Demand Deposit Accounts because the customer can withdraw the funds on demand, without notice to the bank.

E Earnings Credit Electronic Funds Transfers Electronic Funds Transfers Act Equal Credit Opportunity Act (Regulation B) Escheatment Estate Account Expedited Funds Availability Act

32. Earnings

Credit - An allowance to a customer, offsetting part or all of the service charges on an account. The earnings credit is calculated on the basis of the average collected balance in the account during a period and the earning credit rate in effect at the time. Funds Transfers - The movement of financial data (generally the payment or receipt of funds) through computerized debits and credits of appropriate accounts. These systems are designed to eliminate the paper instruments that would normally be associated with funds movement. Funds Transfers Act - (Regulation E) A U.S. regulation that sets guidelines for banks in the area of electronic banking transactions, including ATM transactions, ACH transactions, wire transfers, and telephone initiated transfers. Specifically, it covers the following conditions: Electronic funds transfers (EFTs) may not be a condition of credit. Disclosures must be provided upon the initiation of EFT services. Checking/savings accounts may not be a condition of employment. Receipts must be provided within one month of an EFT debit. Statement of account must be provided at least once a quarter regardless of activity. Positive or negative written notice of preauthorized debit or credit must be provided.

33. Electronic

34. Electronic

35. Equal

Credit Opportunity Act (Regulation B) - Equal Credit Opportunity Act (Regulation B) prohibits lenders from discriminating against credit applicants, establishes guidelines for gathering and evaluating credit information, and requires written notification when credit is denied. - The process of turning over funds from abandoned accounts to the

36. Escheatment
government.

37. Estate Account - Accounts that contain the assets of a decedent.

38. Expedited

Funds Availability Act - (Regulation CC) This United States banking regulation spells out the time frames within which a bank must make deposit funds available to customers on transaction accounts.

F Fair Credit Reporting Act FDIC Federal Funds Purchased Federal Funds Sold Federal National Mortgage Association (Fannie Mae) Fiduciary Fiduciary Account Fixed Rate Float

39. Fair

Credit Reporting Act - The Federal Trade Commission administers the Fair Credit Reporting Act. It grants consumers right of access to their credit records. Related Topics: Major Provisions: In addition to granting consumers the right of access to their credit report, this Act provides dispute resolution guidelines for consumers, credit bureaus and financial organizations. Major Impact: If a loan is declined based upon the applicant's credit rating, the lender is required to notify the applicant of the name and address of the reporting credit bureau (Experian (TRW), Trans Union, or Equifax) by sending an adverse action notice.

40. FDIC -

(Federal Deposit Insurance Corporation) Government agency set up to protect depositors. The FDIC insures deposit accounts in the U.S. for up to $100,000. Funds Purchased - Short-term borrowings from one financial institution to another. These borrowed funds are unsecured (no collateral is required).

41. Federal

42. Federal Funds Sold - Unsecured short-term loans to other financial institutions. 43. Federal
National Mortgage Association (Fannie Mae) - Uses proceeds from bond sales to purchase government-guaranteed loans. It puts money back into the system for mortgage loans.

44. Fiduciary - Related to or involving the holding of something in trust. 45. Fiduciary
Account - An account opened by a representative for the benefit of another. For example, a grandfather may open a savings account for a grandson, naming the mother as the trustee.

46. Fixed Rate - Interest rate that stays constant throughout the term of the deposit. 47. Float - The time it takes for a deposit from another bank to be credited to your bank.
Depending on your bank's funds availability policy, the money may not be available to you until the credit occurs. G Government National Mortgage Association (Ginnie Mae) Guardian Guardianship

48. Government

National Mortgage Association (Ginnie Mae) - Guarantees timely payment of principal and interest on pools of mortgages backed by governmentinsured mortgages. It was formed in 1968 as a government corporation in the Department of Housing and Urban Development when FNMA was chartered as a private corporation.

49. Guardian - An individual who is responsible for managing the property of a minor or a
person who is incompetent and/or who has legal authority for a minor or person who is incompetent.

50. Guardianship - The court directive which names a guardian.

Hold Home Mortgage Disclosure Act H

51. Hold

- A restriction of all or part of an account balance due to legal actions (e.g., death, forgeries, subpoenas). Mortgage Disclosure Act - Legislation that requires lending institutions to compile and make public information on all residential mortgages that are either originated, or purchased in the secondary market. I

52. Home

Income Statement Individual Account Informal Account Interest IRA

53. Income

Statement - A record of the income and expenses of a bank or business covering a period of time. It is also called a Profit and Loss Statement. Account - A type of personal account. As the name implies, this is an account held by one individual. Account - Accounts owned by social, fraternal, non-profit groups and

54. Individual 55. Informal

societies.

56. Interest - Money paid for the use of deposited funds.

57. IRA

- (Individual Retirement Account) - A tax-deferred retirement account whose funds may be disbursed without IRS penalties once the customer reached age 59. IRA funds must be withdrawn once the account owner reaches 70. J

Joint Account Jumbo CD

58. Joint

Account - An account that is held in the name of two or more parties. Individuals, not corporations or businesses, can hold a joint account.

59. Jumbo CD - CDs issued in denomination of $100,000 or more.

Keogh Kiting K

60. Keogh - Tax-deferred retirement savings plans for those who are self-employed. 61. Kiting
- Attempting to draw against uncollected or nonexistent funds for fraudulent purposes. A depositor issues a check, overdrawing an account at one bank, and deposits into that account a check drawn on insufficient or uncollected funds at another bank. L

Ledger Balance Lien Lines of Credit Liquidity List/Post

62. Ledger Balance - The actual daily balance 63. Lien

- A legal claim against specific property that has been pledged as collateral to secure payment of a loan or other debt. This claim can be enforced in court if the loan or other debt is not satisfied. [Pronounced: leen]

64. Lines of Credit - A credit facility drawn upon as needed with specific payment terms. 65. Liquidity
- The quality that makes an asset quickly and easily convertible into cash; also, the ability of a bank, business, or individual to meet current debts. - Primarily related to high-volume accounts, this feature gives financial organizations the capability to consolidate an entire day's transactions into one debit and/or credit on a customer's statement. It also provides a daily detailed list of the transactions, which comprise the one debit and/or credit. M Margin Maturity

66. List/Post

MICR Monetary Control Act of 1980 Money Market

67. Margin

- The dollar difference between Total Interest Income and Total Interest Expense. - When a Certificate of Deposit has reached the end of its term. The time when a debt or other obligation becomes due for payment. - A series of numbers and characters printed along the bottom of a document that makes it possible for checks and other documents to be read by high speed electronic data processing equipment. Control Act of 1980 - This act defines depository institutions to include commercial banks, savings banks, savings & loan associations, and credit unions. Under this act, all of these institutions are allowed to offer consumer and commercial loans, and trust services. This act also requires all of these institutions to maintain reserves. Certain percentages of transaction accounts must be kept on deposit with the Federal Reserve Bank. No interest is paid on these reserves, so they represent a lost opportunity for investment.

68. Maturity 69. MICR

70. Monetary

71. Money

Market - A federally insured account that provides easy access to funds and pays an interest rate that is competitive with money market funds. Money market accounts are limited to six pre-authorized third party transfers per month. No more than three of these transactions can be made with checks. N

Non-Interest Expense Non-Interest Income Note NOW NSF

72. Non-Interest Expense - The category on a bank's Income Statement that represents
expenses, other than interest, such as for salaries, benefits, furniture, equipment, capital investments and lease commitments.

73. Non-Interest Income - The category on a bank's

Income Statement that represents income, other than interest, such as from service fees and trust activities.

74. Note - A written agreement to make payment on a debt, it spells out the terms of the
agreement -- what's due, when it's due, and what happens if you default or pay late.

75. NOW

- (Negotiable Order of Withdrawal) - Interest-bearing checking accounts that usually require a higher minimum balance than a conventional checking account.

76. NSF - (Non-sufficient funds) When a check is written for more than the amount that is
in the account and the account does not have overdraft protection, the bank refuses to pay the funds and returns the check to the entity to whom the check was written.

Overdraft Ownership

77. Overdraft

- When a check is written for more than the amount that is in the account and the bank pays the check with funds from a related account or lends the individual the money to cover the amount for a short period of time. - The type of ownership on an account determines who can use the account and for what purposes the account can be used. P

78. Ownership

Partnership Account Passbook Point of Sale Terminal Principal Public Funds Account Public Record

79. Partnership
individuals.

Account - A legal business arrangement formed by two or more

80. Passbook 81. Point

- An account where transactions (deposits, withdrawals, and interest earned) are recorded in a book for the account holder. of Sale Terminal - Terminals at businesses (e.g., stores, gas stations) that allow a customer to insert a card to make a purchase.

82. Principal - The balance used by the bank to calculate interest. 83. Public 84. Public
Funds Account - Account held by any component of the Federal, state, or local government. This type of account is used to receive and disburse funds. Record - Documents filed with or published by, a government agency. These documents are open to the public for inspection and establish legal ownership and/or rights. R Rate Rebate Regulation CC Regulation D Regulation DD Regulation E Relationship Pricing Repurchase Agreement Reserve Requirements Act Return on Assets Return on Equity

85. Rate - The percentage amount of interest associated with deposit accounts.

86. Rebate

- The return of a portion of a payment that was collected, as in the case of a loan repaid before the maturity date. CC - (Expedited Funds Available Act) This United States banking regulation spells out the time frames within which a bank must make deposit funds available to customers on transaction accounts. D - (Reserve Requirements Act) A U.S. regulation that requires banks to have enough funds on hand to meet customer's withdrawal demands for checking and NOW accounts. DD - (Truth in Savings Act) A requirement for US Banks to provide the customer with account-related information (terms and rules for how interest on the account will be handled) when an account is opened. Transfers Act) A U.S. regulation that sets guidelines for banks in the area of electronic banking transactions, including ATM transactions, ACH transactions, wire transfers, and telephone initiated transfers. Specifically, it covers the following conditions: Electronic funds transfers (EFTs) may not be a condition of credit. Disclosures must be provided upon the initiation of EFT services. Checking/savings accounts may not be a condition of employment. Receipts must be provided within one month of an EFT debit. Statement of account must be provided at least once a quarter regardless of activity. Positive or negative written notice of preauthorized debit or credit must be provided. Pricing - Depending on what other accounts you or other members of your household already have at the institution, relationship pricing may be used to determine various amounts (e.g., service charges, fees, required minimum account balance). Agreement - Borrowings that enable a bank to borrow short-term by assigning (pledging) bank-owned securities to the investor as collateral. The securities are released when repayment is made.

87. Regulation

88. Regulation

89. Regulation

90. Regulation E - (Electronic Funds

91. Relationship

92. Repurchase

93. Reserve Requirements Act - (Regulation D) A U.S. regulation that requires banks to
have enough funds on hand to meet customer's withdrawal demands for checking and NOW accounts.

94. Return

on Assets - (ROA) A financial measurement that indicates how efficiently a bank's assets are being employed. It is usually determined by dividing net profits by average total assets. on Equity - (ROE) A financial measurement that indicates how efficiently the bank's equity capital has been invested. It is usually calculated by dividing net profit by net worth. S

95. Return

Scheduled Debt SEP Signature Card SIMPLE Single Term Sole Proprietorship

Spread Statement Account Stockholders Sweep

96. Scheduled Debt - The total amount of obligations that require a monthly payment to
keep the loan(s) current.

97. SEP

- (Simplified Employee Pension Plans) - A plan which allows small businesses to contribute up to $30,000 per year into IRAs for their employees. Card - A card which is signed by a customer when a deposit account is opened. This card signifies that the customer agrees to all the terms and conditions which govern the account, including service charges and other fees charged by the bank. It also provides a signature for verification purposes. - A SIMPLE (Savings Incentive Match Plan for Employees) is a tax favored, simplified retirement savings plan for small employers.

98. Signature

99. SIMPLE 100. 101. 102. 103. 104. 105.

Single Term - At maturity, the principal and earned interest may be either paid to the customer or reinvested in another CD. Sole Proprietorship - A business which is owned by one individual. This type of account may be in the name of the business or the owner (proprietor). Spread - The percentage difference between Total Interest Income and Total Interest Expense. Statement Account - An account where transactions and interest earned are reported on a statement which is mailed to the customer at regular intervals. Stockholders - The owners of the common and/or preferred stock in a corporation. Sweep - A relationship in which all funds in an non-interest checking account, over and above a specified figures, are automatically transferred into interest-bearing investment securities overnight or for short periods of time. T Target Balance TDOA Tiered Rate TIN Treasury Bills Treasury Bonds Treasury Notes Trust Trust Account Truth in Lending Act (Regulation Z) Truth in Savings Act

106.

Target Balance - A group of bank accounts maintained for the same customer and controlled by a master parent or concentration account. Subsidiary accounts are also set up for each branch of the company near their respective locations with the same bank. The bank

provides the service of moving balances between subsidiary accounts and the parent account to maintain a specific target balance in each of the subsidiary accounts.

107.

TDOA - (Time Deposit Open Account) - A CD-like account which allows you to keep adding funds at varying interest rates. A TDOA may consist of multiple deposits, each with a different interest rate, maturity, and term. These are each tracked separately. Tiered Rate - The interest rate rises or falls depending on the account balance. TIN - (Tax Identification Number) - A number that provides information for taxation. If this number is not provided by the customer when an account is opened, the bank must withhold a portion of the interest accrued on the account (backup withholding). This number is a social security number for individuals, and an assigned tax number for organizations. Treasury Bills - Short-term U.S. Treasury securities issued in minimum denominations of $10,000 and usually having original maturities of 3, 6, or 12 months. Treasury Bonds - Long-term U.S. Treasury securities usually having initial maturities of more than 10 years and issued in denominations of $1,000 or more, depending on the specific issue. Treasury Notes - Intermediate-term coupon-bearing U.S. Treasury securities having initial maturities from 1 to 10 years and issued in denominations of $1,000 or more, depending on the maturity of the issue. Trust - The trust function of a bank involves management of customers' assets in a fiduciary capacity. In a trust arrangement, title of a property is legally transferred to a trustee, who manages the property for the beneficiaries. Trust Account - An account associated with the management of property and other assets for customers. Truth in Lending Act (Regulation Z) - Truth in Lending Act (Regulation Z) prescribes uniform methods for computing the cost of credit, disclosing credit terms, and resolving errors on certain types of credit accounts. Related Topics: Major Provisions: In addition to granting consumers the right of access to their credit report, this Act provides dispute resolution guidelines for consumers, credit bureaus and financial organizations. Major Impact: If a loan is declined based upon the applicant's credit rating, the lender is required to notify the applicant of the name and address of the reporting credit bureau (Experian (TRW), Trans Union, or Equifax) by sending an adverse action notice.

108. 109.

110. 111.

112.

113.

114. 115.

116.

Truth in Savings Act - (Regulation DD) A requirement for US Banks to provide the customer with account-related information (terms and rules for how interest on the account will be handled) when an account is opened. V

Variable Rate Voucher

117.

Variable Rate - Interest rate that fluctuates throughout the term of the deposit. The rates may fluctuate based on market conditions, account balance, bank policy, local competition, etc. Voucher - A document giving proof of a business transaction.

118.

Y Yield Yield on Earning Assets

119. 120.

Yield - The full return on an asset, including interest payments, price, and amortized gain (or loss) to maturity. Yield on Earning Assets - Determines how much interest a bank is earning on total assets.