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Industry Glossary
Data Dictionary Services
Industry Glossaries:
 
Banking
                 
 Underwriter
Category
 

 

Banking
 Basis Point
Category
 

One-hundredth of one percent (0.015) the unit generally used to measure movements in interest rates and investment returns.

 

Banking
 Capital
Category
 

For commercial banks, capital is the sum of equity capital and loan loss reserves. Under certain conditions, regulators allow some categories of subordinated debt to be included as capital.

 

Banking
 Commercial Paper
Category
 

Short term promissory notes issued by companies and sold to investors, mainly other companies. Commercial paper provides corporations with a way to borrow short term funds among themselves and bypassing the banking network.

 

Banking
 Core Deposits
Category
 

The total of a bank's demand deposits (checking accounts), consumer time deposits (saving certificates and regular passbook savings accounts), and NOW accounts.

 

Banking
 Cross-border Outstandings
Category
 

Loans, acceptances, and deposits made to a foreign country in a currency other than the countries local currency.

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Banking
 Discount Rate
Category
 

Interest rate at which an eligible depository institution may borrow funds, typically for a short period, directly from a Federal Reserve Bank.

 

Banking
 Earning Assets
Category
 

Interest-bearing financial instruments, comprising of commercial, real estate, and consumer loans; investment and trading account securities; money market investments; lease finance receivables; and time deposits in foreign banks.

 

Banking
 Federal Funds
Category
 

Funds, including those in excess of bank reserve requirements, that are deposited by commercial banks at Federal Reserve Banks. Commercial banks may lend federal funds to each other on an overnight basis at the federal funds rate.

 

Banking
 Float
Category
 

The portion of gross checking account (demand deposit) balances that is in the process of being collected.

 

Banking
 Margin
Category
 

Net Interest income divided by average earning assets.

 

Banking
 Net Interest Income
Category
 

Total interest revenues minus total interest expense.

 

Banking
 Net Charge-Offs
Category
 

The collective amount of loans that are no longer likely to be collected and are written off as bad debt expense, minus recoveries of payments previously charged off. See Charge-offs

 

Banking
 Hedging
Category
 

A strategy used to offset financial risk. A bank looking to minimize its exposure to interest rate or currency risk, for example, would buy or sell futures or options contracts. A perfect hedge is one that eliminates the possibility of future gain or loss.

 

Banking
 NonPerforming Assets
Category
 

A bank's total nonaccrual loans, renegotiated-rate loans, and other real estate owned , from which principal and interest payments aren't being received according to the original contract.

 

Banking
 Federal Funds Rate
Category
 

The internet rate charged by banks with excess reserves at a Federal Reserve district bank to other banks that need overnight loans to meet reserve requirements.

 

Banking
 Gap
Category
 

The difference between a financial institutions liabilities and its assets as both items mature over time. If more liabilities than assets mature or are repriced, the bank is liability sensitive (has a negative gap). If more assets mature than liabilities, the bank is asset sensitive (has a positive gap). In a period of falling interest rates, a bank with a negative gap will see net interest margin widen; conversely ., a bank with a positive gap will benefit during a period of rising rates.

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Banking
 Mortgage Backed Security (MBS)
Category
 

A Mortgage Backed Security is an investment that represents ownership of an undivided interest in a group of mortgages. Principal and interest from the individual mortgages are used to pay principal and interest on the MBS. MBS securities can be very volatile and risky to hold in an economic periods of rising interest rates. Mortgage backed Securities are also referred to as 'Mortgage Pass Through' Securities.

 

Banking
 Commercial Mortgage Backed Security
Category
 

A Commercial Mortgage Backed (CMBS) Security is very similar to an mortgage backed security. However, a CMBS is secured by loans with commercial property instead of residential property.

 

Banking
 Average Managed Assets
Category
 

Average Managed Assets is the average earning assets plus the average of finance receivables previously securitized and still managed by the bank. The average is used to measure the rate of charge-offs on a managed basis for the period to monitor overall credit performance and expense control.

 

Banking
 Efficiency Ratio
Category
 

The efficiency ratio measures the level of expenses in relation to revenue earned. This is calculated as the percentage of salaries and general operating expenses to operating margin which excludes the provision for credit losses.

 

Banking
 Derivative Contracts
Category
 

Derivatives are contracts entered to reduce interest rate or foreign currency risks, and to hedge credit risk. Derivative contracts can include interest rate swaps, cross currency swaps, foreign exchange forward contracts, and credit default swaps..

 

Banking
 Managed Assets
Category
 

Managed assets are comprised of finance receivables, operating lease equipment, finance receivables held for sale, certain investments, and receivables securitized, which is managed by the bank.

 

Banking
 Gross Yield On Earning Assets
Category
 

The Gross Yield on Earning Assets (GYEA) is a banking ratio figure that shows how much a bank generated from its earning assets. See also Earning Assets.

 

Banking
 Net Interest Rate Spread
Category
 

The net interest rate spread represents the difference between the average yield on average earning assets and the average cost of average interest-bearing liabilities.

 

Banking
 Charge-Offs
Category
 

Charge offs are the value of loans removed from the bank's books and charged against loss reserves. Charge-offs are measured net of recoveries as a percentage of average loans and annualized

 

Banking
 Delinquent loans
Category
 

Delinquent loans are those past due thirty days or more and still accruing interest as well as those in nonaccrual status. They are measured as a percentage of end-of-period loans.

 

Banking
 Covered Loans
Category
 

Covered loans are loans in which the lender's money is secured by collateral from the borrower. The borrower pledges an asset with the lender and obtains the loan. In the event of a default on repayment, the lender gains claim on the asset. Covered loans are much less risky for a bank than conventional unsecured loans.

 

Banking