Banking Vocabulary
- Tab 1A-D
- Tab 2E-H
- Tab 3I-L
- Tab 4M-P
- Tab 5Q-T
- Tab 6U-Z
Account Analysis - Account Analysis is a service provided to business customers through Cash Management to help reduce fees.
Adjustable Rate Mortgage (ARM) - Type of mortgage where the interest rate is not guaranteed to be the same rate for the life of the loan. ARMs may have an initial time period at the start of the loan when the interest rate is fixed. The initial rate lock period can range from a few months to 15 years.
Aggressive Growth Investor - Investors who want to maximize the long-term growth of their retirement savings and are comfortable taking substantial investment risk in exchange for potentially higher returns are aggressive growth investors. They evaluate investments, at least annually, to stay focused on their goals and modify their investment strategy proactively.
Amortized Loan - A loan with scheduled payments that consist of both principal and interest and are set up to be equal payments for the life of the loan.
Annual Percentage Yield (APY) - APY is a calculated interest rate that takes compounding interest into account. It is a yearly percentage of either what a customer can earn or what a customer will have to pay back.
Annual Percentage Rate (APR) - APR is a percentage similar to an interest rate but will always be higher because it may include closing costs, origination fees, and discount points. The federal Truth in Lending Act requires lenders to tell customers the APR when offering a loan.
Annuity - Annuities are financial instruments issued by life insurance companies and are tax-deferred similarly to a 401k or IRA. There are different types of annuities including fixed and variable annuities and may have fees associated with them.
Appraisal - The current value of the home or property.
Asset Allocation - An investment term that refers to dividing an amount of money into high, medium, and low risk investment types. Investments types could include, stocks, bonds, and cash.
Automated Teller Machine (ATM) - A machine at which deposits and withdrawals can be made to and from your account. Every CSB banking center has an ATM.
Automatic Clearing House (ACH) - A network used for electronically moving money between bank accounts across the United States.
Banking Center - A location where accounts can be opened, deposits and withdrawals can be transacted, and loans can be made.
Balloon Payment - A large payment due at the end of a loan, such as a mortgage, commercial loan or other amortized loan. This type of payment is typically on short term loans.
Bonds - Investment issued by governments, companies, and other entities where regular interest payments are made to an investor through a coupon.
Brokerage Services - Services that either involve the negotiation of contracts for, and the execution of, the purchase and sale of securities or otherwise relate to the securities brokerage business.
Budget - A budget is a tool to help organize and prioritize purchases to help save money.
Business Days - Business days are general weekdays (Monday through Friday) and do not include weekend days (Saturday or Sunday) and Federal Holidays.
Cash Management Services - Services for business customers to help manage banking. Services include ACH Origination, Remote Deposit Capture, Positive Pay, Sweep Services, and Merchant Services.
Credit - A credit is a type of transaction in which money is deposited into an account through check, cash, or direct deposit.
Credit Score - A credit score is a three (3) digit number ranging from 300-850 assigned by credit reporting agencies depicting the consumer's creditworthiness. Your credit score is based on information collected by the three national credit-reporting agencies: Equifax, TransUnion, and Experian. Lenders may use credit scores to decide whether to lend money and at what interest rate. Many factors influence credit scores including; payment history, amounts owed, length of credit history, new credit, and credit mix.
Closing Costs - Fees due to a financial institution to complete a residential or commercial mortgage. Expenses may include: loan origination fees, discount points, appraisal fees, title searches, title insurance, surveys, taxes, deed-recording fees, and credit report charges.
Collateral - Item of value used to secure a loan (ex: vehicle, residential or commercial property)
Commercial Lender - Lender who specifically works with businesses to assist them in their banking needs
Compound Interest - Compound interest is interest that is earned and added to an account balance so that the interest, too, earns interest. Compounding speeds up your earnings because, the more often interest is compounded, or added to your account, the more you earn.
Conservative Investor - Investors who seek stability and safety of investments by choosing low risk instruments like cash and bonds are conservative investors. Remember, not having enough money at retirement is a big risk too so keep in mind the time in the market and the impact inflation can have on investments.
Consumer Lender - A consumer lender handles loans for personal items other than mortgages (ex: storage barn, vehicle, RV)
Custodian - A person or entity responsible for holding and managing financial assets.
Digital Banking - Services that include, online, mobile, and text banking.
Diversification - An investment term that describes a way to separate out funds into different investment types like cash, bonds, and stocks which each have different risk values.
Dividend - Payments representing a portion of profits which are paid out to shareholders.
Debit - A debit is a type of transaction in which money is leaving your account to make a purchase or pay a bill.
Debt to Income (DTI) - A ratio used to calculate how much of a person's income is spent paying his or her debts. The higher one's debt to income ratio, the more of their monthly income that is devoted to paying back debts.
Example: If your monthly debt payments $2,000 a month and your monthly income is $6,000 then your DTI is 33%.
Deposit - Funds are added to a bank account balance.
Down Payment - An upfront amount of money needed to purchase a residential or commercial property. Funds for a down payment traditionally come from a borrower's savings. This amount my vary depending on the type of mortgage.
Electronic Funds Transfer (EFT) - Type of transaction which allows transfers from one account to another account electronically. Types of EFTs include wire transfers, direct deposits, and direct deposits.
Electronic Statements and Notices (e-Statements and e-Notices) - Electronic version of account statements and notices.
Equity - The value of ownership built up in a home or property as the borrower pays down a loan. This amount is calculated by taking the current value of the home or property minus the amount the borrower still owes.
For example; if a home is worth (and appraised for) $100,000, and the borrower owes $60,000, they have $40,000 in equity in their home.
Escrow - A portion of a mortgage payment that is used to pay property taxes and insurance each month. Escrow is required when a property is located in a flood zone.
Exchange Traded Funds (ETF) - ETFs is an investable fund created from a collection of securities. They are similar to a mutual fund except that EFTs are traded like stocks on a stock exchange throughout the day.
Expense Ratio - The percentage of a fund's assets used for operating, administrative, and management expenses.
Fixed Rate Mortgage - Fixed rate mortgages guarantee the interest rate for the life of the loan.
Federal Deposit Insurance Corporation (FDIC) - The FDIC is an independent agency created by Congress whose mission is to maintain stability and public confidence in the nation's financial system. Products and financial services that are FDIC insured are required to be disclosed to consumers. There are some products and services that are not insured, for example, brokerage and trust services are not FDIC insured.
Federal Holidays - Federal Holidays include: New Year's Day, Old Christmas, Martin Luther King Day, Presidents Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving, and Christmas.
Growth Investor - Investors who want to increase their savings and are somewhat comfortable riding the ups and downs of the market in exchange for potentially higher returns over the long term are growth investors.
Home Equity Line of Credit (HELOC) - A HELOC can be a simple way to tap into the value (equity) of your home without a complete mortgage refinance. Home equity is the difference between what you owe on your mortgage and what your home is currently worth.
Individual Retirement Account (IRA) - Tax-advantaged investment account individuals use for retirement savings. IRAs are a convenient way to provide income for your retirement years.
Inflation - The tendency for products and services to go up in price over time.
In-House Loans - In-House loans are created and funded by the financial institution that approves the loan. All loan servicing and profit earned from the interest charged is retained within the approving financial institution.
Interest - The rate a bank charges to borrow money or the payment made to a customer on interest bearing accounts.
Loan - A sum of money borrowed from a lender to be paid back with interest.
Loan to Value (LTV) - Ratio that measures the relationship between the loan amount and the market value of the asset securing the loan, such as a house or car.
For example; if a home is worth (and appraised for) $100,000 and a borrower takes a mortgage out for $80,000, their LTV is 80%.
Merchant Services - Service provided to allow businesses to accept credit and debit card payments from customers.
Mobile Banking - Mobile banking allows consumers to complete banking transactions and access account information from a mobile device using an app. With the CSB Mobile App, customers have the ability to transfer funds, pay bills, access statements and much more.
Mobile Deposits - Mobile deposits are deposits made through a mobile banking app.
Moderate Investor - Investors who want money to grow but are more concerned about protecting it are moderate investors. They are cautious but may be willing to diversify to spread out some of the risk depending on the end goal.
Moderate Growth Investor - Investors who like to balance low and high risk investments are moderate growth investors. They evaluate investments, at least annually, to make sure the balance contains the right mix of lower and higher risk investments appropriate for the situation.
Money Manager - Money Manager is a tool offered to personal online banking users to help track spending, create and manage budgets, add accounts from other financial institutions, and set financial goals.
Money Market Funds - This investment is lower risk and are typically invested in things like treasury bills and other stable instruments.
Mortgage - A mortgage is a specific type of loan for the purchase of property secured with collateral, often the property itself, and is an agreement between lender and borrower.
Mortgage Lender - A mortgage lender facilitates loans for residential property with products such as mortgages, refinances, and HELOCs.
Mutual Fund - Mutual funds are made up of a group of investors who come together to buy a various number of investments, including stocks and bonds. This allows the risk and gains to be shared by a larger group of people. Mutual Funds may be a way to diversify your investments.
Net Worth - Calculation of all of your assets minus your liabilities. In other words, it is the value of everything owned after subtracting what is owed on those items.
NASDAQ - Stands for the National Association of Securities Dealers Automated Quotation also known as the electronic stock market and comprises of over 5,000 US and non US companies.
Nonsufficient Funds (NSF) - NSF is a status of an account that does not have enough funds to cover transactions. This is also called insufficient funds.
Online Banking (OLB) - OLB is a way to access account information electronically. With OLB, customers have the ability to transfer funds, pay bills, access statements and much more.
Overdraft (OD) - An overdraft occurs when an account balance is negative. Fees may be charged in the event of an overdraft.
Payable on Death (POD) - An arrangement between a bank and a customer to designate beneficiaries for an account.
Pension Plan - Funds maintained by an employer on behalf of its employees and are usually invested in low-risk investments.
Profit Sharing - Benefit plan offered by an employer and shares the companies profits with its employees
Phone Banking - Service to conduct banking transactions and check account balances by following prompts over the phone.
Point-of-Sale (POS) - Type of transaction completed with a credit card, debit card, or mobile pay either in person or online.
Positive Pay - An automated fraud detection tool for businesses to help identify check & Automated Clearing House (ACH) fraudulent activity.
Powerful Tools - Powerful Tools is a CSB term referring to our digital banking products and services.
Power of Attorney (POA) - POA refers to a legal document in which a person is assigned authority to make financial decisions on behalf of another individual.
Prime Rate – A benchmark used for setting interest rates and is based on the federal funds rate set by the Federal Reserve.
Principal - The amount due on any debt before interest or the amount invested before returns.
Private Mortgage Insurance (PMI) - An insurance policy that provides coverage for mortgage lenders if the borrower defaults on the mortgage.
Property Insurance - An insurance policy that provides coverage to the owner of a structure and its contents in the event of damage or theft.
Property Taxes - A tax assessed on real estate by the local government and is usually based on the value of the property (including the land) owned.
Realtor - Realtors may aid homeowners in the purchase and sale of residential or commercial property.
Rebalancing - Investment term meaning to buy or sell shares to "rebalance" a portfolio to fall back in line with an investor's plan and risk tolerance.
Refinance - Refinancing is a option a borrower has which allows for the current loan balance to be recalculated over a new term (ex: 15, 20, or 30 years) at the current market rate.
Remote Deposit Capture - Remote Deposit Capture is a service which allows a business to scan checks directly from their office and transmit deposits directly to an account.
Return - In investment terms, it is the amount gained or lost when investing.
Risk Tolerance - The amount of risk an investor is will to have to make an investment in exchange for the potential for a larger return.
Rollovers - Distributions sent directedly to an IRA owner and funds must be rolled over within 60 days.
Roth IRA - Retirement plan that is funded with after-tax dollars, so it does not afford a current year tax deduction.
Secondary Market Loans - Secondary Market Loans are loans that are purchased from financial institutions by a larger entity, such as Freddie Mac or Fannie Mae. In most cases, the bank that approves the loan keeps all of the servicing responsibilities. This means borrowers will still make payments to the financial institution that approved the mortgage. However, the payments, including interest, are then sent on to the purchaser of the loan.
Securities and Exchange Commission (SEC) - An agency created by Congress to regulate securities and protect investors and is responsible for ensuring the markets are operating fairly and honestly.
Shareholder - A person how owns, a share from a company; a piece of a company.
Stocks - Investment representing partial ownership of a company.
Sweep Services - Service for business customers to transfer funds between accounts to maximize return and reduce fees. There are three (3) different types of sweeps offered at CSB: Line of Credit, Repurchase Agreement, and Investment Sweeps.
Survey - In real estate terms, this is the documentation of a land's features and description.
Text Banking - Service using SMS text messages to transfer money, obtain account balances, view transaction history, and receive banking activity alerts.
Title - Formal document to prove ownership of items such as property or vehicles.
Title Searches - Process of researching and finding historical documents to prove a clean title and legal ownership.
Title Insurance - Type of insurance meant to protect an owner from financial loss and legal expenses if a title is found to be defective.
Transaction - Act of buy or selling an item; in banking terms it could also refer to making a deposit or withdrawal.
Transfers - Funds sent from one IRA to another IRA directly. This type of distribution is not tax reportable because funds are sent directly to one IRA sponsor to another.
Variable Rate - An interest rate either for a loan or deposit account in which the rate may changed in reaction to the economic environment.
Wealth Management Services - An investment advisory service to assist in asset management.
CSB Wealth Management, Trust, and or brokerage products and services are; not insured by the FDIC; not a deposit or other obligation of, or guaranteed by, the depository institution; subject to investment risks, including possible loss of the principal amount invested.
Wire Transfer - A wire transfer is a type of electronic funds transfer that allows money to be moved from one bank account to another, either domestically or internationally.
Withdrawal - A withdrawal is when money is debited from an account.
Yield - The percentage amount of interest or dividend payments from an investment.
Prepared for informational purposes only.