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

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.

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.

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

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

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

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.

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.

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

Net Interest income divided by average earning assets.

Total interest revenues minus total interest expense.

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

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.

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.

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.

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.

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.

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.

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.

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.

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..

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.

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.

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.

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

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.

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.