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Glossary of Financial Terms



Participation Loan
A large loan that has one or more banks contributing to the sum of the loan.
Legally, a bank may not lend more than a fixed percent of its capital and surplus to an individual borrower. To service a large loan, a bank invites other banks to participate. Each bank lends a portion of the amount to the borrower through the main bank. Participation loans make it possible for large borrowers to get bank financing when the amount involved exceeds the legal lending limit of an individual bank.
A bank may sell all or part of a loan to reinvest in additional loans.

Evidence of a savings account presented by a customer each time a transaction or update is done to the account. This is the customer's account record.

Payable on Death (POD)
An option to direct funds owned by oneself to be paid to an individual or individuals upon your death.

The beneficiary of an instrument; the party to whom payment is to be made.

Personal Identification Number (PIN)
A 4 or 6 digit number used with card transactions. Provides personal security in accessing a financial service terminal and prevents the use of a bank card by unauthorized parties. The customer must enter their PIN at the POS terminal or ATM before doing a transaction.

PIN Verification
The process of checking the PIN that the customer entered at the Automated Teller Machine (ATM) or Point of Sale (POS). The PIN is verified by using an algorithm with the PIN offset and is not stored.

Plastic Card
A plastic card attached to an account that gives the customer access to Automated Teller Machines (ATM) or Point Of Sale terminals (POS). These cards can be linked to Savings or DDA accounts.

Point of Sale (POS)
Term for several types of financial services that facilitate retail payment at a merchant location, i.e., check guarantees or transactions that withdraw funds directly from customer's accounts to pay for the goods or services being purchased.

Power of Attorney (POA)
The legal document by which one party is authorized to act on behalf of another.

Preauthorized Payments
A convenience service offered to customers, enabling then to request that funds be transferred from an account to a creditor's account on a regular, fixed basis.

Prime Rate
A benchmark or guideline interest rate, offered by a bank to its most creditworthy customers, reflecting their deposit balances and financial strength.

Principal is the face amount of a loan or deposit on which interest is either owed or earned.

Process of calculating an interest amount through a specific date in the future and posting the interest prior to the end of the specified interest period.

Promissory Note
A written promise committing the maker to pay a certain sum of money to the payee, with or without interest, on demand or at a fixed or determinable future date.

Proof Department
The central unit in a bank that sorts and distributes checks and other work and arrives at control figures for all transactions.

Proprietary ATM
An ATM owned by the institution.

Public Funds
Public funds are the moneys of the state or of any county, school district, community college district, special district, metropolitan government, or municipality, including agencies, boards, bureaus, commissions, and institutions of any of the foregoing, or of any court, and includes the moneys of all county officers, including constitutional officers, that are placed on deposit in a bank, savings bank, or savings association and for which the bank, savings bank, or savings association is required to maintain reserves. This includes, but is not limited to, time deposit accounts, demand deposit accounts, and nonnegotiable certificates of deposit.

Purchased Loans
Loans that have been purchased in whole or in part, from another originator, but are not serviced by the client.

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