To help you better understand our products and services — and our industry — Oxford Bank has developed the following glossary that includes a variety of terms in alphabetical order.

Ability to pay: A borrower's ability to meet his/her current and future debt obligations.

Accrued Dividend: A regular dividend that is considered to be earned but not declared or payable.

Accrued Expenses: Expenses which are incurred, but for which payment is not yet made, during a given accounting period.

Accrued Interest: Interest due on a bond or other fixed income security since the last interest payment was made. This often occurs for bonds purchased on the secondary market, since bonds usually pay interest every six months, but the interest is accrued by the bondholders every month. When a bond is sold, the buyer pays the seller the market price plus the accrued interest, for which the buyer will be reimbursed at the end of the six- month period. Accrued interest is calculated on a 30-day month for corporate bonds and municipal bonds, and on actual-calendar-days for Government Bonds. Income bonds, bonds in default and zero-coupon bonds trade without accrued interest.

Account: A relationship under a particular legal name (business, individual, trust), such as a checking account or savings account. The term is also used to describe the historical record of payments, deposits or withdrawals, called the statement of account or account statement.

Accountant: One who is skilled in the practice of accounting or who is in charge of public or private accounts.

Accounts Payable: Money that a company owes to vendors for products and services purchased on credit.

Accounts Receivable: Money that is owed to a company by a customer for products and services provided on credit. Treated as a current asset on a balance sheet.

ACH Processing: Automated Clearing House (ACH) processing occurs between a nationwide network of financial institutions that send electronic messages, via telecommunication lines instead of paper (checks), to transfer money between two parties. The most common ACH transactions are direct deposit, pre-authorized debits, cash concentration and corporate to corporate payments.

Adjustable-Rate Mortgage: A loan secured by a mortgage on real estate property that has a variable interest rate that can be changed over the term of the loan which may result in higher or lower monthly payments of principal and interest.

Amortization: The gradual elimination of a liability, such as a mortgage or other type of loan, in regular payments of principal and interest over a specified period of time.

Annual Percentage Rate: The effective rate of interest on a loan assuming a one-year time period. This is the interest rate that is disclosed to borrowers for comparison with credit offered by other lenders. The calculation is the same as Internal Rate of Return (IRR).

Assets: Anything that a company or individual owns that has commercial or exchangeable value is an asset. Assets usually are divided into two classes: fixed assets (sometimes referred to as non-current assets), including property, plant and equipment (PP&E), construction in progress, leasehold improvements; and current assets, including cash, marketable securities, inventories, receivables (money owed to the company for products or services sold), and deferred charges. Intangible assets, such as trademarks, patents, copyrights and goodwill, are usually shown under fixed assets.

Automated Teller Machine (ATM): A machine that allows the customer to perform some of the more common teller transactions, such as cash withdrawals, deposits and transfers. ATMs are generally accessible 24 hours a day, 7 days a week.

Average Balance: For revolving credit, such as credit cards, and certain types of deposit accounts, such as a money market or savings account, this is the balance on which interest is charged or paid. The calculation should be disclosed in the information about the loan or deposit. The simplest is the total of each day's balance divided by the number of days in the cycle.

Bank or Account Statement: The record of transactions for an account over a specified period of time, such as a monthly bank statement or checking account statement that records all the deposits made and checks cleared during the month. A loan or credit card statement will show any new charges, the amount of interest charged, and any payments made.

Cashier's Check: A check drawn by a bank on itself, signed by a cashier or other authorized bank officer and payable to a third party named by the customer. Cashier's checks are universally accepted.

Certificate of Deposit (CD): A type of deposit account typically with a fixed minimum term and a minimum initial deposit; interest payments may be either fixed or variable. Generally, CDs offer a higher interest rate than other deposit accounts.

CFP: Certified Financial Planner.

Check Card (Debit Card): A plastic card with the MasterCard logo, designed to give a customer access to funds in his/her checking account to obtain cash, purchase goods and services, or transfer funds from one account to another. The cards are accepted around the world wherever you see the MasterCard logo.

Check Safekeeping: The process of microfilming customers' paid checks. The microfilm is the official record of the transaction and is retained by the financial institution. Canceled checks are stored rather than returned to the customer.

Compound Interest: Interest that accrues when earnings for a specific period are added to principal; thus interest for the following period is computed on the principal plus accumulated interest.

Credit Cards: A plastic card that can be used by the holder to make purchases or obtain cash advances using a line of credit made available by the card-issuing financial institution.

Daily Compounding: A frequency of calculating interest whereby interest is added to the principal each day and then earns interest itself.

Direct Deposit: A pre-authorized system in which customers' government benefits or other payments are automatically deposited to their checking or savings accounts. Some types of Direct Deposit are social security, SSI, VA benefits, annuities, payroll checks and dividend checks.

Coverdale Education Savings Account (CESA): Formerly known as an Education IRA, the Coverdale Education Savings Account is an investment tool created for the purpose of paying for the future cost of a child's post-secondary education. Contributions and their earnings are tax-free when withdrawn to pay for qualifying education expenses.

Grace Period: A time period within which a depositor can withdraw funds from a certificate without penalty.

Individual Retirement Accounts: Three types to choose from for eligible individuals: the Traditional IRA, Roth IRA, and the Coverdale Education Savings Account (CESA).

Money Market Deposit Account: A deposit account offered by financial institutions that is designed to be directly equivalent to, and competitive with, money market mutual funds. These accounts, unlike mutual funds, are FDIC insured.

NOW Account: A deposit account, similar to a checking account, from which the account holder can withdraw funds by writing a negotiable order of withdrawal (NOW) payable to a third party and which can earn interest.

Overdraft Protection: A service that allows the customer to write checks for an amount over and above the amount in their checking account. Funds are transferred from their line of credit or other designated account to their checking account as needed.

Personal Identification Number (PIN): A secret number or code used by the account holder to authorize a transaction or obtain information regarding his or her account. Often used in conjunction with a plastic card or with a telephone voice response system.

Qualified Retirement Plan: An employee benefit plan that qualifies for special tax treatment under Internal Revenue Code Section 401(a).

Regular Savings Account: A form of deposit account with no legal limits or requirements as to amount, duration, or times of additions or withdrawals (limited to six withdrawals per month).

Rollover IRA: A type of IRA that allows employees who receive a lump-sum distribution upon leaving an employer, or upon termination of an employer's qualified retirement plan, to deposit all or any portion of the funds in an IRA. The portion of eligible distribution that is put into such an account enjoys the same tax-deferral status as a regular IRA.

Roth IRA: Contributions are not tax deductible but distributions can generally be withdrawn tax-free.

Signature Card: A form, executed by an account holder, establishing account ownership and setting forth some of the basic terms of the account and provisions of the deposit contract.

SIMPLE IRA: Savings Incentive Match Plan for Employees of small employers. This Retirement Plan is simple to administer and offers contribution options that are both flexible and substantial; generally available to both for- profit and not-for-profit employers having no more than 100 employees.

Simplified Employee Pension Plan: A plan by an employer to make contributions toward an employee's retirement income. The employer makes contributions, up to the annual contribution limits, directly to an IRA set up by an employee with a qualified financial institution.

Tiered Interest Rate: An interest rate structure in which the entire account balance earns a higher rate once it reaches the designated level.

Tax Identification Number (TIN): The number used to identify an individual or entity for federal income tax purposes.

Traditional IRA: Contributions may be partially or fully deductible, but distributions are generally taxable.

Trustee Transfer: The moving of IRA funds from one IRA trustee directly to another IRA trustee, with no check being made payable to the IRA participant. This type of transfer is not subject to any time or frequency restrictions.

Uncollected Funds: Funds that have been deposited in an account or cashed against an account by a check that has not yet been cleared through the check collection process and paid by the drawee bank. Financial Institutions typically place a temporary hold on their customers' uncollected funds, making those funds unavailable for withdrawal until the time period of the hold expires.

Uniform Transfer to Minors Act: An act that sets forth provisions for giving a minor an intangible gift (e.g., bank accounts, stocks or bonds) that results in income shifting with an adult serving as custodian. The custodian has direct control over the gift and can sell and reinvest proceeds from the gift for the minor with the minor recognizing any gain and/or annual income that results.

Wire Transfer: An electronic transfer of funds from one financial institution to another.