Resources / Glossary
Glossary
Plain definitions of the terms that come up in deposit pricing, branch banking and AI assistant visibility. Where usage varies, we say so. Terms we coined are marked, and their full definitions are on how we measure.
- AI assistant visibility
Whether, and how, AI assistants such as ChatGPT, Gemini, Claude, Copilot and Perplexity name, describe and link to an institution when people ask them money questions. It includes being named at all, being described accurately, and sending people to a page where they can act.
The AI Assistant Audit checks ChatGPT, Gemini and Claude.
- ALCO (asset/liability committee)
The senior committee that manages a bank's or credit union's balance sheet: interest rate risk, liquidity and funding. In many institutions it sets or approves deposit and loan pricing.
- Answer engine optimization (AEO)
A name commonly used for work that makes a website easier for AI assistants to find, read and cite. Also called generative engine optimization (GEO). We do not use the term. Our AI Assistant Audit checks what assistants say against an institution's own pages, and follows them to where an account actually opens.
- APY (annual percentage yield)
The rate a deposit earns over a year, including the effect of compounding. Banks disclose it under the Truth in Savings rules (Regulation DD); credit unions under the NCUA's equivalent rules (Part 707). Comparing APYs, rather than stated rates, puts accounts that compound differently on the same footing.
- As-low-as rate
The lowest rate a lender advertises for a loan, available only to the best-qualified borrowers. Compare as-low-as rates only with other as-low-as rates, never with the rate quoted for a specific borrower.
- Brokered deposits
Deposits placed with an institution through a third party, a deposit broker, rather than directly by its own customers. Bank regulators define them and restrict their use by banks that are less than well capitalized; credit unions fall under the NCUA's separate limits on nonmember and public-unit shares. They are usually treated as less stable than deposits from an institution's own customers.
- Core deposits
Stable deposits from an institution's own customers, such as checking, savings, money market and smaller certificates. Exact definitions vary between regulatory reports, so state which one a figure uses.
- Cost of funds
What an institution pays for the money it lends: the interest paid on deposits and borrowings, usually expressed as a percentage of the average balance of those funds.
- Deposit beta
The share of a change in market rates that an institution passes through to a deposit rate. A beta of 0.40 means a rate moved 40 basis points for a 100 basis point move in the federal funds rate. Usually measured over a whole rate cycle, and different for each product.
Related: Pass-Through Days, which measures how quickly rates move rather than how far.
- Dividend rate
Most credit unions pay dividends rather than interest on share accounts, because members are owners; some state-chartered credit unions pay interest. The dividend rate is the annual rate before compounding; the APY includes compounding.
- Field of membership
The defined group of people a credit union is allowed to serve, such as those who live, work, worship or attend school in an area, employees of named companies, or members of associations. Who can join is often the first question a prospective member asks.
- Full Reprice CostAudare AI term
The yearly cost of a rate change counted on every balance the change reaches, not only on the new money it is meant to win.
Full definition: how we measure. Guide: what a deposit rate increase really costs.
- Funds transfer pricing
An internal method that charges each loan for the funds it uses and credits each deposit for the funds it provides, so every product can be judged on its own margin. The credit a deposit receives is often called its value of funds.
- Market median
As we use it: the middle posted rate for one product, such as a 12-month certificate, among the institutions in a comparison set. Half post more and half post less. Promotional and standard rates are kept apart.
Related: Shrug Zone.
- Maturity retention
The share of maturing certificate balances an institution keeps, whether renewed or moved into another of its products. We measure it by balance rather than by account, because one large certificate leaving matters more than several small ones.
- Net interest margin
Interest earned on loans and investments minus interest paid on deposits and borrowings, divided by average earning assets. The NCUA's credit union reports divide by average total assets instead, so say which a figure uses. The core measure of how much a bank or credit union makes on the money it lends.
- Non-maturity deposits
Deposits with no fixed term, such as checking, savings and money market accounts. Customers can withdraw them at any time, and the institution can change their rate at any time, which is why a rate change reaches every existing balance at once.
- Pass-Through DaysAudare AI term
The number of days between a Federal Reserve rate decision and the date an institution's posted rate for a product first changes.
Full definition: how we measure.
- Products per household
The average number of products, such as checking, savings, certificates, loans and cards, held by each customer household. A common measure of how deep relationships are.
- Promotional rate (deposit special)
A higher rate offered for a limited time or on a specific term, often an unusual one such as 13 months, to raise funds without repricing standard products. It still reaches every certificate opened at the special, including money that would have been placed anyway.
- Relationship rate
A better rate offered to customers who hold other products or meet conditions, such as direct deposit or a minimum combined balance. It reaches fewer balances than a rate for everyone.
- Shrug ZoneAudare AI term
The band of rates around the market median for one product in one market within which a rate reads as in line with the market. Its edges are the Switch Lines.
Full definition: how we measure.
- Switch LinesAudare AI term
The two edges of the Shrug Zone: the rates at which a product stops reading as in line with the market, above it or below it.
Full definition: how we measure.
- Wholesale funding
Money borrowed from outside an institution's own customers, such as advances from a Federal Home Loan Bank (loans secured by collateral like mortgages), brokered deposits or Federal Reserve borrowing. Credit unions can also borrow from corporate credit unions and the NCUA's Central Liquidity Facility. The cost of wholesale funding is a natural yardstick for what new deposits are worth.