FAQs

Definition:

To minimize the chance that an investment’s actual return will be less than expected. This includes the chance of losing some or all of the original investment. Risk is minimized by doing due diligence. In this process the risk is often measured by calculating the standard deviation of the historical returns or average returns of a specific investment.

Definition:

A nonprofit organization is an entity formed for the purpose of serving a public or mutual benefit other than the accumulation of profits.

Definition:

The end of the life of a security.

Definition:

A certificate of deposit is a promissory note issued by a bank. It is a time deposit that restricts holders from withdrawing funds on demand. Although it is still possible to withdraw the money, this action will often incur a penalty.

Definition:

Risk capital, also known as Tier 1 capital, is the core measure of a bank's financial strength from a regulator's point of view. It consists primarily of shareholders' equity but may also include preferred stock that is irredeemable and noncumulative and retained earnings.

Definition:

Noncurrent loans represent loans on banks/credit union books that are overdue by more than 30 days.

Definition:

Diligence write-ups are complete, waiting for Investment Committee vote/approval.

Definition:

Calculated by dividing equity by total assets, the equity/assets ratio is used as a measure or risk. The higher the equity/assets ratio the more protection depositors have against bank losses. This ratio is referred to as net worth/assets for credit unions.