Jargon and Acronyms….They’re everywhere…LOL!
The use of jargon and acronyms has become pervasive in the English language. Whether used by government (e.g. CIA, NATO, etc.), lawyers (e.g. adjudication, brief, etc.), IT specialists (e.g. SEO, SPAM, etc.) or the younger generation (e.g. TTYL, sick, etc.), today our language has become laden with these professionally, generationally and industry specific dialects. With the advent of computerization and the internet specifically, the use of jargon and acronyms has increasingly become more widespread in our culture. So customary, that this lingo has almost become a language of its own – a foreign language for many of us, oftentimes requiring translation.
The use of acronyms and jargon in the financial services industry is not new. Our industry has always had its own language. Whether you are watching your favorite nightly financial news show or conversing with financial professionals, I’m sure you sometimes feel inundated and somewhat intimidated by our industry’s commonplace use of idioms.
Webster’s Dictionary defines jargon as the language, especially the vocabulary, peculiar to a particular trade, profession or group and acronym as a word formed from the initial letters or groups of letters of the words in the name or phrase. In a nutshell, the use, most aptly today, the overuse of this language can be quite confusing and leaves many of us exclaiming, “WHAT???”
Although the list of our industry’s acronyms and jargon is fairly exhaustive, I thought I’d dedicate the balance of this article to a few of the most commonly used acronyms in our industry which tend to be the least understood by our customers. I hope to shed some light and clear up any possible confusion concerning the following popularly used financial acronyms: APR, ARM, AGI, and PMI.
APR – Annual Percentage Rate – This is the annual rate of return made by investing or charged by borrowing, expressed in a single percentage number. It represents the actual return on money invested or cost of funds when borrowed. For example, if a credit card company charges 2% a month on your outstanding balance, the APR is 24% (2% x 12 months). This number differs from APY (Annual Percentage Yield) which takes compound interest into account.
ARM – Adjustable Rate Mortgage – This differs from a fixed rate mortgage in that the interest you pay on the loan balance varies over the life of the loan based on a financial benchmark or index and an additional spread called a margin. The initial rate is fixed for a period of time. Then periodically, the interest rate is reset. For example, if you had a 2/28 ARM, this is a 30 year mortgage, with a fixed rate for the first two years and a floating rate for the remaining 28 years.
AGI – Adjusted Gross Income – This is the “net income” figure used to determine your taxable income. Your AGI is your gross income minus all allowable deductions (e.g. unreimbursed business expenses, medical expenses, contributions to a deductible retirement plan, etc.). This net number is computed on page 1 of your federal tax return.
PMI – Private Mortgage Insurance – Many people confuse this insurance with homeowner’s insurance. This mortgage specific policy is provided by a private mortgage insurer to protect lenders against loss if the borrower defaults on the loan. Most lenders today require PMI on loans with a loan-to-value (LTV….yet another acronym!) that is more than 80% (a down payment less than 20%). Although this allows the borrower to put less down, it typically requires an additional premium payment over and above the mortgage payment and possibly an additional monthly fee.
Although the use of jargon and acronyms is most likely not going away any time soon, we must be cautious not overuse them, especially when we are communicating with people outside of our trade or industry. In our goal to provide excellent service to our customers, the management and staff of Intracoastal Bank make it a priority to always communicate with our customers clearly and concisely. It doesn’t cost a thing ….just a little time and patience. B4N! (Bye for Now)
Corporate Volunteerism: A Win Win Win
Today, the true measure of a corporation’s success is more than the bottom line and the value of the company to its stockholders. Corporate citizenship is an integral part of a company’s success. Some essential business practices of corporate citizenship include treating employees well, practicing good ethics, being transparent and accountable, building trust and relationships, and contributing to a sustainable environment (Hitachi Foundation & Boston College Center for Corporate Citizenship, 2003). However, one of the most critical components of corporate citizenship today is volunteerism; the involvement and positive social impact that the corporation and their employees have on the community where they work. More and more, today’s successful businesses realize that their profitability, reputation and retention of quality employees have a strong correlation to their commitment to employee volunteer programs.
At Intracoastal Bank, we understand and stress the importance of giving back to our community. By providing our employees with an opportunity to do good deeds that they don’t have time for outside of work, we increase company loyalty and develop strong and lasting ties to our community. At the end of the day, our company, our employees and our community reap the benefits of our continued dedication to volunteerism.
Intracoastal Bank’s support of employee volunteerism has several benefits to us as a company. It has grown our relationship with the community who has helped make us successful. A by-product of this valued relationship is the enhancement of our corporate image and reputation. Additionally, our support and direct involvement in various not for profit projects over the past several years; the United Way of Volusia/Flagler Counties, Habitat for Humanity, Mobile Benefits, Feed Flagler, Flagler County Education Foundation, etc., has built an extremely cohesive and motivated workforce. We’ve become a unified team!
For our employees, the involvement in community volunteer programs has many perks. Volunteerism offers our employees the opportunity to improve the community where they work and live. Also, the ability to participate in the bank’s supported programs adds variety and fulfillment to their work day. In addition and quite possibly most importantly, the active engagement of our employees in these volunteer programs has improved their leadership and interpersonal skills and increased their sense of self worth. We truly have more effective and better-rounded employees because of it!
Intracoastal Bank’s unwavering support and involvement in community-based volunteer efforts positively impacts our hometown as well. Our efforts have increased the understanding of the necessity of a strong and enduring relationship between businesses and the not for profit sector in the vitality of our community. Our employees also are providing their skills and talents to needed community services that might not otherwise be possible. Lastly, our bank’s efforts assist in enhancing the quality of life in our community.
Dollars and Sense Series Article for March A Day in the Life of Flagler County’s “Hometown Community Bank”
From the moment you step through the doors of the Key West architecturally themed home of Intracoastal Bank, Flagler County’s “Hometown Community Bank,” you immediately sense a different atmosphere. From the warm friendly greetings, freshly baked aroma of Otis Spunkmeyer chocolate chip cookies, freshly brewed coffee, signature bottled water, and “Customer Appreciation Days” to the dog biscuits for Fido, you will be quickly immersed into a new banking experience. Dorothy, you are not in Kansas….I mean “big bank land” anymore!
With Americans becoming more and more frustrated with the “big banks” or as commonly referred to as the “big box banks,” many are making the choice to move to smaller, more personable community banks. Many American consumers have become fed up with the mergers, buyouts, bailouts, and huge executive bonuses. They feel that these large institutions have lost touch with old-fashioned customer service and serving their community.
When Intracoastal Bank opened its doors on June 16, 2008, we were determined to be different. Our goal was to be different in so many ways. We are not a corporate giant. We are a small bank with hometown values and practices. Our size allows us to be able to customize our products and services to meet the needs of our customers.
Not only are our customers and a growing number of Flagler County residents aware of a change in the air, but our employees as well have a full sense of our unique institutional culture and work environment. Our bank’s core values prioritize teamwork, recognizing that each team member plays a vital role in our overall success. Our overall philosophy empowers our employees to make decisions without having to jump through the big corporate hoops.
We make decisions locally, typically around our upstairs conference table. This allows a much quicker turnaround on loan decisions and decisions pertaining to our customers’ accounts. If a customer ever has a question or concern, “management” is always available. Our management team has an open door policy. The decision makers are not hidden away in offices located on the 43rd floor of a skyscraper in a major metropolitan city. Our decision makers are always accessible and that’s the difference.
Similar to the Bailey Building and Loan Association depicted in the Christmas movie classic “It’s a Wonderful Life,” we pride ourselves in giving our customers a friendly, small town, face to face banking experience. As our cute, recognizable mascot implies, we like being the small fish in the big pond. We are a close, happy family…..employees and customers!