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Banker's Glossary


See Uniform Commercial Code.

UCC - 1
See financing statements.

UCC - 3
See amendment, assignment, continuation, partial release, release and termination.

UCC - 4
See lien search.

Unadvised line
A line of credit that is approved by the bank but not disclosed to the borrower until some specific event, usually a request for funding from the borrower.

Legal term used (especially in UCC Article 8) as an adjective to describe stocks, bonds, other investments, and certificates of deposit held in nonmaterial form as electronic computer entries. Ownership of these instruments is usually evidenced by a receipt or confirmation.

See naked.

Underlying or
An option or a future is a right or a commitment to buy or sell something at a future date. The underlying is the financial instrument that may or must be bought or sold in each option or futures contract. FAS 133, as amended by FAS 149, defines an underlying to be a specified interest rate, security price, commodity price, foreign exchange rate, index of prices or rates, or other variable (including the occurrence or nonoccurrence of a specified event such as a scheduled payment under a contract). An underlying may be a price or rate of an asset or liability but not the asset or liability itself.

The investment bank, commercial bank, or brokerage firm that works with an issuer to sell a new issue. Issuers may select underwriters by obtaining bids or on a negotiated basis. Potential underwriters may form groups called underwriting syndicates to bid collectively.

The name used to describe the process of analyzing and structuring a proposed loan. Good underwriting is the most important aspect of secured lending. Outside of banking, the term primarily refers to the purchase of risk.

Undivided profits
Bank term for retained earnings. Bank profits from current as well as prior years that have neither been distributed to shareholders as dividends nor transferred to surplus. Corporate earnings accumulated over time. One of a corporation’s equity or capital accounts. See tier 1 capital and tier 2 capital.

Unexpected loss or unexpected risk
The portion or component of risk or loss that exceeds the predicted amount.

Unfunded pension losses
A contra equity account created under FAS 87 rules for cases in which the amount of the additional minimum pension liability exceeds the sum of unamortized prior service cost plus transition obligation. Sometimes called minimum pension liability adjustment or minimum pension liability in excess of unrecognized prior service costs.

Uniform Commercial Code (UCC)
A compilation of laws relating to commercial contracts involving personal property. The code does not address real property. In addition, a few types of personal property are also excluded. While the UCC has been adopted by all 50 states, there are differences among the versions adopted in each state. Secured lenders tend to focus on UCC Article 2A covering leases, Article 8 covering securities, and Article 9 covering all other personal property collateral.

Universal life insurance
A form of life insurance that combines term insurance protection with a savings feature. The portion of the funds allocated to the savings feature is invested in a tax-deferred account that typically earns interest at rates comparable to prevailing money market interest rates. A universal insurance policy offers the policy holder the flexibility to change the amount of insurance coverage, the amount of the premium payment and/or the portion of the premium payment allocated to the savings feature.

Uniform Standards of Professional Appraisal Practice (USPAP)
Appraisal requirements published by the Appraisal Foundation. Prior to 1994, USPAP rules were included as an appendix to the Uniform Real Estate Appraisal Rule published by the four federal financial institution regulators. Since 1994, USPAP rules are referenced in the bank regulations but not provided in any form. Comments published with the 1994 amendments to the bank regulations indicate that readers are expected to assume that all references to USPAP in the regulations are references to the most current version of USPAP then available.

Unlimited guaranty
A guaranty agreement that does not include any provisions restricting the amount of debt guaranteed.

Unplatted land
Land that is not platted. Land for which the property description takes the form of a metes and bounds description rather than a lot identification. See metes and bounds and platted land

Unqualified opinion
Term used to describe an opinion letter accompanying audited financial statements in which the CPA states that the financial statements fairly present the financial position and the results of operations. The CPA will also state that the financial statements conform with GAAP for the present and the preceding reporting periods.

Unrecognized initial net gain
The current unamortized balance, as of the financial statement date, of the off-balance sheet asset for the initial transition asset in a defined benefit pension plan. FAS 87 requires that this amount be disclosed in a footnote to the financial statements. See transition asset.

Unrecognized initial net loss
The current unamortized balance, as of the financial statement date, of the off-balance sheet liability for the initial transition obligation in a defined benefit pension plan. FAS 87 requires that this amount be disclosed in a footnote to the financial statements. See transition obligation.

Unrecognized net gain or unrecognized net loss
An off-balance sheet asset or liability created under FAS 87 rules when plan assets in a defined benefit pension plan exceed or fall short of the projected benefit obligation (PBO). The gain or loss is usually caused by actual investment returns for plan assets that exceed or fall short of expected or assumed rates of return. Gains or losses may also result from changes in actuarial assumptions. These are off-balance sheet assets or liabilities because volatile returns on plan assets realized in subsequent periods can reduce or completely offset the unrealized gains or losses that previously existed. These gains or losses are from changes in the plan or the plan assets that occur subsequent to the adoption of FAS 87 rules and should not be confused with initial transition assets, unrecognized transition assets, initial transition obligations, or unrecognized transition obligations. The amount of any unrecognized gains or losses is disclosed in a footnote to the financial statements.

Unrecognized prior service costs
The current unamortized balance, as of the financial statement date, of the off-balance sheet liability for prior service costs in a defined benefit pension plan. FAS 87 requires that this amount be disclosed in a footnote to the financial statements. See prior service costs.

Upstream guaranty
A phrase sometimes used to describe a guaranty of a loan to a borrowing entity when the borrowing entity is a parent company or stockholder of the guarantor.

Upward sloping yield curve
A yield curve depicting a situation in which yields for shorter-term maturities are lower than yields for longer-term maturities. Upward sloping yield curves are common.

An acronym for the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, ("USA PATRIOT Act"). The USA PATRIOT Act substantially amends the Bank Secrecy Act of 1970 (BSA). The statute contains strong measures to prevent, detect, and prosecute terrorism and international money laundering. The Act is far-reaching in scope, covering a broad range of financial activities and institutions. See Patriot Act.

See Uniform Standards of Professional Appraisal Practice.

Usury laws
State and Federal laws establishing maximum allowable interest rates that may be charged on specified types of credit extensions to specified types of borrowers.