FDIC TE Prep Questions And Answers Rated 100% Correct!!
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Module
FDIC TE Prep
Institution
FDIC TE Prep
When can examination schedules be extended to 18 months for a state nonmember
bank? - ️️~the bank has total assets of $3 billion or less
~ the bank is well capitalized as defined in 323.403(B)(1) of FDIC rules and regs
~the ban was assigned a management rating of 1 or 2 at the last examinati...
FDIC TE Prep
When can examination schedules be extended to 18 months for a state nonmember
bank? - ✔️✔️~the bank has total assets of $3 billion or less
~ the bank is well capitalized as defined in 323.403(B)(1) of FDIC rules and regs
~the ban was assigned a management rating of 1 or 2 at the last examination
~the ban was assigned a composite rating of 1 or 2 at the last exam
~the bank is not subject to formal enforcement proceedings or order by the FDIC,
OCC< or FRB
~no person acquired control of the bank during the preceding 12 months in which the
last full-scope examination was completed
Section 10(D)(9) ofthe FDI act requires what? - ✔️✔️The FFEIC to issue guidelines
establishing standards for the purpose of determining the acceptability of state reports
of examination.
What is the purpose of the FDIC conducting bank examinations? - ✔️✔️To ensure
public confidence in the banking system and to protect the DIF
What should examiners do before discussing proposed ratings of a 3 or worse rated
bank? - ✔️✔️Contact the regional office to discuss with the CM or the ARD
Sections 10(b) and 10(c) of the FDI do what? - ✔️✔️Empower examiners to make
thorough examination of the banks affairs
What is often the single most important factor of a successful operation of an insured
institution? - ✔️✔️The quality of management
What is included in tier 2 capital? - ✔️✔️ALLL up to 1.25% of risk-weighted assets
qualifying preferred stock
Subordinated debt
Qualifying tier 2 minority interest, less any deductions in the tier 2 instrument of an
unconsolidated financial institution.
Examination findings, including the composite and component ratings, are subject to
confidentiality under which regulation/rule? - ✔️✔️Part 309 of the FDIC rules and regs
When should an examination letter be delivered to the CEO/President during an exit
meeting? - ✔️✔️for any bank newly assigned a CAMELS composite 3 or worse
Under Section 10(d) of the FDI act, how often must insured branches of foreign banks
be examined? - ✔️✔️every 12 months
,Section 347.211 of the FDIC rule and regs states that domestic branches of foreign
banks can be considered for examination every ___________ months? - ✔️✔️18
months
Limited scope examinations should be performed how many months after an
enforcement action is issued? - ✔️✔️6 months
How much times notice should a bank be given for notice of an up coming examination
and provided enough time to complete pre-examination request - ✔️✔️2 weeks
How are shared-loss agreements generally written? - ✔️✔️With the FDIC absorbing
80% of injured losses (up to a stated threshold) and receives 80 percent of recoveries
How many years are commercial, shared loss agreements generally cover how many
years for losses and recoveries? - ✔️✔️5 years for losses and 8 years for recoveries
For residential mortgages, shared losses agreements generally cover how many years
for losses and recoveries? - ✔️✔️10 years for both
How should an asset covered under a shared loss agreement be classified? - ✔️✔️The
assets should be adversely classified (sub, doubt, loss) and be reduced by the
applicable coverage rate stated in the SLA (often 80% or 95%)
During an exit meeting, management should be made aware of what? - ✔️✔️All
deficiencies and supervisory recommendations that will be cited in the ROE.
What system was devised to rate a Trust department and what composite ratings are
established? - ✔️✔️Uniform Interagency Trust Rating System; composites 1-5.
What five critical areas are evaluated in a Trust exam? - ✔️✔️~management
~operations, internal controls, and audits
~earnings
~compliance
~asset management
What is the primary purposed of an IT exam? - ✔️✔️To determine confidentiality,
integrity, and availability of records produced my automated systems
IT operations are rated in accordance to? - ✔️✔️The Uniform rating System for
Information Technology (URIST)
What four areas are evaluated in an IT examination? - ✔️✔️~Management
,~Audit
~Support and Delivery
~development and acquisition
What is the purpose of a BSA examination? - ✔️✔️To ensure U.S. financial institutions
maintain appropriate records and file certain reports involving currency transactions and
customers relations.
Examiner information ,may contain non-public customer information defined by what? -
✔️✔️Section 501(b) of the Gramm-Leach-Bailey Act
How long should line sheets be retained - ✔️✔️1 examination cycle
How long should risk management and trust questionnaires be retained? - ✔️✔️10
years, indefinitely when irregularities are discovered or suspected.
Financial institutions in this group are sound in every respect and generally have
components rated 1 or 2. Any weaknesses are minor and can be handled in a routine
manner by the board of directors and management. These financial institutions are the
most capable of withstanding the vagaries of business conditions and are resistant to
outside influences such as economic instability in their trade area. These financial
institutions are in substantial compliance with laws and regulations. As a result, these
financial institutions exhibit the strongest performance and risk management practices
relative to the institution's size, complexity, and risk profile, and give no cause for
supervisory concern. - ✔️✔️Composite 1
Financial institutions in this group are fundamentally sound. For a financial institution to
receive this rating, generally no component rating should be more severe than 3. Only
moderate weaknesses are present and are well within the board of directors' and
management's capabilities and willingness to correct. These financial institutions are
stable and are capable of withstanding business fluctuations. These financial institutions
are in substantial compliance with laws and regulations. Overall risk management
practices are satisfactory relative to the institution's size, complexity, and risk profile.
There are no material supervisory concerns and, as a result, the supervisory response
is informal and limited. - ✔️✔️Composite 2
Financial institutions in this group exhibit some degree of supervisory concern in one or
more of the component areas. These financial institutions exhibit a combination of
weaknesses that may range from moderate to severe; however, the magnitude of the
deficiencies generally will not cause a component to be rated more severely than 4.
Management may lack the ability or willingness to effectively address weaknesses
within appropriate time frames. Financial institutions in this group generally are less
capable of withstanding business fluctuations and are more vulnerable to outside
influences than those institutions rated a composite 1 or 2. Additionally, these financial
institutions may be in significant noncompliance with laws and regulations. Risk
management practices may be less than satisfactory relative to the institution's size,
, complexity, and risk profile. These financial institutions require more than normal -
✔️✔️Composite 3
Financial institutions in this group generally exhibit unsafe and unsound practices or
conditions. There are serious financial or managerial deficiencies that result in
unsatisfactory performance. The problems range from severe to critically deficient. The
weaknesses and problems are not being satisfactorily addressed or resolved by the
board of directors and management. Financial institutions in this group generally are not
capable of withstanding business fluctuations. There may be significant noncompliance
with laws and regulations. Risk management practices are generally unacceptable
relative to the institution's size, complexity, and risk profile. Close supervisory attention
is required, which means, in most cases, formal enforcement action is necessary to
address the problems. Institutions in this group pose a risk to the deposit insurance
fund. Failure is a distinct possibility if the problems and weaknesses a -
✔️✔️Composite 4
Financial institutions in this group exhibit extremely unsafe and unsound practices or
conditions; exhibit a critically deficient performance; often contain inadequate risk
management practices relative to the institution's size, complexity, and risk profile; and
are of the greatest supervisory concern. The volume and severity of problems are
beyond management's ability or willingness to control or correct. Immediate outside
financial or other assistance is needed in order for the financial institution to be viable.
Ongoing supervisory attention is necessary. Institutions in this group pose a significant
risk to the deposit insurance fund and failure is highly probable. - ✔️✔️Composite 5
Rating: Strong Capital Level Relative to the Institutions risk profile - ✔️✔️Capital -1
Rating: Satisfactory capital level relative to the financial institutions risk profile -
✔️✔️Capital-2
Rating: Less than satisfactory level of capital that does not fully support the institutions
risk profile. The rating indicates a need for improvement, even if the institution's capital
level exceeds minimum regulatory and statutory requirements - ✔️✔️capital-3
Rating: a deficient level of capital. In light of the institution's risk profile, viability of the
institution may be threatened. Assistance from shareholders or other external sources
of financial support my be required. - ✔️✔️Capital-4
Rating: critically deficient level of capital such that the institution's viability is threatened.
Immediate assistance from shareholders or other external sources of financial support
is required. - ✔️✔️Capital-5
Rating: Strong asset quality and credit administration practices, identified weaknesses
are minor in nature and risk exposure is modest in relation to capital protection and
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