trust

Question 1

Major functions of a trust department….

Answer 1

1. trust administration 2. asset management (investment mgmt) 3. operations 4. internal controls & audits 5. compliance

Question 2

Governing document explicity stating the trustee’s duties and responsibilities

Answer 2

Trust Agreement

Question 3

These assets must be segregated from the bank’s assets?

Answer 3

Trust Assets

Question 4

Trust Departments use this accounting method?

Answer 4

Single entry accounting

Question 5

Trust Departments losses are charged directly against?

Answer 5

Earnings

Question 6

Banks with fiduciary powers are required to file what call report schedule?

Answer 6

RC-T Quarterly, if bank has fiduciary assets of $250MM or gross fiduciary income of 10% of revenue All other banks with fiduciary powers, annually.

Question 7

Trust Rating System (MOECA)

Answer 7

Management; Operations, Internal Controls, Auditing; Earnings, Compliance, Asset Management

Question 8

Fiduciary Duties

Answer 8

1. Duty of undivided loyalty to beneficiaries of the acct. 2. Duty to comply w/governing document/trust agreement 3. Duty to keep and render accountings 4. Duty of prudence 5. Duty to deal impartially with the beneficiaries.

Question 9

One of the primary business risks associated with a bank providing fiduciary services

Answer 9

reputational

Question 10

Prudent investor rule - (aka Modern Portfolio Theory”)

Answer 10

A trustee must first determine the needs and investment objectives of the beneficiaries. Recognizes diversification and places less emphasis on individual asset performance. Accepts risk as unavoidable.

Question 11

The most fundamental duty of a trustee

Answer 11

undivided loyalty to trust beneficiaries

Question 12

Subsidiaries permitted to underwrite and deal in limited amounts of corporate and other securities not eligible for banks?

Answer 12

Section 20 Subsidiaries

Question 13

These are not insured by federal deposit insurance?

Answer 13

Non-Deposit Investment Products