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UCE Regs and Bulletins > UCE Regs and Bulletins > Flashcards

UCE Regs and Bulletins Flashcards

1
Q

Commercial ag multi family and nonresidential SLTV exceptions in aggregate should not exceed what limit of capital?

A

30%

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2
Q

Can a FSA own and operate a financial subsidiary?

A

No

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3
Q

How can a bank cure a Reg O violation?

A

Sell all or part of the loan, Require director to reduce or pay-off note, ask insider to move to market terms

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4
Q

How often must an FSA meet the HOLA/QTL tests?

A

9 of last 12 months.

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5
Q

What RWA category are GSEs?

A

20%

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6
Q

Why do we need to improve our audit program? What good will that do us?

A

An effective internal audit program tests the controls that are in place to ensure accurate financial reporting, prevent fraud, and maintain operational efficiency. They also ensure compliance with bank policies and laws and regulations.

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7
Q

If a loan is secured by livestock and exceeds the general combined limit, what must the LTV be?

A

115% of loan at all times

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8
Q

Banks requesting an appeal must file their appeal within what time frame?

A

60 days of receipt of the final written agency decision in dispute

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9
Q

What are the legal lending limits for a loan secure by livestock

A

10% additional to combined general limit (35%)

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10
Q

If a bank falls below capital minimums, how soon must they submit written capital plan?

60
45
30
15

A

60 days

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11
Q

Tier 2 capital includes?

A 
1.25 percent of ALLL
Long term preferred stock
Convertible preferred stock
Capital instruments
Subordinated debt instruments (50% of tier 1 limit)
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12
Q

What loans are not subject to lending limits

A 
Commercial paper
Bankers acceptances
US obligations
Guarantees by Federal agencies 
Loans to or guaranteed by general obligations of a state
Loans secured by Segregated deposit accounts 
Loans financing govt securities 
Leasing companies 
Intraday credit exposures
Industrial development authorities
Student loan marketing association
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13
Q

What percent of portfolio assets is required by the QTL test?

A

65%

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14
Q

When does a a legal lending limit violation occur?

A

At origination. If it exceeds LLL at any other point in time it is then in nonconformance.

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15
Q

How do OCC fees change for 3,4, and 5 rated banks

A

Additional 50% for 3

Additional 100% for 4 and 5

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16
Q

What types of loans have additional legal lending limits

A

Stock loans

Livestock loans

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17
Q

How are off balance sheet items risk weighted for capital?

A

0% for portion that is unconditionally cancellable

20% for commitment with maturity of 1 year or less

50% for maturity greater than 1 year

100% for guarantees, standby letters of credit, repurchase agreements

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18
Q

Which of the following is an agency account?

Custody account TD
Investment advisory account
Investment management account
An estate

A

Estate

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19
Q

What are the liquidity requirements of Reg F?

A

Bank must limit overnight credit exposure to any individual correspondent insured institution to no more than 25 % of total capital unless it can demonstrate that the correspondent is adequately capitalized

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20
Q

How soon must a bank provide notice when a material capital event has occurred?

A

15 days

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21
Q

How do you calculate Tier 1 risk based ratio?

A

Common stock
Surplus
Undivided profits

Divided by RWA

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22
Q

FSA Directors are required to be US Citizens

A

No

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23
Q

Reliance on wholesale funding. Ratio and definition

A

Portion of banks capital funds that are from wholesale sources.

Total borrowings/borrowings and total deposits

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24
Q

What is the journal entry for OREO declines?

A

debit other noninterest expense, credit to OREO valuation allowance (or just OREO if no allowance).

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25
Q

If a bank disagrees with appeal decision, how soon must they file 2nd tier decision

A

15 days from receiving decision letter

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26
Q 
Which of the following is not a component of non interest income:
Fees on fiduciary accounts
Service fees on commercial loans
Trading fees and commissions 
Deposit service charges
A

Service fees on commercial loans

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27
Q

What is a “transaction when considering a SARS

A

Deposit, withdrawal, transfer between acts, exchange of currency, extension of credit, purchase or sale of stock/bond, or any other payment by or to bank

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28
Q

When can a loan be extended to an executive officer in any amount?

A

For education for children, refi or purchase home, if secured by 1st lien on primary residence, or if the extension is secured by govt bonds, CDs, or Treasury Bills/deposit account

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29
Q

The Deputy Comptroller will issue an appeal decision letter within how any days?

A

45

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30
Q

A/R Days on Hand

A

Accounts Receivable/ Sales * days in period

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31
Q

Type of bankruptcy for corporations to remain in operation while being sheltered from some of its debts

A

Chapter 11

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32
Q

When are we required to get an appraisal?

A
  • Residential real estate transaction over $400M
  • business loan over $1MM
  • commercial real estate transaction over $500M
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33
Q

What is the limit an institution can invest in securities based on reliable estimates?

A

5% of equity capital

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34
Q

Bank shall notify SO at least xxx days before implementing a development or improvement plan for Oreo that has an estimated cost plus the recorded investment amount, in excess of xx percent of capital

A

30 days, 10%

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35
Q

How is CRA frequency determined?

A

Banks under $250MM
Outstanding rating -not before 60 months
Satisfactory -maximum 63 months
Needs to improve maximum 48 months

Over $250MM
Fewer than 30 RAs - maximum 36 months
More than 30 RAs - maximum 48months

Includes scheduling window, and deferral period

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36
Q

3 tests for CRA

A

Lending, service, investment

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37
Q

What regulation governs FSA asset classification?

A

12 CFR 160.160

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38
Q

We may move our banking headquarters to the OREO building. Is this acceptable?

A

Yes, the property must be purchase for future expansion and a Board resolution must be documented within 1 year of acquisition.

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39
Q

When can a bank pay dividends despite capital not equal Libby surplus?

A

When 10% of net income is transferred to surplus

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40
Q

What are the 5 BSA pillars?

A 
BSA Officer
Internal controls
Independent testing 
Training 
Beneficial Ownership
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41
Q

True or False

The OCC can can require higher minimum capital ratios for individuals banks if deemed appropriate?

A

True

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42
Q

When does a loan go on nonaccrual

A

When full collection of principle and interest is in doubt OR the loan is 90+ days past due and not in the process of collection

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43
Q

How many times can a FSA requalify as a QTL

A

Once

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44
Q

Definition: Arises when a bank or a bank’s customer has the RIGHT to alter the level and timing of the cash flows of an asset, liability, or off-balance sheet instrument.

A

Options Risk

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45
Q

What do qualitative factors mean in the ALLL?

A

The ALLL guidance requires that in addition to reserving for impaired loans, you also include amounts for estimated credit losses so that inherent risk in the portfolio is accounted for.

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46
Q

What is BC 181

A

Bank Circular 181, and outlines controls for the purchase of loans and participations.

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47
Q

What are the two legal lending limit combination rules?

A

Direct Benefit and Common Enterprise.

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48
Q

A bank may not declare a dividend unless capital surplus is equal to or greater than capital stock?
T or F

A

True

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49
Q

What is the definition of a special mention loan?

A

A special mention asset has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects at some future date.

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50
Q

What regulation addresses FSA vs NB OREO

A

12 CFR 34 NB

12 CFR 167

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51
Q

What is the discount window?

A

Federal reserve backup of short term funds (usually overnight)

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52
Q

What RWA category are conditional exposures to the US Government

A

20%

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53
Q

What should you ask if there are multiple loans/collateral?

A

Is the loan cross collateralized?

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54
Q

Interlocking relationships of management officials of various non affiliated depository institutions is prohibited except for these 4 instances

A

Institutions in low income areas or that are controlled by monitory groups or women

Newly charged institutions

Institutions in deteriorating conditions

Institutions sponsoring a credit union

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55
Q

What are the five steps for the OCC to increase capital minimum?

A 
Notice,
response 
Decision
Submission of plan
Change in circumstances
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56
Q

How much can an FSA expense on OREO? NB?

A

NB -10% of capital on property

FSA - lending limit

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57
Q

When is a CTR required

A

Cash transaction over $10,000

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58
Q

What are exempt from TRID disclosures?

A

HELOCS
reverse mortgages
Chattel-dwelling loans (secured by mobile home or dwelling not real property ie land)
Final rule also exempts creditors who make five or fewer mortgage loans in a year

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59
Q

Do National Banks and FSAs have to be a member of the Federal Reserve System?

A

NB are required

FSA cannot be

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60
Q

What assets are included in the 50% risk weighting category?

A

Revenue bonds
Public sector OECD bonds
Credit equivalent IRR and exchange swaps and contracts
Assets secured by 1-4 family mortgage that are current
1-4 family construction that have been president with written sales contracts
Multi family loans
Privately issued mbs not guaranteed by govt -must be fully secured or represent sufficiently secure interest in mortgages that qualify for 50% weighting

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61
Q

Inventory Days on Hand

A

Inventory/COGS * days in period

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62
Q

IRR FAQ Bulletin

A

2012-5

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63
Q

Can we obtain an appraisal from another bank?

A

Yes, but not the borrower. The appraisal must be reviewed as you would have any other appraisal reviewed.

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64
Q

The loan is paying as agreed, why is it on nonaccrual?

A

Making scheduled payments are only one test for determining nonaccrual. A loan should be placed on nonaccrual if the collection of Principle and Interest is in doubt.

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65
Q

What are the PCA capital minimums?

A

Total RBC- 10%
Tier 1 RBC - 8%
CET1 - 6.5%
Tier 1 Leverage - 5%

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66
Q

What are the requirements of BC 181?

A

Written lending policy governing these transactions, and independent credit analysis, agreement by the obligor to make full credit information available to the selling bank, written documentation of recourse arrangements outlining the rights and obligations of each party.

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67
Q

What regulation addresses insider conflicts of interest at an FSA

A

12 CFR 163

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68
Q

Why should a bank require a resting period on a LOC?

A

Typically, banks require a resting period on a seasonal LOC, typically at the low point of a season. Not always required for non seasonal or high growth industries. Especially if high working capital needs

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69
Q

How do you calculate leverage ratio?

A

Common stock
Surplus
Undivided profits

Divided by adjusted total assets

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70
Q

OCC is required to refer cases to the DOJ when

A

A pattern or practice of violations of the ECOA

isolated instances of the FHA

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71
Q

What can prevent a bank from being well capitalized despite appropriate ratios?

A

Formal agreement, C&D, capital directive

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72
Q

What does duration of a bond attempt to measure?

A

Time span over which the yield on a bond is a valid measure of the average growth rateof value

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73
Q

What must be met for a bank to use the DBLA test

A

FSA must meet a business operations test and 60% of assets test

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74
Q

What is the dollar cap and time cap for overdrafts to insiders?

A

$1,000 and 5 business days

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75
Q

Type II Investments limits

A

10%

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76
Q

When can I put a loan back on accrual status?

A

A loan can be restored to accrual status when none of it’s principle and interest due is unpaid, and the bank expects repayment of the remaining contractual interest and principle.

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77
Q

12 USC 84 includes what types of livestock

A

Fish, cattle, horses, goats, hens, turkeys, sheep

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78
Q

How do you determine what the classification amount is on an A/R loan?

A

Classified amount is equal to the actual collateral value, not the borrowing base formula.

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79
Q

what bulletin outlines classification guidance for Investment Securities

A

2013-28

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80
Q

Which is not a component of no interest income?

A

Service fees on commercial loans
Trading fees
Fees on fiduciary accounts
Deposit service charges

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81
Q

Tier 1 capital includes

A 
Common stock
Surplus
Undivided profits
Capital reserves
-net gains/losses AFS
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82
Q

How do you calculate investment in bank premises?

A

Land
Building
Capital leases
Leasehold improvements

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83
Q

What are the Reg O Limits for executive officers?

A

the Higher of 2.5 percent of Tier 1 + ALL or $25,000; but never over $100,000.

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84
Q

What may a bank appeal to the ombudsman

A 
Examination ratings
Adequacy or ALLL
Individual loan ratings 
VOL
SNCs
Fair lending decisions 
Licensing decisions
MRAs, enforcement actions, or material conclusions in ROE
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85
Q

How should a bank record repossessed assets?

A

Other assets

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86
Q

Why do we need a Capital Plan?

A

A Capital Plan is a document and tool to guide management and the Board in ensuring the capital levels can support current/anticipated operations and risk levels. It is also a document that should outline ways to accrete capital if necessary,. A good capital plan will include triggers/levels for considering alternative sources of capital.

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87
Q

Type 2 Securities:
A- us treasuries, general obligation bonds, municipal bonds, GNMA, FHLMC

B- Housing binds, university or dormitory bonds, municipal special revenue bonds,

C- corporate bonds, foreign govt bonds, asset backed securities

A

B

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88
Q

What RWA are revenue obligation bonds?

A

50%

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89
Q

An operating subsidiary means the bank controls what percentage?

A

51%

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90
Q

What are the four types of informal enforcment actions

A

Commitment Letter
Memorandum of Understanding
Individual minimum capital ratio

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91
Q

Entry for transferring OREO

A

Debit OREO
Debit ALLL

Credit Loans

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92
Q

What type of external audit opinion states that financials statements are correct except for or subject to

A

Qualified

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93
Q

What two tests must an FSA meet?

A

HOLA or QTL

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94
Q

Why do I need a formal Contingency Funding Plan?

A

The CFP is a tool to ensure that a bank has planned for a liquidity crisis and how to obtain additional funding. A good CFP includes liquidity triggers/stressors (short-long term), asset and liability contingent sources, responsibilities.

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95
Q

What four areas do you look for during IT

A

Data avaialabilty
Data confidentiality
Data integrity, and It management

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96
Q

How should the carrying value over market value of a sub investment grade security be classified

A

Doubtful

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97
Q

When transferring securities HTM to AFS how should the unrealized gain or loss be recognized?

A

Amortized as an adjustment to the bonds yield over the remaining life of the security in a separate component of equity

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98
Q

Net Loans to deposit ratio shows:

A

Measure the extent to which a banks deposit structure funds the loan portfolio. High or increasing ratio indicates high reliance on nondeposit sources to fund the loan portfolio

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99
Q

When can a bank lend, in aggregate, over 100% of capital to insiders?

A

Banks with less than 100MM in total DEPOSITS can lend 200%

Board approval
Board resolution
Regulatory capital requirements must be met
2 rated or better

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100
Q

How should a bank manage CRE concentrations

A

The Board and management should develop a strategic plan that includes lending limits, contingencies for reducing CRE exposure if necessary, MIS to monitor property, market analysis, stress testing, and credit risk review.

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101
Q

What are the standards established in 12 CFR 30

A 
Internal controls and information systems
Internal audit
Loan documentation 
Credit underwriting
IRR exposure
Asset growth 
Asset quality 
Earnings 
Compensation fees and benefits
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102
Q

Is the president required to be on the Board of an FSA

A

No

103
Q

Subchapter S corp benefits

A

No federal and possibly no state income taxes

104
Q

What is the purpose of a loan review function?

A

Loan review is important so the bank receives an independent review of the risks in the portfolio. It will allow the bank to detect deficiencies and limit risk of loss, and can help identify and limit collateral and financial exception issues.

105
Q

How soon must a capital restoration plan be filed

A

45 days from when the bank receives note they are undercaptilized

106
Q

Banks can underwrite and deal type 3 securities? True or false

A

False

107
Q

Delta gamma Vega kappa theta are instances of what risk

A

Options risk

108
Q

Where can I find guidance on a good loan review?

A

Can be found in OCC Bulletin 2006-47, Attachment 1

109
Q

Can a FSA make a loan to an affiliate?

A

No, unless Federal Reserve has determine it permissilbe

110
Q

What regulation addresses insider deposit rules?

A

12 usc 367

111
Q

How long must fiduciary account records be retained per 12 CFR 9

A

3 years

112
Q

The aggregate amount of covered transactions with ALL affiliates is limited to what % of member bank capital

A

20%

113
Q

What happens if we are not well-capitalized?

A

Undercapitalized banks are subject to restrictions on asset growth, acquisitions, or new branches. May be restricted on deposit interest rate pricing and access to brokered deposits and other sources of wholesale funding.

114
Q

12 CFR 34

A

Appraisal Guidance

115
Q

Type III Investments limits

A

10%

116
Q

What are the figures you should use to determine the debt service for A/R line or if annual payment is given

A

Interest expense + CPLTD

117
Q

What regulation establishes a trust audit committee for NB and FSAs (2)

A

12 CFR 9

12 CFR 150 FSA

118
Q

What can the occ do if a bank is under capitalized or worse

A 
Restrict dividend payments 
Require occ monitoring 
Capital restoration plan
Restrict growth
Restrict compensation to senior officers if significantly under capitalized
119
Q

Who is eligible for the discount window?

A

Institutions rated 1,2,3, at least adequately capitalized

120
Q

Definition: differences between the timing of rate changes and the timing of cash flows that occur in the pricing and maturity of a bank’s assets, liabilities and off-balance sheet instruments. Assets reprice differently than liabilities

A

Repricing Risk

121
Q

How are we supposed to know what to complete for investment pre-purchase analysis?

A

OCC Bulletin 2012-18.

122
Q

Key elements of effective liquidity risk management processes?

A 
Funds management MIS
RISK LIMITS
internal controls 
Management and Board reports
CFP
123
Q

RWA category for FHLB equity exposure?

A

20%

124
Q

How should we be recognizing changes in OREO value?

A

OREO should be accounted for at the lower of the loan value or the market value of the property, less costs to sell. Initial write-downs should be taken from the ALLL when moved to OREO, but after the initial transfer, any declines should be charged through the current period earnings. This is because OREO is not a loan.

125
Q

What deductions are made from Tier 1 capital before calculating Tier 2?

A

Goodwill
Intangible assets
Deferred tax assets
Credit enhancing interest only strips

126
Q

What are the basic Reg O guidance and limits?

A

No bank may extend to any insider that, when aggregated, exceeds the higher of $25,000 or 5 percent Tier 1 Capital + ALLL unless it as been approved in advance by the Board and the party in question has abstained.

127
Q

A/P Days on Hand

A

AP/COGS * days in period

128
Q

What assets are included in the 0% risk weighting category?

A 
Cash
Gold
Unconditional US guarantee
Us govt agency securities
Due from
Book value of federal reserve stock 
Portion of assess collateralized by cash or govt securities
129
Q

What is the minimum percentage of voting stock a shareholder must own to be considered a principal shareholder

A

10%

130
Q

What constitutes an insider under 12 CFR 215

A

Executive officer
Director
Principle shareholder
And includes any related interest of such person

131
Q

DBLA requires:

A

public hold 75% of FSAs deposits/share/and other obligations

more than 75% of gross income consists of interest on loans and government obligation

60% of assets that FSAs normally hold

132
Q

When can a bank make a dividend even if capital surplus is less than capital stock?

A

Bank can declare annual dividend if the bank transfers 10% of its net income to capital surplus for the preceding 4 quarters

133
Q

State and local govt general obligation bonds FSA investment limit

A

No limit

134
Q

Type 1 Securities:
A- us treasuries, general obligation bonds, municipal bonds, GNMA, FHLMC

B- Housing binds, university or dormitory bonds, municipal special revenue bonds,

C- corporate bonds, foreign govt bonds, asset backed securities

A

A

135
Q

For a house under construction which can a bank capitalize

Lawn maintenance
Realtor fees
Real estate taxes to obtain title
Construction completion costs
Attorney fees for foreclosure
A

Construction costs

136
Q

When the OCC issues a capital directive, how soon must the bank respond

A

30

137
Q

How often does 12 CFR 9 require an audit of trust activities

A

Annually

138
Q

Definition: a shift in the relationship of the rates in different markets or on different financial instruments. Market rates for different financial instruments, or the indices used to price assets and liabilities, change at different times or by different amounts.

A

Basis Risk

139
Q

What is the legal lending limit

A

The legal lending limit is equal to 15% of a bank’s Tier 1 Capital plus the ALLL. A bank may extend up to an additional 10% (total of 25%) if the additional 10% is secured by readily marketable collateral (cash, metals).

140
Q

What accounting entry is required to place a loan on non accrual?

A

Debit interest income

Credit accrued interest

141
Q

How much Tier 2 capital can be included in RWA calculation

A

Not in excess of tier 1

142
Q

What does it mean if an asset is well secured and in the process of collection?

A

An asset is well-secured if the collateral value is sufficient to cover the debt and accrued interest. In the process of collection means that the bank has taken action to begin collection efforts that will conclude in 60 days.

143
Q

What are the other outside director limitations for FSAs?

A

No more than one director from a single law firm

144
Q

What is the maximum number of directors at an FSA

A

15

145
Q

RWA for loans to builders secured by 1-4 family properties presold under contracts?

A

50% if all criteria is met

100% if contract is cancelled.

146
Q

When increasing capital stock, what shareholder approval ratio is required

A

2/3

147
Q

Is the President required to be the Chairman on the Board at a NB?

A

No

148
Q

What decisions are appealed to the ombudsman?

A 
Appeals filed directly with him 
2nd tier deputy comptroller decisions 
Sncs 
Fair lending determinations 
Licensing decisions
149
Q

Definition: Variations in the movement of interest rates across the maturity spectrum. Involves changes in the relationship between interest rates of different maturities of the same index or market

A

Yield Curve Risk

150
Q

Banks must invest xxx in federal reserve stock

A

At least 6% of capital and surplus

151
Q

What RWA are debt exposures to us depository institutions

A

20%

152
Q

What is the maximum a bank can extend to a director without prior Board approval?

A

$500,000. This is the limit if 5% of capital and surplus is over $500,000.

153
Q

What regulation governs FSA Investment securities

A

12 CFR 160

154
Q

Where can I find Regulation O

A

12 CFR 215

155
Q

What RWA are general obligation bonds

A

20%

156
Q

Commercial Paper and Corporate Debt security limits for FSAs?

A

35% of total assets. s

157
Q

Can a bank appeal an enforcement action to the ombudsman

A

Formal yes

Informal no

158
Q

Are there any family limitations on FSA Board composition?

A

No more than two directors from the same family

159
Q

Every director of a national bank must own in his or her own right shares of the capital stock of the bank. How much do they need to own?

A

Aggregate fair market value of $1,000

160
Q

Your home toolkit disclosure includes all of the following except?

A description of costs associated with settlement
Explanation of the nature and purpose of escrow
Information regarding loan estimate disclosure
Same and explanation of HUD1 form

A

Same of HUD1 form

161
Q

Our budget is our strategic plan. Is that okay?

A

The budget is primarily a shorter-term goal that translates to your longer term strategy. The two should coincide, but the budget should be focused on calendar year or sooner.

162
Q

What guidance outlines our investment purchase limits?

A

12 CFR 1

163
Q

How soon must a Deputy comptroller respond in writing to accept the appeal

A

7 days

164
Q

What makes a bank eligible for an 18 month cycle?

A 
Less than $3b in assets
Well capitalized
1 or 2 in all camel areas and composite
No formal enforcement action or order
No person acquired control in last 12 months
165
Q

How do you calculate the efficiency ratio?

A

Total overhead expense expressed as a percentage of Net interest income +noninterest income.

166
Q

What bulletin outlines guidance for CRE concentration risk? management? What are the thresholds?

A

OCC Bulletin 2006-46. Applies to bank’s with over 100% in land development and total CRE @ 300% AND the CRE portfolio has increased 50% over last 3 years. Not a limit, just have to be approaching threshold for it to apply

167
Q

When must a bank have an audit committee consisting entirely of outside directors

A

Greater than $500m in assets

168
Q

To file a HMDA LAR a bank needs to have:

A

Assets greater than $10MM

Originate one home purchase loan

169
Q

What discrimination standards does ECOA include?

A 
Race
Color
Religion
National origin
Sex
Marital status
Public assistance status
Age
170
Q

Who appoints new director to fill vacancy until next election?

A

Remaining board members

171
Q

What are the three restrictions for paying dividends under 12 USC 56

A

Can not withdraw any portion of capital

Dividends cannot be made if losses equal or exceed undivided profits on hand

Dividends cannot be exceed undivided profits

172
Q

What type of audit opinion states that financials are not presented fairly

A

Adverse

173
Q

What Bulletin establishes liquidity risk management guidelines

A

OCC Bulletin 2010-13

174
Q

What are the minimums of an adequately capitalized bank by PCA guidelines?

A

Total 8%
Tier 1 6%
CET1 4.5%
Leverage 4%

175
Q

Type I Investments limits

A

Unlimited

176
Q

What is the primary purpose of of internal audit

A

Evaluate the adequacy effectiveness and efficiency of the systems of controls and the quality of ongoing operations

177
Q

How much can a bank lend if the loan is secured by discount installment paper

A

10% in additional to the banks combined general limit (35%)

178
Q

Minimum number of employees at a bank service company

A

1

179
Q

Bulletin for Model risk management

A

2011-12

180
Q

XXXXX recourse exists when an institution provide a credit enhancement beyond the provisions contained in a sale agreement

Implicit
No
Residual
Normal

A

Implicit

181
Q

What two categories of assets are in the QTL test

A

includable without limit, and assets limited to 20% of portfolio assets

182
Q

What are the 5 types of Formal Enforcment actions

A 
Cease and desist 
Capital directive 
PCA directive 
12 car 30 safety and soundness order
CMP
183
Q

What is Common Enterprise?

A

When the expected source of repayment for loans at a bank is the same for each borrower, and neither borrower has another source of income from which the loan may be fully repaid. Also when borrower who are directly or indirectly related and financial interdependence exists (when 50% or more of one borrowers gross receipts are derived from transactions with another).

184
Q

Who cannot serve as a shareholder proxy?

A

Officer, clerk, teller, or bookkeeper

185
Q

What regulation addresses insider deposit rules?

A

12 usc 367

186
Q

Bulletin for IA advisory on IRR management

A

2010-1

187
Q

Income accounts are increased by what accounting entry

A

Credit

188
Q

What is duration

A

Measure of price sensitivity of a fixed income investment to a change in interest rates

189
Q

How can lower required minimums be established?

A

Formal Agreement
C&D Order
IMCR

190
Q

What does our AQ rating have to do with earnings?

A

Inadequately management levels of credit risk may result in further loan losses, inadequate allowance calculations can lead to further provisions, and they both can lead to higher operational expenses to workout loans.

191
Q

What is the Director Liability on a legal lending limit violation?

A

Directors are liable for the full balance of the loan until it is paid to zero.

192
Q

When should open and closed end retail loans be charged off

A

Closed - 120 days past due
Open- 180 days past due
90 days substandard

193
Q

what is conflict of interest disclosure procedures for FSA Directors

A

Disclose nonprivileged information
the existence nature and extent of COI

refrain from participating in discussion of the matter

recuse from voting

194
Q

Aggregate limit of LTV exceptions

A

100%

195
Q

What are FSA commercial loan limits?

A

20% of total assets

196
Q

How do we fix this appraisal Violation?

A

The appraisal violation is not cured by getting an appraisal. Although you should validate your collateral position.

197
Q

What is 12 CFR 3

A

Capital Adequacy Guidelines

198
Q

Expense accounts are increased by what accounting entry

A

Debit

199
Q

What are the equity requirements for an FSA Director?

A

Not required to be a stockholder unless bylaws require it.

200
Q

Accounting entry for nonaccrual?

A

Debit interest income/credit accrued interest

201
Q

If a portion of a relationship is placed on nonaccrual, does the entire relationship need to be on nonaccrual?

A

If a portion is placed on Nonaccrual the entire loan needs to be place on nonaccrual.

202
Q

What are the Regulatory Capital Minimums?

A 
12 CFR 3:
Total RBC - 8%
Tier 1 RBC - 6%
CET1 - 4.5%
Leverage - 4%
203
Q

Corporate exposures RWA category

A

100%

204
Q

Which are GSES

FNMA
FREDDIE MAC
FHA
GNMA
SALLIE MAE
HUD
FHLB
A

FNMA
FREDDIE
SALLIE
FHLB

205
Q

What do I do about this legal lending limit violation?

A

Sell all or part of loan, or raise additional capital

206
Q

four bullets for Strategic Planning MRA

A
  • strategic goals and objectives to be accomplished
  • identification of bank personnel responsible and accountable for achieving each goal and objective
  • evaluation of internal operations, staffing requirements, board and management MIS, and succession program
  • system to monitor progress in meeting the strategic objectives
207
Q

HVCRE RWA category

A

150%

208
Q

Why do we need a succession plan?

A

It is the Board’s responsibility to ensure the bank maintains sufficient, competent staff. The plan should identify key management positions and replacement strategies. These can include training and promoting within, or hiring from outside.

209
Q

How long can we hold an OREO property?

A

The bank can hold an OREO property for no more than 5 years. The bank can request an extension of up to 5 years from the OCC if they can demonstrate good faith efforts to sell the property.

210
Q

When should a bank file a SAR

A

Criminal violations involving insider abuse

Criminal violations aggregating $5,000 or more when’s suspect can be identified

Criminal violations of $25,000 or more regardless of potential suspect

Transactions aggregating $5,000 or more that may involve potential money laundering, is designed to evade BSA regulations, is not they type of transaction the customer would be expected to engage in.

211
Q

When should we get a new appraisal on an OREO property?

A

Upon transfer to OREO the bank should obtain an appraisal or appropriate evaluation,

212
Q

What are the three ways to determine MBS risk weighting?

A

Simplified Supervisory formula approach

Gross up approach

1,250 percent risk weight approach

213
Q

What is the assets limit require 12 CFR 363 reporting/audit?

A

$500mil

214
Q

FSA nonresidential real property loan limits?

A

400% of capital

215
Q

If losses equal to or exceeding ______ have at any time been sustained, no dividend shall be paid

A

Undivided profits then on hand

216
Q

Net noncore funding dependence. Ratio and definition

A

Noncore liabilities-short term investments/ long term assets

Degree of reliance on noncore liabilities to fund earning assets. Riskier funding

217
Q

RWA of multi family loans

A

50%

218
Q

What are the 5 rTing components of Trust area

A 
Management 
Operations 
Compliance
Asset mgmt
Earnings of great than 1MM assets
219
Q

If a pool of assets represents more than 1 risk category, how does the bank assign a risk weighting?

A

Bank may assign highest risk weighting the pool is permitted to hold
Or
May assign the asset to different categories. Minimum risk weighting for such an asset is 20%

220
Q

What are the 5 CRA ratings?

A 
Outstanding
High satisfactory 
Low satisfactory 
Low satisfactory 
Needs to improve
Substantial noncompliance
221
Q

Where can I find the capital planning guidance?

A

OCC Bulletin 2018-20 rescinded prior guidance, and incorporated all guidance into the capital handbook.

222
Q

When must a retail loan be charged off?

A

When it becomes 180 days past due. If 90+ days past due and LTV is over 60% it is substandard.

223
Q

What are some common credit administration concerns of A/R Financing?

A
  • Over advances past borrowing base advance rate
  • No collateral inspection
  • No A/R agings
  • Not receiving borrowing base certificates
  • no curtailments, if applicable
224
Q

What is a curtailment? How much should it be?

A

A curtailment is a payment made to the bank for inventory not sold during a given time period. Have seen 10% per month.

225
Q

What is the definition of a Doubtful loan?

A

An asset classified doubtful has all the weaknesses inherent in one classified substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable.

A doubtful assets has a high probability of total or substantial loss, but because of a pending event that may strengthen the assets, the classification of loss is postponed.

226
Q

Liabilities are increased by a debit or credit entry?

A

Credit

227
Q

Which of the following affiliates is not exempt from provisions oof 12 USC 371

Affiliate engaged solely in holding bank premises of the member bank

Affiliate engaged solely in holding fully guaranteed obligations of us gov

Where the affilIte relationship exists as a result of common directors
Where the affiliate relationship exists by virtue of the ownership of control shares in a ficiduary capacity

A

Relationships exists as a result of Common directors

228
Q

Executive officers and shareholders must report their borrowings from correspondent banks. What should be included

A

Maximum amount of debt, terms, and must be filed before January 31 of the following year

229
Q

What RWA category are cash items in the process of collection?

A

0%

230
Q

“we are well capitalized, wh is our capital not rated 1?”

A

PCA guidelines are intended to resolve capital issues at least possible long term cost of the deposit insurance fund. PCA was not created to replace capital adequacy guidelines. The OCC reviews capital adequacy in terms of risks in the institution.

231
Q

When does a call report have to be filed?

A

No later than 30 days after quarter end

232
Q

What bankruptcy allows re organization of debt to allow for payment over 3-5 years?

A

Chapter 13

233
Q

what regulation governs affiliate transactions

A

12 CFR 223

234
Q

Can we capitalize expenditures to improve OREO?

A

Certain expenses can be capitalized if it is to improve the value of the property or ensure a perfect lien interest.

235
Q

What RWA are industrial development bonds?

A

100%

236
Q

12 usc 29a grants what?

A

Provides occ with authority to grant trust powers

237
Q

Asset accounts are increase by a debit or credit entry?

A

Debit

238
Q

What is capital surplus?

A

Capital surplus is retained earnings+ reserves for contingencies+net worth certificates
ALLL
-intangibles
+ mortgage servicing assets
+ mandatory convertible debt (<12 yr maturity)
+ subordinated notes

Limited life preferred stock and subordinated notes must have WAL of 5 years

239
Q

What is the Direct Benefit Combination Rule?

A

Direct benefit exits when the proceeds of a loan or extension of credit to a borrower will be deemed to be used for the direct benefit of another person and will be attributed to the other person when the proceeds are transferred to said person.

240
Q

GSE RWA category?

A

20%

241
Q

Is a commercial letter of credit included in calculation if borrower has exceeded the banks LLL?

A

No

242
Q

What risk weighting are the following assets
Obligations issued by state or local govts repayable by private party

Premises plant equipment and OREO

Investments in unconsolidated subsidiaries

Capital instruments
Stripped MBS

any class if MBS that can absorb principle loss without whole issue being default

A

100%

243
Q

Banks can underwrite Type 1 securities? True or false

A

True

244
Q

FSA municipal revenue bond investment limit

A

10%

245
Q

T or F

All first mortgages and multi family properties carry 50 designation for rwa?

A

False,

90 days pd and nonaccrual TDR are excluded

246
Q

How should a bank treat income earned from a property held as OREO

A

Credit noninterest income

247
Q

What are the components of capital stock?

A

Common stock + unimpaired stock plus preferred stock and unimpaired

248
Q

Can a loan be rebooked after being charged off?

A

No

249
Q

What value should be used to calculate security limits

A

Par Value

250
Q

The aggregate amount of covered transactions with an affiliate is limited to what % of member bank capital

A

10%

251
Q

What happens if an FSA fails to remain a QTL

A

shall not make new investments establish a new branch, or pay dividends - unless this practice is allowable for a National Bank.

If they fail to requalify as a QTL within 3 years, the association shall dispose or disengage from an activity not allowable by NB/FSA

252
Q

Your review of a general obligation bond shows that the bond is in default and the market for these issuances remains unstable. What classification is appropriate?

Book value classified as substandard

Book value classified as doubtful

Book value in excess of market value classified as losss and remainder as doubtful

Market value of securities classified as doubtful

Book value listed as loss

A

Book value classified as doubtful

253
Q

Type of bankruptcy for liquidating assets to pay debt

A

Chapter 7

254
Q

RWA category of past due exposures?

A

150% to portion not secured or guaranteed

100% for 1/4 family 90+ days PD

UCE Regs and Bulletins (1 decks)

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