FDIC RMS Manual Section 3.2 UPDATED ACTUAL Questions
and CORRECT Answers
Estimated Credit Loss An estimate of the current amount of the loan and lease portfolio that is not likely
to be collected.
ASC 310 (FAS 114) Guidance in establishing reserves for impaired credits that are reviewed
individually.
ASC 450 (FAS 5) Guidance that addresses the accounting for impairment for groups of loans.
Layering Recording the inappropriate practice of recording in the ALLL more than one
amount for the same probable loss.
Account Receivable Financing Commercial lending in which borrowers assign their interests in accounts
receivable to the lender as collateral.
Leveraged Lending No set definition but commonly described as:
Proceeds used for buyouts
Total Debt/EBITDA = 4.0x
Senior Debt/EBITDA = 3.0x
Borrower with High debt-to-net-worth
Or borrower's other debt ratios exceeds industry norms
Oil and Gas Lending Should have detailed report reviewing the Pricing, Discount Factors, and Timing of
the potential RBL agreement.
Part 365 Real Estate Lending Standards
LTV for Raw Land 65 percent
LTV for Land Development 75 percent
LTV for Commercial, multi-family, and other non- 80 percent
residential construction
LTV for 1-4 family construction 85 percent
LTV for improved land 85 percent
LTV for 1-4 family residential None
Part 365 LTV Exception Tracking List Total Limit 100% of Total Capital
Part 365 LTV Exception Tracking List Non 1-4 Limit 30% of Total Capital
and CORRECT Answers
Estimated Credit Loss An estimate of the current amount of the loan and lease portfolio that is not likely
to be collected.
ASC 310 (FAS 114) Guidance in establishing reserves for impaired credits that are reviewed
individually.
ASC 450 (FAS 5) Guidance that addresses the accounting for impairment for groups of loans.
Layering Recording the inappropriate practice of recording in the ALLL more than one
amount for the same probable loss.
Account Receivable Financing Commercial lending in which borrowers assign their interests in accounts
receivable to the lender as collateral.
Leveraged Lending No set definition but commonly described as:
Proceeds used for buyouts
Total Debt/EBITDA = 4.0x
Senior Debt/EBITDA = 3.0x
Borrower with High debt-to-net-worth
Or borrower's other debt ratios exceeds industry norms
Oil and Gas Lending Should have detailed report reviewing the Pricing, Discount Factors, and Timing of
the potential RBL agreement.
Part 365 Real Estate Lending Standards
LTV for Raw Land 65 percent
LTV for Land Development 75 percent
LTV for Commercial, multi-family, and other non- 80 percent
residential construction
LTV for 1-4 family construction 85 percent
LTV for improved land 85 percent
LTV for 1-4 family residential None
Part 365 LTV Exception Tracking List Total Limit 100% of Total Capital
Part 365 LTV Exception Tracking List Non 1-4 Limit 30% of Total Capital
