FDIC TE Prep: Technical Evaluation Study Guide, Practice Questions &
Revision Notes
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. - ANS ✔✔What is included in tier 2 capital?
To ensure public confidence in the banking system and to protect the DIF - ANS ✔✔What is the
purpose of the FDIC conducting bank examinations?
Contact the regional office to discuss with the CM or the ARD - ANS ✔✔What should examiners
do before discussing proposed ratings of a 3 or worse rated bank?
Empower examiners to make thorough examination of the banks affairs - ANS ✔✔Sections
10(b) and 10(c) of the FDI do what?
The quality of management - ANS ✔✔What is often the single most important factor of a
successful operation of an insured institution?
Part 309 of the FDIC rules and regs - ANS ✔✔Examination findings, including the composite and
component ratings, are subject to confidentiality under which regulation/rule?
for any bank newly assigned a CAMELS composite 3 or worse - ANS ✔✔When should an
examination letter be delivered to the CEO/President during an exit meeting?
,every 12 months - ANS ✔✔Under Section 10(d) of the FDI act, how often must insured branches
of foreign banks be examined?
18 months - ANS ✔✔Section 347.211 of the FDIC rule and regs states that domestic branches of
foreign banks can be considered for examination every ___________ months?
6 months - ANS ✔✔Limited scope examinations should be performed how many months after
an enforcement action is issued?
~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 - ANS ✔✔When can examination schedules be extended to
18 months for a state nonmember bank?
The FFEIC to issue guidelines establishing standards for the purpose of determining the
acceptability of state reports of examination. - ANS ✔✔Section 10(D)(9) ofthe FDI act requires
what?
2 weeks - ANS ✔✔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
With the FDIC absorbing 80% of injured losses (up to a stated threshold) and receives 80
percent of recoveries - ANS ✔✔How are shared-loss agreements generally written?
,5 years for losses and 8 years for recoveries - ANS ✔✔How many years are commercial, shared
loss agreements generally cover how many years for losses and recoveries?
10 years for both - ANS ✔✔For residential mortgages, shared losses agreements generally cover
how many years for losses and recoveries?
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%) - ANS ✔✔How should an asset covered
under a shared loss agreement be classified?
All deficiencies and supervisory recommendations that will be cited in the ROE. - ANS
✔✔During an exit meeting, management should be made aware of what?
~36 months or more have elapsed since the last such meeting
~the management component is 3 or worse
~two component ratings are 3 or worse
~or any other CAMEL rating is 4 or 5 - ANS ✔✔When is a board meeting required?
Uniform Interagency Trust Rating System; composites 1-5. - ANS ✔✔What system was devised
to rate a Trust department and what composite ratings are established?
~management
~operations, internal controls, and audits
~earnings
~compliance
~asset management - ANS ✔✔What five critical areas are evaluated in a Trust exam?
, To determine confidentiality, integrity, and availability of records produced my automated
systems - ANS ✔✔What is the primary purposed of an IT exam?
The Uniform rating System for Information Technology (URIST) - ANS ✔✔IT operations are rated
in accordance to?
~Management
~Audit
~Support and Delivery
~development and acquisition - ANS ✔✔What four areas are evaluated in an IT examination?
To ensure U.S. financial institutions maintain appropriate records and file certain reports
involving currency transactions and customers relations. - ANS ✔✔What is the purpose of a BSA
examination?
Section 501(b) of the Gramm-Leach-Bailey Act - ANS ✔✔Examiner information ,may contain
non-public customer information defined by what?
1 examination cycle - ANS ✔✔How long should line sheets be retained
10 years, indefinitely when irregularities are discovered or suspected. - ANS ✔✔How long
should risk management and trust questionnaires be retained?
Composite 1 - ANS ✔✔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
Revision Notes
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. - ANS ✔✔What is included in tier 2 capital?
To ensure public confidence in the banking system and to protect the DIF - ANS ✔✔What is the
purpose of the FDIC conducting bank examinations?
Contact the regional office to discuss with the CM or the ARD - ANS ✔✔What should examiners
do before discussing proposed ratings of a 3 or worse rated bank?
Empower examiners to make thorough examination of the banks affairs - ANS ✔✔Sections
10(b) and 10(c) of the FDI do what?
The quality of management - ANS ✔✔What is often the single most important factor of a
successful operation of an insured institution?
Part 309 of the FDIC rules and regs - ANS ✔✔Examination findings, including the composite and
component ratings, are subject to confidentiality under which regulation/rule?
for any bank newly assigned a CAMELS composite 3 or worse - ANS ✔✔When should an
examination letter be delivered to the CEO/President during an exit meeting?
,every 12 months - ANS ✔✔Under Section 10(d) of the FDI act, how often must insured branches
of foreign banks be examined?
18 months - ANS ✔✔Section 347.211 of the FDIC rule and regs states that domestic branches of
foreign banks can be considered for examination every ___________ months?
6 months - ANS ✔✔Limited scope examinations should be performed how many months after
an enforcement action is issued?
~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 - ANS ✔✔When can examination schedules be extended to
18 months for a state nonmember bank?
The FFEIC to issue guidelines establishing standards for the purpose of determining the
acceptability of state reports of examination. - ANS ✔✔Section 10(D)(9) ofthe FDI act requires
what?
2 weeks - ANS ✔✔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
With the FDIC absorbing 80% of injured losses (up to a stated threshold) and receives 80
percent of recoveries - ANS ✔✔How are shared-loss agreements generally written?
,5 years for losses and 8 years for recoveries - ANS ✔✔How many years are commercial, shared
loss agreements generally cover how many years for losses and recoveries?
10 years for both - ANS ✔✔For residential mortgages, shared losses agreements generally cover
how many years for losses and recoveries?
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%) - ANS ✔✔How should an asset covered
under a shared loss agreement be classified?
All deficiencies and supervisory recommendations that will be cited in the ROE. - ANS
✔✔During an exit meeting, management should be made aware of what?
~36 months or more have elapsed since the last such meeting
~the management component is 3 or worse
~two component ratings are 3 or worse
~or any other CAMEL rating is 4 or 5 - ANS ✔✔When is a board meeting required?
Uniform Interagency Trust Rating System; composites 1-5. - ANS ✔✔What system was devised
to rate a Trust department and what composite ratings are established?
~management
~operations, internal controls, and audits
~earnings
~compliance
~asset management - ANS ✔✔What five critical areas are evaluated in a Trust exam?
, To determine confidentiality, integrity, and availability of records produced my automated
systems - ANS ✔✔What is the primary purposed of an IT exam?
The Uniform rating System for Information Technology (URIST) - ANS ✔✔IT operations are rated
in accordance to?
~Management
~Audit
~Support and Delivery
~development and acquisition - ANS ✔✔What four areas are evaluated in an IT examination?
To ensure U.S. financial institutions maintain appropriate records and file certain reports
involving currency transactions and customers relations. - ANS ✔✔What is the purpose of a BSA
examination?
Section 501(b) of the Gramm-Leach-Bailey Act - ANS ✔✔Examiner information ,may contain
non-public customer information defined by what?
1 examination cycle - ANS ✔✔How long should line sheets be retained
10 years, indefinitely when irregularities are discovered or suspected. - ANS ✔✔How long
should risk management and trust questionnaires be retained?
Composite 1 - ANS ✔✔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
