Rating Indicators (Low/Mod/High), 1-5, Strong / Stat /Stable
Assorted Handbooks
100
T/F ALL financial institutions, regardless of size and complexity, should have a formal CFP that clearly sets out the strategies for addressing liquidity shortfalls in emergency situations.
True?
100
For call report purposes these include include “reciprocal deposits.” As defined in Section 327.8(s) of the FDIC’s
regulations, “reciprocal deposits” are deposits that an “institution receives through a deposit placement network on a reciprocal basis, such that: (1) for any deposit received, the institution (as agent for depositors) places the same amount with other insured depository
institutions through the network; and (2) each member of the network sets the interest rate to be paid on the entire amount of funds it places with other network members.”
What is Total brokered deposits
100
Noncore liabilities less short term investments divided by long term assets.
Net Noncore Funding Dependence
100
Funding sources are abundant and Sufficient funding sources are Funding sources and liability
provide a competitive cost available which provide cost structures suggest current or
advantage.
What is Low
100
This risk is the most common and is heightened when there are concentrations of funding that may not be renewed by the funds provider due a decline in the bank’s real or perceived financial condition.
What is “Rollover Risk”
200
T/F- undercapitalized banks may hold brokered deposits with rate restrictions, including that rates not exceed the "national rate cap."
What is False, undercapitalized banks may not hold brokered deposits, there is no waiver.
200
The risk that an institution’s financial condition or
overall safety and soundness is adversely affected by an inability (or perceived inability) to meet its obligations.
What is liquidity risk
200
"To support residential mortgage lending and related community investment through its member financial institutions."
What is the public policy mission of the FHLB System
200
Market alternatives are available to meet demand for liquidity at reasonable terms, costs, and tenors. The liquidity position is not expected to deteriorate in the near term.
What is Moderate
200
These consist of two classes of securities
with each class receiving a different portion of the monthly interest and principal cash flows from underlying mortgage backed securities. In its this is, consists of an interest-only (IO) portion, where the investor receives 100 percent of the interest cash flow, and a principal-only (PO) portion, where the investor receives 100 percent of the principal cash flow.
What is Stripped Mortgage Backed Securities?
300
The standard FDIC insurance amount is ____ per depositor, per insured bank, for each account ownership category.
What is $250,000
300
Identify 3 alternative sources of funding that can strengthen an institution's capacity to withstand a variety of severe institution-specific and marketwide liquidity shocks.
Deposit growth.
Lengthening maturities of liabilities.
Issuance of debt instruments
Sale of subsidiaries or lines of business.
Asset securitization.
Sale (either outright or through repurchase agreements) or pledging of liquid assets.
Drawing down committed facilities.
Borrowing.
300
All demand and savings deposits including money market deposit accounts and NOW and ATS accounts, savings deposits, plus time deposits in amounts of less than $100 thousand.
What is Core Deposits ($000)
300
Liquidity risk management process is generally effective in identifying, measuring, monitoring, and controlling liquidity. There may be minor weaknesses given the complexity of the risks undertaken, but these are easily corrected.
What is Satisfactory
300
A transaction where money market instruments, usually short-term U.S. government securities, are purchased for the bank’s own account or acquired and then sold.
What is an agreement to repurchase / repurchase agreement
400
The Fed uses its lending operations – known as ____ – as one of its tools of monetary policy. The ______:
•Relieves liquidity strains within the reserve markets and in a depository institution
•Provides a safety valve in relieving pressures on the Federal funds market
•Gives stability to a systematically-stressed payment system by supplying much needed liquidity
What is the Discount Window
400
A financial institution’s capacity to readily meet its cash and collateral obligations at a reasonable cost. Maintaining an adequate level of liquidity depends on the institution’s ability to efficiently meet both expected and unexpected cash flows and collateral needs without adversely affecting
either daily operations or the financial condition of the institution.
What is Liquidity
400
A guess at the total liabilities of the FHLB System as of 09/30/2016 within $1.5B?
$985B
400
Institutions rated THIS may not have or be able to obtain a sufficient volume of funds on reasonable terms to meet liquidity needs.
What is 4
400
A transaction in which money market instruments, usually short-term U.S. government securities, are purchased for the bank’s own account or acquired.
What is an agreement to resell
500
U.S. Treasury notes may be pledged to the discount window and held on the books of the borrowing institution's correspondent.
What is False- That is incorrect. U.S. Treasury notes are always in book-entry form. Book-entry collateral must always be held in a pledged account at the Federal Reserve Bank.
500
The extent to which liabilities vary by individual funds provider, product, tenor, market area, industry, etc.
The extent to which assets vary by loans and investments or other assets that the bank could use to raise funds.
What is Diversification
500
Name 7/11 FHLB districts with no more than 2 wrong guesses.
Atlanta, Chicago, Boston, Des Moines, Dallas, Cincinnati, Indianapolis, New York, Pittsburgh, San Francisco, Topeka
500
This rated institution has access to sufficient sources of funds on acceptable terms to meet present and anticipated liquidity needs. Modest weaknesses may be evident in funds management practices.
What is 2
500
The volume and composition of money market assets such as fed funds sold, Eurodollars placed, and certificates of deposit (CDs) purchased.
The volume, composition, and amount of depreciation of free securities (e.g., securities unencumbered by pledging and repurchase agreements).
The capacity to enhance liquidity through asset sales or securitization.