Basic Examination Concepts
What are the UFIRS ratings for CRA?
-Outstanding
-Satisfactory
-Needs to improve
-Substantial non-compliance
The regulation that regulation that regulates the required level of cash reserves.
Federal Reserve Board Regulation D
The number of members on the FDIC Board, and the composition of the Board.
5 members
-Comptroller of the Currency
-Director of CFPB
-3 appointed by the President
**No more than 3 members can be of the same political party
***The chairman serves for 5 years and the rest serve for 6
According to Part 337, less than well-capitalized institutions are limited to paying no more than _____ basis points above the national rate cap.
75bps
Two types of loss limits in blanket bond insurance:
-Single loss limit
-Aggregate loss limit
__________ gives examiners power to examine banks.
Section 10(b) and (c) of the FDI Act empowers examiners to make a thorough examination of all of the affairs of a bank.
What are clearings?
-Activities involved with processing financial transactions from the time a transaction is made until settled
-Checks, drafts, or notes a bank has cased or received for deposit that are drawn on other local banks
Section 14 states that the FDIC is allowed to borrow _____ from the Treasury.
$100 billion
-Audit Committee must have banking experience
-Audit Committee must have access to outside council
-Audit Committee must be independent of management
The time frame losses should be reported to the bonding company:
Within 30 days of discovery
The guidelines for relying on a state examination.
The following criteria are used when considering the acceptability of a state ROE:
-Completeness of the report
-Adequacy of documentation
-Ability of the state to achieve its objectives and accreditation
-Adequacy of formal/informal working agreement with State banking department and FDIC
What are cash items not in the process of collection reported as?
These items should be carried in a non-cash account and reported as other assets.
The minimum level of the Deposit Insurance Fund (DIF)
1.35 percent of insured deposits
Section 38 restriction applicable to ALL banks regardless of PCA category:
Banks cannot pay capital distributions or management fees that would cause the bank to become undercapitalized
Section 18(e) of the FDI Act allows the FDIC to________ regarding insurance.
Section 18(e) requires insurance coverage and if a bank does not comply, the FDIC may contract the coverage and add the cost to the bank's deposit insurance premium
Types of RMS Examinations:
-Risk-focused supervision
-Full-scope examination
-Limited-scope examination and visitation
-Institution subject to corrective action
-Newly chartered institutions
-Converting to insured nonmember status
-Change of ownership control
How are reciprocal balances handled?
Reciprocal balances may be netted:
-A net due from is a deposit asset
-A net due to is a deposit liability
-CD's are not netted
Identify the following sections:
8(a)
8(b)
8(c)
8(e)
8(g)
8(i)
8(a) - Termination of Insurance
8(b) - Cease and Desist
8(c) - Temporary Cease and Desist
8(e) - Removal and Prohibition Order
8(g) - Temporary Removal / Suspension
8(i) - Civil Money Penalties
A bank's security program shall establish the following procedures:
-Safekeeping
-Preservation of evidence
-Opening/closing procedures
-Record retention (of crimes)
-Procedures to assist in identification of suspects
-Training
-Security devices
Basis for claims under a blanket bond:
-Loss sustained
-Discovery basis
Length of Shared-Loss Agreements to cover (commercial and residential mortgage) assets:
-Commercial losses for 5 years; recoveries for 8 years
-Residential mortgage losses and recoveries for 10 years
*FDIC absorbs 80 percent of losses and receives 80 percent of recoveries
Regulation F (Part 206) requires:
-Banks must have policies to prevent excessive exposure to any individual correspondent
-Banks must limit overnight credit exposure to a correspondent to 25% of the exposed bank's total capital unless correspondent is at least "adequately capitalized"
-Must demonstrate correspondent is at least adequately capitalized on a quarterly basis
Section 13 states the FDIC may do the following to prevent the default of a bank:
-Make loans to the bank
-Make deposits to the bank
-Purchase the assets or securities of a bank
-Make contributions to the bank
The five minimum appraisal standards:
-State licensed or certified appraisers
-Conform to USPAP standards
-Be based on the definition of market value
-Written and contain sufficient information to support the bank's decision to enter the transactions
-Appropriate deductions and discounts
Six common clauses within a blanket bond:
Clause (A) - Fidelity
Clause (B) - On Premises
Clause (C) - In Transit
Clause (D) - Forgery or Alteration
Clause (E) - Securities
Clause (F) - Counterfeit Currency