Acronyms

Question 1

Minimum Appraisal Standards - SCUMWADD

Answer 1

State Certified or licensed appraiser
USPAP
Market Value
Written
Appropriate Deductions and Discounts

Question 2

Part 365 - require RE loan policy elements - DULAM

Answer 2

Diversification
Underwriting
Loan Administration
Monitoring (compliance with policy)

Question 3

Top 4 Reasons Violations Occur - WUMN

Answer 3

Willful non-compliance - most severe
Unfamiliarity - most common
Misinterpretation - Most common
Negligence

don’t care, don’t know, don’t understand, irresponsible

Question 4

Potential Risks arising from 3rd party relationships - TORCOCS

Answer 4

Transaction Risk, 
Operation Risk, 
Reputation Risk
Compliance Risk 
Other Risk
Credit Risk
Strategic Risk

Question 5

Types of IRR - PROBY

Answer 5

Price
Re-price
Option
Basis
Yield

Question 6

Types of market risk - PIBY

Answer 6

Price
IRR
Basis
Yield Curve

Question 7

Trust Components - MOa-E-CA

Answer 7

Management
Operations/IRC/Audit
Earnings (only assess in departments $100 million or more in Total trust assets)
Compliance 
Asset Management

Question 8

Information needed for

1) CTR for person conducting transaction.
2) bank for Monetary instrument transaction ($3M - $10M) if bank does not have customer at depositor.
3) information needed prior to account opening for CIP requirements

SAND

Answer 8

SSN
Address
Name
DOB

Question 9

Transaction information that must be obtained for a cash purchase of a financial instrument between $3M and $10M.

STAND

Answer 9

Serial number of each of the instruments purchased; a
Type of instrument;
Amounts in dollars of each of the instruments purchased;
Name;
Date

Question 10

Three types of Check Credit services

SOC

Answer 10

Special Draft System
Overdraft System
Cash Reserve System

Question 11

4 items must be reported on a SAR when the suspect can be identified

Answer 11

DL#,
Address,
Phone,
SSN

Question 12

OREO disposal/sale accounting methodologies

FICRD

Answer 12

Full Accrual 
Installment
Cost Recovery
Reduced-Profit
Deposit

Question 13

Types of Letters of Credit

TSCS

Answer 13

Travelers,
Sold for Cash,
Commercial,
Standby

Question 14

Three fundamental dimensions of management

COP

Answer 14

Controlling
Organizing
Planning

Question 15

Part 326 BSA requirements -

CTOT

Answer 15

controls
testing
officer
training

Question 16

Guidelines exist relative to a BHC entering into new activities

WWCE

Answer 16

All bank subsidiaries must be:
“well capitalized”, 
“well managed”, 
CRA Rating - Satisfactory, 
BHC must file with FRB an Election to become a FHC

Question 17

3 steps in the money laundering process -

PLI

Answer 17

Placement
layering
integration

Question 18

A record of each extension of credit in an amount in excess of $10M, except for extension of credit secured by RE, must contain

PLAND

Answer 18

Purpose of loan
Loan amt
address of borrower
name of borrower
date of loan

Question 19

3 required elements of securities risk management process per the 1998 RM Guidance

PIS

Answer 19

PPL
policies, procedures, limits

IMR
identify, measure, report risk exposure

System of Internal controls

Question 20

7 factors to be considered for applications by Proposed or Newly Organized Institutions – FDI Act section 6

CHEMIC - P

Answer 20

Capital Structure adequacy
History - financial and condition
Earnings prospects
Management characteristics
Insurance risk (risk to DIF)
Community being served
corporate Powers consistent with FDI Act?

Question 21

5 elements/requirements of Management Information Systems

CCART

Answer 21

Consistency, 
Completeness, 
Accuracy, 
Relevance, 
Timeliness

Question 22

3 requirements for Chapter 13 Bankruptcy

RUS

Answer 22

Regular income,
Unsecured debt < $100M,
Secured debt < $350M

Question 23

5 required security devices per Part 326

PLATO

Answer 23

Protecting assets such as vault, safe, 
Lighting system for illuminating, during hours of darkness, the area around the vault if the vault is visible from outside the banking office, 
Alarm system, 
Tamper-resistant locks, 
Other devices

Question 24

reasons why bank management can be held personally liable

BMFUN

when bank mgmt has too much FUN

Answer 24

Breach of trust

Misappropriation or conversion of the bank’s assets

Fraud

Ultra vires act, or acts in excess of their powers

Negligence which is the proximate cause of loss to the bank

Question 25

3 types of fixed asset insurance coverage Bye-Bye Safe

Answer 25

Basic Broad Special

Question 26

Requirements within a broker deposit application waiver FRUITS – PP

Answer 26

Financial Statement with BS and IS - recent consolidated Rates, volume, and maturities of brokered deposits already held and internal limits Undue risk - justification from bank that BDeps do not pose this Information systems overseeing the solicitation of BD Time period for which the waiver is requests Solicitation procedures brokered deposits Pricing strategy and comparison to other (lending and investment) Policy for use in funding strategy

Question 27

Principal errors made in granting RE loans CALI = RE

Answer 27

Capacity to repay Amortization, Limited demand area/property, Inadequate regard to inflated/deflated realty values

Question 28

Risks affecting the marketability of assets CORMS

Answer 28

``` Compliance, Operating, Reputation, Market, Strategic ```

Question 29

Unsuitable investment activities. GAWPERS

Answer 29

``` Gains trading, Adjusted trading, When-Issued securities, Pair-offs, Extended settlement, Repositioning repurchase agreement Short Sale ```

Question 30

Uniform IT Ratings components MADS

Answer 30

Management Audit Development and Acquisition Support and Delivery

Question 31

5 requirements for expedited application processing CCCOW

Answer 31

``` Composite 1/2 Compliance 1/2 CRA satisfactory No Order Well-cap ```

Question 32

Basic Elements of an Internal Control System CeRaCaIcM

Answer 32

``` Control Environment, Risk assessment Control Activities, Information and communication, Monitoring activities, ```

Question 33

The four main elements of an effective third-party risk management process CORD

Answer 33

Contract structuring and review, Oversight, Risk assessment, Due diligence and selecting a 3rd party

Question 34

These are Loan Problems COST FILL PO(P)

Answer 34

``` Competition, Overlending, Self-dealing, Technical incompetence, Failure to establish or enforce liquidation agreements, Incomplete credit info, Lack of attention to changing Economic conditions, Lack of Supervision Poor selection of risks, Overemphasis on loan income, (P) ```

Question 35

Types of investment risks McLOLSI

Answer 35

``` Market Credit, Liquidity Operating Legal Settlement Interconnection ```

Question 36

Restrictions for U, SU, CU capitalized banks 324.405a2 CAMPE

Answer 36

Capital distributions and mgmt fees Asset growth restrictions - no bigger than avg assets in prior year Monitoring - regulatory/FDIC monitoring required Plan - capital plan submission w/in 45 days Expansion needs prior approval - branch, subsidies, new business line

Question 37

Restrictions for CU Banks 324.405a4 MtAmBLES - PidC

Answer 37

``` o Material transactions o Accounting methods o Bylaws / charter o highly Leverage transactions - can't extend credit for these o Excessive compensation or bonuses o Sub debt interest (60 days after CU) ``` o Pay interest on deposits which would increase the bank’s COF significantly above prevailing market rates o covered transactions o FDIC can further restrict anything we want.

Question 38

Capital restoration plan must include (for U, SU, CU banks per Section 38e2 a) SLOTH

Answer 38

o Steps the insured depository institution will take to become adequately capitalized o Levels of capital to be attained during each year the plan will be in effect o Other information as required o Types and levels of activities in which the institution will engage; and o How the institution will comply with the restrictions in effect under prompt corrective action