Trust

Question 1

Administration of fiduciary activities is sound in every respect.

Answer 1

1

Question 2

Generally all components are rated 1 or 2.

Answer 2

1

Question 3

Any weaknesses are minor and can be handled in a routine manner by management.

Answer 3

1

Question 4

The institution is in substantial compliance with fiduciary laws and regulations.

Answer 4

1

Question 5

Risk management practices are strong relative to the size, complexity, and risk profile of the institution’s fiduciary activities.

Answer 5

1

Question 6

Fiduciary activities are conducted in accordance with sound fiduciary principles and give no cause for supervisory concern.

Answer 6

1

Question 7

Administration of fiduciary activities is fundamentally sound.

Answer 7

2

Question 8

Generally no component rating should be more severe than 3.

Answer 8

2

Question 9

Only moderate weaknesses are present and are well within management’s capabilities and willingness to correct.

Answer 9

2

Question 10

Fiduciary activities are conducted in substantial compliance with laws and regulations.

Answer 10

2

Question 11

Overall risk management practices are satisfactory relative to the institution’s size, complexity, and risk profile.

Answer 11

2

Question 12

There are no material supervisory concerns and, as a result, the supervisory response is informal and limited.

Answer 12

2

Question 13

Administration of fiduciary activities exhibits some degree of supervisory concern in one or more of the component areas.

Answer 13

3

Question 14

A combination of weaknesses exists that may range from moderate to severe; however, the magnitude of the deficiencies generally does not cause a component to be rated more severely than 4.

Answer 14

3

Question 15

Management may lack the ability or willingness to effectively address weaknesses within appropriate time frames.

Answer 15

3

Question 16

Additionally, fiduciary activities may reveal some significant noncompliance with laws and regulations.

Answer 16

3

Question 17

Risk management practices may be less than satisfactory relative to the institution’s size, complexity, and risk profile.

Answer 17

3

Question 18

While problems of relative significance may exist, they are not of such importance as to pose a threat to the trust beneficiaries generally, or to the soundness of the institution.

Answer 18

3

Question 19

The institution’s fiduciary activities require more than normal supervision and may include formal or informal enforcement actions.

Answer 19

3

Question 20

Fiduciary activities generally exhibit unsafe and unsound practices or conditions, resulting in unsatisfactory performance.

Answer 20

4

Question 21

The problems range from severe to critically deficient and may be centered around inexperienced or inattentive management, weak or dangerous operating practices, or an accumulation of unsatisfactory features of lesser importance.

Answer 21

4

Question 22

The weaknesses and problems are not being satisfactorily addressed or resolved by the board of directors and management.

Answer 22

4

Question 23

There may be significant noncompliance with laws and regulations.

Answer 23

4

Question 24

Risk management practices are generally unacceptable relative to the size, complexity, and risk profile of fiduciary activities.

Answer 24

4

Question 25

These problems pose a threat to the account beneficiaries generally and, if left unchecked, could evolve into conditions that could cause significant losses to the institution and ultimately undermine the public confidence in the institution.

Answer 25

4

Question 26

Close supervisory attention is required, which means, in most cases, formal enforcement action is necessary to address the problems.

Answer 26

4

Question 27

Fiduciary activities are conducted in an extremely unsafe and unsound manner.

Answer 27

5

Question 28

Administration of fiduciary activities is critically deficient in numerous major respects, with problems resulting from incompetent or neglectful administration, flagrant and/or repeated disregard for laws and regulations, or a willful departure from sound fiduciary principles and practices.

Answer 28

5

Question 29

The volume and severity of problems are beyond management's ability or willingness to control or correct.

Answer 29

5

Question 30

Such conditions evidence a flagrant disregard for the interests of the beneficiaries and may pose a serious threat to the soundness of the institution.

Answer 30

5

Question 31

Continuous close supervisory attention is warranted and may include termination of the institution's fiduciary activities.

Answer 31

5

Question 32

What are the five components?

Answer 32

MOa-E-CA ``` Mgmt Operations/Audit/Internal controls Earnings Compliance Asset Mgmt ```

Question 33

When are Earnings reviewed?

Answer 33

Institutions with $100 million or more in TRUST assets Trust company subsidiaries of nonmember banks. Small Trust Institutions - Trust earnings must be rated in small ("community") trust institutions when one of the following is present: - The trust department has $90 million or more in total fiduciary and custody and safekeeping assets AND recent growth indicates that it is reasonable to believe that it will exceed the $100 million asset threshold by the end of the current calendar year. OR - The trust department has dropped below $100 million asset threshold in the past year, but is reasonably expected to exceed $100 million in the near future. OR - Trust department earnings are a significant to the bank's overall earnings (GROSS TRUST FEES ARE 50% OR MORE of bank NET INCOME).

Question 34

Who should the BOD appoint?

Answer 34

Trust Officer

Question 35

Trust Committee - what are composition characteristics?

Answer 35

3 bank directors - at least one who is not an active bank officer

Question 36

what is the recommended frequency of trust committee meetings?

Answer 36

Qtrly

Question 37

When trust earnings are rated in smaller trust institutions, what should be the examiners primary focus?

Answer 37

primarily focus on management oversight and approval issues, rather than numerical profitability

Question 38

What are the Trust Committee's responsibilities?

Answer 38

approve and document the opening of accounts, purchases/sales of assets, and the closing of accounts review all new accounts review trust department account at least annually maintain comprehensive minutes periodically report to BOD

Question 39

What are fundamental components of a sounds Trust Department?

Answer 39

``` Written policies Legal Counsel Internal Controls Audit Program Review Committee Reports Review Exam Reports Maintain separate trust accounts (separate books and records form the bank assets) ```