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Answers and Rationales
This document contains a complete and graded A+ compilation of exam
preparation material for the FDIC Technical Examiner (TE) exam 2025. It
features hundreds of multiple-choice and open-ended questions across
all key FDIC domains, including capital adequacy, risk management,
Basel III, CAMELS ratings, loan classifications, IT and BSA
examinations, real estate lending, derivatives, and accounting
standards (FAS/ASC). Each question is paired with a 100% correct,
verified answer and rationale, making it a trusted and detailed resource
for candidates.
Latest Updated Exam Guide 2025/
What is included in tier 2 capital? - ansALLL 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. What is the purpose of the FDIC conducting bank examinations? - ansTo ensure public confidence in the banking system and to protect the DIF What should examiners do before discussing proposed ratings of a 3 or worse rated bank? - ansContact the regional office to discuss with the CM or the ARD Sections 10(b) and 10(c) of the FDI do what? - ansEmpower examiners to make thorough examination of the banks affairs What is often the single most important factor of a successful operation of an insured institution? - ansThe quality of management Examination findings, including the composite and component ratings, are subject to confidentiality under which regulation/rule? - ansPart 309 of the FDIC rules and regs When should an examination letter be delivered to the CEO/President during an exit meeting? - ansfor any bank newly assigned a CAMELS composite 3 or worse Under Section 10(d) of the FDI act, how often must insured branches of foreign banks be examined? - ansevery 12 months Section 347.211 of the FDIC rule and regs states that domestic branches of foreign banks can be considered for examination every ___________ months? - ans18 months Limited scope examinations should be performed how many months after an enforcement action is issued? - ans6 months When can examination schedules be extended to 18 months for a state nonmember bank? - ans~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 Section 10(D)(9) ofthe FDI act requires what? - ansThe FFEIC to issue guidelines establishing standards for the purpose of determining the acceptability of state reports of examination. 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 - ans2 weeks
Answers and Rationales
This document contains a complete and graded A+ compilation of exam
preparation material for the FDIC Technical Examiner (TE) exam 2025. It
features hundreds of multiple-choice and open-ended questions across
all key FDIC domains, including capital adequacy, risk management,
Basel III, CAMELS ratings, loan classifications, IT and BSA
examinations, real estate lending, derivatives, and accounting
standards (FAS/ASC). Each question is paired with a 100% correct,
verified answer and rationale, making it a trusted and detailed resource
for candidates.
Latest Updated Exam Guide 2025/
How are shared-loss agreements generally written? - ansWith the FDIC absorbing 80% of injured losses (up to a stated threshold) and receives 80 percent of recoveries How many years are commercial, shared loss agreements generally cover how many years for losses and recoveries? - ans5 years for losses and 8 years for recoveries For residential mortgages, shared losses agreements generally cover how many years for losses and recoveries? - ans10 years for both How should an asset covered under a shared loss agreement be classified? - ansThe assets should be adversely classified (sub, doubt, loss) and be reduced by the applicable coverage rate stated in the SLA (often 80% or 95%) During an exit meeting, management should be made aware of what? - ansAll deficiencies and supervisory recommendations that will be cited in the ROE. When is a board meeting required? - ans~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 What system was devised to rate a Trust department and what composite ratings are established? - ansUniform Interagency Trust Rating System; composites 1-5. What five critical areas are evaluated in a Trust exam? - ans~management ~operations, internal controls, and audits ~earnings ~compliance ~asset management What is the primary purposed of an IT exam? - ansTo determine confidentiality, integrity, and availability of records produced my automated systems IT operations are rated in accordance to? - ansThe Uniform rating System for Information Technology (URIST) What four areas are evaluated in an IT examination? - ans~Management ~Audit ~Support and Delivery ~development and acquisition What is the purpose of a BSA examination? - ansTo ensure U.S. financial institutions maintain appropriate records and file certain reports involving currency transactions and customers relations. Examiner information ,may contain non-public customer information defined by what? - ansSection 501(b) of the Gramm-Leach-Bailey Act How long should line sheets be retained - ans1 examination cycle
Answers and Rationales
This document contains a complete and graded A+ compilation of exam
preparation material for the FDIC Technical Examiner (TE) exam 2025. It
features hundreds of multiple-choice and open-ended questions across
all key FDIC domains, including capital adequacy, risk management,
Basel III, CAMELS ratings, loan classifications, IT and BSA
examinations, real estate lending, derivatives, and accounting
standards (FAS/ASC). Each question is paired with a 100% correct,
verified answer and rationale, making it a trusted and detailed resource
for candidates.
Latest Updated Exam Guide 2025/
complexity, and risk profile. Close supervisory attention is required, which means, in most cases, formal enforcement action is necessary to address the problems. Institutions in this group pose a risk to the deposit insurance fund. Failure is a distinct possibility if the problems and weaknesses a - ansComposite 4 Financial institutions in this group exhibit extremely unsafe and unsound practices or conditions; exhibit a critically deficient performance; often contain inadequate risk management practices relative to the institution's size, complexity, and risk profile; and are of the greatest supervisory concern. The volume and severity of problems are beyond management's ability or willingness to control or correct. Immediate outside financial or other assistance is needed in order for the financial institution to be viable. Ongoing supervisory attention is necessary. Institutions in this group pose a significant risk to the deposit insurance fund and failure is highly probable. - ansComposite 5 Rating: Strong Capital Level Relative to the Institutions risk profile - ansCapital - 1 Rating: Satisfactory capital level relative to the financial institutions risk profile - ansCapital- 2 Rating: Less than satisfactory level of capital that does not fully support the institutions risk profile. The rating indicates a need for improvement, even if the institution's capital level exceeds minimum regulatory and statutory requirements - anscapital- 3 Rating: a deficient level of capital. In light of the institution's risk profile, viability of the institution may be threatened. Assistance from shareholders or other external sources of financial support my be required. - ansCapital- 4 Rating: critically deficient level of capital such that the institution's viability is threatened. Immediate assistance from shareholders or other external sources of financial support is required. - ansCapital- 5 Rating: Strong asset quality and credit administration practices, identified weaknesses are minor in nature and risk exposure is modest in relation to capital protection and management's abilities. Asset quality in such institutions is of minimal supervisory concern. - ansAQ - 1 Rating; satisfactory asset quality and credit administration practices. The level and severity of classifications and other weaknesses warrant a limited level of supervisory attention. Risk exposure is commensurate with capital protection and management's abilities. - ansAQ- 2 Rating: Asset quality or credit administration practices are less than satisfactory. Trends may be stable or indicate deterioration in asset quality or an increase in risk exposure. The level and severity of classified assets, other weaknesses and risk require an elevated level of supervisors concern. There is generally a need to improve credit administration and risk management practices. - ansAQ- 3
Answers and Rationales
This document contains a complete and graded A+ compilation of exam
preparation material for the FDIC Technical Examiner (TE) exam 2025. It
features hundreds of multiple-choice and open-ended questions across
all key FDIC domains, including capital adequacy, risk management,
Basel III, CAMELS ratings, loan classifications, IT and BSA
examinations, real estate lending, derivatives, and accounting
standards (FAS/ASC). Each question is paired with a 100% correct,
verified answer and rationale, making it a trusted and detailed resource
for candidates.
Latest Updated Exam Guide 2025/
Rating: this rating is assigned to institutions financial with deficient asset quality or credit administration practices. The levels of risk and problem assets are significant, inadequately controlled, and subject the institution to potential losses that, if left unchecked, may threaten its viability. - ansAQ- 4 Rating: critically deficient asset quality or credit administration practices that present an imminent threat to the institution's viability. - ansAQ- 5 Rating: string performance by management and the board of directors and strong risk management practices relative to the institution's size, complexity, and risk profile. All significant risk are consistently and effectively identified, measured, monitored, and controlled. Management and the board have demonstrated the ability to promptly and successfully address existing and potential problems and risk. - ansMgt- 1 Rating: satisfactory management and board performance and risk management practices Walt I've to the institution's size, complexity, and risk profile. Minor weaknesses may exist, but are not material to the safety and soundness of the institution and are being addressed. In general, significant risk and problems are effectively identifies, measured, monitored, and controlled.
- ansMgt- 2 Rating: management and board performance needs improvement or risk management practices are less than satisfactory given the nature of the institution's activities. The capabilities of management or the board of directors may be insufficient for the type, size, or condition of the institution. Problems and significant risk may be inadequately identifies, measured, monitored, or controlled. - ansMgt- 3 Rating: indicates deficient management and board performance or risk management practices that are inadequate considering the nature of an institution's activities. The level of problems and risk exposure is excessive. Problems and significant risk are inadequately identified, measured, monitored, or controlled and require immediate action by the board and management to preserve the soundness of the institution. Replacing or strengthening management or the board may be necessary. - ansMgt- 4 Rating; indicates critically deficient management and board performance or risk management practices. Management and the board of directors have not demonstrated the ability to correct problems and implement appropriate risk management practices. Problems and significant risk are inadequacy identified, measured, monitored ,or controlled and now threaten the continued viability of the institution. Replacing or strengthening management or the board of directors is necessary. - ansMgt- 5 Rating: indicates earnings that are strong. Earnings are mire than sufficient to support operations and maintain adequate capital and allowance levels after consideration is given to asset quality, growth, and other factors affecting the quality, quantity, and trend of earnings. - ansEarnings- 1
Answers and Rationales
This document contains a complete and graded A+ compilation of exam
preparation material for the FDIC Technical Examiner (TE) exam 2025. It
features hundreds of multiple-choice and open-ended questions across
all key FDIC domains, including capital adequacy, risk management,
Basel III, CAMELS ratings, loan classifications, IT and BSA
examinations, real estate lending, derivatives, and accounting
standards (FAS/ASC). Each question is paired with a 100% correct,
verified answer and rationale, making it a trusted and detailed resource
for candidates.
Latest Updated Exam Guide 2025/
institution. The level of earnings and capital provide substantial support for the degree of market risk taken by the institution. - ansSMR- 1 Rating: indicates that market risk adequately controlled and that there is only moderate potential that the awnings performance or capital position will be adversely affected. Risk management practices are satisfactory for the size, sophistication, and market risk accepted by the institution. The level of earnings and capital provide adequate support for the degree of market risk taken by the institution. - ansSMR- 2 Rating: indicates that control of market risk sensitivity needs improvement or that there is significant potential that earnings performance or capital position will be adversely affected. Risk management practices need to be improved given the size, sophistication, and level of market risk accepted by the institution. The level of earnings and capital may not adequately support the degree of market risk taken by the institution. - ansSMR- 3 Rating: indicates that control of market risk sensitivity is unacceptable or that there is high potential that earnings performance or capital position will be adversely affected. Risk management practices are deficient for the size, sophistication, and level of market risk accepted by the institution. The level of earnings and capital provide inadequate support for the degree of market risk taken by the institution. - ansSMR- 4 Rating: indicates that control of market risk sensitivity is unacceptable or that the level of market risk taken by the institution is an imminent threat to its viability. Risk management practices are wholly inadequate for the size, sophistication, and level of market risk accepted by the institution. - ansSMR- 5 What is the purpose of capital - ansAbsorb losses, promotes public confidence, helps restrict excessive growth, and provides protection to depositors and the DIF Under Basel III, what type of capital is emphasized? - ansCommon Equity Capital What type of capital is widely recognized ass the most loss absorbing and why? - ansCommon equity capital, as it is premenant and places the shareholders funds at risk of losses in the event of insolvency What part of the FDIC rules and regs contain capital rules? - ansPart 324 What did Basel III provided in terms of capital rules? - ansStrengthened minimum capital ratio requirements and risk weighting definitions, increases prompt corrective action (PCA) thresholds, established a capital conservation buffer, and provided a mechanism to mandate counter-cyclical capital buffer What is generally included in common equity tier 1 capital? - ansCommon stock and related surplus net of treasury stock, retained earnings, certain accumulated other comprehensive income (AOCI) elements if the insist upon did not make an AOCI opt-out election, and qualifying common equity tier 1 minority interest.
Answers and Rationales
This document contains a complete and graded A+ compilation of exam
preparation material for the FDIC Technical Examiner (TE) exam 2025. It
features hundreds of multiple-choice and open-ended questions across
all key FDIC domains, including capital adequacy, risk management,
Basel III, CAMELS ratings, loan classifications, IT and BSA
examinations, real estate lending, derivatives, and accounting
standards (FAS/ASC). Each question is paired with a 100% correct,
verified answer and rationale, making it a trusted and detailed resource
for candidates.
Latest Updated Exam Guide 2025/
What three specific assets type must management consider for deducting from common equity tier 1 capital. - ansMortgage serving assets, deferred tax assets related to temporary timing differences, and significant investments in another unconsolidated financials institution's common stock. How much should managment deducte for Mortgage serving assets, deferred tax assets related to temporary timing differences, and significant investments in another unconsolidated financials institution's common stock from Common Equity Tier 1? What is the aggregate limit for these three types of assets? - ans10%, by category, of the base common equity tier 1 capital calculation; aggregate of 15% What risk weight should be given to Mortgage serving assets, deferred tax assets related to temporary timing differences, and significant investments in another unconsolidated financials institution's common stock for the portions not deducted from common equity tier 1 capital? - ans250% What is included in additional tier1 capital? - ansQualifying non-cumulative perpetual preferred stock 'bank issued small business lending fund and TARP instruments that previously qualifies for tier 1 capital Qualifying tier1 minority interest , less certain investments in other unconsolidated financial institutions instruments that would otherwise quality as additional tier 1 capital What is included in. Tier 2 capital? - ansALLL up to 1.25% of risk weighted assets Qualifying preferred stock Subordinated debt Quality tier 2 minority interest, less any deductions in the tier 2 instruments of an unconsolidated financial institution What are the general categories of risk weights that most balance sheet items and credit equivalent amount of off balance sheet items are place? - ans0%, 20%, 50%, 100% What generally makes up HVCRE and what risk weights does HVCRE get?e - ansHVCRE loans generally refer to a subset of ADC loans 150% What is exclusions and carve-outs are there for HVCRE - ans1-4 family residential ADC projects Loans to finance agriculture properties Community development plans The LTV is below supervisory levels The borrower contributed at least 15% of the as-completed value of cash or unencumbered market assets The contributed capital is contractually required to remain throughout the project life.
Answers and Rationales
This document contains a complete and graded A+ compilation of exam
preparation material for the FDIC Technical Examiner (TE) exam 2025. It
features hundreds of multiple-choice and open-ended questions across
all key FDIC domains, including capital adequacy, risk management,
Basel III, CAMELS ratings, loan classifications, IT and BSA
examinations, real estate lending, derivatives, and accounting
standards (FAS/ASC). Each question is paired with a 100% correct,
verified answer and rationale, making it a trusted and detailed resource
for candidates.
Latest Updated Exam Guide 2025/
Is a subsidiary of a depository institution or holding company that uses the advanced approach, or Elects to use the advanced approach What are the minimum capital ratios for national and state member banks? - ansCET Tier 1 capital to RWA - 4.5% Tier 1 Capital to RWA - 6% Total Capital to RWA - 8% Tier 1 Capital to Total assets (leverage ratio) - 4% Under 324.4(c), at what level (in terms of tier 1 leverage ratio) will a bank be consider operating in an unsafe and unsound condition? - ans2% What is the purpose of earnings from a regulators standpoint? - ansTo absorb losses and augment capital What are the components of the earnings trail? - ansNet interest income Non-interest income Non-interest expense Provision for loan and lease losses Income taxes What is the "net income to average assets ratio" also know as? - ansReturn on assets (ROA) How is the Net Interest Income (TE) t average assets ratios calculated? - ansAnnualized total interest income + tax benefit on tax-expect income - total interest depends / average assets How is the Net Interest Margin (NIM) calculated? - ansAnnualized total interest income (TE)
- total interest expense / average earnings assets How is the ROA calculated? - ansBottom line after-tax net income + securities gains/losses and extraordinary items / average assets What is the noninterest expense ratio also called and what the the components? - ansAlso called the overhead ratio Calculated by: annualizing expenses related to salaries and employee benefits, expenses of premises and fixed assets and other non-interest expense and dividing by average assets. What are extraordinary items? - ansMaterial events and transactions that are unusual AND infrequent If a bank fails to place assets on non-accrual properly, how may earnings be affected? - ansThe bank;s earnings may be overstated What procedures does Appendix A of Part 364 outline that banks should employ periodically to evaluate earnings, thereby ensuring that earnings are sufficient to maintain adequate capital and reserves? - ans~compare recent earnings trends relative to equity, assets, or other commonly used benchmarks to the institutions historical results and those of its peers,
Answers and Rationales
This document contains a complete and graded A+ compilation of exam
preparation material for the FDIC Technical Examiner (TE) exam 2025. It
features hundreds of multiple-choice and open-ended questions across
all key FDIC domains, including capital adequacy, risk management,
Basel III, CAMELS ratings, loan classifications, IT and BSA
examinations, real estate lending, derivatives, and accounting
standards (FAS/ASC). Each question is paired with a 100% correct,
verified answer and rationale, making it a trusted and detailed resource
for candidates.
Latest Updated Exam Guide 2025/
~evaluate the adequacy of earnings given the size, complexity, and risk profile of the institution's assets and operations, ~assess the source, volatility, and sustainability of earnings, including the effect of non recurring or extraordinary income or expenses; ~take steps to ensure that earnings are sufficient to maintain adequate capital and reserves after considering asset quality and growth rate, and ~provide periodic earnings reports with adequate information for management and the board of directors or asses earnings performance What are the general evaluation factors for earnings? - ans~the level of earnings, including trends and stability ~the ability to provide for adequate capital through retained earnings ~the quality and sources of earnings ~the level of expenses in relation to operations ~the adequacy of the budgeting systems, forecasting processes, and management information systems in general ~the adequacy of provisions to maintain the allowance for loans and lease losses and other valuation allowance accounts ~the earnings exposure to market risk such as interest rate, foreign exchanges and price risk. What limit is placed tier 2 capital plus tier 3 capital? - ans100% of tier 1 Capital At what point do the market-based capital rules apply with regard to trading activities for tier 3 capital? - ansTrading activity on a worldwide basis equals 10 percent or more of total asserts or $1 billion or more A bank subject to marker risk rules fir tier 3 capital must do what? - ans1. Value-at-risk model: to estimate the maximum amount the bank's covered positions could decline over a fixed period
- Independent risk control unit: have a risk management system, which is independent and defines a risk control until that reports to senior management
- Daily internal risk measurement model: have an internal risk model integrated into the daily management process. What is in category 1 RWA - 0%? - ans1. Cash
- Gold bullion
- FRB balances
- Central banks of OECD countries balances
- Guaranteed by the US Gov Agencies (GNMA, VA, FHA, FRB, OPIC, CCC, SBA) or OECD Central Governments
- Local currency claims on or unconditionally guaranteed by non-OECD central governments
Answers and Rationales
This document contains a complete and graded A+ compilation of exam
preparation material for the FDIC Technical Examiner (TE) exam 2025. It
features hundreds of multiple-choice and open-ended questions across
all key FDIC domains, including capital adequacy, risk management,
Basel III, CAMELS ratings, loan classifications, IT and BSA
examinations, real estate lending, derivatives, and accounting
standards (FAS/ASC). Each question is paired with a 100% correct,
verified answer and rationale, making it a trusted and detailed resource
for candidates.
Latest Updated Exam Guide 2025/
How do you initially assess the credit worthiness of an oil/gas loan? - ansAnalysis of the engineering function. It serves as a tool to estimate cash flow and establish borrowing base. What three critical factors does an engineering report cover? - ans1. Pricing
- Discount factors
- Timing What are the 4 interconnected segments of the oil and gas process/pipeline? - ans1. Upstream (E&P)
- Midstream (transportation)
- Downstream ( refining)
- support/services (equipment) How would you classify an oil and gas loan with total support of debt provided solely by the value of collateral pledged? - ansSubstandard - 65% of discounted present worth of future net income Loss - 65%-100% of discounted present worth of future net income Loss - any remaining deficiency What situations cause carryover lending? - ans1. Unforeseen circumstances (war their, commodity pricing)
- Existing term debt the needs to be rescheduled because of cash flow problems. What are the types of plans for construction lending? - ans1. Standard - pre-established scheduled of fixed payments at the end of each construction phase
- Progressive - monthly disbursements totaling 90% of the value with 10% held back What are added risk associated with floor plan lending? - ansSince floor plan loans involve loan advances against a specific piece of collateral, the banks a inability to exercise full control over the floored items and that most dealers have minimal capital bases relative to debt are two added risk that make request inspections and curtailments necessary. When can feeder and grain collateral not be classified pass in an adversely classified credit? - ansWhen inspections have not been performed 90 days prior to the examination start date When can breeder stock as collateral not be classified pass within an adversely classified credit? - ansWhen inspections have not been made more than 6 months prior to the exam start date. Copies of invoices, or bills of sale are acceptable substitutes for inspection reports. Feeder stock loans are generally what term (short, intermediate, long) and what is the purpose/repayment source? - ansShort term and the payment comes from the sale of cattle once at wight. Brewer loans are generally what term (short, intermediate, long) and what is the repayment source? - ansIntermediate, sale of offspring Ag equipment loans are generally what term (short, intermediate, long) and what is the repayment source? - ansIntermediate, cash flow from farm
Answers and Rationales
This document contains a complete and graded A+ compilation of exam
preparation material for the FDIC Technical Examiner (TE) exam 2025. It
features hundreds of multiple-choice and open-ended questions across
all key FDIC domains, including capital adequacy, risk management,
Basel III, CAMELS ratings, loan classifications, IT and BSA
examinations, real estate lending, derivatives, and accounting
standards (FAS/ASC). Each question is paired with a 100% correct,
verified answer and rationale, making it a trusted and detailed resource
for candidates.
Latest Updated Exam Guide 2025/
Farm RE loans are generally what term (short, intermediate, long) and what is the repayment source? - ansIntermediate, Cash flow from earnings Direct leasing term: Define Net Lease - ansBank is not directly obligated to assume the expenses of maintaining the equipment Direct leasing term: define full payout leases - ansBank expects to realize both the return of its full investment and the cost of financing the property over the term of the lease Direct Leasing Term: define a leveraged lease. Who should the bank not entered into an leveraged lease with? - ansBank as a lessor purchases and becomes the equipment owner providing a relatively small percentage (20%-40%) of the capital needed. Banks should not enter into a leveraged lease with any party who it would not extend unsecured credit. Direct lease term: define rental lease. - ansInclude only those payments reasonably anticipated by the bank at the time the lease is executed. What are the three ways a bank can be involved in a credit card plan? - ans1. Agent bank: received credit card application and sales draft from merchants and forwards them to licensee and sublicensee banks
- Sublicensee bank: maintains accountability for credit cards loans and merchant accounts, may maintain its own processing center for payments and drafts.
- Licensee bank: Same as a sublicensee bank, but may perform transaction processing and credit card embossing services for sublicensee banks, and acts as a regional or nationally clearinghouse for sublicensee banks. What is a bank involved in if they are involved with merchant credit cards - ansAcceptance of credit card sales drafts for clearing by the financial institution. What are the safety and soundness standards for merchant credit card operations? - ans1. Scrutinize perspective merchants - should scrutinize perspective merchants with same care and due diligence used in evaluating perspective borrowers.
- Closely monitor - closely monitor their merchants with credit card clearing operations
- Periodic reviews - create an account administration program, that incorporates periodic reviews of the merchants financial statements and business activity
- Periodic reporting system - establish a periodic reporting system for merchant activities regardless of the amount or number of transactions cleared.
- Follow network guidelines - clearing institutions should follow guidelines set by card issuing networks. Define what a shared national credit (SNC) - ansAny loan or loan commitment, including any asset (ORE, Stocks, Bonds), which the original amount aggregates over $100 million or more, which is shared by 3 or more unaffiliated institutions under a formal lending agreement or portion is sold to two or more unaffiliated institutions, which purchasing institutions assuming its pro-rate share of credit risk.
Answers and Rationales
This document contains a complete and graded A+ compilation of exam
preparation material for the FDIC Technical Examiner (TE) exam 2025. It
features hundreds of multiple-choice and open-ended questions across
all key FDIC domains, including capital adequacy, risk management,
Basel III, CAMELS ratings, loan classifications, IT and BSA
examinations, real estate lending, derivatives, and accounting
standards (FAS/ASC). Each question is paired with a 100% correct,
verified answer and rationale, making it a trusted and detailed resource
for candidates.
Latest Updated Exam Guide 2025/
- Incomplete credit information
- Failure to establish and implement liquidation plans
- Lack of attention to changing economic plans
- Lack of supervision
- Overlending 10 poor selection of risk define Substandard - ansInadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have well defined weaknesses that jeopardize the liquidation of the debt. That are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Define Doubtful - ansLoans classified doubtful have all the weaknesses inherent in those classified substandard with the added characteristics that the weaknesses make collection or liquidation in full, on the the basis of currently known facts, conditions, and values, highly questionable and improbable. Define Loss - ansLoans classified loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean the loans have absolutely no recovery or salvage value but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be affected in the future. T or F. A statement addressing the charge off of loans is a required comment in the ROE when material amount? - ans Define Special Mention - ansAsset has potential weaknesses that deserve managements close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institutions credit position at some future date.e special mention assets are not adversely classier and do not expose the institution to sufficient risk to warrant adverse classification. When is a loan impaired? - ansWhen based in current information and events, it is likely an institution will be unable t collect all amounts due (P&I) How is impairment measured, and when should impairment be included into the ALLL - ansAmount of impairment should be measured in present value of expected future cash flows discounted at an effective interest rate. If less than book value, should be a valuation allowance for difference (included in part of the general ALLL) An asset is to be defined as non-accrual if it meets what three items? - ans1. Cash basis of P&I payments due to financial determination
- Full P&I is not expected
Answers and Rationales
This document contains a complete and graded A+ compilation of exam
preparation material for the FDIC Technical Examiner (TE) exam 2025. It
features hundreds of multiple-choice and open-ended questions across
all key FDIC domains, including capital adequacy, risk management,
Basel III, CAMELS ratings, loan classifications, IT and BSA
examinations, real estate lending, derivatives, and accounting
standards (FAS/ASC). Each question is paired with a 100% correct,
verified answer and rationale, making it a trusted and detailed resource
for candidates.
Latest Updated Exam Guide 2025/
- Period of 90-day default of P&I - unless the asset is both well secured and in the process of collection When can an asset be taken off of non-accrual status? - ans1. Reasonable and assured - P&I contractually due (included in arrears) are reasonably assured of repayment within a reasonable timeframe
- Sustained performance - there is a sustained period of repayment performance (generally a minimum of six months by the borrower), in accordance with the contractual terms What is a troubled debt restructure? - ansA restructuring in which a bank, for economic or legal reasons related to a borrowers financial condition difficulties, grants a concession to the borrower that it would not otherwise consider. What are three examples of a TDR? - ans1. Transfer from the borrower to bank of RE, receivables from third parties, other assets, or an equity interest in the borrower in full or partial satisfaction of the loan.
- A modification of the loan terms, which includes a reduction in the stated interest rate on the loan and/or a reduction of the principal on the loan and/or a reduction of the accrued interest of the loans
- Combination of the above Assets transferred to the credit by the debtor in full satisfaction of BV if loan must be recorded at........? What must the bank do for the remaining recorded amount? - ans1. Fair value: excess over fair values of assets received is a loss-charged to the ALLL. Excess if investment in securities over fair value should be classified as securities loss. The recorded amount of the loan is reduced by the FV less cost of sale.
- The bank must then measure any impairment on the remaining recorded balance for purposed of FAS 114 What loans are not considered restructured trouble debt? - ans1. Current rate for similar rate: a loan extended or renewed at a stated interest rate equal to the current interest rate for new debt with similar risk
- Assumed by unrelated, financially sound party: a loan which was renegotiated troubled debt which has, subsequent to its restructuring, been assumed by a financially sound, unrelated third party
- Loans to finance ORE: a loan to purchasers of ORE which, to facilitate disposal, is granted at contract rates lower than market rates for loans of similar risk Legal requirements of secured loans are covered under Article 9 of UCC except: - ans1. Wages
- Security interest subject to any statute of the US such as Ship Mortgage Act
- Transfer of claim in insurance
- Landlord liens
Answers and Rationales
This document contains a complete and graded A+ compilation of exam
preparation material for the FDIC Technical Examiner (TE) exam 2025. It
features hundreds of multiple-choice and open-ended questions across
all key FDIC domains, including capital adequacy, risk management,
Basel III, CAMELS ratings, loan classifications, IT and BSA
examinations, real estate lending, derivatives, and accounting
standards (FAS/ASC). Each question is paired with a 100% correct,
verified answer and rationale, making it a trusted and detailed resource
for candidates.
Latest Updated Exam Guide 2025/
- Establish loan origination and approval procedures, both generally and by size and type of loan
- Establish prudent underwriting standards that are clear and measurable
- Establish review and approval process for exception loans
- Establish loan admin procedures (documentation, disbursement, collateral protection, collection, and loan review)
- Establish real estate appraisal and evaluation guidelines
- Require management provide timely and adequate reports to the BOD Part 365 appendix A: what are some considerations for internal and external factors? - ans1. Size and financial condition of the bank
- Expertise and size of lending staff
- Need to avoid undue concentration risk
- Compliance with all RE laws and regulations, including CRA, anti-discrimination laws, etc
- Market conditions. Part 365 appendix A: institutions should monitor market supply and demand factors, that include: - ans1. Demographic indicators, including population and employment trends
- Zoning requirements
- Current and projected vacancy, construction, and absorption rates
- Current and projected lease terms, rental rates, and sales prices
- Current and projected operating expenses for different types of projects
- Economic indicators, including trend and diversification in lending areas
- Valuation trends, including discount and direct cap rates. Part 365 appendix A: what are the supervisorsy LTV limits for:
- Raw land
- Land development
- Construction: commerical, mutifamily, and other non-residential
- Construction: 1-4 fmaily residential
- Improved property - ans1. 65% 2.75%
- 80%
- 85%
- 85% Part 365 appendix A: what is the LTV limit on owner occupied 1-4 family resident? - ansNo limits; however, anything over 90% should require credit enhancement in the form of PMI, or readily marketable collateral. what items should be in a bank's loan policy (16)? - ans1. Types of lending - general fields of lending bank will be engaged in and kind of loans with field
Answers and Rationales
This document contains a complete and graded A+ compilation of exam
preparation material for the FDIC Technical Examiner (TE) exam 2025. It
features hundreds of multiple-choice and open-ended questions across
all key FDIC domains, including capital adequacy, risk management,
Basel III, CAMELS ratings, loan classifications, IT and BSA
examinations, real estate lending, derivatives, and accounting
standards (FAS/ASC). Each question is paired with a 100% correct,
verified answer and rationale, making it a trusted and detailed resource
for candidates.
Latest Updated Exam Guide 2025/
- Lending authority - authoirty of each officer, committee, BoD
- Loan approval/renewal - responsibility of the BOD in reviewing, ratifying, approving loans
- Unsecured lending - guidelines under which unsecured will be granted
- Rates/repayment terms - guidelines for rates of interest and terms if repayment
- LTV guidelines
- Appraisals - guidelines for obtaining and reviewing appraisals
- Credit file maintainace - maintenance and review of complete and current credit files on each borrower
- Cillection procedures - appropriate and adequate collection procedures to be taken against late borrowers
- Max loans to total assets
- Overdrafts - limits on ODs
- Trader areas - what normal trade areas and circumstances under which bank may extend credit outside of areas
- Risk diversification/concentrations - Part 365 appendix A: all loans in excess of LTV limits should not exceed waht level of total capital? - ans100% of total capital Part 365 appendix A: Loan in excess if LTV for the categories of commerical, ag, multi family, and other non 1-4 family residential properties should not exceed what level of total capital? - ans30% of total capital Interagency policy statement on documentation for loans to small- and medium-sized businesses and farms: what is the purposed of the statement? - ansfour federal agencies (OCC, FRB, FDIC, and OTS) are concerned that insitutions May perceive that the agencies are requiring a level of documentation to support these types of loans that are in excess of what is necessary to make a sound credit decision. uncesessary documentation raises the cost, may result in delays in bank lending decisions, and may discourage good borrowers from applying. therefore, banks will be permitted to identify a portion of their loan portfolio of small- and medium-sized business and farm loans that will be evaluated solely on performance and will be exempt from examiner criticism of documentation. Interagency policy statement on documentation for loans to small- and medium-sized businesses and farms: what requirements must be met for banks to take advantage of this policy statement? - ansbank must have a composite of 1 or 2 and be Well-capitalized or adequately capitalized Interagency policy statement on documentation for loans to small- and medium-sized businesses and farms: what is the aggreagate limit of exceptions in relation to total capital? - ans20%
