- | P a g e
pg. 1
FDIC TE PREP 2025 ACTUAL EXAM TEST BANK|400
COMPREHENSIVE EXAM QUESTIONS WITH
DETAILED VERIFIED ANSWERS (100% CORRECT
ANSWERS WITH RATIONALE ) ALREADY GRADED A+
(NEW!!)
What is the primary purposed of an IT exam? - ANSWER - To determine confidentiality, integrity, and availability of records produced my automated systems
IT operations are rated in accordance to? - ANSWER - The Uniform rating System for Information Technology (URIST)
What four areas are evaluated in an IT examination? - ANSWER - ~Management ~Audit ~Support and Delivery ~development and acquisition
What is the purpose of a BSA examination? - ANSWER - To ensure U.S. financial institutions maintain appropriate records and file certain reports involving currency transactions and customers relations.
- / 4
- | P a g e
pg. 2 Examiner information ,may contain non-public customer information defined by what? - ANSWER - Section 501(b) of the Gramm-Leach- Bailey Act
How long should line sheets be retained - ANSWER - 1 examination cycle
How long should risk management and trust questionnaires be retained?
- ANSWER - 10 years, indefinitely when irregularities are discovered or
suspected.
What is the purpose of earnings from a regulators standpoint? - ANSWER - To absorb losses and augment capital
What are the components of the earnings trail? - ANSWER - Net 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? - ANSWER - Return on assets (ROA)
- / 4
- | P a g e
pg. 3 How is the Net Interest Income (TE) t average assets ratios calculated? - ANSWER - Annualized total interest income + tax benefit on tax-expect income - total interest depends / average assets
How is the Net Interest Margin (NIM) calculated? - ANSWER - Annualized total interest income (TE) - total interest expense / average earnings assets
How is the ROA calculated? - ANSWER - Bottom 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? - ANSWER - Also 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? - ANSWER - Material events and transactions that are unusual AND infrequent
If a bank fails to place assets on non-accrual properly, how may earnings be affected? - ANSWER - The banks earnings may be overstated
What is the primary factor affecting the overall AQ rating? - ANSWER - Credit quality and credit admin
- / 4
- | P a g e
pg. 4 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? - ANSWER - ~compare recent earnings trends relative to equity, assets, or other commonly used benchmarks to the institutions historical results and those of its peers, ~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? - ANSWER - ~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.
- / 4