CUNA Business School - Year 3 Exam.
723.1 - CORRECT ANSWER Purpose & Scope
723.2 - CORRECT ANSWER Definitions
723.3 - CORRECT ANSWER Board of Directors & Management responsibility
723.4 - CORRECT ANSWER Commercial Loan Policy
723.6 - CORRECT ANSWER Construction & Development Loans
723.7 - CORRECT ANSWER Prohibited activities
723.8 - CORRECT ANSWER Aggregate MBL limit exclusions & exceptions
723.9 - CORRECT ANSWER Transitional Provisions
723.10 - CORRECT ANSWER State Regulations of business lending
The Board of Directors, per 723.3 at a minimums must: - CORRECT ANSWER Approve a commercial loan
policy that complies with 723.4 of this part.
Ensure the federally insured credit union appropriately staffs its commercial lending program in
compliance with paragraph (b) of this section.
Understands the nature and level of risk of the credit unions commercial loan portfolio, including its
potential impact on the earnings and net worth.
The Senior Executive Officers responsible for overseeing the commercial lending function, per 723.3
must: - CORRECT ANSWER Understand the commercial lending activities at a minimum.
Have a comprehensive understanding of the role of the commercial lending overall business model.
, Establish a risk management processes and controls necessary to safely conduct commercial lending
activities.
Credit Unions that make Construction & Development loans (C&D) must protect against losses by
diligent administration of loan disbursement to eliminate: - CORRECT ANSWER Inappropriate use of loan
proceeds
Intervening liens form other creditors
Failure to complete construction
Failure to build to agreed upon specifications
Cost over-runs
Other unexpected developments that adversely impact a project.
Qualifying independent review on MBL portfolio will determine - CORRECT ANSWER Quality of
underwriting
Compliance with internal CU policies, procedures, laws, and regulations
Loans are documented as approved & all conditions of approval are met
Individual loan quality & accuracy of risk ratings
Loan & collateral documentation
Effectiveness of collection activity
Volume & quality of workout & problem loans management
An impairment analysis under ASC 310.10.35 & ASC 450
Associated Borrower Relationship - CORRECT ANSWER when any person or entity that has a shared
ownership, investment, or other type of relationship in a business or commercial endeavor with a
borrower
Safety and Soundness - CORRECT ANSWER 741.3(b) factors to be considered in determining whether a
CU's financial condition and policies.
Federal Financial Institutions Examination Council (FFIEC) - CORRECT ANSWER a formal interagency body
empowered to prescribe uniform principles, standards, and report forms for the federal examination of
financial institutions
723.1 - CORRECT ANSWER Purpose & Scope
723.2 - CORRECT ANSWER Definitions
723.3 - CORRECT ANSWER Board of Directors & Management responsibility
723.4 - CORRECT ANSWER Commercial Loan Policy
723.6 - CORRECT ANSWER Construction & Development Loans
723.7 - CORRECT ANSWER Prohibited activities
723.8 - CORRECT ANSWER Aggregate MBL limit exclusions & exceptions
723.9 - CORRECT ANSWER Transitional Provisions
723.10 - CORRECT ANSWER State Regulations of business lending
The Board of Directors, per 723.3 at a minimums must: - CORRECT ANSWER Approve a commercial loan
policy that complies with 723.4 of this part.
Ensure the federally insured credit union appropriately staffs its commercial lending program in
compliance with paragraph (b) of this section.
Understands the nature and level of risk of the credit unions commercial loan portfolio, including its
potential impact on the earnings and net worth.
The Senior Executive Officers responsible for overseeing the commercial lending function, per 723.3
must: - CORRECT ANSWER Understand the commercial lending activities at a minimum.
Have a comprehensive understanding of the role of the commercial lending overall business model.
, Establish a risk management processes and controls necessary to safely conduct commercial lending
activities.
Credit Unions that make Construction & Development loans (C&D) must protect against losses by
diligent administration of loan disbursement to eliminate: - CORRECT ANSWER Inappropriate use of loan
proceeds
Intervening liens form other creditors
Failure to complete construction
Failure to build to agreed upon specifications
Cost over-runs
Other unexpected developments that adversely impact a project.
Qualifying independent review on MBL portfolio will determine - CORRECT ANSWER Quality of
underwriting
Compliance with internal CU policies, procedures, laws, and regulations
Loans are documented as approved & all conditions of approval are met
Individual loan quality & accuracy of risk ratings
Loan & collateral documentation
Effectiveness of collection activity
Volume & quality of workout & problem loans management
An impairment analysis under ASC 310.10.35 & ASC 450
Associated Borrower Relationship - CORRECT ANSWER when any person or entity that has a shared
ownership, investment, or other type of relationship in a business or commercial endeavor with a
borrower
Safety and Soundness - CORRECT ANSWER 741.3(b) factors to be considered in determining whether a
CU's financial condition and policies.
Federal Financial Institutions Examination Council (FFIEC) - CORRECT ANSWER a formal interagency body
empowered to prescribe uniform principles, standards, and report forms for the federal examination of
financial institutions
