FDIC TE Set 100 Study Guide Solutions

FDIC TE Set 100 Study Guide Solutions Capital - Equity Exposures SRWA 300% - ANSWER-Publicly traded equity exposure (other than a 600% and including ineffective portion of a hedge pair) Capital - Equity Exposures SRWA 400% - ANSWER-Equity exposure not publicly traded (other than 600%) Capital - Equity Exposures SRWA 600% - ANSWER-An equity exposure to an investment firm that has greater than immaterial leverage (ie. hedge fund) Asset Quality - Bankruptcy Basics Chapter 7 - ANSWER-Liquidation: Assets Liquidate Proceeds distributed Debts discharged Copyright ©EMILLYCHARLOTE 2025 ACADEMIC YEAR, ALL RIGHTS RESERVED. Page 2/27 Asset Quality - Bankruptcy Basics Chapter 11 - ANSWER- Reorganization Borrower keeps assets Debts restructured All creditors vote on restructuring plan Majority vote binds minority Asset Quality - Bankruptcy Basics Chapter 13 - ANSWER- Reorganization - individuals individuals <100M unsecured and $350M secured Only secured creditors entitled to vote Asset Quality - RE appraisals 3 basic valuation approaches - ANSWER- Cost Approach -Estimate of reproduction cost of building/improvements less depreciation plus land value Copyright ©EMILLYCHARLOTE 2025 ACADEMIC YEAR, ALL RIGHTS RESERVED. Page 3/27 Market data/Direct Sales Comparison - Estimate based on sales price of comparable Income Approach - Discounted value of future net operating income stream, including any "reversion" value of property when sold Asset Quality - RE Appraisal Exemptions Part 323 - ANSWER-<250M <1MM business loan and not dependent on sale/ income of collateral Existing credit if: no new monies advanced (except closing costs); no monies ok if no material change to RE mkt CRE < $500M Abundance of Caution Copyright ©EMILLYCHARLOTE 2025 ACADEMIC YEAR, ALL RIGHTS RESERVED. Page 4/27 Lease (unless economic equivalent of purchase) Lien for purpose other than real estate value Pooled (MBS) if loans met standard at origination Gty'd by US Gov't or GSEs (GSEs have their own appraisal requirments) Qualifies for Gov't program or sale to Gov't *Top 4 require evaluations Asset Quality - RE Evaluation Required Part 323 - ANSWER-<250M <1MM business loan and not dependent on sale/ income of collateral Copyright ©EMILLYCHARLOTE 2025 ACADEMIC YEAR, ALL RIGHTS RESERVED. Page 5/27 Existing credit if: no new monies advanced (except closing costs); no monies ok if no material change to RE mkt CRE < $500M Improved Property Definition per Part 365 - Appendix A (For supervisory LTV limit 80%) - ANSWER-Extension of credit secure dby one of the following: Farmland, Ranchland, timberland committed to ongoing man