MC LATEST UPDATED STUDY GUIDE
COMPLETE AND ACCURATE FOR YOUR
EXAM
For what period of time does the notice of a voluntary liquidation have to
be published in a newspaper?
✔✔for a period of 2 months in every issue of a newspaper published in
the city or town in which the bank is located. 12 USC 182
May a NB invest in the stock of a foreign bank? If yes, under what
conditions ? .
✔✔Yes. 10% of capital and surplus in aggregate. 12 USC 601
True or False - Mortgage Servicing Rights are deducted from a NB's Tier 1
capital since they are intangible assets.
✔✔False - MSR are not deducted from a NE's Tier 1 capital since they are
marketable, can be separated and sold apart from the banks assets, and
have an identifiable stream of cash flow.
True or False - Intangibles which are included as Tier 1 capital are limited
to 25% of total Tier 1 capital.
✔✔TRUE
If a change in control of a NB takes place, who must be notified ?
✔✔the appropriate federal banking agency. This also applies to a NB
when the president or CEO believes that a change has occurred. 12 CFR
5.50(g)(3)
,True of False - Change in equity capital must occur within 12 months of
preliminary approval.
✔✔TRUE
True or False - A committee of directors shall at least once during each
calendar year and within 15 months of the last such audit make suitable
audits of the trust department
✔✔True. The board may also adopt a continuous audit system. (12 CFR
9.9)
True or False - All officers and employees taking part in the operation of
the trust department do not need to be bonded.
✔✔False. All need to be bonded - 12 CFR 9.7
True or False - When a bank sells a participation in a loan, in order for it
not to be applied to the bank's lending limits, the participation must be on
a non-recourse basis OR result in a pro-rata sharing of credit risk.
✔✔False - Must be BOTH nonrecourse and pro-rata sharing of risk. 12 CFR
32.107
True or False
A Federally Related Transaction is defined as any real estate related
financial transaction entered into on or before 8/9/90 that the OCC or any
of its regulated institution engages in or contracts for and requires the
services of an appraiser
✔✔TRUE - CFR 34.42
,What are the limitations concerning real estate acquired for future
expansion?
✔✔Utilization should be accomplished within a reasonable period,
normally not to exceed 3 years. After real estate acquired for future
expansion has been held for one year, a board resolution with definitive
plans for utilization must be available for inspection.
Do honorary directors have voting rights?
✔✔No
12 CFR 7.2004
Can a NB director vote by proxy?
✔✔No
12 CFR 7
Can the president of a NB also be the cashier?
✔✔No
Can a NB pay dividends if they have not paid their FDIC assessment fee?
✔✔No
True or False - In addition to cash dividends, directors of a NB may declare
dividends payable in property with the approval of the Comptroller.
✔✔TRUE
, When may a NB loan trust funds to an officer, director or employee?
✔✔Never, max fine is $5,000 or imprisonment not more than 5 years, or
both.
May a NB have an interest bearing deposit in an affiliated NB ?
✔✔No. This is considered to be a loan or extension of credit to an affiliate
and must be secured as required by 371c. However, 12 USC 90 prohibits
banks from securing private deposits.
How much Fed stock must a bank own? 12 USC 282
✔✔Must equal 6% of the bank's capital and surplus. 3% paid-in.
How much stock can a bank hold in a small business investment
company?
✔✔5% of capital and surplus (12 USC 682(b)
How much stock can a bank hold in one of their operating subsidiaries?
✔✔No limit provided that the bank owns at least 80% of the voting stock
of the sub.
How much can a NB invest in a safe deposit business?
✔✔15 percent of capital (12 USC 24)
How much stock can a bank hold in FNMA, GNMA, SLMA?
✔✔Unlimited (12 USC 24)
COMPLETE AND ACCURATE FOR YOUR
EXAM
For what period of time does the notice of a voluntary liquidation have to
be published in a newspaper?
✔✔for a period of 2 months in every issue of a newspaper published in
the city or town in which the bank is located. 12 USC 182
May a NB invest in the stock of a foreign bank? If yes, under what
conditions ? .
✔✔Yes. 10% of capital and surplus in aggregate. 12 USC 601
True or False - Mortgage Servicing Rights are deducted from a NB's Tier 1
capital since they are intangible assets.
✔✔False - MSR are not deducted from a NE's Tier 1 capital since they are
marketable, can be separated and sold apart from the banks assets, and
have an identifiable stream of cash flow.
True or False - Intangibles which are included as Tier 1 capital are limited
to 25% of total Tier 1 capital.
✔✔TRUE
If a change in control of a NB takes place, who must be notified ?
✔✔the appropriate federal banking agency. This also applies to a NB
when the president or CEO believes that a change has occurred. 12 CFR
5.50(g)(3)
,True of False - Change in equity capital must occur within 12 months of
preliminary approval.
✔✔TRUE
True or False - A committee of directors shall at least once during each
calendar year and within 15 months of the last such audit make suitable
audits of the trust department
✔✔True. The board may also adopt a continuous audit system. (12 CFR
9.9)
True or False - All officers and employees taking part in the operation of
the trust department do not need to be bonded.
✔✔False. All need to be bonded - 12 CFR 9.7
True or False - When a bank sells a participation in a loan, in order for it
not to be applied to the bank's lending limits, the participation must be on
a non-recourse basis OR result in a pro-rata sharing of credit risk.
✔✔False - Must be BOTH nonrecourse and pro-rata sharing of risk. 12 CFR
32.107
True or False
A Federally Related Transaction is defined as any real estate related
financial transaction entered into on or before 8/9/90 that the OCC or any
of its regulated institution engages in or contracts for and requires the
services of an appraiser
✔✔TRUE - CFR 34.42
,What are the limitations concerning real estate acquired for future
expansion?
✔✔Utilization should be accomplished within a reasonable period,
normally not to exceed 3 years. After real estate acquired for future
expansion has been held for one year, a board resolution with definitive
plans for utilization must be available for inspection.
Do honorary directors have voting rights?
✔✔No
12 CFR 7.2004
Can a NB director vote by proxy?
✔✔No
12 CFR 7
Can the president of a NB also be the cashier?
✔✔No
Can a NB pay dividends if they have not paid their FDIC assessment fee?
✔✔No
True or False - In addition to cash dividends, directors of a NB may declare
dividends payable in property with the approval of the Comptroller.
✔✔TRUE
, When may a NB loan trust funds to an officer, director or employee?
✔✔Never, max fine is $5,000 or imprisonment not more than 5 years, or
both.
May a NB have an interest bearing deposit in an affiliated NB ?
✔✔No. This is considered to be a loan or extension of credit to an affiliate
and must be secured as required by 371c. However, 12 USC 90 prohibits
banks from securing private deposits.
How much Fed stock must a bank own? 12 USC 282
✔✔Must equal 6% of the bank's capital and surplus. 3% paid-in.
How much stock can a bank hold in a small business investment
company?
✔✔5% of capital and surplus (12 USC 682(b)
How much stock can a bank hold in one of their operating subsidiaries?
✔✔No limit provided that the bank owns at least 80% of the voting stock
of the sub.
How much can a NB invest in a safe deposit business?
✔✔15 percent of capital (12 USC 24)
How much stock can a bank hold in FNMA, GNMA, SLMA?
✔✔Unlimited (12 USC 24)
