FDIC TE - Section 1.1 Basic Examination
Concepts and Guidelines Exam
Why does the FDIC conduct bank exams? - Answers -Ensure public confidence in the
banking system and to protect the DIF
Section 10(b) and (c) of the FDI Act - Answers -Empowers examiners to make a
thorough examination of a bank's affairs
UFIRS stands for what? - Answers -Uniform Financial Institutions Rating System
FFIEC stands for what? - Answers -Federal Financial Institutions Examination Council
6 Areas Composite Ratings are Based on - Answers -CAMELS - Capital, Asset Quality,
Management, Earnings sufficiency, Liquidity Position, SMR
Can banks disclose the ratings or any part of the ROE? - Answers -No, not without prior
consent of the regulator
Specialty Exam Areas - Answers -Bank Secrecy Act (BSA), IT, Trust, Government
Security Dealers, Municipal Security Dealers, and Registered Transfer Agent
Management Disclosure of Ratings - Answers -The EIC should discuss tentative ratings
with management near the end of the exam, stating that their ratings are tentative and
subject to the review and final approval by the regional director
Part 309 of the FDIC Rules and Regs - Answers -Examination findings, including the
composite and component ratings, are subject to confidentiality rules
Examination letter should notify management of what? - Answers -should notify
management that the institution's composite rating was tentatively downgraded and
convey the expectation that management stabilize the institution's risk profile and
strengthen its financial condition. The letter should notify management that actions
taken to materially expand the institution's balance sheet or risk profile are inconsistent
with supervisory expectations. The letter should also inform management they are
required to obtain a non-objection from the regional director before engaging in any
transactions that would materially change the institution's balance sheet composition,
such as significantly increasing total assets or volatile funding sources. If practical, state
banking departments should be included as a joint issuer of examination letters relating
to FDIC-supervised examinations.
Concepts and Guidelines Exam
Why does the FDIC conduct bank exams? - Answers -Ensure public confidence in the
banking system and to protect the DIF
Section 10(b) and (c) of the FDI Act - Answers -Empowers examiners to make a
thorough examination of a bank's affairs
UFIRS stands for what? - Answers -Uniform Financial Institutions Rating System
FFIEC stands for what? - Answers -Federal Financial Institutions Examination Council
6 Areas Composite Ratings are Based on - Answers -CAMELS - Capital, Asset Quality,
Management, Earnings sufficiency, Liquidity Position, SMR
Can banks disclose the ratings or any part of the ROE? - Answers -No, not without prior
consent of the regulator
Specialty Exam Areas - Answers -Bank Secrecy Act (BSA), IT, Trust, Government
Security Dealers, Municipal Security Dealers, and Registered Transfer Agent
Management Disclosure of Ratings - Answers -The EIC should discuss tentative ratings
with management near the end of the exam, stating that their ratings are tentative and
subject to the review and final approval by the regional director
Part 309 of the FDIC Rules and Regs - Answers -Examination findings, including the
composite and component ratings, are subject to confidentiality rules
Examination letter should notify management of what? - Answers -should notify
management that the institution's composite rating was tentatively downgraded and
convey the expectation that management stabilize the institution's risk profile and
strengthen its financial condition. The letter should notify management that actions
taken to materially expand the institution's balance sheet or risk profile are inconsistent
with supervisory expectations. The letter should also inform management they are
required to obtain a non-objection from the regional director before engaging in any
transactions that would materially change the institution's balance sheet composition,
such as significantly increasing total assets or volatile funding sources. If practical, state
banking departments should be included as a joint issuer of examination letters relating
to FDIC-supervised examinations.
