UCE 670 ComplEtE Exam with answEr GradEd a+
"4. Which of the following documents management's efforts to dispose of property held as OREO?
I Records of inquiries by interested persons
II Records of offers by potential buyers
III Board of Directors minutes indicating discussion of the property
IV Evidence of advertising the property for sale
A. I only
B. III only
C. II and III only
D. All of the above
" ✔✔ D
"2. A bank has $30MM in Tier One Leverage capital. We can conclude capital is adequate.
A. True
B. False
" ✔✔ B
"1.) An Examiner reviews a $170M agricultural operating line. The loan is secured by a lien on stored
grain. The market value of the grain is $220M. The loan has matured but has been extended for two
months. Farmer McDonald plans to sell the grain soon. Grain prices remain stable. His most recent
financial statement shows he is leveraged and has minimal liquidity. How should the loan be graded?
A. Pass
B. Special Mention
C. Substandard
D. Loss
" ✔✔ A - Market value of the collateral covers loan
"2.) A bank's balance sheet contains the following information:
,Net Loans $17,000M
ALLL 200M
Capital 1,900M
Surplus 1,900M
Retained earnings (300M)
YTD earnings 60M net
What is the bank's general Legal Lending Limit?
A. $645M
B. $600M
C. $564M
D. $555M
" ✔✔ C . (200+1900+1900-300+60) x .15
"3.) A bank has a loan to Mr. Smith and to the Lazy J Ranch, Inc. Under which of the following conditions
can these two loans be combined for the purposes of the legal lending limit?
I. The source of repayment for both loans is the sale of the Lazy J cattle
II. Each loan was granted to purchase a 50% interest in Big Bob's feeder lot
III. Mr. Smith receives 40% of his income from the ranch.
IV. Mr. Smith individually, and through a trust, controls 50% of the Lazy J Ranch.
A. I and II only
B. II and IV only
C. I, II, and IV only
D. II, III, and IV only
" ✔✔ A. 12 CFR 32.5
,"4.) An examiner reviews the bank's total relationship with one of its directors for compliance with Reg
O. In the file there are several transactions documented. The examiner needs to determine what to
review for Reg O. Which of the following does NOT qualify as an extension of credit?
A. An advance against accrued salary or accrued compensation
B. An increase in existing indebtedness
C. Granting a line of Credit
D. Issuance of a standby letter of Credit
" ✔✔ A. 12 CFR 215.3
"5.) An examiner reviews a $600M loan to a director for compliance with Reg O. Which of these items
should be verified when determining if the loan is in compliance?
I. The loan was made on substantially the same terms as comparable transactions
II Prior approval was obtained
III A majority of the Board approved the loan with the interested party abstaining
IV The loan was for housing or educational purposes
A. I and II only
B. II and III only
C. I, II, and III only
D. I and IV only
" ✔✔ C. 12 CFR 215.4 (a) and (b)
"6.) An examiner reviews an appraisal for $1,350M on an office building at ABC National Bank. The
appraisal was not prepared for ABC, but for another national bank nearby. In addition, the appraiser is
not on ABC's approved list. Can the bank use this appraisal?
A. Yes, if it documents that the appraisal was acceptable
B. Yes, because the other bank is a national bank
C. No, the appraiser must be on the bank's approved list
D. No, the bank must order a new appraisal
" ✔✔ A. 12 CFR 34.45
, "
8.) The computation of risk based capital ratios qualifies the impact of which of the following risks
I. Credit Risk
II. Interest Rate Risk
III Concentration Risk
A. I only
B. I and II only
C. I and III only
D. I , II, and III
" ✔✔ A. 12 CFR 3
"9.) What is NOT true for risk based capital?
A. Designed to strengthen the quality of Capital
B. Recognizes the relative degree of risk within various assets
C. Requires capital for off balance sheet activities
D. Relates capital to total bank assets
" ✔✔ D. 12 CFR 3
"10.) XYZ National Bank has the following capital and balance sheet items:
Common stock $100
Risk weighted assets 15,000
Surplus 150
Adjusted total assets 17, 500
Undivided profits 200
Limited Life Preferred 100
Qualifying Debentures 100
"4. Which of the following documents management's efforts to dispose of property held as OREO?
I Records of inquiries by interested persons
II Records of offers by potential buyers
III Board of Directors minutes indicating discussion of the property
IV Evidence of advertising the property for sale
A. I only
B. III only
C. II and III only
D. All of the above
" ✔✔ D
"2. A bank has $30MM in Tier One Leverage capital. We can conclude capital is adequate.
A. True
B. False
" ✔✔ B
"1.) An Examiner reviews a $170M agricultural operating line. The loan is secured by a lien on stored
grain. The market value of the grain is $220M. The loan has matured but has been extended for two
months. Farmer McDonald plans to sell the grain soon. Grain prices remain stable. His most recent
financial statement shows he is leveraged and has minimal liquidity. How should the loan be graded?
A. Pass
B. Special Mention
C. Substandard
D. Loss
" ✔✔ A - Market value of the collateral covers loan
"2.) A bank's balance sheet contains the following information:
,Net Loans $17,000M
ALLL 200M
Capital 1,900M
Surplus 1,900M
Retained earnings (300M)
YTD earnings 60M net
What is the bank's general Legal Lending Limit?
A. $645M
B. $600M
C. $564M
D. $555M
" ✔✔ C . (200+1900+1900-300+60) x .15
"3.) A bank has a loan to Mr. Smith and to the Lazy J Ranch, Inc. Under which of the following conditions
can these two loans be combined for the purposes of the legal lending limit?
I. The source of repayment for both loans is the sale of the Lazy J cattle
II. Each loan was granted to purchase a 50% interest in Big Bob's feeder lot
III. Mr. Smith receives 40% of his income from the ranch.
IV. Mr. Smith individually, and through a trust, controls 50% of the Lazy J Ranch.
A. I and II only
B. II and IV only
C. I, II, and IV only
D. II, III, and IV only
" ✔✔ A. 12 CFR 32.5
,"4.) An examiner reviews the bank's total relationship with one of its directors for compliance with Reg
O. In the file there are several transactions documented. The examiner needs to determine what to
review for Reg O. Which of the following does NOT qualify as an extension of credit?
A. An advance against accrued salary or accrued compensation
B. An increase in existing indebtedness
C. Granting a line of Credit
D. Issuance of a standby letter of Credit
" ✔✔ A. 12 CFR 215.3
"5.) An examiner reviews a $600M loan to a director for compliance with Reg O. Which of these items
should be verified when determining if the loan is in compliance?
I. The loan was made on substantially the same terms as comparable transactions
II Prior approval was obtained
III A majority of the Board approved the loan with the interested party abstaining
IV The loan was for housing or educational purposes
A. I and II only
B. II and III only
C. I, II, and III only
D. I and IV only
" ✔✔ C. 12 CFR 215.4 (a) and (b)
"6.) An examiner reviews an appraisal for $1,350M on an office building at ABC National Bank. The
appraisal was not prepared for ABC, but for another national bank nearby. In addition, the appraiser is
not on ABC's approved list. Can the bank use this appraisal?
A. Yes, if it documents that the appraisal was acceptable
B. Yes, because the other bank is a national bank
C. No, the appraiser must be on the bank's approved list
D. No, the bank must order a new appraisal
" ✔✔ A. 12 CFR 34.45
, "
8.) The computation of risk based capital ratios qualifies the impact of which of the following risks
I. Credit Risk
II. Interest Rate Risk
III Concentration Risk
A. I only
B. I and II only
C. I and III only
D. I , II, and III
" ✔✔ A. 12 CFR 3
"9.) What is NOT true for risk based capital?
A. Designed to strengthen the quality of Capital
B. Recognizes the relative degree of risk within various assets
C. Requires capital for off balance sheet activities
D. Relates capital to total bank assets
" ✔✔ D. 12 CFR 3
"10.) XYZ National Bank has the following capital and balance sheet items:
Common stock $100
Risk weighted assets 15,000
Surplus 150
Adjusted total assets 17, 500
Undivided profits 200
Limited Life Preferred 100
Qualifying Debentures 100
