FDIC RMS MANUAL SECTION 3.2 EXAM QUESTIONS ANSWERED CORRECTLY LATEST UPDATE 2026
Estimated Credit Loss - Answers An estimate of the current amount of the loan and lease portfolio
that is not likely to be collected.
ASC 310 (FAS 114) - Answers Guidance in establishing reserves for impaired credits that are reviewed
individually.
ASC 450 (FAS 5) - Answers Guidance that addresses the accounting for impairment for groups of
loans.
Layering - Answers Recording the inappropriate practice of recording in the ALLL more than one
amount for the same probable loss.
Account Receivable Financing - Answers Commercial lending in which borrowers assign their interests
in accounts receivable to the lender as collateral.
Leveraged Lending - Answers No set definition but commonly described as:
Proceeds used for buyouts
Total Debt/EBITDA = 4.0x
Senior Debt/EBITDA = 3.0x
Borrower with High debt-to-net-worth
Or borrower's other debt ratios exceeds industry norms
Oil and Gas Lending - Answers Should have detailed report reviewing the Pricing, Discount Factors,
and Timing of the potential RBL agreement.
Part 365 - Answers Real Estate Lending Standards
LTV for Raw Land - Answers 65 percent
LTV for Land Development - Answers 75 percent
LTV for Commercial, multi-family, and other non-residential construction - Answers 80 percent
LTV for 1-4 family construction - Answers 85 percent
LTV for improved land - Answers 85 percent
LTV for 1-4 family residential - Answers None
Part 365 LTV Exception Tracking List Total Limit - Answers 100% of Total Capital
Part 365 LTV Exception Tracking List Non 1-4 Limit - Answers 30% of Total Capital
Name 2 factors outside of Ag borrower's control? - Answers Commodity prices and weather
conditions
Installment Loan - Answers small loans scheduled to be amortized over a specific period
Loan Participation - Answers sharing or selling of ownership interests in a loan between two or more
banks
Substandard - Answers Loans that have a well-defined weakness or weaknesses
Doubtful - Answers Loans that have a well-defined weakness or weaknesses making collection or
liquidation in full high questionable and improbable
Loss - Answers Loans that are considered uncollectible
Special Mention - Answers Characteristics which corrective management action would remedy
Nonaccrual - Answers 91 days or more past due unless well-secured and in the process of collection.
Retail Loan Classification:Open-end and closed end loans 90 Days Past Due? - Answers Substandard
Retail Loan Classification: Closed-end 120 DPD - Answers Loss
Retail Loan Classification: Open-end 180 DPD - Answers Loss
Retail Loan Classification: 1-4 90 DPD 65% LTV - Answers Substandard
Retail Loan Classification: 1-4 90 DPD 50% LTV - Answers Pass*
Retail Loan Classification: Open-end 60 DPD - Answers Pass*
Loan Impairment - Answers It is likely that a bank will be unable to collect all amounts due according
to the contractual terms of the loan agreement.
Troubled Debt Restructuring - Answers takes place when a bank grants a concession to a debtor in
financial difficulty.
Syndicated Lending - Answers loan that involves two or more banks contracting with a borrower,
typically a large or middle market corporation
Subprime Lending - Answers No universal definition, but usually defined by lending to higher-risk
borrowers
Security Agreement - Answers item between a debtor and a secured party that creates or provides for
a security interest
Estimated Credit Loss - Answers An estimate of the current amount of the loan and lease portfolio
that is not likely to be collected.
ASC 310 (FAS 114) - Answers Guidance in establishing reserves for impaired credits that are reviewed
individually.
ASC 450 (FAS 5) - Answers Guidance that addresses the accounting for impairment for groups of
loans.
Layering - Answers Recording the inappropriate practice of recording in the ALLL more than one
amount for the same probable loss.
Account Receivable Financing - Answers Commercial lending in which borrowers assign their interests
in accounts receivable to the lender as collateral.
Leveraged Lending - Answers No set definition but commonly described as:
Proceeds used for buyouts
Total Debt/EBITDA = 4.0x
Senior Debt/EBITDA = 3.0x
Borrower with High debt-to-net-worth
Or borrower's other debt ratios exceeds industry norms
Oil and Gas Lending - Answers Should have detailed report reviewing the Pricing, Discount Factors,
and Timing of the potential RBL agreement.
Part 365 - Answers Real Estate Lending Standards
LTV for Raw Land - Answers 65 percent
LTV for Land Development - Answers 75 percent
LTV for Commercial, multi-family, and other non-residential construction - Answers 80 percent
LTV for 1-4 family construction - Answers 85 percent
LTV for improved land - Answers 85 percent
LTV for 1-4 family residential - Answers None
Part 365 LTV Exception Tracking List Total Limit - Answers 100% of Total Capital
Part 365 LTV Exception Tracking List Non 1-4 Limit - Answers 30% of Total Capital
Name 2 factors outside of Ag borrower's control? - Answers Commodity prices and weather
conditions
Installment Loan - Answers small loans scheduled to be amortized over a specific period
Loan Participation - Answers sharing or selling of ownership interests in a loan between two or more
banks
Substandard - Answers Loans that have a well-defined weakness or weaknesses
Doubtful - Answers Loans that have a well-defined weakness or weaknesses making collection or
liquidation in full high questionable and improbable
Loss - Answers Loans that are considered uncollectible
Special Mention - Answers Characteristics which corrective management action would remedy
Nonaccrual - Answers 91 days or more past due unless well-secured and in the process of collection.
Retail Loan Classification:Open-end and closed end loans 90 Days Past Due? - Answers Substandard
Retail Loan Classification: Closed-end 120 DPD - Answers Loss
Retail Loan Classification: Open-end 180 DPD - Answers Loss
Retail Loan Classification: 1-4 90 DPD 65% LTV - Answers Substandard
Retail Loan Classification: 1-4 90 DPD 50% LTV - Answers Pass*
Retail Loan Classification: Open-end 60 DPD - Answers Pass*
Loan Impairment - Answers It is likely that a bank will be unable to collect all amounts due according
to the contractual terms of the loan agreement.
Troubled Debt Restructuring - Answers takes place when a bank grants a concession to a debtor in
financial difficulty.
Syndicated Lending - Answers loan that involves two or more banks contracting with a borrower,
typically a large or middle market corporation
Subprime Lending - Answers No universal definition, but usually defined by lending to higher-risk
borrowers
Security Agreement - Answers item between a debtor and a secured party that creates or provides for
a security interest
