FDIC TE Prep 2025: Comprehensive Exam Questions &
Answers
Category 1: Deposit Insurance Rules & Regulations
1. What is the standard maximum deposit insurance amount (SMDIA) for a single ownership
account at one FDIC-insured bank?
A. $250,000
B. $500,000
C. $100,000
D. $1,000,000
Answer: A
Rationale: The Dodd-Frank Act permanently set the standard maximum deposit insurance
amount (SMDIA) at $250,000 per depositor, per FDIC-insured bank, per ownership category.
2. A joint account owned by two people is insured up to:
A. $250,000 total
B. $500,000 total
C. $250,000 per co-owner
D. $500,000 per co-owner
Answer: B
Rationale: Each co-owner's share of every joint account they own at the same bank is insured
,up to $250,000. For two co-owners, this provides up to $500,000 in total coverage for the joint
account.
3. Revocable trust accounts (e.g., Payable-on-Death) are insured up to $250,000 per:
A. Account
B. Grantor
C. Beneficiary
D. Unique beneficiary
Answer: D
Rationale: The insurance coverage for revocable trusts is calculated as the number of unique
eligible beneficiaries named by the owner multiplied by $250,000.
4. Which of the following is NOT a separate ownership category for deposit insurance
purposes?
A. Single Accounts
B. Joint Accounts
C. Business Accounts
D. Accounts with a Power of Attorney
Answer: D
Rationale: A Power of Attorney is a legal arrangement but does not create a separate insurance
ownership category. The underlying ownership (e.g., single, joint) determines the coverage.
5. A corporation's deposits at a bank are insured under which ownership category?
A. Certain Retirement Accounts
,B. Business/Organization Accounts
C. Revocable Trust Accounts
D. Irrevocable Trust Accounts
Answer: B
Rationale: Deposits owned by a corporation, partnership, or unincorporated association are
insured under the "Business/Organization Accounts" category, separately from the personal
accounts of its owners.
Category 2: Financial Analysis & CAMELS
6. The "C" in the CAMELS rating system stands for:
A. Credit
B. Capital
C. Compliance
D. Collateral
Answer: B
Rationale: CAMELS is an acronym for the components of a bank's condition: Capital, Asset
quality, Management, Earnings, Liquidity, and Sensitivity to market risk.
7. A bank with a Tier 1 Leverage Ratio of 4% is considered:
A. Well Capitalized
B. Adequately Capitalized
C. Undercapitalized
, D. Significantly Undercapitalized
Answer: B
Rationale: For a bank to be "Adequately Capitalized," it must generally have a Tier 1 Leverage
Ratio of at least 4%. "Well Capitalized" requires at least 5%.
8. The Allowance for Loan and Lease Losses (ALLL) is found on which financial statement?
A. Income Statement
B. Balance Sheet
C. Statement of Cash Flows
D. Report of Condition
Answer: B
Rationale: The ALLL is a contra-asset account, deducted from the gross amount of loans on the
Balance Sheet. It represents an estimate of uncollectible loans.
9. A high concentration in Commercial Real Estate (CRE) loans would most directly impact
which component of CAMELS?
A. Capital
B. Asset Quality
C. Earnings
D. Sensitivity to Market Risk
Answer: B
Rationale: A high concentration in any single loan type, like CRE, increases risk and is a key
factor in assessing the bank's Asset quality.
Answers
Category 1: Deposit Insurance Rules & Regulations
1. What is the standard maximum deposit insurance amount (SMDIA) for a single ownership
account at one FDIC-insured bank?
A. $250,000
B. $500,000
C. $100,000
D. $1,000,000
Answer: A
Rationale: The Dodd-Frank Act permanently set the standard maximum deposit insurance
amount (SMDIA) at $250,000 per depositor, per FDIC-insured bank, per ownership category.
2. A joint account owned by two people is insured up to:
A. $250,000 total
B. $500,000 total
C. $250,000 per co-owner
D. $500,000 per co-owner
Answer: B
Rationale: Each co-owner's share of every joint account they own at the same bank is insured
,up to $250,000. For two co-owners, this provides up to $500,000 in total coverage for the joint
account.
3. Revocable trust accounts (e.g., Payable-on-Death) are insured up to $250,000 per:
A. Account
B. Grantor
C. Beneficiary
D. Unique beneficiary
Answer: D
Rationale: The insurance coverage for revocable trusts is calculated as the number of unique
eligible beneficiaries named by the owner multiplied by $250,000.
4. Which of the following is NOT a separate ownership category for deposit insurance
purposes?
A. Single Accounts
B. Joint Accounts
C. Business Accounts
D. Accounts with a Power of Attorney
Answer: D
Rationale: A Power of Attorney is a legal arrangement but does not create a separate insurance
ownership category. The underlying ownership (e.g., single, joint) determines the coverage.
5. A corporation's deposits at a bank are insured under which ownership category?
A. Certain Retirement Accounts
,B. Business/Organization Accounts
C. Revocable Trust Accounts
D. Irrevocable Trust Accounts
Answer: B
Rationale: Deposits owned by a corporation, partnership, or unincorporated association are
insured under the "Business/Organization Accounts" category, separately from the personal
accounts of its owners.
Category 2: Financial Analysis & CAMELS
6. The "C" in the CAMELS rating system stands for:
A. Credit
B. Capital
C. Compliance
D. Collateral
Answer: B
Rationale: CAMELS is an acronym for the components of a bank's condition: Capital, Asset
quality, Management, Earnings, Liquidity, and Sensitivity to market risk.
7. A bank with a Tier 1 Leverage Ratio of 4% is considered:
A. Well Capitalized
B. Adequately Capitalized
C. Undercapitalized
, D. Significantly Undercapitalized
Answer: B
Rationale: For a bank to be "Adequately Capitalized," it must generally have a Tier 1 Leverage
Ratio of at least 4%. "Well Capitalized" requires at least 5%.
8. The Allowance for Loan and Lease Losses (ALLL) is found on which financial statement?
A. Income Statement
B. Balance Sheet
C. Statement of Cash Flows
D. Report of Condition
Answer: B
Rationale: The ALLL is a contra-asset account, deducted from the gross amount of loans on the
Balance Sheet. It represents an estimate of uncollectible loans.
9. A high concentration in Commercial Real Estate (CRE) loans would most directly impact
which component of CAMELS?
A. Capital
B. Asset Quality
C. Earnings
D. Sensitivity to Market Risk
Answer: B
Rationale: A high concentration in any single loan type, like CRE, increases risk and is a key
factor in assessing the bank's Asset quality.
