UCE QUESTIONS 4 PRACTICE EXAM
QUESTIONS AND ANSWERS COMPLETE
AND VERIFIED GUIDE.
Use the following call report information (in $000's) for CY-0:
CY-0 NI: $2,000
Commons Stock: $750
CY-1 RE: $2,150
Surplus: $800
CY-2 RE: $975
Undivided Profits:$9,750
Assuming this institution has never declared dividends, what is the
maximum current-year dividend the bank can declare without receiving
prior approval from the OCC?
a) $1,550
b) $2,000
c) $5,125
d) $9,750
c - $2,000+$2,150+$975 = $5,125. Per 12 USC 60, a national bank must
obtain prior approval from the OCC to pay dividends that would exceed its
net profits for the current year combined with retained net profits of the prior
two years. See Capital Accounts and Dividends Handbook, pg. 11
The OCC can initiate a variety of informal and formal actions against
national banks. Which of the following actions are public documents?
a) Board Resolutions
b) Formal Agreements
c) Commitment Letters
d) Memoranda of Understanding
b - Formal Agreements. While Formal Agreements are issued pursuant to the
OCC's Cease and Desist Order authority, they are considered less severe than
,C&Ds. See Bank Enforcement Actions document,
http://el.occ/publications/publications-by-type/internal/enforcement-action-
guidance.html
Which of the following auditing, reporting, and audit committee
requirements apply to all national banks with $500 million or more in total
assets?
I. An independent public accountant (IPA) must audit financial statements
II. An audit committee composed entirely of outside directors, independent
of bank management
III. IPAs may or may not make their work papers available to OCC
examiners upon request
IV. A separate attestation by an IPA on the effectiveness of management's
assertions over internal controls
a. I only
b. I and II only
c. I, II, and IV only
d. I, II, III, and IV
a- I only: IPAs must make work papers available upon request. Only
institutions with total assets of at least $1 billion are required to maintain an
audit committee comprised entirely of outside directors (majority for
$500MM-$1B) and obtain a separate IPA attestation. See 12 CFR 363.
Which of the following is a collateral valuation method used to limit the
amount of funds the lender will advance the borrower?
a) Blanket assignment
b) Factoring
c) Trade cycle analysis
d) Borrowing base
d - Borrowing base. A borrowing base is used in accounts
receivable/inventory financing and specifies the maximum amount that can be
borrowed in terms of collateral type, eligibility, and advance rates. See
Accounts Receivable and Inventory Financing Handbook
,American National Bank has decided to close one of its branch locations
due to branch expenses. Which of the following is true regarding the
former banking premises?
I. The holding period for OREO begins on the date the bank ceases to use
the former premises without relocating
II. The bank may hold the property three years
III. The bank may hold the property as long as it desires, as long as the
bank requests an extension
IV. The bank may hold the property no more than ten years, even with an
extension
A. I only
B. I and II
C. I, II, and IV
D. I, II, III, and IV
c - I, II, and IV only. A national bank must dispose of OREO at the earliest time
prudent judgment dictates, but the holding period must be no longer than five
years. In addition, the OCC may grant multiple extensions, as long as those
extensions, in the aggregate, do not exceed an additional five years. See
Other Real Estate Owned Handbook, pg 4
Which of the following funding would not be considered wholesale
funding?
a) Brokered deposits
b) Large CDs obtained through local businesses
c) Repurchase agreements
d) Federal Home Loan Bank advances
b - Examples of alternative funding sources include federal funds lines,
repurchase agreements (repos), correspondent bank lines, Federal Home Loan
Bank (FHLB) advances, Internet deposits, deposit-sharing arrangements, and
brokered deposits. See Liquidity Handbook for more info
Assuming all properties are located in a special flood hazard zone, which
of the following would require the escrowing of flood insurance?
a) A commercial loan secured by a shopping center for which the lender
, requires the escrowing of other funds
b) A residential loan for a 1-4 family home for which the lender does not
require the escrowing of other funds
c) An agriculture loan secured by 27 acres of land for which the lender
requires the escrowing of other funds
d) A business loan secured by a residential rental property for which the
lender requires the escrowing of other funds
d - The escrow requirement is limited to loans secured by "residential
improved real estate." Therefore, the determining factor in applying the
requirement is not the purpose of the loan, but the purpose of the building.
See Flood Handbook, pg 12
Which of the following is correct in regards to a national bank's board of
directors?
I. The number of directors must be at least 5, but no more than 25
II. Original executed oaths of directors must be filed with the OCC
III. Each director must own an aggregate value of $1,000 in stock
IV. The president of a national bank must be a member of the board of
directors
a) I and II only
b) II only
c) I, II, and IV only
d) I, II, III, and IV
d - I, II, III, and IV. A bank's board may have more than 25 members, after
notifying the OCC as to why the reason for the increase occurred. The value
of stock (or qualifying equity interest) may be based on the par value,
shareholder's equity value, or fair market value. See 12 CFR 7 for more
information. Specific documentation can be found in 12 CFR 7.2024, 2008,
2005, and 2012, respectively.
Per the UBPR, which of the following would be considered a noncurrent
loan?
I. A consumer loan that is 30 days past due
II. A doubtful loan that is 40 days past due
QUESTIONS AND ANSWERS COMPLETE
AND VERIFIED GUIDE.
Use the following call report information (in $000's) for CY-0:
CY-0 NI: $2,000
Commons Stock: $750
CY-1 RE: $2,150
Surplus: $800
CY-2 RE: $975
Undivided Profits:$9,750
Assuming this institution has never declared dividends, what is the
maximum current-year dividend the bank can declare without receiving
prior approval from the OCC?
a) $1,550
b) $2,000
c) $5,125
d) $9,750
c - $2,000+$2,150+$975 = $5,125. Per 12 USC 60, a national bank must
obtain prior approval from the OCC to pay dividends that would exceed its
net profits for the current year combined with retained net profits of the prior
two years. See Capital Accounts and Dividends Handbook, pg. 11
The OCC can initiate a variety of informal and formal actions against
national banks. Which of the following actions are public documents?
a) Board Resolutions
b) Formal Agreements
c) Commitment Letters
d) Memoranda of Understanding
b - Formal Agreements. While Formal Agreements are issued pursuant to the
OCC's Cease and Desist Order authority, they are considered less severe than
,C&Ds. See Bank Enforcement Actions document,
http://el.occ/publications/publications-by-type/internal/enforcement-action-
guidance.html
Which of the following auditing, reporting, and audit committee
requirements apply to all national banks with $500 million or more in total
assets?
I. An independent public accountant (IPA) must audit financial statements
II. An audit committee composed entirely of outside directors, independent
of bank management
III. IPAs may or may not make their work papers available to OCC
examiners upon request
IV. A separate attestation by an IPA on the effectiveness of management's
assertions over internal controls
a. I only
b. I and II only
c. I, II, and IV only
d. I, II, III, and IV
a- I only: IPAs must make work papers available upon request. Only
institutions with total assets of at least $1 billion are required to maintain an
audit committee comprised entirely of outside directors (majority for
$500MM-$1B) and obtain a separate IPA attestation. See 12 CFR 363.
Which of the following is a collateral valuation method used to limit the
amount of funds the lender will advance the borrower?
a) Blanket assignment
b) Factoring
c) Trade cycle analysis
d) Borrowing base
d - Borrowing base. A borrowing base is used in accounts
receivable/inventory financing and specifies the maximum amount that can be
borrowed in terms of collateral type, eligibility, and advance rates. See
Accounts Receivable and Inventory Financing Handbook
,American National Bank has decided to close one of its branch locations
due to branch expenses. Which of the following is true regarding the
former banking premises?
I. The holding period for OREO begins on the date the bank ceases to use
the former premises without relocating
II. The bank may hold the property three years
III. The bank may hold the property as long as it desires, as long as the
bank requests an extension
IV. The bank may hold the property no more than ten years, even with an
extension
A. I only
B. I and II
C. I, II, and IV
D. I, II, III, and IV
c - I, II, and IV only. A national bank must dispose of OREO at the earliest time
prudent judgment dictates, but the holding period must be no longer than five
years. In addition, the OCC may grant multiple extensions, as long as those
extensions, in the aggregate, do not exceed an additional five years. See
Other Real Estate Owned Handbook, pg 4
Which of the following funding would not be considered wholesale
funding?
a) Brokered deposits
b) Large CDs obtained through local businesses
c) Repurchase agreements
d) Federal Home Loan Bank advances
b - Examples of alternative funding sources include federal funds lines,
repurchase agreements (repos), correspondent bank lines, Federal Home Loan
Bank (FHLB) advances, Internet deposits, deposit-sharing arrangements, and
brokered deposits. See Liquidity Handbook for more info
Assuming all properties are located in a special flood hazard zone, which
of the following would require the escrowing of flood insurance?
a) A commercial loan secured by a shopping center for which the lender
, requires the escrowing of other funds
b) A residential loan for a 1-4 family home for which the lender does not
require the escrowing of other funds
c) An agriculture loan secured by 27 acres of land for which the lender
requires the escrowing of other funds
d) A business loan secured by a residential rental property for which the
lender requires the escrowing of other funds
d - The escrow requirement is limited to loans secured by "residential
improved real estate." Therefore, the determining factor in applying the
requirement is not the purpose of the loan, but the purpose of the building.
See Flood Handbook, pg 12
Which of the following is correct in regards to a national bank's board of
directors?
I. The number of directors must be at least 5, but no more than 25
II. Original executed oaths of directors must be filed with the OCC
III. Each director must own an aggregate value of $1,000 in stock
IV. The president of a national bank must be a member of the board of
directors
a) I and II only
b) II only
c) I, II, and IV only
d) I, II, III, and IV
d - I, II, III, and IV. A bank's board may have more than 25 members, after
notifying the OCC as to why the reason for the increase occurred. The value
of stock (or qualifying equity interest) may be based on the par value,
shareholder's equity value, or fair market value. See 12 CFR 7 for more
information. Specific documentation can be found in 12 CFR 7.2024, 2008,
2005, and 2012, respectively.
Per the UBPR, which of the following would be considered a noncurrent
loan?
I. A consumer loan that is 30 days past due
II. A doubtful loan that is 40 days past due
