On which of the following loans does First Savings Bank NOT have to provide a 1098-E (Student Loan Interest) report?

A $12,000 loan to Paul and Rhonda Pena and their daughter Jennifer, used to pay her college tuition as well as the tuition at the private high school her sister, Jeanne, attends

A $10,000 tuition loan made to Bobby Wilcox, a student at the state university, guaranteed by the Department of Education

A $35,000 line of credit made to Don and Barbara Cocelli, secured by their home, for the payment of certified school expenses for their twin daughters at an accredited private school

A $15,000 loan to Linda Chu to be used for the purpose of paying tuition and fees and purchasing college books, lab equipment, and a computer for use in her education at the local community college

A $12,000 loan to Paul and Rhonda Pena and their daughter Jennifer, used to pay her college tuition as well as the tuition at the private high school her sister, Jeanne, attends

Which of the following interest-bearing accounts is EXEMPT from Form 1099 annual information reporting requirements under IRS regulations?

Negotiable order of withdrawal accounts

A bank has given a customer a merchandise gift with a fair market value of $25.00 for opening a deposit account. Which of the following statements describes the proper reporting status of this gift?

The fair market value of the gift is added to the interest paid and reported on Form 1099-INT.

If the cost of the gift is under $20.00, it is not reportable to the IRS.

The cost of the gift is credited to the customer's account as a bonus, increasing the account balance.

The fair market value of the gift is reported to the customer on the periodic statement.

The fair market value of the gift is added to the interest paid and reported on Form 1099-INT.

Which of the following relationships does NOT violate Regulation L?* Relationship A: First National Bank is located in the same city as an affiliate of First Savings and Loan. First National and the affiliate share a board member.* Relationship B: State Bank and an affiliate of First National Bank are located in the same RMSA but not in the same town. State Bank has assets of $60 million, and the affiliate has assets of $7 million. The two institutions share a board member.* Relationship C: Savings and Loan Association and Bank Holding Company do not have offices within the same RMSA . Bank Holding Company's assets are in excess of $1.75 billion, and Savings and Loan Association's assets are in excess of $2.5 billion. These institutions share a board member.

All the relationships violate Regulation L

A current member of the board of directors at First Savings Association (an institution with $150 million in total assets) was a director at First National Bank (an institution with total assets of $200 million) for many years. The two institutions are located in the same town. Before being elected to the board of First Savings, the director retired from the First National boarD. To honor his years of service with First National, the bank made him a director emeritus for life. He can attend any board meeting but cannot vote. He may speak to matters before the board and receives a director's fee. In actuality, however, the director never attends board meetings. Does this relationship violate Regulation L?

Yes, because he is really an honorary director.

No, because he does not attend meetings.

Yes, because he receives a fee.

Yes, because he is really an honorary director.

Trust Co. and First National Bank are located in the same city and each has assets of over $20 million. The president of First National has been asked to serve as a director of Trust Co. First National has no trust department and no trust operations. Trust Co. operates solely as a trust company. Would this relationship violate the prohibitions against management official interlocks in Regulation L?

Yes, because the institutions are in the same city.

No, because the institutions are not both depository institutions.

No, because the institutions do not compete.

Maybe, but it depends on the size of the institutions.

First National Bank is a newly chartered bank. Which of the following security related procedures is NOT required under the Bank Protection Act?

Hire a security consultant to inspect the bank for the effectiveness of the bank's security devices

Write procedures to assist in preserving evidence of crimes

Which of the following types of security devices is required for each bank, at minimum, under the Bank Protection Act?

Tamper-resistant locks on exterior windows and doors

Vault door made of steel that is at least 3 inches thick

Bullet-proof glass at all windows

Which of the following sets of policies or procedures is NOT a requirement of a security program?

Procedures for keeping customer information private

Policies addressing what to do in case of a robbery

Procedures for opening the bank at the beginning of the day

Procedures for keeping customer information private

Policies addressing periodic reporting to the board of directors

According to federal regulations, what must a security officer do when establishing a bank security program?

Institute procedures for testing security devices periodically

Survey competitors' security procedures

Hire uniformed armed guards to monitor the bank lobby

Modify the cash vault to meet minimum wall thickness standards

Institute procedures for testing security devices periodically

First National Bank and Fidelity Bank are subsidiaries of Bank Holding Company, Inc. Fidelity is planning to sell First National two loan participations.It has been Fidelity's practice for several years to sell overlines to First National.* Loan A has been on Fidelity's books for two years. It is a line of credit that will be over Fidelity's loan limit with its next advance. It was recently classified as special mention during a safety and soundness examination. First National agreed to purchase overlines on Loan A before Fidelity's funding of the loan two years ago and signed a participation agreement at that time.* Loan B is 60 days past due for a principal payment, although interest payments are current. The loan has been on the books at Fidelity for one year. First National agreed to purchase overlines on Loan B six months ago. Which, if any, of these loans can First National purchase?

Neither, both are low-quality assets

First National Bank is a wholly owned subsidiary of Bank Holding Company, Inc.Which of the following companies is NOT an affiliate of First National Bank?

A company of which First National owns 100 percent of the stock, set up solely to hold the title to the First National Bank building

A company that owns 60 percent of Bank Holding Company, Inc.

A company of which First National owns 100 percent of the stock, set up solely to hold the title to the First National Bank building

A company established to sell securities and that is 100 percent owned by Bank Holding Company, Inc.

Another bank that is owned by Bank Holding Company, Inc.

First National Bank would like to make a loan to an affiliate bank. Which of the following would NOT be acceptable as collateral for such a loan?

An account for the benefit of First National held at the affiliate bank in an amount equal to the loan amount

U.S. Treasury bills in an amount equal to the loan

Stock traded on the New York Stock Exchange that has a market value equal to 130 percent of the loan amount

An account for the benefit of First National held at the affiliate bank in an amount equal to the loan amount

Eligible bankers' acceptances with a market value equal to the loan amount 582 AMERICAN BANKERS ASSOCIATION

Which of the following practices is authorized by the Federal Reserve Act?

A bank's purchase, in its fiduciary capacity, of the affiliate's assets if the fiduciary instrument allows for such a purchase

An agreement by a bank that it is responsible for the obligations of its subsidiary

A bank's purchase, in its fiduciary capacity, of the affiliate's assets if the fiduciary instrument allows for such a purchase

The sale of a nonaccruing loan from a bank to its bank affiliate

The acceptance of an affiliate's securities of an affiliate as collateral for a NOTES bank's loan from the bank to the affiliate

First National Bank made a loan to a nonbank affiliate of its holding company that is secured by stocks, bonds, and debentures. At the outset of the loan,First National had collateral with a market value equal to 150 percent of the loan amount. Over time, some of the collateral has been retired and amortized. Some has dropped in value. What is the responsibility of the bank regarding the collateral?

The bank must check values when the collateral is retired or amortized to make sure the collateral is replaced with securities that will bring the loan into compliance with the percentages required in the law.

The bank has no responsibility once the loan is made provided the percentages were correct at the loan's inception.

The bank must check values every month to ensure that the percentages are correct at all times.

The bank must check values when the collateral is retired or amortized to make sure the collateral is replaced with securities that will bring the loan into compliance with the percentages required in the law.

The bank must annually check the value of the collateral to ensure that the percentage of value is maintained.

Which of the following items is considered a low-quality asset?

An asset in a nonaccrual status

An asset on which interest is past due 15 days

An asset that will be transferred to the workout area within the next 60 days so that the terms can be renegotiated

A member bank wants to sell assets to an affiliated bank that is 100 percent owned by the same bank holding company. Is this transaction allowed?

Yes. It is permitted, if the assets are not low quality.

Yes, but it is subject to an aggregate limit of 10 percent of the member bank's capital and unimpaired surplus.

Yes. It is permitted, if the assets are not low quality.

Yes, but it must be classified on the receiving bank's books as low quality assets.

When may an automatically renewable time deposit account be considered for inclusion in the unclaimed property report?

When the customer has not deposited or withdrawn funds from the account or another account at the same bank

When a customer has corresponded with the bank but not made deposits to the account

When a customer has shown interest in the account but not made deposits to the account

When a customer does not instruct the bank in writing to roll over the account

When the customer has not deposited or withdrawn funds from the account or another account at the same bank

Which state receives the reporting and escheatment of unclaimed property?

The state of the customer's last known address, if available and not foreign

The state where the bank is domiciled, if different from the bank holding company

The state of the customer's last known address, if available and not foreign

The state where the property is located, if a deposit account

The state chosen by a bank holding company, if a multistate operation

What are holders of unclaimed property required to do?

Mail a notification to customers whose accounts may escheat to the state

Charge customers ''inactive/unclaimed'' fees for accounts that are dormant

Publish in a local paper the owners' names of accounts that will escheat

Discontinue paying interest on dormant accounts

Which of the following institutions is exempt from the coverage of CRA?

Trust Company, Inc., an institution offering only trust services located in a large urban area

State National Bank of Ashgrove, a $15 million bank in a rural community, not located in an MSA

Trust Company, Inc., an institution offering only trust services located in a large urban area

ACME Savings Association, a federal thrift institution located in a mediumsized midwestern city, included in an MSA

First National Bank, a $250 million bank located in a rural area, not in an MSA

Which of the following is NOT a requirement of CRA?

To approve the bank's CRA statement at an annual board meeting

To delineate the bank's assessment area(s)

To approve the bank's CRA statement at an annual board meeting

To report small business loan data

ABC National Bank, an independent bank with $120 million in total assets located in a large urban area, is in the process of determining its option for its CRA evaluation. Which of the following options is NOT open to ABC Bank?

The small bank performance standard

The lending, investment, and service tests

QRS State Bank is being examined under the lending test. Which of the following is the most relevant criteria for the lending test?

The distribution of the bank's small business loans

The racial and gender characteristics of QRS's lending staff

The services QRS offers to its community

In the small bank performance standard, which of the following is NOT a criterion?

The bank's loan-to-deposit ratio

The geographic distribution of loans

The percentage of loans within the bank's assessment area(s)

Which of the following is true of a bank's CRA strategic plan?

It must be limited to a one-year term.

Affiliates must have their own plans.

Even if the bank has multiple assessment areas, it must have one strategic plan.

A bank received a signed letter criticizing its performance in meeting the credit needs of the community, but not adversely reflecting upon any individual bank employee's reputation. What must the bank do with this letter?

Retain it in the CRA public comment file

Have it reviewed and discussed by the board of directors

File it with the regional office of the bank's federal regulator

Retain it in the CRA public comment file

Answer it within 10 business days

What is the definition of a ''small'' business under CRA rules?

Produces gross annual revenues of $1 million or less

Has assets of less than $5 million

Produces gross annual revenues of $1 million or less

Does not generally have access to regional or national credit markets

Which of the following must a ''large'' bank maintain as part of its CRA program?

Description of its assessment area, written comments and responses, and the public portion of the regulator's most recent CRA performance evaluation

Listing of director, officer, and employee community involvement, and a listing of loans made to low- and moderate-income individuals

Description of its assessment area, written comments and responses, and the public portion of the regulator's most recent CRA performance evaluation

Copy of the bank's CRA Notice and the bank's most recent five years of CRA disclosure statements

A comprehensive record of all CRA-related training completed by employees during the past two years 696 AMERICAN BANKERS ASSOCIATION

A bank has been criticized by an examiner for less than satisfactory CRA performance. The bank must show improvement in its commitment to CR A. For the examiner, what would be LEAST effective in demonstrating the change?

Informing the examiner that the bank does not plan to acquire or merge with another bank, so CRA is not a priority

Giving the examiner an updated CRA public file

Showing the examiner a list of community groups with which the bank has met in the past 24 months to discuss credit needs

Showing the examiner results of the bank's most recent geocoding analysis, indicating parity in the number of loans made in each census tract

Which of the following is the best method for a large bank to use in monitoring its CRA performance?

Perform a geographic analysis of lending levels and dispersion of loans.

Review the effectiveness of marketing materials.

Evaluate approval and denial rates for minority loan applicants.

Perform a quarterly evaluation of the bank's loans-to-deposits ratio.

Perform a geographic analysis of lending levels and dispersion of loans.

In evaluating a bank's CRA performance, to what do bank examiners give the greatest consideration?

Extensions of credit the bank has made where the financing benefits low and moderate-income borrowers or neighborhoods

Efforts to analyze the geographic origins of its deposit base

Efforts to establish communication with members of the community regarding credit needs

Participation of the bank's board of directors in formulating CRA policy

Extensions of credit the bank has made where the financing benefits low and moderate-income borrowers or neighborhoods

What obligation does a bank have to disclose a covered CRA agreement 40 months after it terminates?

It has no obligation to disclose these covered CRA agreements.

It must maintain a copy in its CRA public file.

It must send a copy to its regulatory agency upon request.

It must send a copy to a member of the public upon request.

It has no obligation to disclose these covered CRA agreements.

Which of the following institutions is NOT subject to the coverage of HMDA?* Bank A, with assets of $55 million and located in a large urban city, makes home improvement loans and some home purchase loans to existing customers, but no mortgage loans.* Bank B, with assets of $9 million and located in a rural area, has several branches, also in rural areas, including one that makes home improvement and home purchase loans.* Mortgage Company C, with assets of $75 million and a home office in a large East Coast city, makes exclusively home purchase loans.

All the institutions are subject to HMDA

Several types of loan-related data appear in the following list. Which type of data is NOT required to be reported under HMDA?

Data on loans to purchase residential lots

Data on unsecured home improvement loans

Data on refinancings of home purchase loans

Data on loans to purchase residential lots

Of the following types of data, which one is NOT required to be reported for each application for an originated loan subject to Regulation C?

Race, ethnicity, and sex of the applicant

Type of action taken and the date

ABA CRCM Practice Test 9 - Free Online Exam Prep & Questions

First National Bank receives a notice from the IRS to begin withholding 28 percent of the interest payments on the money market savings account of Myra Wilcox because of payee underreporting. What is the most proper action for First National Bank to take?

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ABA CRCM Practice Test 9

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