BPMC Day 1 Review (IA Code, Ownership, Misc. Bal Sheet)

Question 1

What could be an issue with a dominate shareholder who is also CEO?

Accepted Answer

Unchecked control

Question 2

What does Other Real Estate Owned represent?

Accepted Answer

A defaulted real estate loan's collateral

Question 3

What happens to MSR value when interest rates fall and borrowers refinance?

Accepted Answer

Decreases

Question 4

Goodwill must be amortized.

Accepted Answer

False

Question 5

What is a potential risk of ESOP ownership in a struggling bank?

Accepted Answer

Liquidity strain from buybacks

Question 6

What could a lot of OREO signal at a bank?

Accepted Answer

Weak underwriting/AQ issues

Question 7

What is the main goal of banking regulations?

Accepted Answer

Promote safety and soundness

Question 8

Why does the Superintendent need to approve certain things?

Accepted Answer

Oversee key risks/activities

Question 9

What is a risk with BOLI?

Accepted Answer

Failure of insurance carrier

Question 10

What is one main benefit of a holding company?

Accepted Answer

Easier ability to raise capital

Question 11

What does Goodwill represent?

Accepted Answer

Premium paid above net asset value

Question 12

What do mortgage servicing rights (MSRs) represent?

Accepted Answer

Right to service sold loans

Question 13

What is the typical amortization period for a core deposit intangible?

Accepted Answer

5-10 years

Question 14

What do we check when reviewing OREO values?

Accepted Answer

Support for fair value less selling costs

Question 15

Why do certain things require Shareholder approval?

Accepted Answer

Protect ownership

Question 16

Which type of OREO property is hardest to sell?

Accepted Answer

Specialized manufacturing plant

Question 17

What is a potential concern for publicly traded banks?

Accepted Answer

Prioritize returns over safety

Question 18

Why are limits placed on certain asset holdings (LLL, BOLI, investments)?

Accepted Answer

Reduce concentration risk

Question 19

Why do bank's want to sell OREO quickly?

Accepted Answer

Nonearning asset/costly to hold

Question 20

What are two common ways banks acquire OREO?

Accepted Answer

Foreclosure or Deed in Lieu

Question 21

What can be an issue with cost-sharing arrangements?

Accepted Answer

Bank gets unfairly charged

Question 22

Why would a community bank have goodwill?

Accepted Answer

Acquired another bank

Question 23

What is the biggest factor affecting MSR value?

Accepted Answer

Interest rates

Question 24

What is a risk of a weak holding company?

Accepted Answer

Pressures bank for dividends

Question 25

Why does the Iowa Code require the Board to perform certain actions?

Accepted Answer

Encourage strong governance

Question 26

What is a core deposit intangible?

Accepted Answer

Value of acquired depositors

Question 27

What is the main reason banks acquire BOLI?

Accepted Answer

Decent returns

BPMC Day 1 Review (IA Code, Ownership, Misc. Bal Sheet)

Questions 27

BPMC Day 1 Review (IA Code, Ownership, Misc. Bal Sheet)

Questions 27