Core Banking Operations Flashcards

A customer presents a check drawn on another bank. The teller accepts it and credits the customer's account. What is this process called?

Answer: Check clearing

Check clearing is the process by which banks exchange checks and settle the resulting balances between institutions.

Under Regulation CC, what is the maximum hold period a bank may place on local checks for most customers?

Answer: 2 business days

Regulation CC generally requires banks to make funds from local checks available within 2 business days.

Which document establishes the terms, interest rate, and repayment schedule for a bank loan?

Answer: Promissory note

A promissory note is a legally binding written promise to repay a loan under specified terms including interest rate and schedule.

A bank's net interest margin (NIM) is best described as:

Answer: Difference between interest earned and interest paid, as a percentage of earning assets

NIM measures profitability by comparing the net interest income a bank earns relative to its interest-earning assets.

What type of endorsement restricts a check's use to a specific purpose, such as 'For Deposit Only'?

Answer: Restrictive endorsement

A restrictive endorsement limits how the check can be negotiated, such as requiring it only be deposited to a specific account.

In banking, what does 'float' refer to?

Answer: Funds that have been deposited but not yet collected from the paying bank

Float represents funds that appear in both the depositor's and paying bank's accounts during the check-clearing process.

A Suspicious Activity Report (SAR) must be filed within how many days of detecting suspicious activity?

Answer: 30 days

FinCEN requires banks to file a SAR within 30 calendar days of detecting activity that may involve money laundering or fraud.