Which factors can lead to a bank being placed on the FDIC's "problem list"?

Prepare for the FDIC Technical Evaluation Test with engaging questions and comprehensive explanations. Enhance your knowledge and boost your confidence for the exam!

The correct answer focuses on significant financial and operational issues that can jeopardize a bank's stability. Undercapitalization indicates that a bank does not have sufficient capital reserves to cover its risks or losses, which raises concerns about its ability to withstand financial shocks. Significant loan defaults further complicate this situation, as they directly affect the bank's liquidity and overall financial health. A bank facing these challenges is likely to exhibit risky behavior and an inability to meet its obligations, thus prompting regulators to place it on the FDIC's "problem list" to closely monitor its condition and take necessary corrective actions if needed.

The other options, while beneficial for a bank's health, do not align with the criteria that would typically result in a bank being flagged for problems. High customer satisfaction ratings, effective risk management practices, and strong community engagement are indicators of a stable and well-managed institution rather than signs of distress.

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