Audit Report

OIG-16-052

SAFETY AND SOUNDNESS: Analysis of Bank Failures Reviewed

by the Department of the Treasury Office of Inspector General

August 15, 2016

Office of

Inspector General

Department of the Treasury

Contents

Analysis of Bank Failures Reviewed by Treasury OIG Page i

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Audit Report

Results in Brief............................................................................................ 1

Background ................................................................................................ 4

Audit Results .............................................................................................. 7

Common Causes of Bank Failures ............................................................. 7

Common Supervisory Themes .................................................................. 12

OCC Strengthened Its Supervisory Process ................................................ 16

Other Initiatives ...................................................................................... 19

Recommendations ....................................................................................... 22

Appendices

Appendix 1: Objectives, Scope, and Methodology......................................... 24

Appendix 2: Failed Banks’ Background Information ....................................... 26

Appendix 3: Bank Failures by Region........................................................... 31

Appendix 4: Common Causes of Bank Failures ............................................ 32

Appendix 5: Common Supervisory Themes of Bank Failures........................... 37

Appendix 6: Prior Office of Inspector General Recommendations to OCC......... 40

Appendix 7: OCC Management Comments................................................... 52

Appendix 8: Major Contributors to This Report ............................................. 55

Appendix 9: Report Distribution .................................................................. 56

Abbreviations

CDO collateralized debt obligation

CMO collateralized mortgage obligation

CRE commercial real estate

DIF Deposit Insurance Fund

Dodd-Frank Dodd-Frank Wall Street Reform and Consumer Protection Act

EIC Examiner-in-Charge

Fannie Mae Federal National Mortgage Association

FBR failed bank review

FDIA Federal Deposit Insurance Act
Contents

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FDICIA Federal Deposit Insurance Corporation Improvement Act of 

1991

FDIC Federal Deposit Insurance Corporation

FFIEC Federal Financial Institutions Examination Council

Freddie Mac Federal Home Loan Mortgage Corporation

FSOC Financial Stability Oversight Council

GSE Government-Sponsored Enterprise

MLR material loss review

MRA matter requiring attention

OCC Office of the Comptroller of the Currency

OIG Office of Inspector General

OTS Office of Thrift Supervision

PCA prompt corrective action

Platinum Platinum Community Bank

ROE report of examination

SAR Suspicious Activity Report

TeamBank TeamBank, National Association

Treasury Department of the Treasury
OIG Audit

Report

The Department of the Treasury

Office of Inspector General

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August 15, 2016

Thomas J. Curry

Comptroller of the Currency

This report presents the results of our analysis of the material loss 

review (MLR), failed bank review (FBR), and in-depth review

reports we issued during 2008–2012, as well as Office of the 

Comptroller of the Currency’s (OCC) actions to strengthen its bank 

supervision process.

Our audit objectives were to (1) identify common themes related to 

the supervision of banks and thrifts1and the causes of their failures

and (2) assess OCC’s actions to strengthen its supervisory process 

in response to our audit recommendations and through other 

initiatives. To accomplish our objectives, we reviewed the 

120 MLR, FBR, and in-depth review reports we issued to OCC and 

the legacy Office of Thrift Supervision (OTS) from January 1,

2008, through December 31, 2012, on banks that failed from

September 2007 through July 2012.

2 We also reviewed relevant 

OCC documentation and guidance, interviewed OCC officials, and 

conducted other applicable fieldwork from December 2011 through 

March 2015. Appendix 1 contains a detailed description of our 

objectives, scope, and methodology.

Results in Brief

The bank failures stemmed mainly from the banks’ ineffective 

management, inadequate board oversight, aggressive growth 

strategies, inability to adjust quickly or effectively to changing 

economic conditions and the declining real estate market, and 

failure to maintain sufficient capital. 

 

1

 Both national banks and thrifts are collectively referred to as banks throughout this report.

2

 Legacy OTS regulated all thrifts until July 21, 2011, when OCC assumed regulatory responsibility for 

federal savings associations pursuant to P.L. 111-203. Therefore, we did not assess the corrective 

actions taken by legacy OTS.
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We determined the most common themes associated with the

failed banks were: (1) asset concentrations, (2) inadequate credit 

administration and risk management, and (3) reliance on wholesale 

funding. We also identified several other attributes that, though not 

as common, contributed to bank failures. In addition, we identified 

certain matters in 29 failed banks relating to potential fraud that 

we referred or provided information to the Department of the 

Treasury’s (Treasury) Office of Inspector General’s (OIG) Office of 

Investigation. Further review of these matters by Treasury OIG’s 

Office of Investigation led to the prosecution of several individuals. 

Appendix 4 contains a listing of the common themes of the 

failures, by bank, as reported in our MLR, FBR, and in-depth review 

reports.

We also identified common supervisory themes of the banks prior 

to their failures. We determined that OCC’s supervision was

appropriate in some of the banks and OCC’s and the legacy OTS’s

uses of authority under prompt corrective action (PCA) were 

generally in accordance with PCA requirements. However, for

many banks, OCC and the legacy OTS: (1) did not take timely 

and/or strong enough supervisory actions and/or (2) did not timely 

identify or failed to identify key issues. In some instances, we 

noted that OCC and the legacy OTS lacked appropriate guidance or 

did not follow their guidance. Appendix 5 contains a listing of the 

common supervisory themes and other supervisory issues, by 

bank, reported in our MLR and in-depth reports.

OCC generally concurred with the recommendations we made in 

our MLR and in-depth review reports. And, OCC implemented

policies and procedures, updated examination guidance, and took 

other corrective actions consistent with the intent of our 

recommendations. Appendix 6 contains further details of OCC’s 

corrective actions, planned or taken, to address our 

recommendations.

Finally, OCC has undertaken independent initiatives to strengthen 

its supervisory process, including implementing processes to 

identify emerging risks to bank safety and soundness. Additionally, 

the Comptroller of the Currency requested that a small group of 

current and former senior supervisory personnel from other 

countries independently review OCC’s supervision. In a December 
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2013 report to OCC, the group commended OCC’s improved ability 

to focus on specific risk areas and its creation of an independent 

quality assurance process to review its own supervision. 

OCC is addressing several key recommendations made by the 

group, covering six broad areas: 

 mission, vision, and strategic goals;

 risk identification;

 ratings systems;

 staffing;

 scope and consistency of supervisory strategies; and

 enterprise governance.

Banking crises such as the one that occurred from 2008-2012 

have happened before; most recent prior to the Great Recession 

was the savings and loans crisis of the late 1980s/early 1990s 

when thousands of institutions failed. A major challenge facing 

OCC going forward is to institutionalize and maintain the “lessonslearned” and initiatives from this crisis to hopefully minimize the 

impact of future stresses to the economy on banking. Accordingly, 

we recommend that the Comptroller of the Currency ensures OCC 

identifies common trends and emerging issues to take corrective 

action in a timely manner by continuing to: (1) address 

recommendations from our MLRs and in-depth reviews, as well as

the international review; (2) participate in various committees and 

groups to identify emerging risks and communicate them to 

examiners and banks; and (3) use its newly implemented lessonslearned review program and other analyses, as appropriate. 

In a written response, OCC management showed concurrence with 

our audit results. To address previous MLR and in-depth review 

recommendations, management stated that OCC will continue its 

practice of identifying and taking appropriate actions in a timely 

manner in response to recommendations from MLRs and in-depth 

reviews as well as continue with its initiatives that addressed and 

implemented the December 2013 International Peer Review 

recommendations. With respect to participating on committees and 

the like, management responded that OCC is a member of the 

Financial Stability Oversight Council (FSOC) and the Federal 

Financial Institutions Examination Council (FFIEC), and OCC staff 
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participate on FSOC and FFEIC support committees. In addition, 

OCC participates on international committees, supervisory colleges, 

and crisis management groups; interagency and crossgovernmental working groups; and ad hoc groups where risks are 

raised and discussed. As for OCC’s new lessons-learned program, 

management stated that OCC will continue to use the program 

going forward. Overall, we found management’s response to meet 

the intent of our recommendations. We have summarized and 

evaluated management’s response in the recommendation section 

of this report and included the response in its entirety as appendix 

7.

Background

Section 38(k) of the Federal Deposit Insurance Act (FDIA) requires 

that the inspectors general for federal banking agencies review 

bank failures resulting in Deposit Insurance Fund (DIF) losses. OCC 

is the Federal banking agency responsible for supervising national 

banks and federal savings associations. On July 21, 2011, OCC 

assumed regulatory responsibility for the federal savings 

associations from the legacy OTS pursuant to P.L. 111-203.

Prior to enactment of the Dodd-Frank Wall Street Reform and 

Consumer Protection Act (Dodd-Frank), on July 21, 2010, 

section 38(k) of the FDIA defined a DIF loss as material if it 

exceeded the greater of $25 million or 2 percent of the failed 

institution’s total assets. Among other things, Dodd-Frank amended

how the FDIA defined the materiality of a DIF loss. A DIF loss is

material if it exceeds $200 million for a failure occurring in calendar 

years 2010 and 2011, $150 million in 2012 and 2013, and 

$50 million in 2014, with a provision that the threshold can be 

raised temporarily to $75 million thereafter if certain conditions are 

met.

Such material losses trigger formal review by the cognizant OIG, 

and for each MLR, section 38(k) of FDIA requires that the OIG

(1) determine the causes of the institution’s failure; (2) assess the

appropriate agency’s supervision of the institution, including 

implementation of the PCA provision of section 38(k); and (3) make 

recommendations for preventing such a loss in the future.
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Dodd-Frank also created new reporting requirements for failures 

that result in losses below the appropriate materiality threshold. We 

refer to these reports as FBRs. In these situations, we must 

determine the grounds identified by OCC for appointing the Federal 

Deposit Insurance Corporation (FDIC) as receiver and determine 

whether any unusual circumstances warrant a more in-depth

review of the loss.3

In our 2004 compendium report, Summary of Treasury OIG’s 

Material Loss Reviews of Failed National Banks and Thrift 

Institutions Between 1993 and 20024, our office performed 7 

MLRs between 1993 and 2002 pursuant the Federal Deposit 

Insurance Corporation Improvement Act of 1991 (FDICIA). Of the 7 

MLRs performed, 5 were required under FDICIA and two were 

considered pilots since the losses occurred before such reviews 

were required by law. Also of note, between 2003 and 2007, there 

were no failures that required an MLR. 

From September 2007 through July 2012, 126 of the 

approximately 2,200 banks (or approximately 6 percent) supervised 

by OCC or the legacy OTS failed.5 We issued 120 reports on 

119 of those failed banks during the period January 1, 2008

through December 31, 2012.

6 The reports included results from:

 54 MLRs (26 supervised by OCC and 28 by legacy OTS),

 63 FBRs (45 supervised by OCC and 18 by legacy OTS), and

 3 in-depth reviews (2 supervised by OCC and 1 by legacy OTS).

The banks we reviewed had approximately $185.4 billion in 

aggregate total assets, and their failures resulted in an aggregate

estimated DIF loss of $35.3 billion, or 19 percent, of the aggregate

total assets of the failed banks.

 

3

In the event that a loss warrants an in-depth review, we must report in our FBR the reasons for such 

review and state when it will be submitted to OCC and the Congress. Our objectives for in-depth 

reviews, similar to MLRs, are to (1) assess OCC’s supervision of the institution, including 

implementation of the PCA provision of section 38(k), and (2) make recommendations for preventing 

such a loss in the future.

4 Treasury OIG, Safety, Soundness, and Accessibility of Financial Services: Summary of Treasury 

OIG’s Material Loss Reviews of Failed National Banks and Thrift Institutions Between 1993 and 

2002, OIG-CA-04-004 (May 28, 2004).

5

 Among the 126 failed banks, 7 did not meet the $25 million materiality threshold requiring an MLR,

and they failed prior to the Dodd-Frank Act requirement for an FBR.

6 We issued an FBR report and an in-depth review report on First National Bank of Davis.
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Of the failed banks we reviewed, 65 percent were located in the 

southern and the western regions of the United States. They

constituted 83 percent, or $29.4 billion, of the aggregate 

estimated losses in our review. As Figure 1 shows, banks in eight 

states accounted for 69 percent of bank failures and 78 percent of 

estimated DIF losses, or approximately $27.6 billion. Florida and 

California were the top two states in both number of failures and 

DIF losses, accounting for 37 failures and $23.1 billion in 

estimated losses among the banks in our review. Appendices 2 and

3 provide additional details of the failed banks we reviewed, 

including their assets and estimated losses.

Figure 1: Bank Failures and Estimated Losses to the DIF, by State, 9/2007–7/2012

Source: Analysis of Treasury OIG reports issued from January 1, 2008, through December 31, 2012.

21

16

12

10

8

5 5 5

$6,862.9 

$16,267.6 

$1,598.9 

$1,700.3 

$523.8 $284.3 $169.4 $167.3 

$0

$5,000

$10,000

$15,000

$20,000

0

5

10

15

20

25

Florida California Georgia Illinois South

Carolina

Maryland Minnesota Arizona

Estimated 

Losses to the 

DIF

($ millions)

Bank Failures
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Audit Results

Common Causes of Bank Failures

We found that many of the recent bank failures displayed some of 

the same risks we identified in our 2004 compendium report.

These involved board of director and/or management weaknesses 

and aggressive growth strategies that resulted in excessive 

concentrations of high-risk assets and overreliance on continued 

growth in the economy.

Most bank failures were the result of ineffective management,

inadequate board oversight, aggressive growth strategies, the 

inability to adjust quickly or effectively to changing economic 

conditions and the declining real estate market, and the failure to 

maintain sufficient capital:

Ineffective Management and Inadequate Board Oversight

The boards of directors and management for the banks did not 

appropriately address problem areas or adequately identify,

measure, monitor, or control significant risks that threatened 

viability. For example, the banks’ boards and management 

(1) engaged in business strategies that encouraged high growth 

without adequately monitoring higher-risk loans, (2) did not 

establish or enforce concentration limits on their portfolios, and 

(3) did not maintain adequate capital to compensate for their

high-risk lending. In some instances, the boards and 

management were non-responsive to regulator efforts to correct 

unsafe and unsound practices. As a result, the banks’ asset 

quality deteriorated, classified asset levels and losses increased, 

and capital and earnings declined, ultimately leading to their 

failures.

Aggressive Growth Strategy

Prior to 2007, the banking industry experienced success due to 

strong financial performances, particularly in real estate. This led 

many banks to pursue aggressive growth strategies, especially in

real estate, which was profitable and in demand. These strategies 

led to lax credit administration and risk management, asset
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concentrations, and overreliance on wholesale funding, all of which 

are discussed below.

Economic Downturn

By 2007, the U.S. economy as a whole had begun to decline. 

The economic downturn hit real estate markets in southern and 

western states hardest. Those regions led in both number of 

bank failures and DIF loss in our review. Appendix 3 provides 

further details of the failures by region.

As the economy declined, property prices fell, and collateral 

values dropped. The drop in collateral values left many 

borrowers unable to refinance, leading to defaults on many 

loans, substantial write-downs on others, and, eventually,

foreclosures. This left the banks with many rapidly depreciating 

real estate assets that they could not sell. Furthermore, 

management relied on the previously robust real estate market 

to generate high-risk, high-yield loans without implementing 

adequate safeguards. The downturn in the economy magnified 

other deficiencies and helped to accelerate many bank failures.

Insufficient Capital

Federal banking law requires banking organizations to achieve 

and maintain adequate capital to serve as a buffer against 

unexpected losses. Sufficiency of capital is relative to the risk 

level of a bank’s loan portfolio. Whether failed banks maintained

capital just above the well-capitalized standard (affording little 

cushion for unanticipated, adverse events) or maintained higher 

capital levels, they could not sustain the large loan losses and 

economic downturn associated with the housing collapse. Over

time, the losses eroded capital until the banks eventually 

became critically undercapitalized and then ultimately failed.

We determined the most common themes of bank failures to be: 

(1) asset concentrations, (2) inadequate credit administration and 

risk management, and (3) reliance on wholesale funding. We also 

identified several less common causes contributing to bank failure. 

Appendix 4 contains a listing of the common causes of the failures,

by bank, as reported in our MLR, FBR, and in-depth review reports.
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Asset Concentration

OCC broadly defines a concentration as a group of classes of 

credit exposures that share common risk characteristics or 

sensitivities to economic, financial, or business developments

that, in aggregate, exceed 25 percent of the bank’s capital 

structure.

7

If a bank’s assets are highly concentrated in a 

particular category, negative events affecting that category can 

be highly detrimental to the bank as a whole.

Of the 119 banks we reviewed:

 89 (or 75 percent) had concentrations in commercial real 

estate (CRE) loans8

 20 (or 17 percent) had concentrations of non-traditional

mortgages9

 18 (or 15 percent) had concentrations of other assets, such 

as auto loans with subprime characteristics, non-agency 

collateralized mortgage obligations (CMOs),

10 collateralized 

 

7 The legacy OTS defined concentrations as a group of similar types of assets or liabilities that, when 

aggregated, exceed 25 percent of a thrift’s core capital plus allowance for loan and lease losses.

8 CRE loans are loans for real property for which the primary or significant source of repayment is from 

rental income associated with the property or the proceeds of the sale, refinancing, or permanent 

financing of the property. CRE loans include construction and real estate development loans, land 

development loans, and commercial property loans (such as for office buildings and shopping 

centers).

9 Non-traditional mortgages describe mortgages that do not take the traditional form. Traditional 

mortgage loans, both fixed and adjustable rate, typically require that the borrower’s monthly 

payment cover both interest and a reduction in principal, allowing for a reasonably predictable 

amortization over the life of the mortgage. Nontraditional mortgages include, but are not limited to, 

interest-only mortgages, payment-option adjustable-rate mortgages, and subprime mortgages.

10 A non-agency CMO is a type of financial debt vehicle that is not issued by a Government Sponsored 

Enterprise (GSE). A CMO is a special-purpose entity that is wholly separate from the institution that 

creates it. The entity is the legal owner of a set of mortgages, called a pool. Investors in a CMO buy 

bonds issued by the CMO, and they receive payments according to a defined set of rules.
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debt obligations (CDOs),

11 home equity lines of credit,12 and 

nonhomogeneous loans.

13

Inadequate Credit Administration and Risk Management

Credit administration and risk management include underwriting, 

loan review and appraisal processes, risk weighting, analyses of 

allowances for loan and lease losses, and multivariable stress 

testing of loan portfolios.14

Eighty-six (86), or 72 percent, of the 119 failed banks had 

inadequate credit administration and risk management practices. 

We reported instances in which bank management provided 

flexibility in underwriting standards to compete with other 

lenders. Some of the banks failed to obtain appraisals or had 

improper appraisal practices, such as untimely, incomplete, or 

inadequate support for appraisal values. In some cases, this

leniency resulted in approved loans for borrowers with financial 

weaknesses, including poor credit history, deficient collateral, 

low credit scores, numerous late payments, and previous 

foreclosures. In some instances, banks identified some of these 

weaknesses prior to approving the loans. Appraisal deficiencies 

often resulted in properties being overvalued, violating standard 

appraisal requirements.

Additionally, OCC or legacy OTS examiners documented various 

weaknesses in banks’ credit risk management practices,

 

11 A CDO is a structured investment security that consists of a securitized pool of debt instruments, 

such as trust-preferred securities. The cash flows of the underlying collateral are divided into 

separate portions, or tranches, each having its own yield, term, and other characteristics designed to 

appeal to different investors. Each CDO tranche represents a different type of credit risk. To 

compensate for their higher risk, tranches with higher-risk debt (junior or mezzanine tranches) offer 

higher interest rates to investors than more senior tranches. Typically, senior notes are rated at a 

higher investment grade than mezzanine notes.

12 A home equity line of credit is a form of revolving credit backed by the home as collateral.

13 Nonhomogeneous assets have underwriting criteria that are less likely to be uniform, and 

classification decisions are based on broader considerations than just the loan’s delinquency status. 

Nonhomogeneous loans may include, for example, construction, land, and land development loans, 

commercial mortgage loans, multifamily mortgage loans, and commercial loans.

14 Multivariable testing is designed to determine whether an insured depository institution has enough 

capital to weather the impact of adverse developments.
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including inability to properly risk weight loans, incomplete 

analyses of allowance for loan and lease losses, inadequate 

multivariable stress testing of loan portfolios, and excessive 

loan exceptions. Furthermore, banks did not diversify lending 

into other geographic areas during the peak of the real estate 

market to alleviate the concentration and economic risks within 

local markets. All of these factors left banks with poor-quality, 

delinquent loans which led to diminished assets, eventual 

losses, and, ultimately, bank failures.

Reliance on Wholesale Funding

Twenty-four (24), or 20 percent, of the 119 banks failed, in 

part, because of an overreliance on wholesale funding, often 

used to finance growth. Brokered deposits, the most common 

type of wholesale funding that banks in our review used, are 

highly interest-rate-sensitive; and therefore, an unstable deposit 

source. FDICIA requires that acceptance of brokered deposits 

can only be made by well-capitalized institutions that exceed 

the minimum PCA requirements. As banks fell below the wellcapitalized threshold, additional brokered deposits were no 

longer available as a funding source. Once cut off, banks were 

unable to identify alternative, sufficient funding solutions.

Other Causes

Several other causes, though not as common, contributed to 

bank failures. For example, one of the 119 banks failed because 

of significant losses from preferred stock holdings in Federal 

National Mortgage Association (Fannie Mae) and Federal Home 

Loan Mortgage Corporation (Freddie Mac). Such losses were 

also a contributing factor to the failure of another five banks 

affiliated with one holding company. After the Federal Housing 

Finance Agency placed Fannie Mae and Freddie Mac into 

conservatorship on September 7, 2008, the market value of the 

GSE preferred stock owned by the banks declined significantly, 

and banks were required to write down their GSE investments. 

Other causes included failed mergers, sales, or acquisitions;

high management/staff turnover; improper accounting 

transactions; inadequate internal controls; and a lack of core 
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deposits or funding. In addition, we identified certain matters in 

29 failed banks relating to potential fraud that we referred or 

provided information to Treasury’s OIG Office of Investigation.

Further review of these matters by Treasury OIG’s Office of 

Investigation led to the prosecution of several individuals.

Common Supervisory Themes

We assessed supervision of OCC and/or the legacy OTS in 

54 MLRs and 3 in-depth reviews,

15 identifying common supervisory 

themes of the banks prior to their failures. We determined that 

OCC supervision were appropriate in some of the banks, and uses 

of OCC and legacy OTS authority under PCA were generally in 

accordance with PCA requirements. However, for many banks, 

OCC or legacy OTS: (1) did not take timely and/or strong enough 

supervisory actions, and/or (2) did not identify or timely identify 

key issues.

We also noted that several of the actions taken or not taken were 

the result of OCC and the legacy OTS not following their guidance 

and/or the lack of appropriate guidance. Furthermore, we noted

several other supervisory issues that were not as common among 

the banks. Appendix 5 contains a listing of the common 

supervisory themes reported in our MLR and in-depth reports.

Appropriate Supervision

We considered OCC’s overall supervision appropriate in in 7 banks 

(6 of the 54 MLRs and 1 of the 3 in-depth reviews).

16 For example, 

we concluded that OCC’s supervision of the First National Bank of 

Anthony was appropriate even though it did not prevent a material 

loss to the DIF. OCC identified credit administration issues in a 

 

15 The other 63 reports are FBRs. The objectives of FBRs do not require a supervision assessment of 

those failed banks whose assets fall below the MLR materiality threshold.

16 We considered the overall supervision of the seven OCC-regulated banks to be appropriate because 

reports on them did not include any supervisory concerns. We did not identify any banks in which 

the legacy OTS’ overall supervision was considered fully adequate, either in terms of timely 

identifying problems at the banks, and/or taking appropriate supervisory action. 
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timely manner, issued enforcement actions, and used its authority 

under PCA.17

PCA Was Generally Used Appropriately

The purpose of PCA is to resolve the problems of insured 

depository institutions at the least possible long-term loss to the 

DIF. According to PCA requirements, Federal banking agencies are 

to take certain actions when an institution’s capital drops below 

the adequately capitalized level. Under PCA, regulators have 

flexibility to take other supervisory actions against institutions 

based on criteria other than capital levels to help reduce deposit 

insurance losses caused by unsafe and unsound practices.

We found that OCC and the legacy OTS generally followed existing 

examination guidelines and implemented PCAs as required. OCC 

and legacy OTS routinely monitored capital levels, imposed 

increasingly restrictive mandatory provisions as capital levels 

decreased, and acted quickly to close critically undercapitalized 

banks. 

Two instances out of the 54 MLRs and 3 in-depth reviews showed 

that PCAs were not used in accordance with PCA requirements:

IndyMac Bank FSB and Platinum Community Bank (Platinum), both 

regulated by the legacy OTS:

 Legacy OTS took PCA against IndyMac Bank on July 1, 2008, 

following reclassification of IndyMac from well-capitalized to 

adequately capitalized on June 30, 2008. Although this 

conformed to PCA requirements, our office found that legacy 

OTS allowed IndyMac to record an $18 million capital infusion 

received from the holding company in May 2008 as though it 

had been available on March 31, 2008. We determined that 

legacy OTS should have taken PCA in May 2008 based on 

information in IndyMac’s 10-Q filing for the quarter ending 

March 31, 2008. 

 Legacy OTS did not implement PCA during its supervision of

Platinum given a rapid chain of events relating to the unsafe and 

 

17 Treasury OIG, Safety and Soundness: Material Loss Review of First National Bank of Anthony, OIG11-105 (September 20, 2011)
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unsound use of escrow deposits to purchase certain mortgage 

loans, which led to the bank’s failure. As a result of effects

relating to the loan purchases, OTS notified Platinum in a letter 

dated August 3, 2009, that the bank was in troubled condition. 

The letter imposed restrictions on growth, severance pay, and 

dividends. On August 24, 2009, legacy OTS issued a cease and 

desist order to Platinum, requiring the bank to maintain capital 

ratios higher than PCA well-capitalized ratios. Because of this 

requirement, the cease and desist order stated that Platinum 

could not be deemed well-capitalized for PCA purposes and 

included other provisions normally associated with PCA 

requirements for undercapitalized banks.

Untimely Actions Taken and/or Stronger Actions Warranted 

Federal banking agencies can take a number of corrective actions 

to address safety and soundness practices at banks. In 41 of the 

54 MLRs and 1 of the 3 in-depth reviews (or 74 percent), we 

determined that OCC or the legacy OTS should have taken stronger 

actions and/or taken action earlier. Out of the 42 banks, 14 were 

regulated by OCC and 28 were regulated by the legacy OTS. 

 We found instances where Federal banking agencies could have 

taken more forceful actions to compel banks to restrain and 

reduce higher-risk lending and secure higher capital levels. 

 In some cases, Federal banking agencies took no supervisory 

action or should have taken stronger action to address unsafe 

and unsound concentrations in CRE, construction and land 

loans, and non-homogeneous loans identified in earlier exams. 

 Federal banking agencies sometimes failed to require banks to 

increase capital levels to compensate for increasing risk in their 

loan portfolio in a timely manner.

Furthermore, we reported instances where Federal banking 

agencies did not take formal or informal enforcement actions in a 

timely manner, nor were they timely using matters requiring 

attention (MRAs)

18 and corrective actions to compel boards of 

directors and management to mitigate risks. In many instances, 

examiners eventually concluded that regulatory action was 

 

18 The legacy OTS referred to MRAs as “matters requiring board attention.”
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necessary, but that conclusion came too late to reverse the bank’s 

worsening condition.

Guidance Not Followed or Lack of Appropriate Guidance

In 38 of the MLRs and in-depth reviews (or 67 percent), Federal 

banking agencies did not follow or lacked appropriate guidance. 

OCC regulated 16 of the banks, and the legacy OTS regulated 22. 

In certain cases, the Federal banking agencies took informal action 

rather than formal action, or assigned inaccurate CAMELS ratings.19

Federal banking agencies also failed to follow guidance on 

completion of working papers and examination documentation, had 

guidance that was too general, or lacked guidance requiring 

Examiner-in-Charge (EIC) rotation and a formal review of the 

supervision process.

In another example, OCC did not follow its guidance during the 

process of converting Silverton Bank to a national bank. OCC 

approved the conversion despite noting significant weaknesses in 

the pre-conversion examination, and it did not assign an EIC timely. 

Additionally, OCC did not have guidance for performing secondlevel reviews during the conversion approval process.20 These 

issues were crucial to the bank’s supervision during the 

deterioration of the housing market.

Key Issues Not Identified or Not Identified Timely

In 13 of the MLR or in-depth reviews (or 23 percent), OCC or the 

legacy OTS did not identify key issues, or did not identify the 

issues until subsequent examinations. OCC regulated 2 of the 

banks, and legacy OTS regulated 11. In our MLR report on 

TeamBank, National Association (TeamBank), for example, OCC did 

not timely identify that the bank was being controlled by a Chief 

Executive Officer/President with too many other responsibilities to 

 

19 Federal banking agencies use the Uniform Financial Institutions Rating System, or “CAMELS,” to 

assign composite and component ratings to banks. A bank’s composite CAMELS rating integrates 

ratings from six components: capital adequacy, asset quality, management, earnings, liquidity, and 

sensitivity to market risk. The ratings range from 1 to 5, with 1 being the highest rating and least 

supervisory concern.

20 Treasury OIG, Safety and Soundness: Material Loss Review of Silverton Bank, N.A., OIG-10-033 

(January 22, 2010)
Analysis of Bank Failures Reviewed by Treasury OIG Page 16

(OIG-16-052)

properly manage the bank’s risk profile and growth strategy. 

Furthermore, OCC did not review TeamBank’s incentive 

compensation or bonus plans, or ensure that the bank conducted 

stress testing. We determined that the incentive compensation plan 

and bonus plan for TeamBank’s loan officer encouraged

uncontrolled growth of the bank’s loan portfolio, which contributed 

to the bank’s failure.21

Other Supervision Issues

Several other supervisory issues, though not as common among 

the banks, posed concerns. Specifically, both OCC and the legacy 

OTS assigned CAMELS ratings that were too high, legacy OTS 

allowed three banks to inappropriately backdate capital

transactions, and OCC allowed a lapse in supervisory coverage 

after a bank’s charter conversion.

OCC Strengthened Its Supervisory Process

We made a number of audit recommendations to OCC to address 

the causes of the bank failures and supervision weaknesses we 

noted in our MLRs and in-depth reviews. The recommendations 

addressed issues such as CRE concentrations, a lessons-learned

process, charter conversions, management oversight, volatile 

funding sources, and investment securities. OCC generally 

concurred with the recommendations and instituted policies and 

procedures, updated examination guidance, and took other 

corrective actions that met the intent of our recommendations, 

including:

 To address funding and liquidity risk management, OCC 

modified its Community Bank Supervision Handbook.22 In 

addition, OCC, the legacy OTS, and FDIC issued an interagency 

policy statement in May 2010. The policy statement 

summarized the principles of sound liquidity risk management 

that the agencies have issued in the past and reiterates the 

 

21 Treasury OIG, Safety and Soundness: Material Loss Review of TeamBank, National Association, 

OIG-10-001 (October 7, 2009).

22 Comptroller’s Handbook: Community Bank Supervision (January 2010).
Analysis of Bank Failures Reviewed by Treasury OIG Page 17

(OIG-16-052)

process that banks should follow to appropriately identify, 

measure, monitor, and control their funding and liquidity risk.23

 To address the charter approval process and ensure an EIC is 

promptly assigned after a charter conversion of a bank, OCC 

formalized a process to perform second-level reviews of charter 

conversion proposals prior to recommending approval of the 

application. OCC also revised the Comptroller’s Licensing 

Manual by expanding the Conversion Handoff Package prepared 

by the licensing staff upon transfer of supervisory responsibility. 

The package calls for specific attention to the timely 

appointments of an EIC when a charter conversion becomes

effective.24

 To emphasize to examiners that MRAs are to be issued in 

reports of examination in accordance with the criteria regarding 

deviations from sound management and noncompliance with 

laws or policies listed in the Comptroller’s Handbook, OCC 

issued an MRA Reference Guide in June 2010. The guide set 

forth expectations of examiners for proactive supervision, clear 

and assertive communication of concerns to boards of directors, 

and prompt follow-up on commitments for corrective action.25

 OCC revised guidance in October 2011 to establish a formal 

rotation policy for EICs of banks.

26

 To address the possibility of establishing limits or other controls 

for concentrations that pose an unacceptable safety and 

soundness risk, OCC approached other Federal banking 

agencies for collaboration. To date, no interagency agreement 

has been made, so in its absence, OCC revised its 

Concentrations of Credit Handbook to help bankers and 

examiners identify, analyze, and establish sound risk 

management processes for concentrations of credit.27

 

23 Interagency Policy Statement on Funding and Liquidity Risk Management (March 22, 2010).

24 OCC Comptroller’s Licensing Manual: Conversions (April 2010).

25 Midsize and Community Bank Supervision MRA Reference Guide (June 10, 2010).

26 PPM 5000-38(REV): Examiner-in-Charge Rotations, (October 31, 2011).

27 Comptroller’s Handbook: Concentrations of Credit (December 2011).
Analysis of Bank Failures Reviewed by Treasury OIG Page 18

(OIG-16-052)

 To emphasize to examiners the importance of following OCC’s 

guidance on (1) performing reconciliations of all reports 

submitted by management to ensure that the reports are 

accurate and agree with the bank’s general books and

(2) analyzing a bank’s new products to determine their effects

on credit risk, OCC sent an all-employee message on 

February 11, 2013. The message reminded employees to follow 

established OCC guidance for performing reconciliations of 

reports received from bank management during examinations 

and to evaluate the effect of new products on key risks, 

including credit risk.

 To emphasize to examiners the importance of following OCC’s 

guidance to verify that the bank’s corrective actions have been 

successful and timely, OCC sent an all-employee message on

February 11, 2013, to reinforce the expectation for examiners 

to comply with all aspects of the July 1, 2010, MRA Reference 

Guide.

 To address the need to reassess guidance for examination of 

investment securities, including GSE securities, OCC issued a 

supervisory memo to all examining personnel on risk 

management practices on August 10, 2009. OCC also issued 

the “New Capital Rule Community Bank Guide” in July 201328, 

which raised the risk weight from 20 percent to 100 percent on 

GSE preferred stock for national banks. 

 To address the need for formal guidance to address OCC’s 

response to investigations and requests for information from 

law enforcement agencies, OCC issued guidance on February 7, 

2014, covering interaction with law enforcement agencies and 

communication protocols for notifications to OCC headquarters 

and OIG.29 The guidance provides notification procedures for 

when OCC should notify OIG regarding (1) efforts to obstruct or 

hinder OCC’s statutory authority, (2) suspicious activity report

(SAR) filing, (3) initial contact with law enforcement personnel, 

and (4) certain investigations. 

 

28 New Capital Rule Community Bank Guide (July 2013).

29 PPM 5000-40: OCC Filings of SAR (February 7, 2014); PPM 5000-41: Notification Requirements to 

the Treasury OIG for Examination Obstruction, Administrative Actions, SARs, and Contacts with 

Law Enforcement (February 7, 2014)
Analysis of Bank Failures Reviewed by Treasury OIG Page 19

(OIG-16-052)

 To address our recommendation that OCC establish, in policy, a 

process to assess the causes of bank failures and the 

supervision exercised over banks, and to take appropriate action 

to address any significant supervisory weaknesses or concerns 

identified, OCC established a lessons-learned review program in

February 2012. OCC’s lessons-learned review program provides

an independent assessment of the adequacy of bank supervision 

for each OCC failed bank. It requires that a written summary 

report—detailing issues of concern, causes of failure, 

supervision best practices, and any recommended supervision 

process enhancements—be submitted to the OCC ombudsman30

for approval within 4 weeks of completion of examination 

procedures. As of March 17, 2015, OCC completed all lessonslearned reviews for every failed bank from 2008 forward. In 

total, OCC completed 90 lessons-learned reviews, which 

included reviews of 72 bank failures within the scope of this 

review, as well as 18 failures that were not. 

For a summary of OCC’s corrective actions planned or taken to 

address our recommendations, by report, see appendix 6.

Other Initiatives

OCC has taken other initiatives to strengthen its supervisory 

process during this wave of bank failures. For example, OCC has

processes in place to identify emerging risks to bank safety and 

soundness. As we discussed in an April 2013 audit report, OCC 

participates in various committees and groups that meet regularly 

to identify emerging risks and communicate them to examiners and 

banks.

31 The groups address potential risks by estimating potential 

consequences, making recommendations for appropriate 

supervisory responses, and issuing supervisory strategy guidance 

to strengthen and improve the supervision process. In addition, the 

 

30 The Ombudsman serves as an independent arbiter for the OCC’s regulated banks and their 

customers by operating apart from the OCC bank supervision function and by reporting directly to 

the Comptroller of the Currency. This separation enables the Ombudsman to respond independently 

and fairly to the questions and complaints that consumers have about their banks, and to provide 

bankers with a way to challenge agency decisions without fear of retribution or reprisal.

31 Treasury OIG, Safety and Soundness: OCC Identification of Emerging Risks, OIG-13-037 (April 9, 

2013).
Analysis of Bank Failures Reviewed by Treasury OIG Page 20

(OIG-16-052)

committees and groups collaborate with other regulatory agencies,

such as the Board of Governors of the Federal Reserve System and 

FDIC to identify emerging risks to national banks.

OCC also released guidance on MRAs in October 2014 establishing

procedures for examiners to identify and aggregate supervisory 

concerns into MRAs.

32 The guidance focuses on the criteria, 

communication, and follow-up of concerns in MRAs. According to 

OCC, the guidance was a substantive change in MRA philosophy 

with the intention of improving early identification of concerns due 

to a bank’s deficient practices. Concurrent with the issuance of the 

MRA guidance, OCC held required training sessions to ensure 

employees understood the new standards and set up a SharePoint 

site where examiners can refer to the guidance, submit questions, 

and review frequently asked questions.

Furthermore, the Comptroller of the Currency and his executive 

team requested that a small group of current and former senior 

supervisory personnel from Australia, Canada, and Singapore, 

along with a former staff member of the International Monetary 

Fund, participate in an independent review of OCC’s supervision of 

large and midsize banks. In a report issued to OCC in December 

2013,

33 the team noted that OCC has better defined the roles of its 

lead experts, improving its ability to focus on specific risk areas 

and to identify emerging risks in these areas early. According to the 

report, OCC exceled at taking information from examiners and 

experts, further researching these topics, and implementing 

applicable policy. Furthermore, OCC initiated a Lean Six Sigma 

project to enhance the efficiency of its internal processes and 

created an independent quality assurance process to review the 

processes and practices of its supervision divisions.

The report made key recommendations covering six broad areas:

 mission, vision, and strategic goals;

 risk identification;

 ratings systems;

 staffing;

 

32 PPM 5400-11: Matters Requiring Attention, (October 9, 2014).

33 An International Review of OCC’s Supervision of Large and Midsize Institutions: Recommendations 

to Improve Supervisory Effectiveness (December 4, 2013).
Analysis of Bank Failures Reviewed by Treasury OIG Page 21

(OIG-16-052)

 scope and consistency of supervisory strategies; and

 enterprise governance.

In response to the recommendations, OCC is:

 developing a vision statement and strategic objectives that 

clearly align to OCC’s mission statement and ensure bank 

safety and soundness is the primary objective;

 expanding the organization, functions, and responsibilities of its 

large-bank lead-expert program to improve horizontal 

perspective and analysis, systemic risk identification, quality 

control and assurance, and resource prioritization;

 establishing a formal rotation program for all examiners to 

provide them with broader, fresh perspectives on a regular 

basis;

 formalizing an enterprise risk management framework that will 

involve developing a risk appetite statement, creating a 

decision-tree process, and enhancing the OCC’s existing 

National Risk Committee framework and processes;

 analyzing the effectiveness of the MRA process and developing 

controls to better manage the large bank supervision MRA 

follow-up to promote more timely and consistent resolution of 

identified deficiencies;

 improving policy development and decision-making response 

times through better structured processes and strengthening 

collaboration to allow more efficient and effective senior 

management input for strategic issues;

 developing standards for the varying supervisory responses to 

emerging issues;

 enhancing the application of CAMELS and integration with the 

Risk Assessment System; and

 enhancing identification of deteriorating banks and clarifying 

supervisory expectations.
Analysis of Bank Failures Reviewed by Treasury OIG Page 22

(OIG-16-052)

Recommendations

We recommend that the Comptroller of the Currency continue to:

1. Address recommendations from our MLRs and in-depth reviews, 

as well as the international review.

Management Response

Management responded that OCC will continue its practice of 

identifying and taking appropriate actions in a timely manner in 

response to recommendations from MLRs and in-depth reviews. 

Further, OCC will continue with its initiatives that addressed and 

implemented the December 2013 International Peer Review 

recommendations.

OIG Comment

Management’s response meets the intent of our recommendation.

2. Participate in various committees and groups to identify 

emerging risks and communicate them to examiners and banks.

Management Response

Management responded that the Comptroller of the Currency is a 

member of the FSOC and the FFIEC, and OCC staff participates on 

FSOC and FFEIC support committees. In addition, OCC participates 

on international committees, supervisory colleges, and crisis 

management groups; interagency and cross-governmental working 

groups; and ad hoc groups where risks are raised and discussed. 

OCC conveys these risks to examiners through the Comptroller’s 

Handbook, numerous internal communications, and training, and to 

examiners and banks through publications (e.g., the Semiannual 

Risk Perspective), OCC Bulletins, other guidance documents, and 

outreach efforts.

OIG Comment

Management’s response meets the intent of our recommendation.
Analysis of Bank Failures Reviewed by Treasury OIG Page 23

(OIG-16-052)

3. Use its newly implemented lessons-learned review program and 

other analyses, as appropriate.

Management Response

Management responded that OCC will continue to use the lessonslearned review program going forward.

OIG Comment

Management’s response meets the intent of our recommendation.

* * * * * *

We appreciate the courtesies and cooperation provided to our staff

during the audit. If you wish to discuss the report, you may 

contact me at (202) 927-5776 or Alicia Weber, Audit Manager, at 

(202) 927-5811. Major contributors to this report are listed in 

appendix 8.

Susan Barron /s/

Audit Director
Appendix 1

Objectives, Scope, and Methodology

Analysis of Bank Failures Reviewed by Treasury OIG Page 24

(OIG-16-052)

Our objectives were to (1) identify common themes related to the 

supervision of banks and thrifts and the causes of their failures and 

(2) assess the Office of the Comptroller of the Currency’s (OCC)

actions to strengthen its supervisory process in response to our 

audit recommendations and through other initiatives. We 

conducted our fieldwork in Washington, DC from December 2011 

through March 2015. The scope of our audit included banks that 

failed from September 2007 through July 2012, and on which we 

issued reports from January 1, 2008, through December 31, 2012.

To accomplish our objectives, we 

 reviewed a 2004 Department of the Treasury Office of 

Inspector General (OIG) compendium report, Summary of 

Treasury OIG’s Material Loss Reviews of Failed National Banks 

and Thrift Institutions Between 1993 and 2002, to gain an 

understanding of the common causes, supervisory issues, and 

risks relating to the bank failures in the prior financial economic 

crisis;

 analyzed material loss review (MLR), failed bank review (FBR), 

and in-depth review reports we issued from January 2008 

through December 2012;

 analyzed the number of failed banks by region and state.

 identified the most common causes of failure and supervisory 

issues associated with these failures;

 reviewed a 2013 OIG report, OCC Identification of Emerging 

Risks, to gain an understanding of the processes OCC has in 

place to identify emerging risks to bank safety and soundness;

 reviewed a December 2013 report on an international review of 

OCC’s supervision of large and midsize banks

 interviewed the Senior Advisor to the Senior Deputy Comptroller 

for Midsize and Community Bank Supervision, the Deputy 

Comptroller for Credit and Market Risk, and Bank Supervision 

Specialist;

 reviewed relevant guidance and documentation relating to the 

OCC corrective actions taken to address the recommendations.
Appendix 1

Objectives, Scope, and Methodology

Analysis of Bank Failures Reviewed by Treasury OIG Page 25

(OIG-16-052)

 compiled a list of our prior recommendations included in our 

MLR and in-depth reports, and the related corrective actions 

taken or planned by OCC;

34 and

 reviewed relevant documentation supporting other initiatives 

OCC is taking to improve its supervision of banks.

We conducted this performance audit in accordance with generally 

accepted government auditing standards. Those standards require 

that we plan and perform the audit to obtain sufficient, appropriate 

evidence to provide a reasonable basis for our findings and 

conclusions based on our audit objectives. We believe that the 

evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

 

34 Under section 38(k) of the Federal Deposit Insurance Act, in performing FBRs, the Offices of 

Inspector Generals of Federal banking agencies are not required to review the supervision of the 

banks or make recommendations.
Appendix 2

Failed Banks’ Background Information

Analysis of Bank Failures Reviewed by Treasury OIG Page 26

(OIG-16-052)

Table 1 provides demographic and financial information, including the locations, closure dates, total assets, and the 

estimated losses to the Deposit Insurance Fund (DIF), as well as the percentages of estimated losses to assets, for 

the 119 banks that failed from September 2007 and July 2012, and on which we issued reports from January 1,

2008, through December 31, 2012. The banks had $185.4 billion in aggregate total assets and an aggregate 

estimated $35.3 billion in losses to the DIF.

Table 1: Summary of OCC-regulated and Legacy OTS-regulated Failed Banks, January 1, 2008–December 31, 2012

Bank Location Closure Date

Total Asset 

Size

(in $ Millions)

Estimated DIF 

Loss

(in $ Millions)

Estimated DIF 

Loss as 

Percentage of 

Total Assets

OCC-regulated

1 ANB Financial, National Association AR May 9, 2008 2,100.0 214.0 10%

2 First Heritage Bank, National Association CA July 25, 2008 254.0 33.0 13%

3 First National Bank of Nevada NV July 25, 2008 3,400.0 706.0 21%

4 National Bank of Commerce IL January 16, 2009 430.9 92.5 21%

5 Ocala National Bank FL January 30, 2009 223.5 99.6 45%

6 TeamBank, National Association KS March 20, 2009 669.8 98.4 15%

7 Omni National Bank GA March 27, 2009 956.0 288.2 30%

8 Silverton Bank, N.A. GA May 1, 2009 4,100.0 608.3 15%

9 Citizens National Bank IL May 22, 2009 437.0 26.0 6%

10 First National Bank of Anthony KS June 19, 2009 156.9 38.3 24%

11 Vineyard Bank, National Association CA July 17, 2009 1,900.0 597.0 31%

12 Union Bank, National Association AZ August 14, 2009 124.0 54.5 44%

13 Corus Bank, N.A. IL September 11, 2009 7,000.0 797.9 11%

14 Southern Colorado National Bank CO October 2, 2009 39.5 6.6 17%

15 Flagship National Bank FL October 23, 2009 190.0 66.8 35%

16 Bank USA, National Association 1 AZ October 30, 2009 194.0 30.2 16%

17 California National Bank 1 CA October 30, 2009 6,989.0 900.1 13%

18 Citizens National Bank 1 TX October 30, 2009 120.7 16.7 14%

19 Park National Bank 1IL October 30, 2009 4,701.0 417.7 9%

20 Pacific National Bank 1 CA October 30, 2009 2,086.0 310.9 15%

21 San Diego National Bank 1 CA October 30, 2009 3,560.0 366.7 10%

22 Riverside National Bank of Florida FL April 16, 2010 3,420.0 240.9 7%

23 Pacific Coast National Bank CA November 13, 2009 134.4 29.8 22%
Appendix 2

Failed Banks’ Background Information

Analysis of Bank Failures Reviewed by Treasury OIG Page 27

(OIG-16-052)

Bank Location Closure Date

Total Asset 

Size

(in $ Millions)

Estimated DIF 

Loss

(in $ Millions)

Estimated DIF 

Loss as 

Percentage of 

Total Assets

24 First Security National Bank GA December 4, 2009 128.0 35.4 28%

25 Republic Federal Bank, N.A. FL December 11, 2009 4,428.0 120.6 3%

26 Valley Capital Bank, N.A. AZ December 11, 2009 40.3 7.4 18%

27 First National Bank of Georgia GA January 29, 2010 832.6 197.5 24%

28 Marshall Bank, National Association MN January 29, 2010 59.9 4.1 7%

29 The La Coste National Bank TX February 19, 2010 53.9 3.7 7%

30 American National Bank OH March 19, 2010 70.3 17.1 24%

31 Beach First National Bank SC April 9, 2010 585.1 130.3 22%

32 Amcore Bank, N.A. IL April 23, 2010 3,800.0 154.5 4%

33 BC National Banks MO April 30, 2010 67.2 11.4 17%

34 Granite Community Bank, N.A. CA May 28, 2010 102.9 17.3 17%

35 First National Bank, Rosedale, Mississippi MS June 4, 2010 60.4 12.6 21%

36 First National Bank, Savannah, Georgia GA June 25, 2010 252.5 68.9 27%

37 Bay National Bank MD July 9, 2010 282.2 17.4 6%

38 Home National Bank OK July 9, 2010 644.5 78.7 12%

39 First National Bank of the South SC July 16, 2010 682.0 74.9 11%

40 Williamsburg First National Bank SC July 23, 2010 139.3 8.8 6%

41 Community National Bank at Bartow FL August 20, 2010 67.9 10.3 15%

42 Independent National Bank FL August 20, 2010 156.2 23.2 15%

43 First Suburban National Bank IL October 22, 2010 148.7 30.9 21%

44 The First National Bank of Barnesville GA October 22, 2010 131.4 33.9 26%

45 Community National Bank MN December 17, 2010 31.6 3.7 12%

46 The Bank of Miami, N.A. FL December 17, 2010 448.2 64.0 14%

47 United Americas Bank, National Association GA December 17, 2010 242.3 75.8 31%

48 Canyon National Bank CA February 11, 2011 210.9 10.0 5%

49 First National Bank of Davis (In-Depth Review) OK March 11, 2011 90.2 26.5 29%

50 Western Springs National Bank and Trust IL April 8, 2011 186.8 34.0 18%

51 Rosemount National Bank MN April 15, 2011 37.6 3.6 10%

52 First National Bank of Central Florida FL April 29, 2011 352.0 42.9 12%

53 BankMeridan, National Association SC July 29, 2011 239.8 65.4 27%

54 Integra Bank, National Association IN July 29, 2011 2,200.0 205.9 9%

55 First National Bank of Olathe KS August 12, 2011 538.1 118.6 22%

56 First Southern National Bank GA August 19, 2011 164.6 39.6 24%
Appendix 2

Failed Banks’ Background Information

Analysis of Bank Failures Reviewed by Treasury OIG Page 28

(OIG-16-052)

Bank Location Closure Date

Total Asset 

Size

(in $ Millions)

Estimated DIF 

Loss

(in $ Millions)

Estimated DIF 

Loss as 

Percentage of 

Total Assets

57 The First National Bank of Florida FL September 9, 2011 296.8 48.4 16%

58 Western National Bank AZ December 16, 2011 162.9 42.9 26%

59 American Eagle Savings Bank PA January 20, 2012 19.6 6.2 32%

60 Charter National Bank and Trust IL February 10, 2012 93.9 20.4 22%

61 SCB Bank IN February 10, 2012 182.6 33.9 19%

62 Home Savings of America MN February 24, 2012 434.1 38.8 9%

63 Unity National Bank (In-Depth Review) GA March 26, 2012 292.2 71.0 24%

64 Fort Lee, Federal Savings Bank NJ April 20, 2012 51.9 14.0 27%

65 Inter Savings Bank, FSB MN April 27, 2012 481.6 119.2 25%

66 Palm Desert National Bank CA April 27, 2012 125.8 23.4 19%

67 Plantation Federal Bank SC April 27, 2012 486.4 75.9 16%

68 Security Bank, National Association FL May 4, 2012 101.0 13.7 14%

69 Alabama Trust Bank, National Association AL May 18, 2012 51.6 11.4 22%

70 Carolina Federal Savings Bank SC June 8, 2012 54.4 17.1 31%

71

Second Federal Savings and Loan Association of 

Chicago IL July 20, 2012 199.1 76.9 39%

OCC Total $63,696.0 $8,402.2 13%

Legacy OTS-regulated

72 NetBank, FSB GA September 28, 2007 2,500.0 108.0 4%

73 IndyMac Bank, FSB CA July 11, 2008 32,010.0 10,700.0 33%

74 Ameribank, Inc. WV September 19, 2008 115.0 33.4 29%

75 Downey Savings and Loan Association, F.A. CA November 21, 2008 12,800.0 1,400.0 11%

76 PFF Bank and Trust CA November 21, 2008 3,700.0 729.6 20%

77 Suburban Federal Savings Bank MD January 30, 2009 360.0 126.0 35%

78 Waterfield Bank (In-Depth Review) MD March 5, 2009 155.6 42.5 27%

79 American Sterling Bank MO April 17, 2009 181.0 41.9 23%

80 First Bank of Idaho ID April 24, 2009 488.9 174.6 36%

81 BankUnited, FSB FL May 21, 2009 12,800.0 4,900.0 38%

82 Peoples Community Bank OH July 31, 2009 705.8 136.0 19%

83 Ebank GA August 21, 2009 143.0 46.3 32%

84 Guaranty Bank TX August 21, 2009 13,000.0 1,300.0 10%

85 Bradford Bank MD August 28, 2009 452.0 96.3 21%
Appendix 2

Failed Banks’ Background Information

Analysis of Bank Failures Reviewed by Treasury OIG Page 29

(OIG-16-052)

Bank Location Closure Date

Total Asset 

Size

(in $ Millions)

Estimated DIF 

Loss

(in $ Millions)

Estimated DIF 

Loss as 

Percentage of 

Total Assets

86 Platinum Community Bank IL September 4, 2009 345.6 49.5 14%

87 Vantus Bank IA September 4, 2009 458.0 182.2 40%

88 Irwin Union Bank, FSB KY September 18, 2009 493.0 138.7 28%

89 Partners Bank FL October 23, 2009 65.5 34.6 53%

90 Home Federal Savings Bank MI November 6, 2009 14.9 5.4 36%

91 Century Bank, FSB FL November 13, 2009 728.0 266.5 37%

92 AmTrust Bank OH December 4, 2009 12,000.0 2,500.0 21%

93 Greater Atlantic Bank VA December 4, 2009 203.0 38.0 19%

94 First Federal Bank of California, FSB CA December 18, 2009 6,100.0 10.0 0.2%

95 New South Federal Savings Bank AL December 18, 2009 1,500.0 227.0 15%

96 Peoples First Community Bank FL December 18, 2009 1,800.0 514.7 29%

97 Charter Bank NM January 22, 2010 1,200.0 246.1 21%

98 La Jolla Bank, FSB CA February 19, 2010 3,600.0 1,035.0 29%

99 Key West Bank FL March 26, 2010 88.0 23.1 26%

100 First Federal Bank of North Florida FL April 16, 2010 393.3 6.0 2%

101 TierOne Bank NE June 4, 2010 2,800.0 313.8 11%

102 Ideal Federal Savings Bank MD July 9, 2010 6.3 2.1 33%

103 MainStreet Savings Bank, FSB MI July 16, 2010 97.4 11.4 12%

104 Olde Cypress Community Bank FL July 16, 2010 168.7 31.5 19%

105 Turnberry Bank FL July 16, 2010 263.9 34.4 13%

106 Woodlands Bank SC July 16, 2010 376.2 115.0 31%

107 Bayside Savings Bank, FSB FL July 30, 2010 66.1 16.2 25%

108 Imperial Savings and Loan Association VA August 20, 2010 9.4 3.5 37%

109 Los Padres Bank CA August 20, 2010 870.4 8.7 1%

110 Maritime Savings Bank WI September 17, 2010 350.5 83.6 24%

111 Security Savings Bank, FSB KS October 15, 2010 508.4 82.2 16%

112 First Arizona Savings AZ October 22, 2010 272.2 32.3 12%

113 Appalachian Community Bank, F.S.B. GA December 17, 2010 68.2 26.0 38%

114 United Western Bank CO January 21, 2011 2,050.0 292.3 14%

115 San Luis Trust Bank, FSB CA February 18, 2011 332.6 96.1 29%

116 Superior Bank 2 AL April 15, 2011 3,000.0 290.0 10%

117 Coastal Bank 2 FL May 6, 2011 129.4 13.4 10%

118 Atlantic Bank and Trust 2 SC June 3, 2011 208.2 36.4 17%
Appendix 2

Failed Banks’ Background Information

Analysis of Bank Failures Reviewed by Treasury OIG Page 30

(OIG-16-052)

Bank Location Closure Date

Total Asset 

Size

(in $ Millions)

Estimated DIF 

Loss

(in $ Millions)

Estimated DIF 

Loss as 

Percentage of 

Total Assets

119 Lydian Private Bank 3 FL August 19, 2011 1,700.0 292.1 17%

Legacy OTS Total $121,678.5 $26,892.4 22%

Total OCC and Legacy OTS $185,374.5 $35,294.6 19%

Source: Department of the Treasury Office of Inspector General reports issued from January 1, 2008, through December 31, 2012.

1 Nine failed banks were owned by First Bank of Oak Park Corporation. OCC regulated the 6 national banks, and FDIC regulated the 3 state-chartered banks.

2 We issued our reports to OCC for these banks after OCC assumed regulatory responsibility for federal savings associations under Public Law 111-203. However, we 

listed these banks as legacy OTS-regulated because they were closed by legacy OTS prior to the transfer of legacy OTS functions to OCC and other Federal banking 

agencies pursuant to that law.

3 Pursuant to Public Law 111-203, OCC assumed regulatory responsibility for Lydian Private Bank shortly before its closure. Although OCC closed Lydian, we assessed 

legacy OTS’ supervision and, therefore, included it as a legacy OTS-regulated bank.
Appendix 3

Bank Failures by Region

Analysis of Bank Failures Reviewed by Treasury OIG Page 31

(OIG-16-052)

Figures 2 and 3 break out the number of failed banks and their aggregate estimated 

losses by region.

Figure 2: Failed Banks, by Region

Figure 3: Aggregate Estimated Losses, by Region (in $ millions)

Sources: Analysis of the Department of the Treasury Office of Inspector General reports issued from January 1,

2008, through December 31, 2012.

18

43

24

34

Northeastern

Southern

Central

Western

$903.20 

$10,642.40 

$5,001.70 

$18,747.30 Northeastern

Southern

Central

Western
Appendix 4

Common Causes of Bank Failures

Analysis of Bank Failures Reviewed by Treasury OIG Page 32

(OIG-16-052)

Table 2 summarizes the common causes of the 119 failed banks that we reviewed. The “Various” column includes

additional causes that occurred less frequently.

Table 2: Common Causes of Bank Failures

Institution

High Loan 

Concentration 

in CRE

Inadequate 

Credit 

Administration 

and Risk 

Management

Reliance on 

Wholesale 

Funding

Concentration in 

Nontraditional 

Mortgage Loans

Other

Concentration GSE Various

OCC-regulated

ANB Financial, National Association x x x x

First Heritage Bank, National Association x x

First National Bank of Nevada x x x

National Bank of Commerce x

Ocala National Bank x x x

TeamBank, National Association x x x x

Omni National Bank4 x x x

Silverton Bank, N.A.4 x x x x

Citizens National Bank4 x x x x x

First National Bank of Anthony x x

Vineyard Bank, National Association x x x

Union Bank, National Association x x x

Corus Bank, N.A.4 x x x

Southern Colorado National Bank x x

Flagship National Bank4 x x

Bank USA, National Association 1 x x x

California National Bank 1 x x x

Citizens National Bank 14 x

Park National Bank 14 x x x

Pacific National Bank 1 x x x

San Diego National Bank 1 x x x

Riverside National Bank of Florida4 x x x x

Pacific Coast National Bank x x x

First Security National Bank x x x

Republic Federal Bank, N.A. x x

Valley Capital Bank, N.A.4 x x x

First National Bank of Georgia x x x

Marshall Bank, National Association x
Appendix 4

Common Causes of Bank Failures

Analysis of Bank Failures Reviewed by Treasury OIG Page 33

(OIG-16-052)

Institution

High Loan 

Concentration 

in CRE

Inadequate 

Credit 

Administration 

and Risk 

Management

Reliance on 

Wholesale 

Funding

Concentration in 

Nontraditional 

Mortgage Loans

Other

Concentration GSE Various

The La Coste National Bank x

American National Bank x x x

Beach First National Bank x x x

Amcore Bank, N.A. x x

BC National Banks x x x

Granite Community Bank, NA x x

First National Bank, Rosedale, Mississippi x

First National Bank, Savannah, Georgia x x

Bay National Bank x x

Home National Bank4 x x

First National Bank of the South x x

Williamsburg First National Bank x x

Community National Bank at Bartow x x

Independent National Bank x

First Suburban National Bank x x

The First National Bank of Barnesville4 x x

Community National Bank x x

The Bank of Miami, N.A. x x

United Americas Bank, National Association x x x x x

Canyon National Bank x x

First National Bank of Davis (In-Depth Review) x

Western Springs National Bank and Trust4 x x

Rosemount National Bank x x

First National Bank of Central Florida x x x

BankMeridian, National Association x x x

Integra Bank, National Association4 x x x

First National Bank of Olathe x x

First Southern National Bank x x x

The First National Bank of Florida x x

Western National Bank4 x x

American Eagle Savings Bank x x

Charter National Bank and Trust4 x x

SCB Bank x x x

Home Savings of America x x
Appendix 4

Common Causes of Bank Failures

Analysis of Bank Failures Reviewed by Treasury OIG Page 34

(OIG-16-052)

Institution

High Loan 

Concentration 

in CRE

Inadequate 

Credit 

Administration 

and Risk 

Management

Reliance on 

Wholesale 

Funding

Concentration in 

Nontraditional 

Mortgage Loans

Other

Concentration GSE Various

Unity National Bank (In-Depth Review) x x x x

Fort Lee, Federal Savings Bank x x

Inter Savings Bank, FSB x x

Palm Desert National Bank x x

Plantation Federal Bank x x

Security Bank, National Association x x

Alabama Trust Bank, National Association4 x x

Carolina Federal Savings Bank x x x

Second Federal Savings and Loan Association of Chicago x x x

OCC-regulated Total 57 59 16 5 8 6 *

Legacy OTS-regulated

NetBank, FSB x x

IndyMac Bank, FSB x x x x x

Ameribank, Inc. x x

Downey Savings and Loan, F.A. x x x

PFF Bank and Trust x

Suburban Federal Savings Bank x x x

Waterfield Bank (In-Depth Review) x x x x

American Sterling Bank4 x x x

First Bank of Idaho4 x x

BankUnited, FSB4 x x x

Peoples Community Bank4 x x

ebank x x x x

Guaranty Bank x

Bradford Bank x x

Platinum Community Bank4 x

Vantus Bank x x x x

Irwin Union Bank, FSB x x

Partners Bank x x x

Home Federal Savings Bank x

Century Bank, FSB4 x x x x x

AmTrust Bank x x x

Greater Atlantic Bank x x x
Appendix 4

Common Causes of Bank Failures

Analysis of Bank Failures Reviewed by Treasury OIG Page 35

(OIG-16-052)

Institution

High Loan 

Concentration 

in CRE

Inadequate 

Credit 

Administration 

and Risk 

Management

Reliance on 

Wholesale 

Funding

Concentration in 

Nontraditional 

Mortgage Loans

Other

Concentration GSE Various

First Federal Bank of California, FSB x x x x

New South Federal Savings Bank x x

Peoples First Community Bank x x

Charter Bank x x x x

La Jolla Bank, FSB4 x x x

Key West Bank x x

First Federal Bank of North Florida x x

TierOne Bank4

x x x

Ideal Federal Savings Bank4 x x

MainStreet Savings Bank, FSB x

Olde Cypress Community Bank

Turnberry Bank x x

Woodlands Bank x x

Bayside Savings Bank, FSB x x

Imperial Savings and Loan Association x

Los Padres Bank x x x

Maritime Savings Bank x x

Security Savings Bank, FSB x x

First Arizona Savings x x x x

Appalachian Community Bank, FSB x

United Western Bank4 x x

San Luis Trust Bank, FSB x x

Superior Bank 24 x x x

Coastal Bank 24 x x

Atlantic Bank & Trust 3 x x x

Lydian Private Bank34 x x x

Legacy OTS-regulatedTotal 32 27 8 15 10 0 *

Total OCC and Legacy OTS 89 86 24 20 18 6 *

Source: Department of the Treasury Office of Inspector General reports issued from January 1, 2008, through December 31, 2012.

1 Nine failed banks were owned by First Bank of Oak Park Corporation. OCC regulated the 6 national banks, and FDIC regulated the 3 state-chartered banks.

2 We issued our reports to OCC for these banks after OCC assumed regulatory responsibility for federal savings associations pursuant to P.L.111-203. 

However, we listed these banks as legacy OTS-regulated because they were closed by legacy OTS prior to legacy OTS’s transfer to OCC.

3 Pursuant to P.L. 111-203, OCC assumed regulatory responsibility for Lydian Private Bank shortly before its closure. Although OCC closed Lydian, we
Appendix 4

Common Causes of Bank Failures

Analysis of Bank Failures Reviewed by Treasury OIG Page 36

(OIG-16-052)

assessed legacy OTS’s supervision and, therefore, included it as a legacy OTS-regulated bank.

4

 We identified certain matters in 29 failed banks relating to potential fraud that we referred or provided information to the Department of the Treasury’s 

Office of Inspector General’s Office of Investigation.
Appendix 5

Common Supervisory Themes of Bank Failures

Analysis of Bank Failures Reviewed by Treasury OIG Page 37

(OIG-16-052)

Table 3 summarizes the supervision trends identified in our material loss reviews (MLR) and in-depth 

reviews. Offices of Inspector Generals (OIG) of federal regulators are not required to assess supervision as 

part of failed bank reviews; therefore, we did report on supervision issues in those reports. The “Various” 

column includes additional supervision issues that occurred less frequently.

Table 3: Supervisory Trends Reported in the MLRs and In-depth Reviews

Institution

Stronger Actions 

Warranted and/or 

Actions Untimely

Guidance Not 

Followed and/or 

Lack of Appropriate 

Guidance

Key Issues Not 

Identified or Not 

Identified Timely

Appropriate

Supervision Various

OCC-regulated

ANB Financial, National Association X X

First Heritage Bank, National Association X X

First National Bank of Nevada X X

National Bank of Commerce X

Ocala National Bank X X

TeamBank, National Association X X X

Omni National Bank X X

Silverton Bank, N.A. X X X

Citizens National Bank X

First National Bank of Anthony X

Vineyard Bank, National Association X X

Union Bank, National Association X

Corus Bank, N.A. X X

Flagship National Bank X

California National Bank 1 X

Park National Bank 1 X

Pacific National Bank 1 X

San Diego National Bank 1 X
Appendix 5

Common Supervisory Themes of Bank Failures

Analysis of Bank Failures Reviewed by Treasury OIG Page 38

(OIG-16-052)

Institution

Stronger Actions 

Warranted and/or 

Actions Untimely

Guidance Not 

Followed and/or 

Lack of Appropriate 

Guidance

Key Issues Not 

Identified or Not 

Identified Timely

Appropriate

Supervision Various

Riverside National Bank of Florida X X

Pacific Coast National Bank X X X

First Security National Bank X

Republic Federal Bank, N.A. X

First National Bank of Georgia X

Amcore Bank, N.A. X X X

First National Bank of Davis (In-depth) X X X

Integra Bank, National Association X

Unity National Bank (In-depth) X

OCC-regulated Total 14 16 2 7 *

Legacy OTS-regulated

NetBank, FSB X X X

IndyMac Bank, FSB X X X X

Ameribank, Inc. X X X X

Downey Savings and Loan Association, F.A. X X

PFF Bank and Trust X

Suburban Federal Savings Bank X X

Waterfield Bank (In-depth) X X

American Sterling Bank X X X X

First Bank of Idaho X X X X

BankUnited, FSB X X X X

Peoples Community Bank X

Ebank X X

Guaranty Bank X
Appendix 5

Common Supervisory Themes of Bank Failures

Analysis of Bank Failures Reviewed by Treasury OIG Page 39

(OIG-16-052)

Institution

Stronger Actions 

Warranted and/or 

Actions Untimely

Guidance Not 

Followed and/or 

Lack of Appropriate 

Guidance

Key Issues Not 

Identified or Not 

Identified Timely

Appropriate

Supervision Various

Bradford Bank X X

Platinum Community Bank X X

Vantus Bank X X

Irwin Union Bank, FSB X X

Partners Bank X X X

Century Bank, FSB X X X

AmTrust Bank X

Greater Atlantic Bank X X

First Federal Bank of California, FSB X X

New South Federal Savings Bank X X X

Peoples First Community Bank X X X

Charter Bank X X

La Jolla Bank, FSB X

TierOne Bank X

United Western Bank X X X

Superior Bank2 X X

Lydian Private Bank3 X X

Legacy OTS-regulated Total 28 22 11 0 *

Total OCC and Legacy OTS 42 38 13 7 *

Sources: Department of the Treasury OlG reports issued from January 1, 2008, through December 31, 2012.

1 Nine failed banks were owned by First Bank of Oak Park Corporation. OCC regulated the 6 national banks, and FDIC regulated the 3 state-chartered banks.

Of the 6 national banks OCC regulated, 4 required MLRs and are included in the above chart.

2 We issued our report to OCC for Superior Bank after OCC assumed regulatory responsibility for federal savings associations pursuant to P.L. 111-203. 

However, we listed Superior Bank as legacy OTS-regulated because they were closed by legacy OTS prior to legacy OTS’s transfer to OCC.

3 Pursuant to P.L. 111-203, OCC assumed regulatory responsibility for Lydian Private Bank shortly before its closure. Although OCC closed Lydian, we

assessed legacy OTS’s supervision and, therefore, included it as a legacy OTS-regulated bank.
Appendix 6

Prior Office of Inspector General Recommendations to OCC

Analysis of Bank Failures Reviewed by Treasury OIG Page 40

(OIG-16-052)

This appendix provides recommendations we made to the Office of the Comptroller of the Currency (OCC) as a 

result of our material loss reviews and in-depth reviews of OCC-regulated failed banks, as well as corrective actions 

taken or planned by OCC. With one exception related to Omni National Bank noted later in this appendix, OCC 

management concurred with the recommendations and has taken or planned corrective actions that are responsive 

to the recommendations. In certain instances, the recommendations address matters that require ongoing OCC 

management and examiner attention.

Report Title Recommendations to the Comptroller OCC Corrective Action Taken or Planned

Safety and Soundness: Material 

Loss Review of ANB Financial, 

National Association

OIG-09-013 (November 25, 

2008) 

Re-emphasize to examiners that examiners must 

closely investigate a bank’s circumstances and 

alter its supervisory plan if certain conditions 

exist as specified in OCC’s Examiner’s Guide to 

Problem Bank Identification, Rehabilitation, and 

Resolution.

OCC communicated the findings of our report 

and its lessons-learned review to field staff 

during a national conference call in 

March 2009 to reinforce its expectations of 

examiners in the execution of its supervisory 

process.

In addition to numerous policies and processes 

currently in place to ensure timely recognition 

and response to increasing risks in banks, 

including formal enforcement action if 

warranted, OCC provided guidance to 

examiners on assessing commercial real estate 

(CRE) portfolios and discussed this guidance in 

April 2008 and October 2008 conference calls 

with examiners.

Re-emphasize to examiners that formal action is 

presumed warranted when certain 

circumstances specified in OCC’s Enforcement 

Action Policy (PPM 5310-3) exist. Examiners 

should also be directed to document in the 

examination files the reasons for not taking 

formal enforcement action if those 

circumstances do exist.

OCC refreshed examiner awareness of PPM 

5310-3 and promoted consistency in the 

application of the policy in three ways: in a 

written document, through discussions at 

district management meetings, and during an 

all-examiner conference call in October 2008. 

The central message was that enforcement 

actions should be taken at an early stage, while 

problems are still manageable and the 

prospects for rehabilitation or, alternatively, 

sale or merger of the bank, are still good.
Appendix 6

Prior Office of Inspector General Recommendations to OCC

Analysis of Bank Failures Reviewed by Treasury OIG Page 41

(OIG-16-052)

Report Title Recommendations to the Comptroller OCC Corrective Action Taken or Planned

Reassess guidance and examination procedures 

in the Comptroller’s Handbook related to bank 

use of wholesale funding with focus on heavy 

reliance on brokered deposits and other nonretail 

deposit funding sources for growth.

The liquidity section of the Comptroller’s 

Handbook for community bank supervision was

revised to address liquidity issues in light of the 

financial crisis.1In addition, an interagency 

policy statement on funding and liquidity risk 

management was issued on March 22, 2010.2

Establish in policy a “lessons-learned” process 

to assess the causes of bank failures and the 

supervision exercised over the institution and to 

take appropriate action to address any 

significant weaknesses or concerns identified.

OCC established a lessons-learned review 

program requiring an independent assessment 

of the adequacy of bank supervision for each 

failed institution under OCC jurisdiction to be 

completed and submitted to the Ombudsman 

within four weeks of completion of 

examination procedures.

3

Safety and Soundness: Material 

Loss Review of First National 

Bank of Nevada and First 

Heritage Bank, National 

Association

OIG-09-033 (February 27, 2009)

Re-emphasize to examiners the need to ensure 

that banks take swift corrective actions in 

response to examination findings.

OCC re-emphasized the requirements of its 

enforcement action policies to examiners and

the need to ensure banks take swift corrective 

actions in response to examination findings

during a national conference call. OCC tracks 

the follow-up on outstanding concerns in the 

supervisory strategies for individual banks. 

Subsequent to the failure of First National Bank 

of Nevada and First Heritage bank, OCC's 

Enterprise Governance unit conducted a special 

 

1 The liquidity section of the Comptroller’s Handbook, Community Bank Supervision (January 2010) discusses, among other things, 

evaluating risk in wholesale and other non-deposit funding activities and determining stability by reviewing deposit structure and 

stability of specific types of accounts, including brokered deposits.

2 Federal Register/Vol. 75, No. 54, Interagency Policy Statement on Funding and Liquidity Risk Management (March 22, 2010) issued by 

OCC, the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, the legacy Office of Thrift 

Supervision, and the National Credit Union Administration summarizes the principles of sound liquidity risk management that the 

agencies issued in the past and, when appropriate, supplements them with the “Principles for Sound Liquidity Risk Management and 

Supervision” issued by the Basel Committee on Banking Supervision issued in September 2008.

3 Comptroller of the Currency, Office of the Ombudsman, Failed Institutions Lessons Learned Review Program Statement 

(February 2012).
Appendix 6

Prior Office of Inspector General Recommendations to OCC

Analysis of Bank Failures Reviewed by Treasury OIG Page 42

(OIG-16-052)

Report Title Recommendations to the Comptroller OCC Corrective Action Taken or Planned

review to confirm that all community bank 

quality assurance programs contain specific 

quality management elements pertaining to 

corrective action, follow-up, and enforcement.

Re-emphasize to examiners OCC’s policy on the 

preparation of supervision workpapers (i.e., 

workpapers are to be clear, concise, and readily 

understood by other examiners and reviewers).

An OCC official stated that they ensure that 

observations about the quality of workpapers 

identified as part of its quality assurance 

processes involving regular views of samples of 

supervision work papers, and recommendations 

for improving documentation, are included in 

the communication of quality assurance results 

to examiners. OCC re-emphasized OCC’s policy 

on the preparation of supervision workpapers

and the importance of workpaper quality and 

completeness during a national conference call 

with examiners.

Safety and Soundness: Material 

Loss Review of the National 

Bank of Commerce

OIG-09-042 (August 6, 2009)

Conduct a review of investments by national 

banks for any potential high-risk concentrations 

and take appropriate supervisory action.

During the months leading up to the 

government intervention at Federal National 

Mortgage Association and Federal Home Loan 

Mortgage Corporation, OCC proactively used 

call report financial data to identify banks with 

concentrations in government-sponsored 

enterprise (GSE) securities. Banks with high 

exposure relative to their capital were identified 

and supervisory offices were provided with the 

information to investigate further and take 

appropriate supervisory action. This process is 

embedded in ongoing supervisory activities and 

will be used on an ongoing basis to identify 

and address other concentrations in high-risk 

securities.

Reassess examination guidance regarding 

investment securities, including GSE securities.

OCC issued a supervisory memo to all 

examining personnel on investment securities 
Appendix 6

Prior Office of Inspector General Recommendations to OCC

Analysis of Bank Failures Reviewed by Treasury OIG Page 43

(OIG-16-052)

Report Title Recommendations to the Comptroller OCC Corrective Action Taken or Planned

risk management practices on August 10, 

2009.4

OCC also issued the “New Capital Rule

Community Bank Guide” in October 2013.

Safety and Soundness: Material 

Loss Review of Ocala National 

Bank

OIG-09-043 (August 26, 2009)

Caution examiners and their supervisors that 

when a bank’s condition has deteriorated, it is 

incumbent on examiners to properly support and 

document in examination workpapers the 

CAMELS component and composite ratings 

assigned, including those that may not have 

changed from prior examinations, as well as 

support a decision not to take an enforcement 

action.

OCC senior management used the “lessons 

learned" in earlier bank failures to illustrate the 

importance of being assertive in identifying and 

following through on identified weaknesses in a 

timely manner. OCC management also 

reiterated that compliance with OCC's policy 

on workpaper documentation is particularly 

important in problem bank situations. OCC also 

discussed this topic during an October 2009 

national conference call.

Remind examiners that it is prudent to expand 

examination procedures for troubled or high-risk 

banks to review the appropriateness of 

(a) dividends and (b) payments to related 

organizations, particularly when the dividends or 

payments may benefit bank management and 

board members. In this regard, OCC should 

reassess, and revise as appropriate, its 

examination guidance for when expanded 

reviews of dividends and related organizations 

should be performed.

OCC responded that heightened scrutiny of 

certain dividends and payments to related 

organization is appropriate. OCC believes its 

existing guidance is sufficient to compel 

examiners to perform expanded reviews of 

dividends and payments to related 

organizations when appropriate. During an 

October 2009 national conference call, OCC 

reinforced to examining staff the prudence of 

expanding examination procedures for 

dividends and related organizations when 

warranted, particularly when payments may 

benefit bank management or board members.

Emphasize to examiners that matters requiring 

attention (MRAs) are to be issued in reports of 

OCC reinforced the importance of adhering to 

its MRA policy during an October 2009

 

4 Comptroller of the Currency, Supervisory Memo (SM 2009-5), Examiner Guidance on Investment Securities Risk Management Practices

(August 10, 2009) provides guidance to examiners in evaluating investment portfolio activities and the changing risk profile of bank 

investment portfolios. Specifically, it provides additional guidance on potential red flags and appropriate risk management of complex, 

structured investments, evaluating re-securitizations, and determining asset quality ratings and risk-based capital calculations.
Appendix 6

Prior Office of Inspector General Recommendations to OCC

Analysis of Bank Failures Reviewed by Treasury OIG Page 44

(OIG-16-052)

Report Title Recommendations to the Comptroller OCC Corrective Action Taken or Planned

Safety and Soundness: Material 

Loss Review of TeamBank, 

National Association

OIG-10-01 (October 7, 2009)

examination (ROEs) in accordance with the 

criteria regarding deviations from sound 

management and noncompliance with laws or 

policies listed in the Comptroller’s Handbook.

national conference call and again in a 

September 2013 call. OCC plans to continue 

to reinforce this message in numerous ways, 

including quality assurance activities and

management discussions.

Emphasize to examiners the need to 

a. adequately assess the responsibilities of a 

controlling official (chief executive 

officer/president, for example) managing the 

bank to ensure that the official’s duties are 

commensurate with the risk profile and 

growth strategy of the institution

b. review incentive compensation and bonus 

plans for executives and loan officers; and

c. ensure that banks conduct transactional 

and portfolio stress testing when 

appropriate

OCC stated that examiners are provided with 

guidance on (a) assessing the adequacy of 

management resources to ensure they are 

commensurate with a bank's risk profile and 

growth strategies and (b) incentive and 

compensation plans. 

Additionally, the Senior Deputy Comptroller for 

Midsize and Community Bank Supervision and 

the Director for Special Supervision 

emphasized these points during an

October 2009 conference call with examiners.

Having found that the use of portfolio stress 

testing and sensitivity analysis required by 

OCC policy continues to be challenging for 

many banks, particularly community banks, 

OCC developed a transactional-level CRE Loan 

Stress Workbook, which is available to all 

national banks on OCC's National Bank Net 

Web site. An additional model designed for 

CRE stress testing at the portfolio level was 

implemented on September 30, 2012. OCC 

continues to use outreach and other activities 

to encourage national banks to use these tools 

in measuring and managing the level of risk in 

their portfolios. The model was deployed to 

BankNet on September 27, 2012.

Safety and Soundness: Material 

Loss Review of Omni National 

Bank

Review OCC processes to ensure that more 

timely enforcement action is taken once the 

need for such action is identified.

OCC did not agree with this recommendation. 

In its response to our report, OCC asserted that 

current policies are sufficient to ensure that 
Appendix 6

Prior Office of Inspector General Recommendations to OCC

Analysis of Bank Failures Reviewed by Treasury OIG Page 45

(OIG-16-052)

Report Title Recommendations to the Comptroller OCC Corrective Action Taken or Planned

OIG-10-017 (December 9, 2009) timely enforcement action is taken. We 

accepted its position with respect to its current 

processes and consider the recommendation 

closed.

Impress upon examiner staff the importance of 

completing all activities in annual supervisory 

cycles, including quarterly monitoring. In this 

regard, supervisors should ensure that quarterly 

monitoring activities are scheduled and carried 

out.

Examiners were reminded that periodic 

monitoring is integral to effective supervision 

during a March 2010 national conference call.

Implement a policy for examiner-in-charge (EIC)

rotation for midsize and community banks.

Issued revised guidance establishing a formal 

rotation policy for EIC of banks supervised in 

the large bank supervision and midsize and 

community bank supervision lines of business.5

Safety and Soundness: Material 

Loss Review of Silverton Bank, 

N.A.

OIG-10-033 (January 22, 2010)

Ensure that after a charter conversion an EIC is 

promptly assigned and supervisory coverage of 

the bank is continuous, to include the timely 

initiation (within no more than 12 months of the 

full-scope examination by the prior regulator) of 

the first full-scope examination after conversion.

Revised the Conversions booklet of the 

Comptroller's Licensing Manual by expanding 

the Conversion Handoff Package prepared by 

licensing staff upon transfer of supervisory 

responsibility to include specific language 

calling attention to the requirements to appoint 

an EIC, who will follow-up with the bank within 

120 days of the effective date of the 

conversion, and to schedule a target date for 

initiating the first full-scope examination based 

on the last full-scope examination conducted 

by the previous regulator.

Ensure that appropriate actions are taken to 

amend or reinforce OCC guidance in response 

to the lessons-learned review of the Silverton 

failure.

OCC established a lessons-learned review 

program requiring an independent assessment 

of the adequacy of bank supervision for each 

failed institution under OCC jurisdiction to be 

completed and submitted to the Ombudsman 

 

5

 Comptroller of the Currency, Policies & Procedures Manual (PPM 5000-38(REV), Bank Supervision Operations, Examiner-in-Charge 

Rotations (October 31, 2011)
Appendix 6

Prior Office of Inspector General Recommendations to OCC

Analysis of Bank Failures Reviewed by Treasury OIG Page 46

(OIG-16-052)

Report Title Recommendations to the Comptroller OCC Corrective Action Taken or Planned

within four weeks of completion of 

examination procedures.

OCC also transferred the responsibility for 

performing lessons-learned reviews of bank 

failures to its Ombudsman.

Ensure that banks seeking conversion to a 

national charter address all significant 

deficiencies identified by OCC or prior regulators 

before approval.

OCC updated the Conversion booklet of the 

Comptroller’s Licensing Manual to include a 

more thorough description of the procedures 

that should be followed to determine that 

banks seeking conversion satisfactorily address 

significant deficiencies before approval.6

Formalize the process for second-level reviews 

of charter conversions.

The Supervisory Review Committee charter for 

each district and midsize was amended to 

formalize the process and require second level 

reviews of charter conversions.

Safety and Soundness: Material 

Loss Review of Citizens National 

Bank

OIG-10-038 (March 22, 2010)

Due to the complexity of the risk-based capital 

treatment of structured investment securities, 

assess the adequacy of OCC Bulletin 2009-15, 

Investment Securities after it has been in use 

for a reasonable time.

OCC determined that no changes are 

necessary to OCC Bulletin 2009-15.

Work with OCC’s regulatory partners to 

determine whether to propose legislation and/or 

change regulatory guidance to establish limits or 

other controls for bank investments.

OCC works with other regulators to develop 

guidance on a variety of subjects where 

common issues exist. The Federal Financial 

Institutions Examination Council and other 

interagency forums are evaluating a number of 

factors that contributed to the current 

problems in the banking industry and will 

consider what regulatory changes are needed. 

As of June 10, 2010, OCC determined 

additional guidance is not needed and planned 

to continue to evaluate this issue.

 

6 Comptroller’s Licensing Manual, Conversions (April 2010)
Appendix 6

Prior Office of Inspector General Recommendations to OCC

Analysis of Bank Failures Reviewed by Treasury OIG Page 47

(OIG-16-052)

Report Title Recommendations to the Comptroller OCC Corrective Action Taken or Planned

In a Task Force on Supervision Meeting on 

August 7, 2012, our recommendation was 

discussed and there was general agreement 

that the agencies have sufficient supervisory 

authority to address compliance with 

applicable standards and that a legislative 

change would not be necessary.

Safety and Soundness: Material 

Loss Review of Union Bank, 

National Association

OIG-CA-10-009 (May 11, 2010)

(Review performed by Mayer 

Hoffman McCann P.C., an 

independent certified public 

accounting firm, under the 

supervision of the Department of 

the Treasury (Treasury) Office of 

Inspector General (OIG))

Work with OCC’s regulatory partners to 

determine whether to propose legislation and/or 

change regulatory guidance to establish limits or 

other controls for concentrations that pose an 

unacceptable safety and soundness risk and 

determine an appropriate range of examiner 

response to high-risk concentrations.

OCC responded that it works with other 

regulators to develop guidance on a variety of 

subjects where common issues or concerns 

exist. Federal banking agencies are in the 

process of evaluating a number of factors that 

contributed to current problems in the banking 

industry and will consider what regulatory 

changes are needed. OCC responded that,

although it was too early to determine whether 

the final outcome of the agencies’ deliberations 

will include changes in concentration limits or 

risk management expectations, it would

continue to study the situation and interface

with other regulatory partners.

Safety and Soundness: Material 

Loss Review of Vineyard Bank, 

National Association

OIG-10-044 (July 13, 2010)

No new recommendations.

Reiterated prior recommendations made in our 

Silverton report.

No additional actions necessary.

Safety and Soundness: Material 

Loss Review of Flagship National 

Bank

OIG-10-044 (May 3, 2011)

Same recommendation as stated above for 

Union Bank, National Association.

OCC stated in its response that it proposed a 

group to study the issue of CRE concentrations

in interagency forums. The proposal was not 

acted on, so OCC convened an internal group 

to study it and develop solutions. OCC revised 

its Concentrations of Credit Handbook to 
Appendix 6

Prior Office of Inspector General Recommendations to OCC

Analysis of Bank Failures Reviewed by Treasury OIG Page 48

(OIG-16-052)

Report Title Recommendations to the Comptroller OCC Corrective Action Taken or Planned

address concerns raised in the audit. OCC will 

continue to seek an interagency agreement.7

Emphasize to examiners that MRAs are to be 

issued in ROEs in accordance with the criteria 

regarding deviations from sound management 

and noncompliance with laws or policies listed 

in the Comptroller’s Handbook.

OCC stated that its policy for utilizing MRAs is 

clearly stated within the Comptroller’s 

Handbook. In addition, it distributed a MRA 

Reference Guide in July 2010 to further 

emphasize expectations for proactive 

supervision, clear and assertive communication 

of concerns to the Board of Directors, and 

prompt follow-up on commitments for 

corrective action. Training was also conducted 

on the guide in all field offices in 2010.8

Safety and Soundness: Material 

Loss Review of First Security 

National Bank

OIG-11-075 (June 10, 2011)

(Review performed by Crowe 

Horwath LLP, an independent 

certified public accounting firm, 

under the supervision of the 

Treasury OIG)

No new recommendations No additional actions necessary.

Safety and Soundness: Material 

Loss Review of First National 

Bank of Anthony

OIG-11-105 (September 20, 

2011)

No new recommendations. No additional actions necessary.

Safety and Soundness: Material 

Loss Review of Amcore Bank, 

N.A.

OIG-12-035 (December 28, 

2011)

Ensure: According to OCC, lead experts now report to 

the Midsize Bank Supervision Risk Officer and 

do not have direct supervisory responsibility for 

specific banks. Midsize Bank Supervision has 

incorporated mandatory lead expert reviews in 

 

7 Comptroller of the Currency, Concentrations of Credit Handbook (December 2011).

8 Midsize and Community Bank Supervision MRA Reference Guide (July 2010).
Appendix 6

Prior Office of Inspector General Recommendations to OCC

Analysis of Bank Failures Reviewed by Treasury OIG Page 49

(OIG-16-052)

Report Title Recommendations to the Comptroller OCC Corrective Action Taken or Planned

a) lead expert's input is considered in 

supervisory decisions, 

b) Midsize Bank supervisory office personnel 

follow established OCC guidance to resolve 

issues raised by the lead expert, and 

c) resolution of recommendations is 

documented. OCC should determine whether 

there are other concerns by lead experts that are 

currently unresolved and ensure appropriate 

agreement is reached on those matters.

its supervisory product workflow. EIC must 

address the lead expert’s comments, and any 

differences must be resolved to the satisfaction 

of both parties prior to finalizing and issuing 

the product to the bank. Any supervisory 

matters that have not been resolved at the 

EIC/lead expert level are elevated to the Risk 

Officer for resolution. In addition, a system 

(WALTER) was developed in Midsize Bank 

Supervision to track the flow of a supervisory 

product, including reviews by lead experts. 

Their reports capture issues they raise, and 

documents are adjusted accordingly.

Ensure relevant emails are maintained in the 

supervisory record (Examiner View) as 

appropriate.

In a September 30, 2013, national conference 

call, OCC emphasized maintaining support for 

emails in Examiner View.

Implement policies and controls to monitor and 

ensure that ROEs are issued timely.

OCC implemented an automated system for 

tracking and monitoring all written supervisory 

communications, including ROEs, from 

submission by examiners through the time they 

are issued to the bank. This allows Midsize 

Bank Supervision to promptly identify any ROE 

or other communication that is not being 

reviewed and processed in a timely manner, 

and to address other issues. OCC will also 

reinforce to all staff the importance of issuing 

ROEs and other supervisory products in a 

timely manner.

Safety and Soundness: In-depth

Review of Unity National Bank 

OIG-12-036 (January 11, 2012)

No new recommendations. No additional actions necessary.

Safety and Soundness: Material 

Loss Review of Corus Bank, N.A.

OIG-12-037 (January 24, 2012)

Work with OCC's regulatory partners to 

determine whether regulatory guidance be 

changed, or legislation should be proposed to 

In a Task Force on Supervision meeting on 

August 7, 2012, this topic was discussed. 

Members generally agreed that the agencies 
Appendix 6

Prior Office of Inspector General Recommendations to OCC

Analysis of Bank Failures Reviewed by Treasury OIG Page 50

(OIG-16-052)

Report Title Recommendations to the Comptroller OCC Corrective Action Taken or Planned

amend 12 U.S.C. 84, Lending Limits, to prohibit 

or limit the sale of loan participations by a bank 

to its holding company for purpose of complying 

with the legal lending limit.

have sufficient supervisory authority to address 

compliance with applicable standards and that 

a legislative change would not be necessary.

Safety and Soundness: Material 

Loss Review of Riverside 

National Bank of Florida

OIG-12-039 (January 31, 2012)

Determine whether a limit, such as a specific 

percentage of capital, should be placed on the 

amount national banks can invest in complex 

mortgage-related securities before supervisory 

approval must be obtained.

In a Task Force on Supervision meeting on 

August 7, 2012, our recommendation was 

discussed. Members generally agreed that the 

agencies have sufficient supervisory authority 

to address compliance with applicable 

standards and that a legislative change would 

not be necessary.

Work with regulatory partners to reevaluate the 

regulatory capital treatment of unrealized losses 

on available-for-sale debt securities in 

determining Tier 1 capital.

On October 11, 2013, OCC and the Federal 

Reserve System adopted a final rule that 

revises their risk-based and leverage capital 

requirements for banking organizations.9 This 

rule also addresses the inclusion of 

accumulated other comprehensive income in 

Tier 1 capital.

Safety and Soundness: Material 

Loss Review of Republic Federal 

Bank, N.A.

OIG-12-040 (February 7, 2012)

No new recommendations. No additional actions necessary.

Safety and Soundness: Material 

Loss Review of First National 

Bank of Georgia

OIG-12-041 (February 14, 2012)

No new recommendations. No additional actions necessary.

Safety and Soundness: Material 

Loss Review of Pacific Coast 

National Bank, San Clemente, 

California

OIG-12-042 (February 27, 2012)

No new recommendations. No additional actions necessary.

 

9

 12 CFR Parts 208, 217, and 225 Regulatory Capital Rules.
Appendix 6

Prior Office of Inspector General Recommendations to OCC

Analysis of Bank Failures Reviewed by Treasury OIG Page 51

(OIG-16-052)

Report Title Recommendations to the Comptroller OCC Corrective Action Taken or Planned

Safety and Soundness Reviews 

of Failed National Banks Owned 

by First Bank of Oak Park 

Corporation

OIG-12-043 (March 1, 2012)

Re-evaluate whether OCC guidance for risk

weighting of GSE equity securities should be 

consistent with the other federal banking 

agencies and changed from 20 percent to 100 

percent.

On October 11, 2013, OCC and the Federal 

Reserve System adopted a final rule that 

revises their risk-based and leverage capital 

requirements for banking organizations.

Safety and Soundness: Material 

Loss Review of Integra Bank, 

National Association

OIG-12-050 (April 12, 2012)

No new recommendations. No additional actions necessary.

Safety and Soundness: In-Depth

Review of the First National Bank 

of Davis

OIG-12-055 (June 7, 2012)

Remind examiners of the importance of 

following OCC’s guidance regarding 

(1) performing reconciliations of all reports 

submitted by management to ensure that the 

reports are accurate and agree to the bank’s 

general books, an (2) analyzing a bank’s new 

products to determine the effect on credit risk.

OCC sent an all employee message on 

February 11, 2013, reminding employees to 

follow established OCC guidance regarding 

performing reconciliations of reports received 

from bank management during examinations 

and to evaluate the effect of new products on 

key risks, including credit risk.

Establish formal guidance to address OCC’s 

response to investigations and requests for 

information from law enforcement agencies. The 

guidance should address, for example, when 

examination procedures should be expanded 

based on information provided by law 

enforcement agencies as well as notification to 

OCC Headquarters and OIG.

On February 7, 2014, OCC issued Policies and 

Procedures Manual documents 5000-40, “OCC 

Filings of Suspicious Activity Reports (SAR” 

and 5000-41, “Notification Requirements to 

the Treasury OIG for Examination Obstruction, 

Administrative Actions, SARs, and Contacts 

with Law Enforcement” providing guidance on 

interaction with law enforcement agencies and 

communication protocols for notifications to 

OCC Headquarters and OIG.
Appendix 7

OCC Management Comments

Analysis of Bank Failures Reviewed by Treasury OIG Page 52

(OIG-16-052)
Appendix 7

OCC Management Comments

Analysis of Bank Failures Reviewed by Treasury OIG Page 53

(OIG-16-052)
Appendix 7

OCC Management Comments

Analysis of Bank Failures Reviewed by Treasury OIG Page 54

(OIG-16-052)
Appendix 8

Major Contributoers to This Report

Analysis of Bank Failures Reviewed by Treasury OIG Page 55

(OIG-16-052)

Alicia Weber, Audit Manager

John Tomasetti, Auditor-in-Charge

Kevin Guishard, Auditor

Khuyen Tran, Auditor

April Ellison, Referencer 

Andrea Smith, Referencer
Appendix 9

Report Distribution

Analysis of Bank Failures Reviewed Treasury OIG Page 56

(OIG-16-052)

The Department of the Treasury

Deputy Secretary of the Treasury

Office of Strategic Planning and Performance Management

Office of the Deputy Chief Financial Officer, Risk and Control 

Group

Office of the Comptroller of the Currency

Comptroller of the Currency

Liaison Officer

Office of Management and Budget

OIG Budget Examiner
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