A Guide to the


National


Banking System


CO

M

PTROLLER OF THE CURREN

CY 

1863 

Washington, DC 

April 2008 
A Guide to the National Banking System 

This guide, prepared by the Office of the Comptroller of the Currency (OCC), is intended 

to provide an overview of the national banking system, its regulatory structure, and 

entrance into it. The OCC encourages organizing groups, financial institutions not currently 

regulated by the OCC, and national banks to consult with appropriate OCC contacts or 

counsel familiar with banking law to obtain advice on specific issues. 
A Guide to the National Banking System 

Table of Contents 

Introduction............................................................... 1

Creation of the National Banking System ................................ 3

The System Today . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

The OCC Today ......................................................... 3

The OCC ............................................................... ... 5

Organization............................................................ 5

Lines of Supervision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Bank Supervision Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Effective Use of Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

OCC Staff Expertise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

The OCC’s Outreach Program.............................................. 8

Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Assessments and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

The National Bank Charter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

The OCC’s Licensing Process ............................................. 11

Entry into the National Banking System.................................. 12

Establish a New National Bank....................................... 12

Convert an Existing Institution to a National Bank . . . . . . . . . . . . . . . . . . . . . . . 13

Permissible National Bank Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Operating Subsidiary................................................. 14

Financial Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Bank Service Company............................................... 14

Other Equity Investment .............................................. 14
A Guide to the National Banking System 

Supervision and Oversight............................................... 17

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Supervision by Risk..................................................... 17

Risk Assessments....................................................... 18

Ratings............................................................... 18

Specialized Area Supervision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Checks and Balances..................................................... 21

The Ombudsman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

National Bank Appeals Process......................................... 21

Bank Examination Questionnaire ....................................... 21

Customer Assistance Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Program and Management Accountability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Appendixes ............................................................... 23

A. OCC Locations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

B. OCC Contacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

C. OCC Publications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
A Guide to the National Banking System 

Introduction


This guidprovides an overview of the national banking system, its regulation, and the Office 

of the Comptroller of the Currency (OCC). Specifically, it: 

•	 Provides background on the national banking system. 

•	 Provides an overview of the OCC’s organization, including its mission, 

structure, and staff. 

•	 Discusses the value and approach of OCC supervision. 

•	 Outlines the OCC’s corporate application process and discusses permissible 

banking activities for national banks. 

•	 Discusses the OCC’s supervision philosophy and its examination process. 

•	 Shows how the OCC uses checks and balances to ensure equitable, quality 

supervision. 

•	 Includes OCC contacts, additional OCC publications, and other resources. 

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A Guide to the National Banking System 

Creation of the National 


Banking System


The national banking system was conceived by President Abraham Lincoln and Treasury 

Secretary Salmon P. Chase to revive the national economy and promote a uniform system of 

currency and credit. The National Currency Act (Act), which created the national banking 

system, was enacted in 1863. Provisions of that act were reenacted and clarified by the National 

Bank Act a year later, in 1864. The opening in Philadelphia of the first bank chartered under the 

new system presented the United States with a fresh means to promote a sense of nationhood 

based on uniformly regulated financial institutions and a growing economy. The issuance of 

“national bank notes” by national banks alleviated a serious obstacle to interstate commerce that 

existed before the Civil War. 

Under the direction of the Comptroller of the Currency, the national banking system acquired a 

reputation for safety and soundness that inspired confidence from the banking public. 

The System Today 

Today the national banking system consists of around 2,000 national banks, their branches, and 

other facilities located throughout the United States and in many countries around the world. 

Although national banks are no longer involved in creating paper currency, they continue to 

play a critical role in creating and distributing the nation’s wealth, to ensure a healthy, growing 

economy. 

The OCC Today 

The OCC’s mission is to charter national banks, to oversee a nationwide system of banking 

institutions, and to assure that national banks are safe and sound, competitive and profitable, 

and capable of serving in the best possible manner the banking needs of their customers. The 

OCC’s mission ensures a robust and financially sound national banking system in which national 

banks soundly manage their risks, comply with applicable laws, compete effectively with other 

providers of financial services, offer products and services that meet the needs of customers, and 

provide fair access to financial services and fair treatment of their customers. For more than 

140 years, the OCC has been a leader in examining national banks, evaluating industry trends, 

identifying emerging banking issues, and, through the supervisory process, assisting national 

banks to meet the challenges of today’s fast-changing financial markets. 

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A Guide to the National Banking System 

Throughout its history, the OCC has sought to provide the highest quality bank supervision. The 

OCC’s approach to bank supervision has evolved in response to the experiences of many years. 

It is based on a judicious combination of on- and off-site activity conducted by locally based 

examiners and front-line supervisors who know the communities where national banks operate. 

It is backed by the strength and depth of a national organization of professionals dedicated to 

the interests of a safe, sound, fair, and competitive banking system. The OCC maintains a highquality, professional staff of bank examiners, risk specialists, economists, and attorneys to ensure 

quality bank supervision. 

The OCC also ensures that supervision is fair and balanced. The OCC’s Office of the 

Ombudsman serves a key role in making the OCC more accessible to the banking industry and its 

customers. The Ombudsman provides bankers with an avenue to discuss problems in confidence, 

explore options, and seek advice. The OCC’s Customer Assistance Group, part of the agency’s 

Office of the Ombudsman, was created to assist consumers in resolving complaints about national 

banks, offer guidance, and answer questions. 

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A Guide to the National Banking System 

The OCC 

The OCC’s staff of national bank examiners and other professional and support personnel 

examine and supervise national banks and federally licensed branches and agencies of foreign 

banks. Supervision policy and guidance is centralized at the national level to ensure continuity 

and consistency nationwide. Although this structure is instrumental in setting the OCC’s overall 

direction, the OCC believes that supervision of a national bank occurs most effectively when 

performed by staff located in or near the bank. This section describes how the OCC uses a 

flexible structure, deploys its expert staff, and communicates regularly with bankers to ensure 

effective supervision at the local level as well as nationwide. 

Organization 

The OCC’s organizational structure is designed to promote top-quality bank supervision. The 

OCC’s structure is flexible so that it can adjust its supervision to changes in the industry’s 

structure and activities. Most importantly, decision-making authority is decentralized through 

examiners, who interact regularly with national banks. Decentralized decision making, coupled 

with centralized policymaking and a system of checks and balances, provides national banks with 

the assurance that OCC’s supervision is fair, balanced, and expert with respect to their business 

focus. 

Approximately 1,800 OCC bank examiners work from numerous locations around the country 

and in London. In addition to its national headquarters in Washington, DC, the OCC maintains 

district and field offices. Although the national headquarters sets policy and direction and 

oversees bank supervision, supervision of most national banks is coordinated through four district 

offices, located in New York City, Chicago, Dallas, and Denver, and 48 field offices located in 

cities throughout the United States. 

Assistant deputy comptrollers (ADCs) in field office locations and examiners-in-charge (EICs) in 

midsize and large banks maintain close local contacts with individual national banks. The OCC’s 

nationwide examiner staff conducts on-site reviews of national banks and provides ongoing 

supervision of bank operations. Legal and licensing staffs are based at the national headquarters 

as well as in the four district offices. 

The OCC’s broad responsibilities and national perspective give the agency unique breadth and 

depth in understanding the banking industry and its emerging issues and challenges. The OCC’s 

workforce also includes subject matter experts who work with ADCs and midsize and large 

bank EICs across the country. Collectively, they enable the OCC to deliver quality supervision 

effectively at the local level. 

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A Guide to the National Banking System 

Lines of Supervision 

The OCC has aligned its domestic supervisory operations into two lines of supervision 

— community banks and midsize banks, on one hand, and large banks, on the other. The OCC 

implemented this structure to enhance consistency, gain efficiency, and serve the diverse national 

bank population more effectively. 

•	 Community bank supervision includes community banks involved mostly in 

traditional banking activities. The OCC’s district operations are focused on 

the needs of these national banks. 

Midsize bank supervision generally includes companies with national 

bank assets totaling between $8 and $25 billion, either in a single charter 

or aggregated among several charters. Oversight of these more complex 

organizations is centralized under a single deputy comptroller located in 

Washington, DC, to facilitate consistent supervision. 

•	 Large bank supervision includes the largest national banking companies, 

which generally are involved in the most complex activities and operate over 

wide geographic areas. This line of supervision is coordinated through the 

Large Bank Supervision Department headquartered in Washington, DC, and 

is carried out by examination staff assigned to those companies on a full-time 

basis. 

Bank Supervision Staff 

The ADCs and large bank EICs are front-line supervisors. They monitor the condition of 

assigned banks. They also schedule and conduct regular safety and soundness, compliance, 

and specialized area examinations. In addition, they maintain an awareness of trends within the 

banking industry and the financial services marketplace and deal with a variety of issues that pose 

potential risks to the institutions they supervise. The ADCs supervise the majority of national 

bank examiners who work from field offices situated strategically throughout the country to best 

serve the population of national banks. Large bank EICs and their staff are assigned supervision 

of a particular bank. 

The OCC uses a “Portfolio Manager Approach” to bank supervision to build examiners’ in-depth 

knowledge of community banks and their operating environments. Local examiners, who have 

substantial authority, perform the direct bank supervision activities. This fosters effective and 

consistent communications between examiners and banks, assures continuity in supervisory 

matters, and enhances the OCC’s responsiveness to bankers’ questions and concerns. 

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A Guide to the National Banking System 

The OCC determines the frequency of its examinations (the supervisory cycle) based on the 

bank’s size, complexity, risk profile, and condition. Examiners meet with bank management and 

the bank’s board of directors throughout the supervisory cycle to obtain information or discuss 

issues. Full-scope examinations normally are conducted either annually or up to every 18 months 

(12 CFR 4.6), but examination activities may be spread throughout the supervisory cycle. The 

portfolio manager contacts bank management to: 

•	 Discuss current issues in the bank and in financial trends. 

•	 Follow-up on matters from prior examinations. 

•	 Explore the bank’s plans for new products and services, expansion, or other 

possible changes. 

In this way, the OCC helps national bankers explore possible pitfalls in new products and 

services, flag emerging areas of concern, and address existing problems before they worsen. 

In addition, portfolio managers can provide information and tools that may help local bankers 

evaluate their business. 

The OCC assigns a dedicated EIC to each midsize bank to develop and implement a supervisory 

strategy, with assistance from other examiners who also are involved in the supervision of either 

community or large banks. Having one examiner assigned overall responsibility for continuous 

supervisory oversight allows for ongoing communication with bank management. This 

supervisory structure assists the OCC in the prompt identification of supervisory issues in these 

growing and increasingly complex institutions. 

The OCC maintains a resident onsite EIC, supported by a resident core staff of examiners, in each 

of the largest banks. These examiners, who report directly to a deputy comptroller in Large Bank 

Supervision, perform ongoing analysis related to the banks’ condition, risk profiles, economic 

factors, and marketplace developments. 

Effective Use of Technology 

OCC staff uses technology to promote efficient, consistent supervision and effective 

communication and to resolve issues quickly. Examiners, even in remote locations, can access 

a wealth of information through computers loaded with current policy guidance and specialized 

examination and diagnostic tools, and that are connected to network systems. The OCC’s 

extensive resources are available increasingly to other audiences as well as through the OCC’s 

Web site (http://www.occ.treas.gov/). 

National BankNet is a system that allows the OCC to communicate with and deliver services 

via the Internet to the financial institutions it regulates. Available exclusively to national banks, 

BankNet is a secure extranet site designed to meet bankers’ needs and complement OCC 

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A Guide to the National Banking System 

regulatory activities. It accommodates a bank’s real-time decision making, improves two-way 

communications between the bank and the OCC, and delivers products and services of value 

to bankers. National BankNet serves as a primary system for the agency to communicate with 

national banks in times of national emergency. 

National BankNet contains an electronic process, called e-Corp, for completing, signing, 

and submitting corporate applications. e-Corp features hyperlinks to all laws, regulations, 

and licensing terms; the ability to save working drafts of applications; complete application 

checking; and easy on-line signature and submission. e-Corp is part of the OCC’s continuing 

effort to eliminate unnecessary regulatory burden, simplify administrative processes, enhance 

communications, reduce paperwork, and take full advantage of e-government mandates. 

OCC Staff Expertise 

Like the banking industry, the OCC adjusts its hiring, training, and deployment of staff to reflect 

the changing mix and increasing complexity of bank activities. The OCC seeks to anticipate 

new needs, and it creates programs to enhance employee expertise in specific areas. The OCC 

employs experts in consumer compliance, information technology, fraud, fiduciary and asset 

management, as well as attorneys, economists, and staffs with in-depth knowledge in licensing, 

bank accounting, retail credit, capital markets, community development, risk modeling, and other 

areas. 

The OCC recognizes the value many bankers derive from having seasoned and knowledgeable 

examiners with diverse experience and specialized skills examining their banks. The OCC 

regularly modifies and updates its examiner’s training curriculum to ensure that examiners 

have the knowledge, skills, and abilities needed to supervise banks effectively. As a result, 

OCC examiners have a broad background on which to base their assessment of the condition of 

national banks. 

The average experience level of OCC’s examining staff is more than 14 years. Many years of 

experience on the job gives the typical examiner insight and perspective from observing and 

analyzing banks of all kinds in different areas and through various economic conditions. This 

broad knowledge base enhances the advisory function that examiners can provide to bank 

management and boards of directors. 

The OCC’s Outreach Program 

The OCC supports national banks by being a leading source of regulatory and supervisory 

information for the financial services industry. In addition to performing regular on-site 

examinations and periodic supervisory updates, the OCC disseminates information on emerging 

issues, supervisory concerns, and industry best practices covering a wide range of issues. These 

programs include instructor-led workshops designed exclusively for community bank directors 

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A Guide to the National Banking System 

and telephone seminars aimed at community national banks but available industry-wide through 

common technology. These high-quality, cost-effective programs have immediate, practical 

application and focus on critical industry issues and trends. 

Moreover, OCC district and field office staff regularly sponsor outreach meetings with bankers 

and other local financial service industry stakeholders. Agendas organized to meet the specific 

needs of the local audience typically include examiner presentations and roundtable discussions 

on timely supervision matters where participants share ideas and offer different perspectives on 

the issues of the day. Presentations cover such topics as legal and regulatory developments and 

changes in banking laws, credit underwriting, retail credit, fraud detection and prevention, interest 

rate risk, economic updates, community development and investments, consumer and Community 

Reinvestment Act compliance, Bank Secrecy Act, anti-money laundering, audit, and corporate 

activities. 

The OCC’s frontline managers are involved in these outreach efforts. District deputy 

comptrollers, ADCs, and EICs forge strong relationships with a wide range of industry groups, 

serving as OCC spokespersons at meetings and conferences with bank executives, boards of 

directors, and officials of other federal, state, and local government agencies. They also meet 

with public interest groups and other members of the public to discuss matters of mutual interest 

and to clarify and enhance understanding of OCC policy. 

Communications 

The OCC is committed to continual, effective communication with national banks. 

Communication includes formal and informal conversations, meetings, and written policy 

guidance and examination reports. The OCC strives to be professional, objective, clear, 

informative, and consistent in all communications. Examiners communicate with bank 

management and board members as often as the bank’s condition and interests and the examiners’ 

findings require. 

The OCC periodically provides material to bankers about changes in laws, regulations, and 

supervisory policy. Issuances also discuss emerging issues, threats to the banking industry, 

and possible frauds. The OCC disseminates information in advisory letters, alerts, bulletins, 

handbooks, and manuals. Issuances are available electronically to the industry and general public 

on the OCC’s Web site and through BankNet for national banks. 

The Comptroller’s Handbook, which contains policies and procedures for national bank 

examinations, is updated regularly. The handbook provides in-depth discussions of the various 

aspects of bank products and services, including associated risks. Additionally, the handbook 

(http://www.occ.treas.gov/handbook/chndbk.htm) provides guidance on the OCC’s expectations 

for management and oversight. 

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A Guide to the National Banking System 

The Comptroller’s Licensing Manual (Licensing Manual) explains OCC policies and procedures 

for establishing, acquiring, or converting to a national bank, and effecting structural changes and 

corporate expansion. The Licensing Manual (http://www.occ.treas.gov/corpapps/corpapplic.htm) 

describes requirements for corporate applications and the processes for public comment and OCC 

review and analysis of both. 

The OCC also disseminates information on “best practices” to strengthen the national banking 

system. This includes information on various subjects, such as credit underwriting, privacy, and 

community development. 

Assessments and Fees 

The OCC is a nonappropriated federal agency funded through assessments and fees paid by 

national banks. The OCC publishes an assessment and fee schedule at least annually in a bulletin 

entitled, “Notice of Comptroller of the Currency Fees.” A copy of the current schedule may be 

obtained from the OCC’s Communications Division or by visiting our Web site at http://www. 

occ.treas.gov/. 

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A Guide to the National Banking System 

The National Bank Charter


The national bank charter is a flexible, dynamic license to provide a broad array of financial 

products and services. This section describes how the OCC’s licensing process works, in general, 

and then focuses on alternative means of entry into the national banking system, such as acquiring 

a national bank charter. It then describes the broad range of activities available to national banks 

and how they may be structured. 

The OCC’s Licensing Process 

The Licensing Manual describes requirements for: 

•	 Applications to establish, acquire, or convert to a national bank, and 

•	 Existing national banks to effect corporate changes, including geographical 

expansion through branching, merger, acquisition, and structural changes to 

enable delivery of new products or services. 

The Licensing Manual sets out OCC’s policies and step-by-step procedures, so that applicants 

know what to do and what to expect from the OCC. The OCC works continually to streamline 

application filing and review processes and to minimize burden, consistent with maintaining 

safety and soundness and satisfying statutory requirements. Staff conducts internal reviews and 

obtains feedback from applicants to spot areas for improvement. 

The Licensing Manual is available on the OCC’s Web site, including current application forms. 

The OCC is equipped to accept an ever-increasing volume and variety of application material 

electronically from national banks through e-Corp on National BankNet. 

Licensing and legal staffs in the district offices and national headquarters are available by 

telephone, e-mail, or meetings, to advise applicants and answer their questions. This is 

particularly useful for the early discussion of proposals that are unusual or highly complex. 

The OCC will accept draft applications and provide feedback to applicants before they file an 

application. The OCC may approve or conditionally approve or deny any filing after reviewing 

the application and considering all relevant factors. The OCC may impose conditions if it 

determines that they are necessary or appropriate to ensure that approval is consistent with 

applicable statutes, regulations, OCC policies, and safe and sound banking practices. 

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A Guide to the National Banking System 

Entry into the National Banking System 

There are two dominant ways that an organizing group, company, or bank can enter the national 

banking system: 

•	 Establish a new national bank. 

•	 Convert an existing institution to a national bank. 

A national bank may be owned directly by individuals or a holding company. The OCC 

requires each proposed organizer, director, principal shareholder, and executive officer to submit 

biographical and financial reports in connection with applications for de novo charters and certain 

other types of corporate applications. The OCC conducts background checks to assess a person’s 

competence, experience, integrity, and financial ability, to determine the person’s qualification to 

serve in the proposed capacity. The OCC also may require certain information from a corporate 

filer along with financial reports. (See the Interagency Biographical and Financial Reports form 

in the “Background Investigations” booklet of the Licensing Manual.) 

Establish a New National Bank 

The OCC approves proposals to establish national banks that will foster healthy competition, 

operate in a safe and sound manner, and have a reasonable chance of success. In so doing, 

the OCC does not guarantee that a proposal to establish a national bank is without risk to the 

organizers or investors. The OCC’s decision on a proposed new charter depends primarily on its 

assessment of the organizers’ qualifications, choice of management, and strength of their business 

plan. 

Given the importance of strong, new, independent charters and the serious commitment 

required from an organizing group, the OCC encourages early contact with licensing staff so 

that organizers can discuss plans and confirm required steps in the chartering process. Once 

an organizing group is ready to proceed, the OCC will schedule a prefiling meeting, which all 

organizers must attend. 

Throughout the chartering process, the OCC’s licensing staff works closely with local examiners 

who will supervise the new bank. By the time a new bank opens at the end of a successful 

chartering process, staff from the OCC’s supervisory office and the organizers normally will 

be well acquainted with each other. (See the “Charters” booklet of the Licensing Manual for a 

complete discussion of the chartering process.) 

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A Guide to the National Banking System 

Convert an Existing Institution to a National Bank 

Another alternative for entering the national banking system is to convert a financial institution 

with a different type of charter. Under applicable statutes and regulations, state banks, state 

savings banks, and other state banking institutions engaged in the business of receiving 

deposits, as well as federal savings associations, may convert directly to national bank charters.1 

Conversions generally are not subject to a public notice and comment period. The OCC has 

an expedited process for converting institutions that have favorable ratings from their current 

regulators and a sound capital structure. A detailed discussion of conversion transactions is 

contained in the “Conversions” booklet of the Licensing Manual. 

Permissible National Bank Activities 

National banks may engage in activities that are part of, or incidental to, the business of banking, 

or are otherwise authorized for a national bank. The OCC publishes Activities Permissible for 

a National Bank, available on the OCC’s Web site. The business of banking is an evolving 

concept, and the permissible activities of national banks similarly change over time. Accordingly, 

this list contained in the publication is not exclusive; the OCC may permit national banks to 

conduct additional activities in the future. Any activity described in the publication’s summary as 

permissible for a national bank also is permissible for an operating subsidiary of a national bank. 

The national bank charter permits several options for corporate structure. This gives national 

banks flexibility to structure their operations in whatever way is most advantageous for them. 

Applications by national banks for changes to enable them to engage in new activities may be 

subject to the OCC’s licensing process, as described earlier. OCC licensing and legal experts 

are available for consultation and advice. Examiners from the bank’s local supervisory office, or 

specialists elsewhere in OCC, can help evaluate any supervisory implications of new proposals. 

A national bank does not need OCC approval to perform any bank-permissible activity directly in 

the bank. Banks may alternatively perform activities through other structures, including: 

•	 An operating subsidiary. 

•	 A financial subsidiary. 

•	 A bank service company. 

•	 Other equity investment. 

1

Indirect conversions also could occur through merging an interim national bank with the state-chartered entity or 

federal savings association. For a discussion of mergers involving interim banks, see the “Business Combinations” 

booklet of the Licensing Manual. 

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A Guide to the National Banking System 

Following are brief descriptions of these alternatives. 

Operating Subsidiary 

An operating subsidiary is a means through which national banks are authorized to conduct their 

business. It can be a corporation, limited liability company (LLC), or similar entity. It must be 

controlled by the national bank, and it may conduct any activity that the parent bank could engage 

in directly, either as part of, or incidental to, the business of banking, as determined by the OCC 

or other statutory authority. Although prior OCC approval is required in some cases, simple afterthe-fact notice to the OCC may be sufficient in other cases. For further information on operating 

subsidiaries, see OCC regulations at 12 CFR 5.34 and the “Investment in Subsidiaries and 

Equities” booklet of the Licensing Manual. 

Financial Subsidiary 

As authorized by the Gramm-Leach-Bliley Act, a financial subsidiary is a corporation, LLC, or 

similar entity, controlled by one or more insured depository institutions, that conducts activities 

that are “financial in nature” or incidental to financial activities. Financial subsidiaries do not 

include operating subsidiaries or bank service companies. However, a financial subsidiary 

may perform activities permissible for national banks to engage in directly in conjunction with 

activities that are financial in nature or incidental to financial activities. For a bank to own a 

financial subsidiary, the bank and the subsidiary must meet certain requirements and comply with 

safeguards. For further information on financial subsidiaries, see OCC regulations at 12 CFR 

5.39 and the “Investment in Subsidiaries and Equities” booklet of the Licensing Manual. 

Bank Service Company 

National banks also may make investments in bank service companies. A bank service company 

is a corporation, whose capital stock is owned by one or more insured banks, or a LLC, whose 

members are insured banks. National banks are specifically authorized to control this type of 

subsidiary by the express terms of a federal statute. Bank service companies may conduct only 

activities a bank could perform directly, unless the Federal Reserve authorizes them to conduct 

other activities permissible for bank holding companies. If the bank service company has 

national and state bank shareholders or members, the activities conducted must be permissible for 

all of the insured banks. For further information, see the Bank Service Company Act, 12 USC 

1861-1867, OCC regulations at 12 CFR 5.35, and the “Investment in Subsidiaries and Equities” 

booklet of the Licensing Manual. 

Other Equity Investment 

A national bank and its operating subsidiary may make a noncontrolling investment, or hold 

a minority interest, in certain enterprises. The OCC regulation (12 CFR 5.36) provides for an 

after-the-fact notice process if the enterprise is engaged in an activity permissible for after-the14

A Guide to the National Banking System 

fact notice under the OCC’s operating subsidiary regulation (12 CFR 5.34) or if the activity 

is substantively the same as that contained in published OCC precedent on noncontrolling 

investments. 

Other investors in the business may be other banks or nonbank companies. Minority investments 

may be used as a way to limit costs, or to enable a bank to engage in a line of business with 

partners possessing particular experience or other important attributes. This option, therefore, 

provides national banks with significant business flexibility. For further information, see OCC 

regulations at 12 CFR 5.36 and the “Investment in Subsidiaries and Equities” booklet of the 

Licensing Manual. 

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A Guide to the National Banking System 

Supervision and Oversight


Overview The OCC strives to deliver to all national banks the highest possible quality of bank 

supervision. Supervisory efforts are directed toward identifying material problems, or emerging 

problems, in individual banks or the banking system, and toward ensuring that such problems are 

corrected appropriately. Because banking is essentially a business of managing risk, supervision 

is centered on the accurate evaluation and management of risks. The OCC believes that bankers, 

and not regulators, should manage their banks. As a result, the OCC expects banks to establish 

and follow appropriate risk management practices. 

The OCC uses an integrated risk-based approach to supervision. The goal of this approach is 

to maximize the effectiveness of the OCC’s supervision process by assessing all bank activities 

under one supervisory plan. With this integrated approach, each supervisory office ADC or 

large bank EIC has responsibility for all supervisory activities, including safety and soundness, 

information technology, asset management, and compliance. Integrating all examining areas 

under one supervisor ensures that the OCC assesses risks in all areas using the same criteria and 

that the most significant risks to the bank will receive the most supervisory attention. 

Clear and meaningful communication between the OCC and the banks it supervises is a 

vital component of high-quality supervision. To that end, the OCC publishes on its Web site 

examination procedures and guidance about evolving issues so that bankers are apprised of OCC 

examination and supervision activities. 

Supervision by Risk 

Examiners meet with bank management and the bank’s board of directors throughout the 

supervisory cycle to obtain information or discuss issues. At the completion of the cycle, the 

examiners prepare a report and conduct a meeting with the bank’s board of directors to discuss 

the results. Those meetings allow participants to discuss the objectives of the OCC’s supervision; 

strategic issues that may be confronting the bank; any major concerns, risks, or issues that may 

need to be addressed; and other matters of mutual interest. 

An environment in which examiners and board members communicate openly and honestly 

benefits a bank. OCC examiners and professional staff have experience with a broad range of 

banking activities and can provide independent, objective information on safe and sound banking 

principles and compliance with laws and regulations. 

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A Guide to the National Banking System 

Risk Assessments 

The OCC’s primary supervisory objective is to assess each bank’s ability to identify, measure, 

monitor, and control risks through its risk management systems. The OCC does this through 

its risk assessment process. The OCC has defined nine categories of risk for bank supervisory 

purposes. Those risks are credit, interest rate, liquidity, price, foreign currency translation, 

transaction, compliance, strategic, and reputation. 

From a supervisory perspective, risk is the potential that events, expected or unanticipated, may 

have an adverse impact on the bank’s earnings and capital. The simple existence of risk is not 

necessarily reason for concern. To put risks in perspective, the OCC determines whether the 

risks a bank plans to undertake are warranted. Generally, risks are warranted when they are 

understandable, measurable, controllable, and within the bank’s capacity to readily withstand 

adverse performance. 

Examiners assess the quantity of risk and the quality of risk management. They then assign each 

risk an aggregate assessment (low, medium, or high) and determine whether the risk is expected 

to decrease, increase, or remain stable over the next 12 months. 

Ratings 

Additionally, all financial institutions are evaluated and rated under the Federal Financial 

Institutions Examination Council’s (FFIEC) Uniform Financial Institutions Rating System. 

This system, which is referred to as the CAMELS rating, assesses six components of a bank’s 

performance: Capital adequacy, Asset quality, Management administration, Earnings, Liquidity, 

and Sensitivity to market risk. Each component is rated on a scale of 1 to 5, with 1 being the 

most favorable rating. 

A composite or overall rating ranging from 1 to 5 also is assigned under the CAMELS rating 

system. A rating of “1” indicates the strongest performance and risk management practices 

relative to the institution’s size, complexity, and risk profile. Those institutions present the least 

level of supervisory concern. Conversely, a 5-rated institution demonstrates critically deficient 

performance, inadequate risk management practices, and the highest level of supervisory concern. 

Specialized Area Supervision 

The OCC also reviews specialized functions and areas not specifically addressed in the CAMELS 

ratings. This includes the Community Reinvestment Act, USA PATRIOT Act (amended the 

Bank Secrecy Act), consumer compliance, information technology, and asset management. 

These supervisory programs are risk based and generally integrated into the CAMELS reviews. 

Examiners with greater knowledge of specialized areas typically conduct the reviews of areas and 

activities that are deemed high-risk.

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A Guide to the National Banking System 

For example, the OCC employs compliance specialists who conduct compliance examination 

work. These compliance specialists report to an ADC or a large bank EIC. In a small bank, 

generalists usually lead the examination and may be assisted by other generalists, compliance 

specialists, and other specialty (information technology and asset management) examiners. In a 

large bank, a compliance specialist generally will lead the compliance examination, assisted by 

other compliance specialists, generalists, and specialty examiners. 

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A Guide to the National Banking System 

Checks and Balances


The OCC builds checks and balances into its high-quality bank supervision program through 

a number of offices, including the offices of the Ombudsman and Program and Management 

Accountability. 

The Ombudsman 

The Office of the Ombudsman is a distinct division of the OCC that operates independently of 

the agency’s bank supervision function. The three primary functions of the Ombudsman’s office 

are: the National Bank Appeals Process, the Bank Examination Questionnaire, and the Customer 

Assistance Group (CAG). These units share a common goal: to act as catalysts for improvement 

in the industry and the agency. The Office of the Ombudsman is committed to the core principles 

of timely and fair dispute resolution and quality customer service. 

National Bank Appeals Process 

The Office of the Ombudsman administers a national bank appeals process. Established in 1993 

and modified in 2002, this process ensures that national banks receive a fair and expeditious 

review of OCC decisions and actions. The Ombudsman functions independently, outside of the 

bank supervision and examination area, and reports directly to the Comptroller. With the consent 

of the Comptroller, the Ombudsman may supersede any OCC decision or action during the 

resolution of an appealable matter. 

Bank Examination Questionnaire 

The OCC solicits and receives feedback routinely from the banking industry through 

“examination questionnaires” and “satisfaction surveys” that accompany reports of examination 

and decisions on corporate applications, respectively. The OCC uses these tools to gather candid 

and timely feedback from bankers and others. Bankers’ feedback enables OCC management 

to evaluate the overall effectiveness of supervision and licensing processes and to refine and 

make improvements continuously. These measurement tools may be completed and submitted 

electronically through National BankNet. 

Customer Assistance Group 

The Customer Assistance Group (CAG) acts as a liaison between national banks and their 

customers. CAG’s assistance with customer problem resolution reflects OCC’s commitment to 

ensure fair access to financial services and fair treatment for all national bank customers. CAG 

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A Guide to the National Banking System 

provides complaint trends and consumer issues through detailed reports, onsite meetings with 

bankers, and direct consultation with OCC’s supervision staff. Information identified from the 

complaints can serve as an early warning system that alerts the bank and the OCC to potential 

areas of risk. 

A recent enhancement to CAG services has been the development of CAGNet. This is a Webbased “business-to-business” application that facilitates the paperless transfer of consumer 

complaints, the banks’ responses, and analytical reports via a secure and dedicated extranet 

application. In addition to improving complaint resolution time, CAGNet has decreased the 

burden on the industry. To date, CAGNet is available to national banks and may be accessed 

exclusively through National BankNet. 

Program and Management Accountability 

The OCC’s Program and Management Accountability (PMA) units, composed of the Quality 

Management Division and the Program Analysis Unit, report directly to the Comptroller through 

the Comptroller’s Chief of Staff. The PMA units administer the OCC’s internal audit, internal 

review, program analysis, and also serve as liaison to other audit and investigative offices. 

The Quality Management Division oversees enterprise risk management issues, promotes 

performance excellence initiatives, and manages the liaison function. The Program Analysis Unit 

provides sophisticated analytical support in the areas of program analysis, budget review, and 

staffing plans. These units work together to ensure that: 1) the OCC’s programs are achieving 

intended results, 2) resource usage is aligned with the agency’s mission, 3) resources are 

protected from waste, fraud, and abuse, 4) applicable laws and regulations are followed, and 5) 

reliable and timely management information systems support decision-making. 

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A Guide to the National Banking System 

Appendix A: OCC Locations


G HI uam 

AR 

LA 

MS AL 

TN 

NC 

PA 

VT ME 

NH 

MA 

DE 

NJ 

MD 

RI CT 

SC 

TX 

OK 

WA 

OR 

CA 

NV 

AZ 

UT 

ID 

MT ND 

SD 

MN 

WI 

IL IN 

MI 

OH 

KY 

WY 

CO 

NM 

NE 

KS 

GA 

FL 

AK 

MO 

IA 

VA 

NY 

WV 

Virgin Islands 

Puerto Rico 

Central District 

Northeastern District 

Southern District 

Western District 

The following pages list headquarters divisions that are referenced in this guide and telephone 

numbers for district offices. For a complete directory of OCC offices, consult the OCC Web site 

at http://www.occ.treas.gov/. 

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A Guide to the National Banking System 

Appendix B: OCC Contacts 

General Information 

Office of the Comptroller of the Currency 

250 E Street, SW 

Washington, DC 20219-0001 

Telephone (202) 874-5000 

Web site http://www.occ.treas.gov 

Selected Headquarters Divisions 

Chief Counsel 

Telephone (202) 874-5200 

Fax Number (202) 874-5374 

Provides legal advice on a broad range of banking law questions, federal securities laws, 

electronic banking, consumer protection laws, corporate structure and governance, lending limits, 

affiliate insider transactions, international banking, among other banking matters. 

Chief National Bank Examiner 

Telephone (202) 874-2870 

Fax Number (202) 874-5352 

Has responsibility for formulating and disseminating the OCC’s supervision policies to promote 

national bank safety and soundness and compliance with laws and regulations. The department 

issues policy, guidance, and examination procedures related to national banks’ commercial, 

consumer, asset management, capital markets, and community compliance activities. 

Communications 

Telephone (202) 874-4700 

Publications (202) 874-4884 

Fax Number (202) 874-5263 

Provides information, publications, and design services for the OCC. It also operates and 

oversees the Public Information Room, which offers access to OCC public documents; and 

processes initial requests filed under the Freedom of Information and Privacy Acts. 

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A Guide to the National Banking System 

Community Affairs 

Telephone (202) 874-5556 

Fax Number (202) 874-4652 

Helps national banks to provide community development financing and retail services to 

underserved consumers and communities. Staff, located in headquarters and the districts, provide 

assistance on local community development resources; sponsor forums for exchanging ideas 

among lenders, community groups, and government officials; conduct research and develop 

publications on best practices; and administer the OCC’s Part 24 Community Development 

Investment Authority. 

Community Bank Activities 

Telephone (202) 874-4861 

Fax Number (202) 874-5305 

Coordinates the OCC’s efforts to reduce burden and assist in making supervision more effective 

and helpful for community banks. 

Compliance 

Telephone (202) 874-4428 

Fax Number (202) 874-5221 

Has responsibility for the development of compliance policy and examination procedures and 

liaison with compliance experts in the field and with other agencies. 

Customer Assistance Group (CAG) 

Comptroller of the Currency 

1301 McKinney, Suite 3450 

Houston, Texas 77010 

Toll-free Number (800) 613-6743 

Fax Number (713) 336-4301 

E-mail Customer.assistance@occ.treas.gov 

Acts as a liaison between national banks and their customers but is not an advocate for either 

party. CAG provides assistance with problem resolution. It also evaluates complaint trends and 

consumer issues, serving as an early warning system for potential areas of risk. 

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A Guide to the National Banking System 

International Banking and Finance 

Telephone (202) 874-4730 

Fax Number (202) 874-5234 

Has responsibility for maintaining relations and information exchange with foreign supervisors, 

coordinating OCC participation in the FBO Supervision Program in support of the supervision of 

federal branches and agencies, and assessing potential risks associated with banks’ cross-border 

exposures. 

Large Bank Supervision 

Telephone (202) 874-4610 

Fax Number (202) 927-0631 

Has responsibility for supervision of the largest national banking companies that generally are 

involved in more complex activities and operate over wide geographic areas. 

Licensing 

Telephone (202) 874-5060 

Fax Number (202) 874-5293 

Web site bos@occ.treas.gov 

Has responsibility for developing and applying OCC licensing policy. It provides support and 

guidance to the district licensing staffs in their processing of applications filed in the districts. 

Midsize Bank Supervision 

Telephone (202) 874-0685 

Fax Number (202) 874-5339 

Has responsibility for supervision of midsize national banking companies and credit card banks 

that generally are involved in more complex activities than community banks and operate over 

wide geographic areas. 

Ombudsman 

Comptroller of the Currency 

1301 McKinney Street, Suite 3400 

Houston, Texas 77010 

Telephone (713) 336-4350 

Fax Number (713) 336-4351 

Has responsibility for overseeing the national bank appeals process and the customer assistance 

group. 

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A Guide to the National Banking System 

OCC District Offices 

Northeastern 

1114 Avenue of the Americas (212) 819-9860 

Suite 3900 Fax (212) 790-4098 

New York, NY 10036-7780 

Deputy Comptroller (212) 790-4001 

District Counsel (212) 790-4010 

Licensing Manager (212) 790-4055 

Supervises most national banks headquartered in Connecticut, Delaware, District of Columbia, 

Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, 

Pennsylvania, Puerto Rico, Rhode Island, South Carolina, Vermont, Virginia, the Virgin Islands, 

and West Virginia. Generally, field or local satellite offices also are located in these states. 

Southern 

500 North Akard Street, Suite 1600 (214) 720-0656 

Dallas, Texas 75201-3394 Fax (214) 720-7000 

Deputy Comptroller (214) 720-7005 

District Counsel (214) 720-7012 

Licensing Manager (214) 720-7052 

Supervises most national banks headquartered in Alabama, Arkansas, Florida, Georgia, Louisiana, 

Mississippi, Oklahoma, Tennessee, and Texas. Generally, field or local satellite offices also are 

located in these states. 

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A Guide to the National Banking System 

Central 

One Financial Place, Suite 2700 (312) 360-8800 

440 South LaSalle Street Fax (312) 435-0951 

Chicago, Illinois 60605-1073 

Deputy Comptroller (312) 360-8802 

District Counsel (312) 360-8805 

Licensing Manager (312) 360-8851 

Supervises most national banks headquartered in Illinois, Indiana, Kentucky, Michigan, 

Minnesota, Missouri, North Dakota, Ohio, South Dakota, and Wisconsin. Generally, field or local 

satellite offices also are located in these states. 

Western 

1225 17th Street, Suite 300 (720) 475-7600 

Denver, Colorado 80202 Fax (720) 475-7690 

Deputy Comptroller (720) 475-7603 

District Counsel (720) 475-7630 

Licensing Manager (720) 475-7650 

Supervises most national banks headquartered in Alaska, Arizona, California, Colorado, Guam, 

Hawaii, Idaho, Iowa, Kansas, Missouri, Montana, Nebraska, Nevada, New Mexico, Northern 

Mariana Islands, Oregon, Washington, Wyoming, and Utah. Generally, field or local satellite 

offices also are located in these states. 

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A Guide to the National Banking System 

Appendix C: OCC Publications 

OCC publications that you may find useful are listed in this appendix. To request an order form 

and a list of publications, contact the OCC’s Communications Division at (202) 874-4700. 

Electronic copies of these and other OCC publications are available in a downloadable and 

searchable format on the OCC’s Web site at http://www.occ.treas.gov/. 

Comptroller’s Licensing Manual 

The Licensing Manual consists of a series of booklets. The booklets explain the OCC policies 

and procedures to form a new national bank, for existing institutions to enter the national banking 

system, for individuals to acquire control of a national bank, and for national banks to effect 

structural changes and expand activities. 

Comptroller’s Handbook 

This handbook consists of a series of booklets on fundamental topics of bank supervision. The 

Community Bank Supervision and Large Bank Supervision Handbooks explain the OCC’s 

supervisory approaches for these two lines of business and contain standards and procedures that 

guide examiners in reaching conclusions about a bank’s operations. Other booklets provide more 

detailed descriptions and examination procedures for areas. 

Comptroller’s Handbook for Asset Management 

This publication consists of several booklets that present policies and procedures for the 

examination of the asset management activities of national banks. 

Comptroller’s Handbook for Compliance 

The booklets comprising this publication contain the procedures used in examining national 

banks for compliance. The handbook is a supervisory tool for examiners performing compliance 

examinations and a self-assessment tool for bankers analyzing bank compliance systems. 

Selected Other OCC Publications 

Activities Permissible for a National Bank. This report describes the activities that are authorized 

for a national bank as part of, or incidental to, the business of banking. 

The OCC Annual Report. This report sets forth the agency’s accomplishments in supervision, 

regulation, risk analysis, and chartering. It also describes management initiatives, financial 

management results, and OCC outreach to industry, community, and consumer organizations. 

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A Guide to the National Banking System 

Detecting Red Flags in Board Reports – A Guide for Directors, Comptroller of the Currency, 

October 2003. This booklet describes information generally found in board reports that national 

bank directors use to meet their fiduciary responsibility. It highlights red flags that may signal 

existing or potential problems. 

The Director’s Book: The Role of the National Bank Director, Comptroller of the Currency, 

March 1997. This publication provides general guidance to directors of national banks. 

Interpretations and Actions. This publication is published monthly and has been available on the 

OCC’s Web site since May 1996. It includes legal staff interpretations, trust interpretative letters, 

securities letters, and bank accounting advisory series, which represent the informal views of 

the Comptroller’s staff concerning the applications of banking law to contemplated activities or 

transactions. 

National Banks and the Dual Banking System, Comptroller of the Currency, September 2003. 

This paper explains the history and features of the “dual banking system” and discusses the 

judicial and legislative precedents establishing the constitutional limits on the ability of states to 

control or direct national bank powers conferred under federal law. 

Quarterly Journal. This publication is published in March, June, September, and December and 

has been available on the OCC’s Web site since 1997. It is the journal of record for the most 

significant actions and policies of the OCC. It is published only in electronic form four times a 

year. 

Report of the Ombudsman, Comptroller of the Currency, December 2002. It includes descriptions 

of the appeals process, the Customer Assistance Group, and the results of the examination 

questionnaires. 

30