Office of Comptroller of the Currency 

Mission Statement 

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. 

Program Summary by Account Dollars in Thousands 

FY 2006 FY 2007 FY 2008

Obligated Estimated Estimated $ Change % Change 

Supervise $471,882 $569,137 $597,600 $28,463 5.00%

Regulate 70,992 81,508 87,000 5,492 6.74%

Charter 13,952 20,544 21,200 656 3.19%

Total Resources $556,826 $671,189 $705,800 $34,611 5.16%

Capital Investments $6,360 $7,389 $6,137 ($1,252) (16.9%) 

(Included in Total Resources above) 

FY 2007 Priorities 

• Regulate and supervise approximately 1,830 institutions with national bank charters 

and 49 federal branches of foreign banks with total assets of approximately $6.5 

trillion; 

• Conduct examinations based on the risk profile of individual national banks to ensure 

they are safe and sound, sufficiently capitalized, and comply with consumer 

protection laws and regulations; 

• Address potential adverse changes in national bank asset quality and risk profiles; 

• Fill key experienced and specialty examiner and bank supervision policy analyst 

positions; enhance retention of entry-level examiners at the critical three/four year 

point of their careers; develop the next generation of bank supervision leadership; 

• Work with other federal banking regulators on proposed revisions to the banking 

agencies’ risk-based capital standards (often referred to as the Basel II and Basel IA 

proposals);

• Combat fraud and money laundering and protect the integrity of the financial system 

through national banks’ compliance with the Bank Secrecy Act, anti-money 

laundering, and USA PATRIOT Act laws and regulations;

• Address sound underwriting, risk management systems, and consumer issues 

presented in connection with retail banking products offered by national banks; and

• Continue to support and defend the attributes and benefits of the national bank 

charter.
Table of Contents 

Section 1 – Purpose ........................................................................................................... 2

1A – Description of Bureau Vision and Priorities.......................................................... 2 

1B – Program History and Future Outlook..................................................................... 3 

1C – Industry Outlook .................................................................................................... 9 

Section 2 – Budget Adjustments and Appropriations Language ............................... 10

2.2 – Operating Levels Table........................................................................................ 10 

2B – Appropriations Language..................................................................................... 10 

2C – Legislative Proposals............................................................................................ 10 

Section 3 – Budget and Performance Plan ................................................................... 11

3.1 – Resource Detail Table.......................................................................................... 11 

3A – Supervise.............................................................................................................. 11 

3.2.1 – Supervise Budget and Performance Plan.......................................................... 11 

3B – Regulate................................................................................................................ 14 

3.2.2 – Regulate Budget and Performance Plan ........................................................... 14 

3C – Charter.................................................................................................................. 14 

3.2.3 – Charter Budget and Performance Plan.............................................................. 14 

Section 4 – Supporting Materials.................................................................................. 16

4.1 – Human Resources Table ...................................................................................... 16 

4A – Human Capital Strategy Description ................................................................... 16 

4.2 – Summary of IT Resources Table ......................................................................... 18 

4B – Information Technology Strategy ........................................................................ 19 

4.3 – PART Evaluation Table....................................................................................... 20 

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Section 1 – Purpose

1A – Description of Bureau Vision and Priorities 

The Office of the Comptroller of the Currency (OCC) was created by Congress 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 supervises approximately 1,830 institutions with national bank charters and 49 

federal branches of foreign banks in the United States (U.S.). Total assets under OCC 

supervision are nearly $6.5 trillion or 67 percent of total U.S. commercial banking assets. 

The average size and complexity of the institutions in the national banking system

continue to grow, creating increasing and diverse challenges for the OCC. 

The OCC has its headquarters in Washington, DC, and operates four district offices in 

Chicago, Dallas, Denver, and New York, and field and satellite offices throughout the 

U.S. Resident examiner teams are located in the largest banking companies, and there is 

an examining office in London, England. 

The OCC’s operations are funded primarily (more than 96 percent) from semiannual 

assessments levied on national banks. Revenue from investments in U.S. Treasury 

securities and licensing and other fees comprises the remaining three percent of the 

OCC’s funding. The OCC does not receive congressional appropriations to fund any 

portion of its operations. 

As the regulator of national banks, the OCC has established four strategic goals that help 

to support a strong economy for the American public: 1) a safe and sound national 

banking system, 2) fair access to financial services and fair treatment of bank customers, 

3) a flexible legal and regulatory framework that enables the national banking system to 

provide a full competitive array of financial services, and 4) an expert, highly motivated, 

and diverse workforce that makes effective use of OCC resources. The OCC organizes 

its activities under three programs: Supervise, Regulate, and Charter, to achieve the goals 

and objectives outlined in its strategic plan. 

The OCC’s FY 2007 priorities include supervisory issues related to potential adverse 

changes in national bank asset quality and risk profiles, continued work on proposed 

revisions to the federal banking agencies’ risk-based capital standards, compliance with 

Bank Secrecy Act/anti-money laundering (BSA/AML) and USA PATRIOT Act 

(USAPA) requirements, and addressing issues raised by the range of retail banking 

products offered by national banks. Critical issues concerning national bank powers and 

preemption of state laws will continue to be significant for the agency and the industry. 

Filling key experienced and specialty examiner and bank supervision policy analyst 

positions, enhancing retention of entry-level examiners at the critical three/four year point 

of their careers, and developing the next generation of bank supervision leadership are 

also critical initiatives for the OCC. 

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1B – Program History and Future Outlook 

Demands on OCC resources, especially those created by large, highly complex national 

banks, require that OCC set priorities that maximize the efficient use and allocation of

those resources. OCC bank supervision needs to be flexible and proactive in nature to 

adapt to changing priorities and unexpected supervisory issues. Uncertainties in the 

financial and commodities markets and in the global political landscape are likely to 

continue and may result in a more volatile operating environment for the banking 

industry. Risks facing the banking industry and the OCC are increasingly interdependent, 

cutting across traditional disciplines and business lines. Operational and compliance 

risks are becoming more prominent; traditional distinctions between credit and capital 

markets activities are eroding. Corporate governance, accounting, compliance, and 

customer information security continue to be high visibility issues for the banking 

industry. The rapid pace of financial innovation and growing concentrations, both within 

bank’s portfolios and across industry segments, pose additional challenges and require 

improved risk management and information systems. Quantitative risk measurement 

systems will continue to become more prominent in banks’ risk management processes. 

The following are highlights of OCC FY 2006 accomplishments and specific FY 2007 

challenges. 

Supervisory Activities

The OCC continously supervises banks in its community bank, midsize and credit card 

bank, and large bank programs. A supervisory strategy is developed based on each 

banking institution’s risk profile and condition. The strategy includes a variety of 

supervisory activities, including examinations and off-site analyses, to be completed 

during a supervisory cycle. Examination activities focus on safety and soundness, 

consumer compliance, BSA/AML/USAPA, fair lending, asset management, bank 

information technology, and the Community Reinvestment Act (CRA). 

Areas of emphasis during the OCC’s FY 2006 supervisory strategies included 

compliance with the BSA/AML (as discussed more fully below), follow up on Home

Mortgage Disclosure Act (HMDA) data, asset quality, risk management practices, audit 

and internal controls, integrity of financial statements and conformance with accounting 

changes/practices, reliance on noninterest income, outsourcing and vendor activities, 

interest rate risk models and controls, liquidity and investment portfolio practices and 

holdings, concentration risk, Basel II implementation, allowance for loan and lease loss 

methodology and adequacy, and corporate governance. Credit quality and the risk 

management of concentrations will continue to be areas of emphasis in FY 2007 

strategies. 

Throughout FY 2006, the OCC continued to help bankers and their customers and 

communities respond to the aftermath of Hurricane Katrina. These efforts included 

public service announcements in major U.S. media markets to encourage individuals 

adversely affected by the hurricane to contact their lenders to discuss options that may be 

available to assist them. In March 2006, the OCC and other federal banking agencies 

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hosted a forum in New Orleans that brought together financial institutions from within 

and outside the Gulf Coast region to discuss the challenges facing financial institutions in 

areas affected by the hurricane and on ways of helping to meet the needs of the local 

affected communities. In June 2006, OCC Bulletin 2006-26 transmitted the booklet 

Lessons Learned from Hurricane Katrina: Preparing Your Institution for a Catastrophic 

Event, developed by the Federal Financial Institutions Examination Council (FFIEC) and 

the Conference of State Bank Supervisors, to assist institutions in evaluating their 

readiness for a catastrophic event. 

The OCC also monitors and responds to systemic trends and emerging risks in the 

banking industry. During FY 2006, the OCC worked with other federal bank regulators 

to develop and issue for comment, proposed risk management guidance on nontraditional mortgage products, concentrations in commercial real estate lending, and 

complex structured finance transactions. Final action on these guidelines is expected in 

the coming months. 

Basel II and Basel IA

The OCC continues its efforts, along with the other federal bank and thrift regulators, 

with respect to the U.S. implementation of the “International Convergence of Capital 

Measurement and Capital Standards: A Revised Framework,” generally known as Basel 

II. The major focus in FY 2006 was the development of the notice of proposed 

rulemaking (NPR) that will provide the industry and others with detailed information 

about the U.S. implementation of Basel II. The OCC received clearance from OMB in 

June 2006 to publish the NPR, which will provide a formal 120-day comment period. In 

addition to the NPR, the agencies have been working on a package of related supervisory 

reporting templates and supervisory guidance that also will be published for comment. 

During FY 2007, the OCC will continue to work with the other federal banking agencies 

on the Basel II proposals and consult with banks on their implementation efforts. 

Work also continues on potential revisions to the risk-based capital standards that would 

apply to non-Basel II banks (referred to as Basel IA). In December 2006, OCC and other 

federal banking agencies issued an NPR built upon the evaluation of comments obtained 

from the advanced notice of proposed rulemaking issued in October of 2005. 

As in previous years, the goal is that any changes to capital adequacy rules are consistent 

with safety and soundness, good risk management practices, and the continued 

competitive strength of the U.S. banking system. 

Bank Secrecy Act/Anti-Money Laundering 

During the first part of FY 2006 the OCC incorporated a set of comprehensive initiatives 

to strengthen OCC BSA/AML examinations, to enhance OCC resources and expertise 

devoted to BSA/AML supervision, and to provide clear and consistent expectations about 

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BSA/AML supervision to the industry. The OCC continued, throughout FY 2006, to 

address BSA/AML compliance, identified as one of the five challenges facing the 

Treasury Department by the Treasury Office of Inspector General in October 2005, as 

follows: publication of the revised FFIEC BSA/AML Examination Manual in the 

summer of 2006; completion of compliance exams for all large banks, 100 percent 

completion in midsize and high risk community banks, and 90 percent completion for the 

remaining community banks by the end of FY 2006; and, development of a national pool 

of BSA/AML examiners, including 20 OCC employees, who as of June 2006, have 

attained the Certified Anti-Money Laundering Specialist certification, delivery of 

BSA/AML training to Large Bank Supervision (LBS) Examiners-in-Charge and 

compliance specialists and an increase in the number of AML schools from four in 2005 

to eight in 2006. 

OCC will commit to ongoing BSA/AML challenges by ensuring, via FY 2007 bank 

supervision examination strategies, that banks have adequate and effective BSA/AML 

programs in place, and by conducting OCC BSA/AML supervisory actions in a fair and 

consistent manner. 

Fair Access to Financial Services and Fair Treatment of Bank Customers

The OCC fulfills its strategic goal of fair access to financial services and fair treatment of 

bank customers through its ongoing supervisory programs for national banks and their 

operating subsidiaries. These programs include ongoing supervisory examinations to 

ensure compliance with fair lending laws, CRA, and other consumer laws and 

regulations. In addition to supervisory activities, the OCC issues guidance and 

handbooks and offers training to bankers and bank directors to help them understand and 

meet their compliance and CRA obligations. The OCC also conducts outreach with a 

variety of organizations, including advocacy groups, research organizations, community 

development practitioners, and community development membership organizations 

whose constituencies include or affect low- and moderate-income consumers, distressed 

communities, and small and minority-owned businesses. 

During FY 2006, the OCC and other federal banking agencies issued interagency 

questions and answers that address topics related to changes made in the agencies’ 2005 

revisions to their CRA regulations; updated lists of distressed or underserved nonmetropolitan middle-income geographies in which bank revitalization or stabilization

activities will receive CRA consideration; and updated median family income levels that 

are used in CRA performance evaluations. Updated examination procedures for large, 

small, limited purpose or wholesale banks that incorporate the 2005 CRA regulatory 

revisions were also published by the agencies. 

 

The OCC, other federal banking agencies and the U.S. Department of Housing and Urban 

Development released updated answers to frequently asked questions to aid in the 

interpretation of 2005 home loan data to be disclosed under HMDA. The OCC also 

issued an updated version of its consumer compliance booklet, Fair Lending Examination 

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Procedures, also published to incorporate several changes in Regulation B (123 CFR 

202) and the “Interagency Fair Lending Procedures” issued in 2004. 

The OCC actively supports the efforts of national banks to engage in sound and 

successful community development activities. To assist in these efforts, the OCC 

publishes periodic Community Development Insights papers on products, services, and 

initiatives that are relevant to community development and consumer banking activities. 

During FY 2006, papers on commercial lending in Indian Country and on the Small 

Business Administration’s 504 loan programs were published. In June 2006, the 

Comptroller of the Currency urged Congress to provide increased authority, via Part 24 

legislation revisions, for banks and thrifts to invest in low- and moderate-income 

communities. 

 

During FY 2006, the OCC continued its work with the other federal banking agencies to 

improve financial disclosures to consumers. The proposed risk management guidance 

on non-traditional mortgage products issued in late 2005 extensively discussed consumer 

protection concerns that may be raised by these products in addition to addressing the 

traditional areas of safety and soundness. In March 2006, the agencies released Evolution 

of a Prototype Financial Privacy Notice, a report summarizing consumer research 

contributing to improved financial privacy notices. In August 2006, the OCC issued 

guidance on disclosure and marketing issues associated with gift cards, which focused on 

the need for national banks that issue gift cards to do so in a manner in which both 

purchasers and recipients are fully informed of the product’s terms and conditions. This 

work will continue in FY 2007. 

Supervision Staffing 

OCC designated recruitment activities in the Chief National Bank Examiner’s (CNBE) 

office and LBS examiner positions as high priorities during FY 2006. To attract internal 

candidates to these positions, the OCC implemented rotational assignments, pay, and 

relocation and transitional cost of living incentives. Simultaneously, the OCC focused its 

external recruitment on candidates with expertise in compliance, complex capital market 

activities, and mortgage banking and authorized referral bonuses to current employees to 

attract externally hired examiners. During 2006, LBS exceeded expectations by hiring

more than 30 individuals from outside the OCC, including nine with compliance 

expertise. In addition, CNBE filled six critical managerial and group leader positions and 

hired two individuals from outside the OCC with accounting expertise. The OCC also 

continued its nationwide recruitment and training program for entry-level bank 

examiners. Since the program’s inception in FY 2003, approximately 430 examiners 

have been hired, including over 160 in FY 2006. 

To ensure that OCC’s bank supervision organizations have a steady and deep pipeline of 

qualified employees to meet future leadership needs, the OCC introduced the 

LeaderTRACK initiative. The program, which will be piloted for 18 months beginning 

in FY 2007, offers participants three six-month assignments, with significant managerial 

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and supervisory roles, that will develop leadership rather than prepare them for a specific 

position. 

Customer Assistance

The OCC’s Customer Assistance Group (CAG) assists consumers who have questions or 

complaints about national banks and their operating subsidiaries. During the last twelve 

months, the CAG received nearly 70,000 telephone calls and also published an 

informational brochure to assist those who are Spanish-speaking. Also, during FY 2006 

the OCC achieved resource efficiencies by outsourcing initial calls. The Government

Accountability Office (GAO) released a favorable report in 2006 regarding CAG. 

CAG goals for FY 2007 include a CAG customer survey, CAG outreach with state 

regulators, and expanded CAG hours of operation. 

 

Regulation

During FY 2006, the OCC, with other federal banking agencies, conducted the regulatory 

burden reduction review process, as required by the Economic Growth and Regulatory 

Paperwork Reduction Act of 1996 (EGRPRA). In FY 2007 OCC is planning to propose 

an NPR that eliminates or streamlines existing requirements or procedures and enhances 

national banks’ flexibility in conducting authorized activities, either by revising 

provisions currently contained in OCC regulations or by codifying, and thus making 

generally applicable, conclusions that the OCC has reached in case-by-case

determinations. In addition, the OCC will continue to 1) provide legal analysis of and 

support for federal preemption and agency visitorial authority under national bank law, in 

order for national banks to operate efficiently under uniform national standards, and 2) 

develop and communicate additional guidance regarding principles determining the 

application of state consumer protection laws to national banks. 

SNC Modernization

The Shared National Credit (SNC) is a collaborative review and assessment by the OCC, 

Federal Reserve System, Federal Deposit Insurance Corporation and Office of Thrift 

Supervision of the largest and most complex credits that are held by multiple financial 

institutions. The OCC assumed the lead in FY 2006 of an interagency initiative, which 

will continue throughout FY 2007, to improve SNC data collection/analysis. 

 

OMB Circular A-123, Management’s Responsibility for Internal Control, Appendix A

In FY 2006, the OCC undertook a risk assessment of all business processes related to 

financial reporting in compliance with OMB Circular A-123, Appendix A. Based on this 

assessment, the OCC documented 81 business processes and developed and carried out 

36 test plans, including coverage of the information systems that support financial 

reporting. The testing showed no material internal control weaknesses. During FY 2007, 

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another risk assessment will be conducted, documentation will be developed or revised as 

needed, and test plans will be carried out to support the FY 2007 assessment over 

financial reporting. 

Homeland Security Presidential Directive 12 (HSPD-12) and Federal Information 

Security Management Act (FISMA)

During the first quarter of FY 2006, the OCC successfully implemented an integrated 

Personal Identity Verification (PIV) process which ensured compliance with the PIV-1 

requirements of HSPD-12. The OCC implementation strategy included utilizing new 

technology such as digital fingerprinting machines, document verification software and 

several new applications providing a secure means of exchanging information on a real 

time basis with the Office of Personnel Management. In FY 2007 the primary focus 

under HSPD-12 will be designing, developing and implementing the systems necessary 

to create and use smartcard IDs which control both physical access to Treasury facilities 

and logical access to Treasury information systems. The challenge for the OCC will be 

developing a strategy for enrolling over 3000 existing employees and contractors into a 

new identity management system and conducting the required identity proofing without 

adversely impacting the day-to-day operations of the OCC. The challenges will continue 

with adapting existing processes, procedures and IT infrastructure to work with the new 

smartcard IDs. The wide geographical distribution of OCC offices and the unique 

mission of the OCC will require an innovative approach to implementing any HSPD-12 

PIV-2 solutions.

The OCC has also made improvements in computer security via policy and technical 

changes. New rules instituted in FY 2006 on the use of OCC computer equipment and 

networks include: prohibiting the attachment of unauthorized non-OCC equipment to the 

OCC network, clarifying procedures for reporting lost or stolen IT equipment, and 

prohibiting all use of "instant messaging”. Technical changes include: encrypting all 

OCC network traffic among sites, implementing firewall and intrusion detection software 

on all laptops and workstations, implementing additional technical controls on all 

BlackBerry devices, enhancing network intrusion detection, and upgrading both server 

and workstation/laptop operating systems to versions with better security capabilities. On 

the compliance side, the OCC continues to refine its approach to documentation, training, 

and certification and accreditation activities required by the FISMA as well as evolving 

Treasury and government-wide standards. Employees and contractors in the OCC’s 

Chief Information Officer's and Acquisitions Management offices with special security 

responsibility took additional training to underscore and reinforce their security duties. 

OCC - 8 
1C – Industry Outlook 

Bank earnings have been strong for the last 15 years, and strong earnings have in turn 

contributed to healthy capital ratios. Banks have successfully expanded their product 

range, and this expansion has been an important factor in maintaining robust earnings 

growth. Along with the greater range of products has come the growing importance of 

off-balance sheet income, and noninterest income. These have been especially important 

at the largest banks, and are now becoming important for smaller institutions as well.

These trends are expected to continue. There is more uncertainty about banks’ ability to 

continue to rely on the real estate sector to drive asset and earnings growth. 

 

In the following projections, bank assets are assumed to grow 1.5 percentage points faster 

than nominal GDP each year over the next five years, consistent with experience of the 

recent past. Assuming annual real GDP growth at 3 percent, and inflation at 2 

this gives nominal GDP growth of 5 percent and growth of bank assets at 6.5 percent. 

percent, 

 Banking system assets: 2005 and 2010 projected 

Commercial National Share of total

banks banks system assets in

Assets ($tr) Assets ($tr) banks over $10 billion

2005 9.04 6.00 75.1

2010e 12.39 8.22 75.1

 The number of banks has fallen steadily for at least two decades. The projection assumes 

that the long-term trend of banks consolidation will continue, both for national banks and 

all commercial banks, and that for all but the largest banks, the rate of decline over the

next five years will equal the rate of decline experienced over the last five years. In 2005, 

84 commercial banks had assets exceeding $10 billion, while about 3,400 banks had 

assets under $100 million. By 2010, the number of banks over $10 billion is expected to 

remain about the same, while the number of banks under $100 million is expected to 

continue to decline, to around 2, 500.

 

Large banks will continue to dominate the industry. Banks with over $10 billion in assets

now account for 75.1 percent of system assets, and should be able to maintain if not 

increase that share. 

 

Until about five years ago, national banks consistently accounted for about 57 percent of 

all commercial bank assets. Since then, a series of mergers has increased the national 

bank share to about 67 percent of commercial bank assets.

 

Risks to the banking system include an economic slowdown, and deterioration in real 

estate markets, which as noted above have accounted for much of the growth in bank

income and assets over the last several years.

OCC - 9 
Section 2 – Budget Adjustments and Appropriations Language 

2.2 – Operating Levels Table 

Dollars in Thousands

FY 2006

Obligated

FY 2007

Estimated

FY 2008

Estimated

FTE 2,812 2,977 3,041

Object Classification:

11.1 Full-Time Permanent Positions...................... $274,159 $320,750 $342,900

11.1 Other than Full-Time Permanent Positions..... 7,130 7,974 8,500

11.5 Other Personnel Compensation..................... 949 1,813 1,800

11.8 Special Personal Services Payments............. 0 0 0

11.9 Personnel Compensation (Total).................... 282,238 330,537 353,200

12.0 Personnel Benefits......................................... 95,182 106,356 115,150

13.0 Benefits to Former Personnel......................... 215 169 200

21.0 Travel............................................................. 35,619 42,259 45,600

22.0 Transportation of Things................................ 2,319 2,603 1,800

23.1 Rental Payments to GSA............................... 196 2,360 2,700

23.2 Rent Payments to Others............................... 24,284 28,873 30,400

23.3 Communications, Utilities, & Misc.................. 8,922 12,572 13,300

24.0 Printing and Reproduction.............................. 1,158 1,188 1,100

25.1 Advisory & Assistance Services..................... 70,018 105,737 101,900

25.2 Other Services............................................... 0 0 0

25.3 Purchase of Goods/Serv. from Govt. Accts... 0 0 0

25.4 Operation & Maintenance of Facilities............ 0 0 0

25.5 Research & Development Contracts.............. 0 0 0

25.6 Medical Care.................................................. 0 0 0

25.7 Operation & Maintenance of Equipment......... 000

25.8 Subsistence & Support of Persons................. 000

26.0 Supplies and Materials................................... 5,139 6,301 6,300

26.0 Metal and Fabrication..................................... 000

31.0 Non-Capital Equipment.................................. 27,221 14,030 15,300

32.0 Land and Structures....................................... 3,893 18,154 18,800

41.0 Grants, Subsidies........................................... 000

42.0 Insurance Claims & Indemn........................... 422 50 50

43.0 Interest and Dividends.............................. 0 0 0

44.0 Refunds.......................................................... 000

Total Operating................................................ $556,826 $671,189 $705,800

Budget Activities:

Supervision $471,882 $569,137 $597,600

Regulate 70,992 81,508 87,000

Charter 13,952 20,544 21,200

Total Budget Authority....................................... $556,826 $671,189 $705,800

2B – Appropriations Language 

OCC receives no appropriated funds from Congress. 

2C – Legislative Proposals 

OCC currently has no legislative proposals. 

OCC - 10 
Section 3 – Budget and Performance Plan

3.1 – Resource Detail Table 

Dollars in Thousands

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

Revenue:

Assessments $622,278 $661,900 $703,900 6.35%

Interest 21,938 22,300 23,900 7.17%

Other Income 3,759 3,000 3,100 3.33%

Total Revenue $647,975 $687,200 $730,900 6.36%

Obligations Incurred:

Supervision 2,375 $471,882 2,545 $569,137 2,603 $597,600 2.28% 5.00%

Regulate 364 70,992 344 81,508 350 87,000 1.74% 6.74%

Charter 73 13,952 88 20,544 88 21,200 0.00% 3.19%

 Total Obligations Incurred 2,812 $556,826 2,977 $671,189 3,041 $705,800 2.15% 5.16%

Total Reserve Contribution $91,149 $16,011 $25,100 56.77%

Actual Estimated Estimated to FY 2008

FY 2007

Description

FY 2006 FY 2007 FY 2008

% Change

3A – Supervise ($569,137,000): The Supervise program consists of those ongoing 

supervision and enforcement activities undertaken to assure that each national bank is 

operating in a safe and sound manner and is complying with applicable laws, rules, and 

regulations relative to the bank and the customers and communities it serves. This 

program includes bank examinations and enforcement activities; resolution of disputes

through the National Bank Appeals process; ongoing monitoring of banks; and analysis 

of systemic risks and market trends in the national banking system or groups of national 

banks, the financial services industry, and the economic and regulatory environment. 

3.2.1 – Supervise Budget and Performance Plan 

Dollars in Thousands

Supervise Budget Activity Includes Strategic Objective F3C

FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Resource Level Obligated Obligated Obligated Estimated Estimated

Financial Resources

 Other Resources 371,252 408,091 471,882 569,137 597,600

Total Operating Level $371,252 $408,091 $471,882 $569,137 $597,600

Human Resources

 Other FTE 2,212 2,250 2,375 2,545 2,603

Total FTE (reimbursable) 2,212 2,250 2,375 2,545 2,603

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Supervise Budget Activity Includes Strategic Objective F3C

Measure FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Target 95% 95% 95% 95% 95%

Actual 99% 99% 99%

Percentage of national banks that are well 

capitalized (%) (Oe) 

Met Yes Yes Yes

Target 90% 90% 90% 90% 90%

Actual 94% 94% 95%

Percentage of national banks with composite 

CAMELS rating 1 or 2 (%) (Oe) 

Met Yes Yes Yes

Target 94% 94% 94% 94% 94%

Actual 96% 94% 94%

Percentage of national banks with consumer 

compliance rating of 1 or 2 (%) (Oe) 

Met Yes Yes Yes

Target 40% 40% 40% 40% 40%

Actual 40% 44% 46%

Rehabilitated problem national banks as a 

percentage of the problem national banks one 

year ago (CAMELS 3, 4 or 5) (%) (Oe) Met Yes Yes Yes

Target Baseline $9.55 $9.55

Actual $8.84

Total OCC costs relative to every $100,000 in 

bank assets regulated ($) (E) 

Met Yes

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, and M - Management/Cust. 

Satisfaction 

Description of Performance: 

Well Capitalized National Banks 

The Federal Deposit Insurance Act established a system of prompt corrective action 

(PCA) that classifies insured depository institutions into five categories (well capitalized; 

adequately capitalized; undercapitalized, significantly undercapitalized; and critically 

undercapitalized) based on their capital levels relative to their risks. At the fiscal yearend, 99 percent of national banks were classified as well capitalized. National banks’ 

capital has remained at this consistently high level for the past several years. 

National Banks with Composite CAMELS Rating of 1 or 2 

The composite CAMELS rating reflects the overall condition of a bank. Bank regulatory 

agencies use the Uniform Financial Institutions Rating System, CAMELS, to provide a 

general framework for evaluating all significant financial, operational and compliance 

factors inherent in a bank. Evaluations are made on: Capital adequacy, Asset quality, 

Management, Earnings, Liquidity, and Sensitivity to market risk. The rating scale is 1 

through 5 where 1 is the highest rating granted. CAMELS ratings are assigned at the 

completion of every supervisory cycle or when there is a significant event leading to a 

change in CAMELS. In FY 2006, 95 percent of national banks earned a composite 

CAMELS rating of either 1 or 2, signifying an overall safe and sound national banking 

system and a foundation for a strong U.S. economy. 

Rehabilitated National Banks

Problem banks can ultimately reach a point where rehabilitation is no longer feasible. 

OCC’s early identification of, and intervention with, problem banks can lead to 

successful remediation of these banks. The OCC recommends corrective actions to

problem banks for improving their operations and as a result, 46 percent of banks with 

composite CAMELS rating of 3, 4 or 5 one year ago have improved their ratings to either 

1 or 2 this year. This is an improvement from 44 percent achieved in FY 2005 and the 40 

percent achieved in FY 2004. 

 

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National Banks with Consumer Compliance Rating of 1 or 2 

To ensure fair access to financial services and fair treatment of bank customers, the OCC 

evaluates a bank’s compliance with consumer laws and regulations. Bank regulatory 

agencies use the Uniform Financial Institutions Rating System, Interagency Consumer 

Compliance Rating, to provide a general framework for assimilating and evaluating 

significant consumer compliance factors inherent in a bank. Each bank is assigned a 

consumer compliance rating based on an evaluation of its present compliance with 

consumer protection and civil rights statutes and regulations, and the adequacy of its 

operating systems designed to ensure continuing compliance. Ratings are on a scale of 1 

through 5 in increasing order of supervisory concern. National banks continue to show 

strong compliance with consumer protection regulations with 94 percent earning a 

consumer compliance rating of either 1 or 2.

Total OCC Costs Relative to Every $100,000 in Bank Assets Regulated 

Beginning in FY 2006, the OCC implemented a performance measure—Total OCC Costs 

Relative to Every $100,000 in Bank Assets Regulated—that reflects the efficiency of its 

operations while meeting the increasing supervisory demands of a growing and more 

complex national banking system. OCC costs are those reported as total program costs 

on the annual audited Statement of Net Cost. Bank assets are those reported quarterly by 

national banks on their Reports of Condition and Income. Total bank assets represent the 

growth and complexity of the national banking system. This measure supports the 

OCC’s strategic goal of efficient use of agency resources. The OCC’s ability to control 

its costs while ensuring the safety and soundness of the banking system benefits all 

national bank customers. 

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3B – Regulate ($81,508,000): The Regulate program consists of those ongoing activities 

that result in the establishment of regulations, policies, operating guidance, and 

interpretations of general applicability to national banks. These regulations, policies, and 

interpretations may establish system-wide standards, define acceptable banking practices, 

provide guidance on risks and responsibilities facing national banks, or prohibit (or 

restrict) banking practices deemed to be imprudent or unsafe. The program also provides 

analysis and legal opinions on federal preemption of state law. This program includes the 

establishment of examination policies, handbooks, and interpretations for examiners as 

well as representing the OCC’s regulatory authorities and interpretations in 

administrative, judicial, and congressional hearings. 

3.2.2 – Regulate Budget and Performance Plan 

Dollars in Thousands

Regulate Budget Activity Includes Strategic Objective E1B

FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Resource Level Obligated Obligated Obligated Estimated Estimated

Financial Resources

 Other Resources 61,763 64,011 70,992 81,508 87,000

Total Operating Level $61,763 $64,011 $70,992 $81,508 $87,000

Human Resources

 Other FTE 368 353 364 344 350

Total FTE (reimbursable) 368 353 364 344 350

3C – Charter ($20,544,000): The Charter program involves those ongoing activities that 

result in the chartering of national banks as well as the evaluation of the permissibility of 

structures and activities of national banks and their subsidiaries. This includes the review 

and approval of new national bank charters, federal branches and agencies, mergers, 

acquisitions, conversions, business combinations, corporate reorganizations, changes in 

control, operating subsidiaries, branches, relocations, and subordinated debt issues. 

3.2.3 – Charter Budget and Performance Plan

Dollars in Thousands

Charter Budget Activity Includes Strategic Objective E1B

FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Resource Level Obligated Obligated Obligated Estimated Estimated

Financial Resources

 Other Resources 16,448 15,011 13,952 20,544 21,200

Total Operating Level $16,448 $15,011 $13,952 $20,544 $21,200

Human Resources

 Other FTE 98 83 73 88 88

Total FTE (reimbursable) 98 83 73 88 88

Charter Budget Activity Includes Strategic Objective E1B

Measure FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Target 95% 95% 95% 95% 95%

Actual 96% 96% 94%

Percentage of licensing applications and notices 

completed within established timeframes. (%) 

(Oe) Met Yes Yes No

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, and M - Management/Cust. 

Satisfaction 

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Description of Performance: 

Licensing Applications and Notices Completed within Time Frames 

The OCC’s timely and effective approval of corporate applications contributes to the 

nation’s economy by enabling national banks to complete various corporate transactions 

and introduce new financial products and services. Delays in providing prompt decisions 

on applications and notices can deprive a bank of a competitive or business opportunity, 

create business uncertainties, or diminish financial results. Time frames have been 

established for completing each type of application and notice. The OCC completed 94 

percent of applications and notices within the time standard during FY 2006. The target 

of 95 percent wasn’t met as the result of several applications that initially appeared to be 

routine in nature requiring additional time due to unique circumstances. Institutions

receiving decisions on their corporate applications and notices rated the OCC’s overall 

licensing services an average of 1.2. The licensing survey is based on a five-point rating 

scale, in which 1 indicates outstanding and 5 indicates significantly deficient. 

For detailed information about each performance measure, including definition, 

verification and validation, please go to: 

http://www.treas.gov/offices/management/dcfo/accountability-reports/2006-

par/Part_IV_Appendices.pdf

OCC - 15 
Section 4 – Supporting Materials 

4.1 – Human Resources Table 

Changes in Full Time Equivalents

Direct and Reimbursable FY 2006 FY 2007 FY 2008

Base: Year-end Actual from Prior Year 2,686 2,812 2,977

Increases:

Hiring:

Recruitment for supervision for large

banks subject to increasing complexity, 

maintaining community bank oversight, 

and replacement of losses in other

areas due to normal turnover.

366 355 254

Subtotal, Increases 366 355 254

Decreases:

Normal Attrition:

Separations anticipated as a result of 

resignations or retirements of 

permanent staff and termination of 

temporary appointments.

-240 -190 -190

Subtotal, Decreases -240 -190 -190

Year-end Actual/Estimated FTEs 2,812 2,977 3,041

Budgeted FTEs 2,812 2,977 3,041

Actual FTEs Utilized

Net Change from prior year SOY to budget year EOY 229

4A – Human Capital Strategy Description 

The OCC has developed bureau-specific human capital goals to meet its overall strategic 

goal of maintaining an expert, highly motivated, and diverse workforce. The first is to 

align and employ OCC workforce resources consistent with current and projected agency 

priorities. To help achieve this goal, on an annual basis, OCC will identify high priority 

recruitment needs and approve incentives specifically designed to address those 

priorities. Other strategies include: 1) using all qualified personnel on priority 

assignments, realizing the increasing dependence and need for “fungibility” among and 

within various disciplines; 2) using the midsize/community banks area as the primary 

entry-level recruitment, training, and development vehicle to provide a diverse bank 

examiner selection pool for many departments and divisions in the bureau; 3) continuing 

to implement OCC’s Strategic Plan for Active Recruitment, Retention, and Career 

OCC - 16 
Development (SPARC); 4) building a more inclusive, accepting environment for 

differences and better assist employees in effectively navigating in OCC’s work 

environment; and 5) identifying skill gaps and using them to establish recruitment and 

training priorities as part of OCC’s ongoing strategic planning process.

SPARC is the bureau’s five-year diversity strategy that includes goals, objectives, and 

activities for the recruitment, hiring, and development of all OCC employees, including 

women, minorities, and individuals with disabilities. It has been used successfully to 

attract, hire, and retain a diverse pool of applicants with superior qualifications. 

Recruiting has been very successful in meeting the OCC’s targeted hiring numbers and 

diversity objectives. Since June 2003, OCC has hired 430 new entry-level examiners, of 

which 54.7 percent are women and 38.1 percent are minorities.

A second human capital goal is to develop current and future leaders who demonstrate 

strong strategic, people management, and technical skills. To achieve this goal, the OCC 

is piloting a leadership development program based upon identified competencies. The 

OCC also will focus on aligning leadership performance expectations with organizational 

goals; preparing leaders to create and sustain a productive work environment and assume

responsibility for developing staff. The implementation of five new internal leadership 

courses will take place in FY 2007.

A third human capital goal is to maintain strategic compensation/benefit programs and 

performance systems that link with organizational goals and mission accomplishment, 

enable the OCC to recruit and retain critical positions, and reward high performers. To 

accomplish this goal, the OCC regularly reviews and adjusts compensation and benefits 

and performance management programs to ensure that they continue to support OCC 

objectives. The OCC operates under a merit-based performance system. Annual acrossthe-board increases are not granted; rather salary increases are awarded based on merit to 

reward employee performance, employee development that is relevant to OCC needs and 

employee contributions to OCC’s priorities. The OCC continually evaluates its programs

to ensure that there is an appropriate correlation between pay and performance.

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4.2 – Summary of IT Resources Table 

Dollars in Millions

Information Technology Investments(in $ Millions) FY 2006 FY 2007 FY Major IT Investments Budget Activity/Funding Source

Operating 

Plan Obligations

Operating 

Plan

Estimated 

Budget

Es

B

SIS OCC - Supervise $6.295 $6.295 $1.000

LIS OCC - Charter 3.036 3.036 3.732

Management and Accountability Reporting Tools ($MART) OCC - Supervise 1.668 1.668 1.628Total - Major $10.999 $10.999 $6.360 -42.2%Non-Major IT InvestmentsCAR & FINDRS Redesign Requirements OCC - Supervise $0.000 $0.117

Conference Office Scheduling and Booking System OCC - Manage 0.029 0.024

Core Knowledge Datamart - 03 OCC - Supervise 0.042 0.004Enforcement Action Metasearch OCC - Charter, Supervise, Regulate 0.207 0.000E-Time OCC - Manage 0.993 0.384Examination Survey Program OCC - Supervise 0.058 0.012Large Bank Datamart OCC - Supervise 0.089 0.004Manager Data Mart Enhancement OCC - Manage 0.071 0.004Next Gen CAG Reports/Reporting and Application Migration OCC - Supervise 0.190 0.000OCC - CCORe OCC - Charter, Supervise, Regulate 0.000 0.350OCC - ePublishing OCC - Charter, Supervise, Regulate, Manage 0.000 0.350OCC - SIS-DM OCC - Supervise 0.000 0.500Operational Data Store - 03 OCC - Manage 0.344 0.234Supervisory Reports Repository OCC - Supervise 0.000 0.050Suspicious Activity Reports (SARS) OCC - Supervise 0.193 0.201Total - Non-Major $2.216 $2.234Infrastructure InvestmentsOCC - FY06 Infrastructure $8.161 $8.182 $11.267OCC - FY06 Office Automation 13.822 22.135 18.637OCC - FY06 Security 2.772 2.916 4.096OCC - FY06 Telecommunications 8.199 11.299 15.071Total - Infrastructure Investments $32.954 $44.532 $49.071 10.2%Enterprise Architecture $0.323 $0.329 $0.335 1.8%Sub-total - OCC IT Investments $46.492 $53.455 $49.406 -7.6%FY07 OCC FISMA/CPIC PORTFOLIOFISMA Major InvestmentsChief Counsel OCC - Charter, Supervise, Regulate $0.750 

Enterprise Services OCC - Charter, Supervise, Regulate, Manage $4.177 1.909 

Examinations OCC - Supervise 4.730 

Fiscal Management OCC - Manage N/A 

Total - FISMA Major Investments $4.177 $7.389 FISMA Non-Major IT InvestmentsEmployee Security OCC - Manage $0.565 

International Economic OCC - Supervise 0.050 

Ombudsman OCC - Supervise 0.796 Workforce Operations OCC - Manage 0.005 Total - FISMA Non-Major Investments $1.416 TOTAL OCC IT INVESTMENTS $46.492 $4.177 $53.455 $58.211 

FY 2005 % Change 

from FY05

Obligations to 

FY06

% Change

from FY06 to

FY07

OCC - 18 
4B – Information Technology Strategy 

At the end of FY 2005, the OCC’s Investment Review Board (IRB) and Technology and 

Systems Subcommittee (TSS), which is comprised of executive level members and 

chaired by the Chief Information Officer (CIO), moved from an annual selection process 

to a year round process in which new projects could be selected to the portfolio quarterly 

or monthly (emergency request). All new investments are subject to business case 

scoring, enterprise architecture and security alignment, and appropriate systems 

development lifecycle documentation. New investments are funded through the IRB 

Portfolio Reserve account which acts as a discretionary account managed by the IRB to 

fund new or provide additional funding to existing investments. 

Linkage to OCC programs and strategic goals are documented in each 

project business case and prioritized by the IRB and TSS. Performance metrics are 

linked to the delivery, alignment, and achievement of OCC strategic program objectives. 

Investments are monitored on a quarterly basis by the IRB and TSS. OCC's IT 

investments are also subject to Quarterly Control reviews conducted by Treasury’s CIO 

Council. OCC is in the process of developing an IT strategic plan. The plan will link IT 

strategic goals and objectives with OCC strategic business goals and objectives. 

Publication of the plan is scheduled for the end of calendar year 2006. The plan will 

contain measurable objectives for each goal identified in the strategic plan. 

OCC - 19 
4.3 – PART Evaluation Table 

PART Name: Bank Supervision

Strategic Goals: Preserve the integrity of financial systems (F3)

Promote prosperous U.S. and World economies (E1)

Rating: Effective

OMB Major Findings/Recommendations

Bureau Actions Planned or Underway

1. Regulatory agencies that include the OCC, OTS, NCUA, FDIC, Federal Reserve, Office of Federal Housing

Enterprise Oversight (OFHEO), Securities and Exchange Commission (SEC), and the Federal Housing Finance

Board (FHFB) continue to share their strategic plans, performance plans, and performance measures on a regular 

basis. This allows each agency to consider the approaches used by the other agencies when developing or 

revising their goals and measures. The OCC and OTS, as bureaus in the Department of the Treasury, continue to

work together to maintain alignment of their performance measures. 

1. The FY 2003 assessment of the OCC's Bank Supervision found that the program purpose is clear, goals are 

outcome-oriented, program measurements are clear, program is efficiently and effectively managed, but the

program is not unique in that other agencies perform similar types of regulatory functions in the banking

industry.

2. Federal banking regulatory agencies, including the OCC, the Office of Thrift Supervision (OTS), the National 

Credit Union Administration (NCUA), the Federal Reserve, and the Federal Deposit Insurance Corporation 

(FDIC), should work together to align outcome goals and related measures to allow for greater comparison of 

program performance in the industry.

For a complete list of PART results visit the following website: 

http://www.whitehouse.gov/omb/expectmore/all.html

OCC - 20