Office of Thrift Supervision 

Mission Statement 

To supervise savings associations and their holding companies in order to maintain their 

safety and soundness and compliance with consumer laws and to encourage a competitive 

industry that meets America’s financial services needs.

Program Summary by Budget Activity 

Dollars in Thousands 

FY 2009 FY 2010 FY 2011

Actual Estimated Estimated $ Change % Change

 Supervision of the Thrift Industry $233,571 $251,145 $244,867 ($6,278) (2.5%)

Total Resources $233,571 $251,145 $244,867 ($6,278) (2.5%)

Total FTE 1,051 1,065 1,082 17 1.6%

FY 2010 Priorities 

• Comprehensive Risk Focused Examinations that Focus on Core Risk Areas, 

• Strengthening Thrift Industry Guidance, 

• Disaster and Emergency Preparedness, 

• Global Financial Services, 

• Regulatory Burden, 

• Communicating the Features of the Thrift Charter, and 

• Succession Planning and Management of OTS Resources. 

Information regarding the Administration’s comprehensive regulatory reform proposals is 

provided in a separate budget chapter.
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 Appropriation Language ................................. 11

2.2 – Operating Levels Table ........................................................................................ 11 

2.3 – Resource Detail Table .......................................................................................... 12 

2B – Appropriations Language and Explanation of Changes ....................................... 12 

Section 3 – Budget and Performance Plan ................................................................... 13

3.1 – Budget by Strategic Outcome .............................................................................. 13 

Section 4 – Supporting Materials .................................................................................. 17

4A – Human Capital Strategy Description ................................................................... 17 

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

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

4.2 – Program Evaluation ............................................................................................. 20 

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Section 1 – Purpose

1A – Description of Bureau Vision and Priorities 

Established by Congress as a bureau of the Department of the Treasury on August 9, 

1989, the Office of Thrift Supervision (OTS) charters, examines, supervises, and 

regulates federal savings associations insured by the Federal Deposit Insurance 

Corporation (FDIC). The OTS’ primary statutory authority is the Home Owners’ Loan 

Act originally enacted in 1933. OTS also examines, supervises, and regulates statechartered savings associations insured by the FDIC and provides for the registration, 

examination, and regulation of savings and loan holding companies (SLHCs) and other 

affiliates. 

The thrift charter has several unique characteristics including nationwide branching under a 

single charter; a holding company structure offering a single regulator for the holding 

company and its subsidiary depository institutions; and preemption authority. The OTS is 

the only federal banking agency that both charters depository institutions and supervises their 

holding companies. 

The number of thrifts supervised by OTS stood at 780 with assets of $1.07 trillion as of 

September 30, 2009. In addition, OTS supervised 452 holding company enterprises with 

approximately $5.5 trillion in U.S. domiciled consolidated assets. These enterprises 

owned 413 thrifts with total assets of $729 billion, or 68 percent of total thrift industry 

assets. 

As of September 30, 2009, the majority of thrifts - 95.8 percent - held capital exceeding 

the “well capitalized” regulatory standards, suggesting that the industry’s financial 

fundamentals remain solid.. Furthermore, these thrifts’ combined assets represented 95.9 

percent of industry aggregate assets. 

Office of Thrift Supervision Vision, Strategic Goals and Priorities

OTS’ vision is to perform and be recognized as the premier regulator of financial 

institutions and their holding companies. The FY 2010 budget submission is guided by 

the four strategic goals outlined in OTS’ 2007-2012 Strategic Plan. 

• A safe and sound thrift industry, 

• Fair access to financial services and fair treatment of thrift customers, 

• A flexible legal and regulatory framework that enables the thrift industry to 

provide a full competitive array of financial services, and 

• A professional, highly motivated, and diverse workforce that effectively uses OTS 

resources to provide exceptional service to its customers.

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OTS’ estimated FY 2010 budget of $251 million supports the OTS’ efforts to address 

these key strategic issues and challenges: 

• Examine, supervise, and regulate thrifts and their holding companies, 

• Assess the risk profile of the institution when planning examinations and focus the 

examination based on the institution’s risk, size, and complexity,

• Provide regulatory guidance to thrifts and their holding companies, 

• Encourage thrifts to pursue loss mitigation strategies to prevent mortgage foreclosures 

when appropriate, 

• Conduct safety and soundness examinations of savings associations every 12-18 

months that incorporate an assessment of compliance with consumer protection laws 

and regulations, 

• Promote the reduction of regulatory burden, 

• Coordinate supervisory and policy development activities with domestic and foreign 

financial regulators, 

• Continue efforts to implement the international Basel II risk-based capital framework, 

• Abate money laundering and terrorist financing by examining savings associations for 

compliance with the Bank Secrecy Act, the USA Patriot Act, and other anti-money 

laundering laws, 

• Communicate the benefits of the thrift charter and the important role of communitybased thrifts including minority based institutions, and 

• Address succession planning. 

1B – Program History and Future Outlook 

OTS is headquartered in Washington, D.C. with four regional offices located in Atlanta, 

Chicago, Dallas, and Jersey City. The headquarters office develops nationwide policies 

and programs for the agency and coordinates the operations of OTS. The regional offices 

examine and supervise institutions and process most applications. Approximately 70 

percent of OTS’ staff works in the OTS regional offices. 

The President, with Senate confirmation, appoints OTS’ Director for a 5-year term. 

OTS’ Director also serves as a member of the Board of Directors of the FDIC, a member 

of the Federal Financial Institutions Examination Council (FFIEC), and a director of 

NeighborWorks® America. 

The following activities highlight OTS’ 2009 accomplishments and 2010 strategic 

priorities. 

Comprehensive and Risk Focused Examinations that Focus on Core Risk Areas

OTS conducts comprehensive examinations combining safety and soundness and 

compliance reviews to eliminate multiple reviews of the same area for different purposes. 

OTS’ examination teams issue one report of examination that covers both compliance 

and safety and soundness. This approach allows OTS to comprehensively assess an 

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institutions’ risk management programs, business strategy, and operations with a topdown, risk-focused approach that promotes comprehensive compliance management, 

including the establishment of adequate internal controls to ensure regulatory compliance 

and to prevent predatory practices. 

OTS is more efficient and has reduced regulatory burden due to its comprehensive 

examination approach. OTS issues one information request package prior to the start of 

each examination and examines lending portfolios from the compliance and safety and 

soundness perspectives. This comprehensive approach reduces savings association cost 

and burden while promoting an efficient, risk-focused examination report that details all 

exam findings. The majority of OTS-regulated institutions are in favor of the 

comprehensive examination approach. 

To maintain its rigorous staff accreditation standards, OTS requires that its examiners: 1) 

undergo formal, informal, and independent training, 2) pass proficiency tests, 3) receive 

on-the-job training to become proficient in examination disciplines, and 4) serve as 

examiner-in-charge on at least two examinations in their respective discipline prior to 

accreditation. OTS continually works to provide specialized training and rigorous 

accreditation and professional development programs to ensure OTS is capably equipped 

to supervise a dynamic thrift industry. 

Interest Rate Risk and Credit Risks

OTS closely monitors interest rate risk due to the thrift industry’s natural concentration in 

longer-term mortgage loans, which are generally funded with shorter-term deposits and 

borrowings. OTS’ enhanced Net Portfolio Value (NPV) Model provides an accurate 

estimate of each institution’s interest rate risk profile. More importantly, the NPV model 

gives OTS the ability to value a much wider range of financial instruments and the 

capability to produce a series of reports that focus on areas such as net interest income, 

liquidity, and value-at-risk. 

Alternative or nontraditional mortgage lending products present a unique intersection of 

credit and interest rate risks. OTS maintains a staff of specialists in capital markets, 

accounting, mortgage banking, alternative mortgage products, and credit cards to assist in 

identifying, assessing and mitigating interest rate and credit risks. 

In addition to these risk mitigation and monitoring programs, the thrift industry’s 

relatively high capital ratio in the aggregate acts as a further mitigating factor helping the 

industry address potential credit quality problems. OTS has been and will continue to 

work with the industry to remain focused on appropriate capital levels commensurate 

with the risk profile. 

Compliance Risks, Anti-Money Laundering, and Financial Crimes

OTS compliance examination procedures direct institutions to identify, monitor and 

mitigate their compliance risks to ensure compliance with the broad range of consumer 

protection laws and regulations. OTS examiners regularly assess thrift institutions’ 

compliance programs during comprehensive examinations. For example, OTS’ 

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compliance program is structured to ensure that thrifts maintain systems and controls to 

fight identity theft and ensure the accuracy of consumers’ credit reports. OTS reviews 

data security at thrifts and third party technology service providers. (The Gramm-LeachBliley Act requires that all financial institutions establish a program to protect their 

customers’ personal information). 

As outlined in OTS’ 2007-2012 Strategic Plan, a primary strategy for meeting the goal of 

a safe and sound thrift industry includes effective examination for potential money 

laundering, terrorist financing and Bank Secrecy Act (BSA) compliance issues in OTSsupervised institutions. OTS continues to examine for compliance with BSA, the USA 

Patriot Act, and other anti-money laundering provisions. The examination process 

consists of on-site examinations that are conducted every 12-18 months, supplemented by 

off-site monitoring and follow-up to address identified supervisory issues. OTS has 

expanded supervisory resources in this area by hiring additional, experienced compliance 

examiners and compliance specialists. 

OTS has actively worked with the other federal banking agencies, the Financial Crimes 

Enforcement Network (FinCEN), the Office of Foreign Assets Control (OFAC), and the 

Conference of State Bank Supervisors (CSBS) to ensure examination consistency and to 

provide guidance to financial institutions for developing policies and programs to comply 

with anti-money laundering requirements. 

FinCEN sponsors the Bank Secrecy Act Advisory Group (BSAAG), which has 

established several committees to discuss BSA compliance issues among regulators, the 

banking industry, and law enforcement. OTS’ staffs serve on several of these 

committees. OTS is also working with the other federal banking agencies to develop an 

examiner risk scoping tool to enhance BSA examination efficiencies. 

Strengthening Thrift Industry Guidance including Regulations on Prohibitions Relating to 

Unfair or Deceptive Acts and Practices

In the past, OTS has exercised its rulemaking authority in the area of unfair or deceptive 

acts and practices to parallel the Federal Trade Commission’s (FTC’s) rules. In 1985 the 

FTC issued its Credit Practices Rule and OTS’ predecessor agency, the Federal Home 

Loan Bank Board (FHLBB), issued a similar rule. The Credit Practices Rule prohibits 

creditors from using contract provisions considered to be unfair to consumers, requires 

creditors to advise consumers who co-sign obligations about their potential liability, and 

prohibits late charges in some situations. 

OTS has supplemented its Credit Practices Rule with other regulations. These rules and 

regulations are unique among the federal banking agencies in the way they protect 

consumers. For example, OTS has a long-standing Advertising Rule, which prohibits 

savings associations from making any representation that is inaccurate or that 

misrepresents its services, contracts, investments, or financial condition. In addition, 

OTS has imposed consumer protections, not mandated by federal law, for home loans 

made by federal savings associations. These protections address the regulation of late 

charges, prepayment penalties, and adjustments to the interest rate, payment, or term to 

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maturity. OTS issued a Nondiscrimination Rule that exceeded the federal fair lending 

laws by prohibiting additional forms of discrimination. 

In August 2007, OTS sought to strengthen its unfair or deceptive acts and practices 

(UDAP) rules and requested public comment on a broad array of issues and practices 

including practices related to the marketing, originating and servicing of credit cards. 

The effort led to the Federal Reserve Board (FRB), and the National Credit Union 

Administration (NCUA) joining the OTS in May 2008, to issue a proposed UDAP rule 

that focused on credit cards and overdraft protection programs. The UDAP rule was 

finalized on December 18, 2008. For credit cards, the rule prohibited: (1) increasing 

interest rates on existing card balances for consumers who are paying on time; (2)using 

billing practices that require consumers to pay finance charges on their balances from 

previous billing cycles; (3) charging consumers up-front fees that significantly erode the 

amount of available credit; and (4) applying payments first to balances with the lowest 

interest rates – leaving balances with higher rates accruing, thereby creating higher costs 

for consumers; and (5) failing to give customers a reasonable amount of time to make 

payments. 

In 2009, Congress also focused on these practices when it enacted the Credit Card 

Accountability, Responsibility and Disclosure Act – or “Credit CARD Act” – which 

provides additional protections for consumers. For example, the Credit CARD Act 

includes provisions that protect young credit card users and restrict gift card fees. 

Moreover, because Congress has more latitude when it addresses issues through 

legislation than agencies have when they promulgate rules1

, the Credit CARD Act 

strengthens some of the protections provided by the UDAP rules. For instance, while the 

agencies limited up-front fees to an amount no greater than half of the credit provided, 

Congress limited such fees to no more than 25 percent of the credit offered. 

Loss Mitigation Strategies to Prevent Mortgage Foreclosures when Appropriate

OTS published its first Mortgage Metrics Report in July 2008. This report presented key 

performance data on first lien residential mortgages serviced by thrift institutions or their 

affiliates, and focused on delinquencies, loss mitigation actions, and foreclosures. Since 

September 12, 2008, the OTS and the Office of the Comptroller of the Currency (OCC) 

have jointly issued the Mortgage Metrics Report on a quarterly basis. It covers 34 

million loans, worth $6 trillion—about 64 percent of all mortgages in the country. The 

Mortgage Metrics Report provides an additional tool to help examiners assess emerging 

trends, identify anomalies, compare thrift institutions to the rest of the industry, evaluate 

asset quality and loan-loss reserve needs, and evaluate the effectiveness of loss mitigation 

actions. 

Since we began public reporting on loan modification activities at the beginning of 2008, 

servicers have implemented more than 612,000 mortgage modifications. Servicers 

implemented 185,156 modifications in the first quarter of 2009, a 55 percent increase 

 

1 To issue the UDAP rules, the agencies were required to demonstrate that the relevant practices met well established standards for 

“unfairness” under the Federal Trade Commission Act. Among other things, these standards require the agencies to consider whether 

the harm caused by a practice outweighs any benefits to consumers or the market.

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over the fourth quarter of 2008. Over 97,000 first quarter modifications (54 percent of 

the total) decreased the borrower’s monthly principal and interest payment. These 

payment reducing modifications increased more than 7 percent from the prior quarter. 70 

percent of first quarter modifications involved some combination of two or more specific 

actions, with most including a reduction in the interest rate and extension of maturity. Of 

the 185,156 modifications made in the first quarter, 70 percent included a capitalization 

of past due interest, fees and tax/insurance advances; 63 percent reduced interest rates; 25 

percent extended the length of the loan; and 13 percent froze the interest rate rather than 

allow it to reset higher. The percentage of modifications that reduced monthly payments 

by 20 percent or more increased by almost 20 percent during this quarter. 

Earlier this year, Congress adopted the Helping Families Save Their Homes Act of 2009. 

Section 104 of this Act requires the OTS and OCC to submit the Mortgage Metrics 

Report to Congress on a quarterly basis and specifically requires the following 

information: (1) the total number of mortgage modifications resulting in the modification 

of terms or combinations of terms, such as interest rate reductions, and reductions or 

deferrals of principal; (2) the total number of mortgage modifications resulting in changes 

to total monthly principal and interest payments; and (3) the total number of loans that 

were modified and then went into default, where the loan modification resulted in 

monthly payments that increased or decreased. Our first submission to Congress 

responded to each of these specific requests, and we will continue to provide copies of 

this increasingly useful information to assist in resolving the problems facing our 

economy. 

OTS has also provided tools to consumers who are facing foreclosure and working to 

save their homes. In the Spring of 2009, OTS published a brochure entitled Foreclosure 

Rescue Scams – How to Avoid Becoming a Victim. The OTS developed this brochure 

after hearing from consumers who had been victimized by non-bank companies that 

promised to solve their mortgage concerns and save their homes from foreclosure. They 

paid significant sums of money and received virtually nothing in return. 

In the brochure, OTS informs consumers that they can file a complaint with a bank’s 

regulator to investigate their concerns at no charge. We also inform consumers about 

tactics fraudulent companies frequently use in foreclosure rescue scams. Institutions may 

obtain the brochure through the OTS website to provide to consumers who want to learn 

more about how to guard against such scams. We have also distributed the brochure at 

public events across the country such as annual conventions for the National Council of 

La Raza, National Council of State Housing Agencies, and the American Bankers 

Association Annual Compliance Conference. 

Disaster and Emergency Preparedness

OTS is actively involved in initiatives to address emergency and disaster preparedness. 

For the past 20 years, OTS, in conjunction with the other FFIEC agencies, has issued 

guidance to the industry with regard to Disaster Recovery and Business Continuity 

Planning. During examinations, OTS reviews each institution’s plan for continuity of 

operations and emergency preparedness. OTS participates on the Financial and Banking 

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Information Infrastructure Committee to improve the reliability and security of the 

financial industry’s infrastructure. 

International Participation

The OTS continues to be involved in the development of policies and operational 

standards in the international arena. The agency continues to participate in meetings of 

the Basel Committee on Bank Supervision (BCBS), its principal subcommittees, the 

Policy Development Group, the Standards Implementation Group and the Accounting 

Task Force and their supporting working groups. Through its participation on the BCBS, 

the OTS continues to work with supervisors on a global basis to strengthen the 

regulation, supervision and risk management of the banking sector. The OTS also 

actively participates in the meetings and decisions of the Association of Supervisors of 

Banks of the Americas. OTS shares its supervisory experiences with these organizations 

to assist in the development of uniform global safe and sound banking principles. 

Regulatory Burden

Under the Economic Growth and Regulatory Paperwork Reduction Act, enacted by 

Congress in 1996, federal banking agencies are required to review all of their regulations 

at least once every 10 years. In 2003, the agencies began a joint effort to categorize the 

regulations, publish the categories for comment, report to Congress on any significant 

issues raised by the comments, and eliminate unnecessary regulations. The first review 

was completed in 2006 as required under this law. 

The federal banking agencies identified burdens that would require legislative changes to 

the underlying statutes before making changes to the regulations. These changes were 

presented to Congress as a list of consensus items that the national bank and thrift 

industries support. Congress passed the “Financial Services Regulatory Relief Act of 

2006” on September 30, 2006, and it was signed into law on October 13, 2006. This law 

provides regulatory burden relief for the financial services, banking, and thrift industries. 

The law allows regulators to adjust exam cycles of healthy institutions for greater 

efficiency and modernizes record keeping requirements for regulators. 

Communicating the Features of the Thrift Charter

The thrift charter provides advantages in the delivery of financial services, primarily for 

community-based lenders. OTS has a unique supervisory role in that it monitors and 

regulates all aspects of an institution’s operations and holding company affiliate 

activities. OTS regularly attends financial services industry conferences and has 

developed a booth that is used to highlight aspects of its oversight program. 

Succession Planning and Management of OTS Resources

Approximately, thirty-two percent of OTS’ current staff will be eligible for voluntary 

retirement by year-end 2010. Thus, OTS faces the challenge of competing for, training, 

and retaining its human resources to build the workforce required for the future. To meet 

this need, OTS has successfully recruited 165 new examination staff members since 

2006. The current retention rate for these individuals is 88 percent. OTS has developed a 

three-year accreditation program for all new Safety and Soundness and Compliance 

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Examination staff and has begun to shift its training and education needs to seasoned staff 

through a back-to-basics skill learning programs. To support the examination function, 

OTS plans to recruit up to 40 new examiners during fiscal year 2010. 

To gain expertise and achieve accreditation, examiners engage in a multi-year training 

program, pass proficiency tests, participate in on-the-job instruction and developmental 

assignments, and serve as Examiner-In-Charge on at least two comprehensive 

examinations. During FY 2009, classroom training addressed the needs of pre-accredited 

examiners in their various stages of advancement. Courses included New Thrift 

Regulator School, Loan Analysis School, Information Technology Risks and Controls 

and Real Estate Appraisal Review and Management Workshop. Compliance related 

courses included: Introduction to Compliance Examination Schools I and II, Bank 

Secrecy Act/Anti-Money Laundering School, Fair Lending School, Intermediate 

Compliance Course and Management Workshop. OTS also offers courses and seminars 

in advanced examiner topics, management and leadership topics, ethics and information 

security. OTS’ blend of regulatory and non-regulatory training and development keep 

OTS’ employee competencies current and relevant to industry needs. During FY 2009, 

36 examiners were accredited, increasing the accredited examiner staff to 450. 

OTS receives no appropriated funds from Congress; its revenue is derived principally 

from assessments on savings associations and savings and loan holding companies. The 

FY 2010 projected assessment revenue is lower than FY 2009 due to the impact of 

ongoing industry consolidation and recent thrift failures. The bureau has experienced 

surpluses in recent years which led to an increase in the agency’s cash reserves in excess 

of $200 million. Existing reserves will be sufficient to cover the FY 2010 and FY 2011 

shortfalls. In addition, OTS is limiting permanent new hires and increasing term 

appointments to fill the need for increased supervision. Additionally, OTS is prudently 

managing other expenses. With efficient operations and demonstrated prudent use of 

funds, OTS will be able to continue supervising savings associations and holding 

companies while maintaining the safety and soundness of the thrift industry. 

1C – Industry Outlook 

The United States economy remains distressed and the thrifts and banks engaged in home 

mortgage financing continue to feel the impact from the economic crisis. In response to 

the decline in the housing market, OTS has urged thrifts to bolster reserves for potential 

loan losses by significantly adding to their loan loss provisions. OTS is also encouraging 

thrifts to strike the appropriate balance between working with distressed borrowers to 

restructure loans to prevent avoidable foreclosures and ensuring sufficient recoveries to 

avoid further erosions in capital. 

The industry posted break-even results for the second quarter of 2009—a profit of $4 

million, or 0.00 percent of average assets (ROA). These results were an improvement 

from the first quarter 2009 loss of $1.62 billion, or a negative 0.53 percent of average 

assets. 

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As of June 30 2009, OTS—regulated thrifts accrued an estimated $500 million expense 

for the special assessment levied by the FDIC. This expense reduced after-tax net 

income by an estimated $325 million, second quarter ROA by approximately 12 basis 

points, and year-to-date ROA by 6 basis points. A restatement of first quarter 2009 

results by one large thrift increased losses by $1.6 billion and lowered first quarter ROA 

by 51 basis points. 

The earnings improvement was primarily due to higher net interest margins, lower 

provisions for loan losses, higher fee income, and lower other-than-temporary 

impairment charges in the second quarter. Partially offsetting these improvements in 

earnings were lower gains on the sale of assets and higher noninterest expense. 

As an annualized percent of average assets, provisions measured 1.71 percent, a decline 

from 1.91 percent from the previous quarter and 3.70 percent one year ago. 

Despite the decline, provisions for losses remain at elevated levels. As of June 30, 2009 

provisions were the sixth highest on record—higher than all other quarters except for the 

five preceding quarters. Loss provisioning is expected to continue at elevated levels and 

to dampen industry earnings until inventories of for-sale homes appreciably decline, 

home prices firm, and the employment picture brightens. 

Although the substantial additions to loan loss reserves dampened earnings, they 

bolstered the industry’s reserve levels to at, or near, record levels. 

Capital measures for the industry continue to be strong, stable, and well in excess of 

minimum requirements. Equity capital at the end of the June was 10.37 percent of assets, 

up from 8.65 percent one year ago. At the end of the June, over 96 percent of the 

industry exceeded well-capitalized standards and 15 thrifts were less than adequately 

capitalized. 

Industry assets decreased by 27 percent over the year to $1.10 trillion from $1.51 trillion 

reflecting the loss of several large thrift failures over the year. Thrifts remain focused on 

residential mortgage lending, with 39.9 percent of assets invested in 1-4 family mortgage 

loans at the end of June, down from 49.5 percent one year ago. Of these 1-4 family 

mortgage loans, 4.9 percent are home equity lines of credit, down from 7.9 percent one 

year ago. Holdings of consumer loans increased to 6.5 percent of assets from 5.8 percent 

a year ago. Multifamily mortgages decreased over the year from 4.3 percent of assets to 

3.2 percent by June 30, 2009. Commercial loans increased to 5.5 percent of assets from 

3.9 percent one year ago. 

OTS has worked closely with the industry to maintain the integrity and viability of the 

thrift charter uniquely focused on consumer and community lending as the industry 

continues to adapt to the evolving nature of the financial services business and the 

demands of its customers. 
Section 2 – Budget Adjustments and Appropriation Language 

2.2 – Operating Levels Table 

Office of Thrift Supervision FY 2009 

Obligated

FY 2010 

Estimated

FY 2011 

Estimated

 

FTE 1,051 1,065 1,082

Object Classification: 

11.1 - Full-time permanent 119,806 120,875 117,853

11.3 - Other than full-time permanent 1,059 6,907 6,734

11.5 - Other personnel compensation 4 0 0

11.8 - Special personal services payments 6,963 1,506 1,468

12 - Personnel benefits 51,268 61,366 59,832

13 - Benefits for former personnel 455 201 196

21 - Travel and transportation of persons 17,804 19,502 19,014

22 - Transportation of things 324 295 288

23.2 - Rental payments to others 4,110 4,651 4,535

23.3 - Comm, utilities, and misc charges 4,666 5,653 5,512

24 - Printing and reproduction 146 222 216

25.1 - Advisory and assistance services 2,375 2,787 2,717

25.2 - Other services 5,495 5,335 5,202

25.3 - Other purchases of goods and services from Govt. 5,098 5,986 5,836

accounts 

25.4 - Operation and maintenance of facilities 5,009 6,941 6,768

25.7 - Operation and maintenance of equip 193 716 698

25.8 - Subsistence and support of persons 10 15 15

26 - Supplies and materials 3,359 2,819 2,749

31 - Equipment 4,234 4,173 4,069

32 - Land and structures 1,193 1,195 1,165

Total Budget Authority $233,571 $251,145 $244,867

 

Budget Activities: 

Supervision of the Thrift Industry 233,571 251,145 244,867

Total Budget Authority $233,571 $251,145 $244,867

 

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2.3 – Resource Detail Table 

FY 2009 FY 2010 FY 2011

Description Actual Estimated Estimated

(Dollars in Thousands)

Summary of Revenue and Expenses:

Revenue:

Supervision

Assessments $240,112 $212,871 $217,128

Rental Income 5,661 5,400 5,508

Interest 5,516 4,295 4,381

Fees & Other 4,691 3,452 3,521

Total Revenue $255,980 $226,018 $230,538

Expenses:

Supervision

Compensation & Benefits $179,155 $190,855 $186,084

Travel & Transportation 18,128 19,797 19,302

Facilities 8,776 11,499 11,211

Other Services & Supplies 27,512 28,994 28,270

Total Expenses $233,571 $251,145 $244,867

Net Results $22,415 ($25,127) ($14,329)

2B – Appropriations Language and Explanation of Changes 

OTS receives no appropriated funds from Congress. 

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Section 3 – Budget and Performance Plan

This table lists all FY 2010 resources by strategic goal, objective and outcome outlined in 

the FY 2007-2012 Treasury Department Strategic Plan. The Treasury Strategic Plan is a 

corporate level plan for the Department that provides a description of what the agency 

intends to accomplish over the next five years. 

For detailed information about the FY 2007-2012 Treasury Strategic Plan, please go to: 

http://www.treasury.gov/offices/management/budget/strategic_plan.shtml

3.1 – Budget by Strategic Outcome 

Dollars in Thousands 

Treasury Strategic Outcome FY 2010 

Estimated

FY 2011 

Estimated Percent Change

 Economic competitiveness 25,114 24,488 -2.49%

 Fin. & econ.crises 226,031 220,379 -2.50%

Total $251,145 $244,867 -2.50%

3A – Supervision of the Thrift Industry ($251,145,000 from reimbursable programs): 

On December 9, 1996, the FFIEC adopted the CAMELS rating system (Capital 

adequacy, Asset quality, Management, Earnings, Liquidity and Sensitivity to market risk) 

as the internal rating system to be used by the federal and state regulators for assessing 

the safety and soundness of financial institutions on a uniform basis. The CAMELS 

rating system puts increased emphasis on the quality of risk management practices. OTS 

assigns a composite CAMELS rating to savings associations at each examination. OTS 

adjusts the level of supervisory resources devoted to an association based on the 

composite rating. The CAMELS rating is based upon a scale of 1 through 5 in increasing 

order of supervisory concern. 

The FFIEC first approved a uniform, interagency compliance rating system in 1980. The 

rating system reflects, in a comprehensive and uniform fashion, the nature and extent of a 

savings association’s compliance with consumer protection statutes, regulations and 

requirements. The Compliance Rating System is based upon a scale of 1 through 5 in 

increasing order of supervisory concern. 

OTS elected to combine safety and soundness and compliance examinations to attain 

exam efficiencies and to improve risk assessment. Using comprehensive exam 

procedures, compliance with consumer protection laws is reviewed at more frequent 

intervals, which has improved the quality of the examination process. 

Capital absorbs losses, promotes public confidence and provides protection to depositors 

and the FDIC insurance fund. Capital provides a financial cushion that can allow a 

savings association to continue operating during periods of loss or other adverse 

conditions. The Federal Deposit Insurance Act established a system of prompt corrective 

action (PCA) that classifies insured depository institutions into five categories (wellOTS - 13 
capitalized; adequately capitalized; undercapitalized, significantly undercapitalized; and 

critically undercapitalized) based on their relative capital levels. The purpose of PCA is 

to resolve the problems of insured depository institutions at the least possible long-term 

cost to the deposit insurance fund. 

OTS examines savings associations every 12-18 months for safety and soundness, and 

compliance with consumer protection laws. OTS performs safety and soundness 

examinations of its regulated savings associations consistent with statutory authority. 

When OTS identifies safety and soundness or compliance issues during its risk-focused 

examinations, it acts promptly to ensure association management and directors institute 

corrective actions to address supervisory concerns. OTS staff often meets with the 

savings association’s board of directors after delivery of the Report of Examination to 

discuss findings and recommendations. 

Beginning in FY 2006, OTS included a performance measure that reflects the efficiency 

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

more complex thrift industry. This measure supports OTS’ ongoing efforts to efficiently 

use agency resources. The efficiency measure is impacted by the relative size of the 

savings associations regulated. Approximately 60 percent of all savings associations 

have total assets of less than $250 million and are generally community-based 

organizations that provide retail financial services in their local markets. The measure 

does not include the assets of the holding company enterprises regulated by OTS. 

3.2.1 – Supervision of the Thrift Industry Budget and Performance Plan 

Supervision of the Thrift Industry Budget Activity

Resource Level

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Obligated Obligated Estimated Estimated Estimated

 Appropriated Resources $0 $0 $0 $0 $0

 Reimbursable Resources $218,129 $245,699 $233,571 $251,145 $244,867

Total Resources $218,129 $245,699 $233,571 $251,145 $244,867

Budget Activity Total $218,129 $245,699 $225,125 $251,145 $244,867

Budget Activity Performance Measure

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Actual Actual Target Actual Target Target

OTS: Supervision Percent of safety and soundness exams 95 94 90 94 90 90 

started as scheduled (%) 

OTS: Supervision Percent of thrifts that are well capitalized 99 98.4 95 97 95 95 

(%) 

OTS: Supervision Percent of thrifts with a compliance 97 95.8 90 95 90 90 

examination rating of 1 or 2 (%) 

OTS: Supervision Percent of thrifts with composite 93 90 90 84 80 80 

CAMELS ratings of 1 or 2 (%) 

OTS: Supervision Total OTS costs relative to every 13.46 13.9 23.04 19.88 22.00 15.07 

$100,000 in savings association assets 

regulated ($) 

OTS - 14 
Description of Performance.

OTS will have met all goals relating to (1) Percent of safety and soundness exams started 

as scheduled, (2) A Well-capitalized thrift industry, (3) Percent of thrifts with 

COMPLIANCE exam ratings of “1” or “2.” The targets for these measures should 

probably remain the same for FY2010. 

The fourth goal, Percent of thrifts with COMPOSITE ratings of “1” or “2” will be short 

approximately 6% of goal for FY2009 – 84% compared to the performance goal of 90%. 

The target will not be met due to the challenging economic environment, a housing 

market downturn, rising unemployment, and lower real estate values. As a result, the 

banks are reporting an increase in troubled assets, delinquencies, charge-offs, and 

reserves which have adversely impacting earnings and return on equity. As long as 

economic challenges continue in FY2010, it will continue to impact our institution's 

performance, therefore, we reduced our target to 80%. 

Percent of safety and soundness exams started as scheduled.

OTS examines savings associations every 12-18 months for safety and soundness, and 

compliance with consumer protection laws. OTS performs safety and soundness 

examinations of its regulated savings associations consistent with statutory authority. 

When OTS identifies safety and soundness or compliance issues during its risk-focused 

examinations, it acts promptly to ensure association management and directors institute 

corrective actions to address supervisory concerns. OTS staff often meets with the 

savings association’s board of directors after delivery of the Report of Examination to 

discuss findings and recommendations. 

Percent of thrifts that are well capitalized.

Capital absorbs losses, promotes public confidence and provides protection to depositors 

and the FDIC insurance fund. Capital provides a financial cushion that can allow a 

savings association to continue operating during periods of loss or other adverse 

conditions. The Federal Deposit Insurance Act established a system of prompt corrective 

action (PCA) that classifies insured depository institutions into five categories (wellcapitalized; adequately capitalized; undercapitalized, significantly undercapitalized; and 

critically undercapitalized) based on their relative capital levels. The purpose of PCA is 

to resolve the problems of insured depository institutions at the least possible long-term 

cost to the deposit insurance fund. 

Percent of thrifts with compliance examination ratings of 1 or 2.

The FFIEC first approved a uniform, interagency compliance rating system in 1980. The 

rating system reflects, in a comprehensive and uniform fashion, the nature and extent of a 

savings association’s compliance with consumer protection statutes, regulations and 

requirements. The Compliance Rating System is based upon a scale of 1 through 5 in 

increasing order of supervisory concern. 

OTS elected to combine safety and soundness and compliance examinations to attain 

exam efficiencies and to improve risk assessment. Using comprehensive exam 

OTS - 15 
procedures, compliance with consumer protection laws is reviewed at more frequent 

intervals, which has improved the quality of the examination process. 

Percent of thrifts with composite CAMELS ratings of 1 or 2.

On December 9, 1996, the FFIEC adopted the CAMELS rating system (Capital 

adequacy, Asset quality, Management, Earnings, Liquidity and Sensitivity to market risk) 

as the internal rating system to be used by the federal and state regulators for assessing 

the safety and soundness of financial institutions on a uniform basis. The CAMELS 

rating system puts increased emphasis on the quality of risk management practices. OTS 

assigns a composite CAMELS rating to savings associations at each examination. OTS 

adjusts the level of supervisory resources devoted to an association based on the 

composite rating. The CAMELS rating is based upon a scale of 1 through 5 in increasing 

order of supervisory concern. 

Total OTS costs relative to every $100,000 in savings association assets regulated.

Beginning in FY 2006, OTS included a performance measure that reflects the efficiency 

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

more complex thrift industry. This measure supports OTS’ ongoing efforts to efficiently 

use agency resources. The efficiency measure is impacted by the relative size of the 

savings associations regulated. Approximately 60 percent of all savings associations 

have total assets of less than $250 million and are generally community-based 

organizations that provide retail financial services in their local markets. The measure 

does not include the assets of the holding company enterprises regulated by OTS. 

OTS - 16 
OTS - 17 

Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

Human capital represents OTS’ primary resource for meeting its strategic objectives. 

Sustaining and nurturing human capital resources requires a blend of career building 

opportunities, competitive compensation, strategic and innovative training, and a diverse, 

supportive work environment. 

OTS developed its Human Capital Strategic Plan in response to the President’s 

Management Agenda. The Plan incorporates practical strategies to ensure that OTS has 

sufficient staff with the right skills to accomplish its mission. The Plan consists of four 

main strategic goals: Organizational Effectiveness, Recruitment and Diversity, 

Employee Retention and Satisfaction, and Technology Skills. 

Thirty-two percent of OTS’ current staff will be eligible for voluntary retirement by yearend 2010. Over the past two years OTS successfully recruited 165 new examination staff 

members; in addition several key specialty positions were filled. OTS’ compensation 

program continues to enable OTS to attract, retain, and reward staff comparable to the 

other federal banking agencies. To support a solid business case, OTS will be recruiting 

up to 40 new examiners in the bank operations area during the 2010 fiscal year. 

OTS continuously trains its examination staff to create a work force capable of 

performing multiple examination types (e.g., safety and soundness, compliance, 

information technology and FFIEC service provider examinations). OTS designs training 

programs to meet the challenges OTS faces with anticipated retirements as part of its 

overall succession planning program. 

To meet the needs of the thrift industry, OTS seeks qualified and experienced as well as 

entry level candidates with diverse backgrounds. OTS is developing recruiting materials, 

attending job fairs including events targeting minority and women’s groups, and working 

to provide both centralized and regional recruitment support to meet its various 

recruitment needs. 

The 2008 Federal Human Capital Survey ranked OTS 39th out of more than 200 

comparable government agency subcomponents for best places to work in the federal 

government. That rank notably improves our 192nd place finish in 2006. OTS has made 

numerous improvements in an attempt to enhance its benefits programs, increase 

employee satisfaction and promote progression within the agency. The survey scores 

reflect OTS’s commitment to cultivating an employee-focused and performance-based 

culture where employees have the opportunity to develop their skills and knowledge 

continuously. 
4.1 – Summary of IT Resources Table 

Dollars in Thousands 

Information Technology Investments

FY 2008 FY 2010

Major IT Investments / Funding Source

Budget 

Activity

& Earlier

Enacted 1/

FY 2009

Enacted

President's

Budget

Major IT Investments $ - - $ $ - 0.Non-Major IT InvestmentsAdministrative - Mixed Supervision 0.923 $ 1.807 $ $ -27.3% 

1.313 

Examinations Supervision 1.477 $ 1.807 $ $ 1.688 -6.6% 

Thrift Financial Data Supervision 4.834 $ 3.463 $ $ 3.391 -2.1% 

TFR Validation Supervision 1.477 $ 1.807 $ $ -16.9% 

1.501 

Industry Structure and Tracking Supervision 1.293 $ 1.581 $ $ -17.0% 

1.313 

CIO Planning Supervision 1.227 $ 1.739 $ $ 1.647 -5.3% 

Total Non-Major IT Investments $ 12.204 11.231 $ $ 10.853 -11.1% 

Infrastructure InvestmentsTreasury Consolidated Data Center & Services $ 10.349 13.292 $ $ -33.8% 

6.856 

Treasury Consolidated Telecommunications $ 4.029 1.948 $ $ 4.055 0.6% 

Treasury Consolidated End User Services $ 3.813 2.789 $ $ -39.6% 

2.303 

Treasury Consolidated Security $ 1.242 1.010 $ $ -100.0% 

- 

Total Infrastructure Investments $ 19.433 19.039 $ $ 13.214 -32.0% 

Enterprise Architecture $ 0.244 0.185 $ $ -23.0% 

0.188 

Total IT Investments $ 30.455 $ 31.881 $ 24.255 -23.9% 

% Chang

from FY09 

FY1

OTS - 18 
4B – Information Technology Strategy 

The OTS Information Technology Investment Review Board (IRB) provides overall 

direction and vision for how OTS’ information technology should contribute to OTS’ 

goals and objectives. It serves as the forum for senior OTS executives to make decisions 

regarding IT expenditures and investments. There was a decrease of 7 FTE’s from 

FY2009 to FY2010 spread among the various investments. In FY2009 funds were 

budgeted for Network and VTC upgrades. These projects were largely completed in 

FY2009 and will be under maintenance in FY2010. Security personnel and other 

expenses have been reallocated to the infrastructure services they support (i.e., Data 

Center, Telecommunications, and End User Services). 

OTS’ Chief Information Officer is responsible for the policy, oversight, and improvement 

of all information systems as well as the information management and data 

communications used by OTS to carry out its mission. OTS’ Chief Information Officer 

serves as the Executive Director of the IRB; OTS’ Director serves as the IRB Chair. 

The IRB meetings are incorporated into the Regional Managers meetings to ensure that 

all senior staff participates in the discussion of the IT program, its budget, projects, 

strategies, and priorities. Projects are evaluated annually during the budget cycle and can 

be terminated or funded for further development. 

Upcoming OTS IT projects in FY 2010. 

Infrastructure Upgrades – OTS performed major information technology infrastructure 

upgrades to include: 

• Upgrading of network switches, circuits and routers, 

• Implementing a new enterprise data storage solution, 

• Modernizing the email infrastructure, and 

• Deploying virtualization software. 

In order to ensure optimal management and control of the upgraded infrastructure, OTS 

implemented new change and configuration management processes. 

Developing a new Business Resumption Program – OTS will implement an enhanced 

Business Resumption Program for its Mission Essential Functions. The purpose of this 

program is to raise our continuity of operation plan to the next level. 

• A business impact analysis will be performed across OTS systems based on the 

Mission Essential Function analysis, 

• Recovery strategies will be developed based on Recovery Point Objective and 

Recovery Time Objective needs, 

• IT Contingency Plans will be updated for all OTS systems; and, 

• Recovery strategies will be tested based on Business Resumption Program goals. 

OTS has no major IT investments planned for FY 2010. 
OTS - 20 

4.2 – Program Evaluation 

Program Name: Thrift Supervision 

Assessment and Improvement Actions: 

• OCC and OTS worked together throughout the strategic and performance 

planning efforts to ensure that their strategic goals were closely aligned. The 

banking regulatory agencies share their strategic and performance plans with each 

other and meet quarterly to discuss strategic and performance planning. 

• Based on feedback received over the past few years, the vast majority of the 

industry prefers the efficiency and effectiveness of joint examinations. OTS 

eliminated much of the redundancy of two separate exams. OTS will fulfill its 

statutory examination responsibilities with fewer FTEs as a result of this change. 

• During the 2007 strategic planning process, systemic risks were examined and 

addressed in the Plan. 

• Going forward, OTS will continue to work with OCC to ensure that strategic 

goals are aligned. OTS will also continue to share its strategic and performance 

plans with other banking regulatory agencies and meet with them to discuss 

strategic and performance planning. 

• OTS will continue to perform joint examinations while performing ongoing 

examinations of systemic risk and addressing any issues identified.