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 2007 FY 2008 FY 2009

Office of Thrift Supervision Obligated Estimated Estimated $ Change % Change 

Supervision of the Thrift Industry $232,500 $245,500 $251,638 $6,138 2.50%

Total Resources $232,500 $245,500 $251,638 $6,138 2.50%

FY 2008 Priorities 

• Comprehensive and Risk-Focused Examinations, 

• Interest Rate and Credit Risks including sub-prime mortgage lending, 

• Compliance Risks, Financial Crimes, Data Breaches, and Information Security, 

• Disaster and Emergency Preparedness, 

• Global Financial Services, 

• Regulatory Burden Reduction, 

• Communicate the benefits of the Thrift Charter, and 

• Succession Planning and Management of OTS Resources. 

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Table of Contents 

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

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

1B – Program History and Future Outlook..................................................................... 2 

1C – Industry Outlook .................................................................................................... 7 

Section 2 – Budget Adjustments and Appropriation Language................................... 8

2.2 – Operating Levels Table.......................................................................................... 8 

2.3 – Resource Detail Table............................................................................................ 9 

2B – Appropriations Language and Explanation of Changes......................................... 9 

2C – Legislative Proposals ............................................................................................. 9 

Section 3 – Budget and Performance Plan ................................................................... 10

3.1 – Budget by Strategic Outcome .............................................................................. 10 

3A – Supervision of the Thrift Industry....................................................................... 10 

3.2.1 – Supervision of the Thrift Industry Budget and Performance Plan.................... 12 

Section 4 – Supporting Materials.................................................................................. 15

4A – Human Capital Strategy Description ................................................................... 15 

4.1 – Summary of IT Resources Table ......................................................................... 16 

4B – Information Technology Strategy ........................................................................ 17 

4.2 – PART Evaluation Table....................................................................................... 18 

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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). OTS’s primary statutory authority is the Home Owners’ Loan Act 

originally enacted in 1933. OTS also examines, supervises, and regulates state-chartered 

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 institution; and preemption authority. OTS is the 

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

holding companies. The thrift charter continues to flourish as institutions change and 

adapt their business strategies and focus. OTS supervised holding companies are diverse, 

ranging from large, multinational corporations to small companies with few assets other 

than their thrift charter. As of September 30, 2007, OTS supervised 470 holding 

company enterprises with approximately $8.5 trillion in U.S. domiciled consolidated 

assets. Over half of all savings associations and 83 percent of total savings association 

assets are owned by OTS regulated holding companies. 

The thrift industry is strong and well capitalized. As of September 2007, OTS regulated 

831 savings associations with total assets of $1.57 trillion. Savings associations operate 

in a safe and sound manner with 93 percent achieving an overall composite CAMELS 

rating of 1 or 2. The CAMELS rating reflects OTS’s evaluation of an institution’s 

Capital, Asset Quality, Management, Earnings, Liquidity, and Sensitivity to market risk. 

The industry’s capital position remains strong with 99 percent of savings associations

meeting the well-capitalized standards. 

OTS Vision, Strategic Goals and Priorities 

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

institutions and holding companies. The FY 2008 budget submission is guided by the 

four strategic goals outlined in the 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. 

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

resources to provide exceptional service to its customers. 

OTS’s FY 2008 budget of $245.5 million supports OTS’s efforts to address these key 

strategic issues and challenges: 

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• Examine, supervise, and regulate 831 savings associations with total assets of $1.57 

trillion 

• Supervise 470 holding company enterprises with approximately $8.5 trillion in 

consolidated assets, 

• Tailor examinations to the risk profile of the institution and streamline the 

examination of smaller institutions, 

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

months that also incorporates an assessment of compliance with consumer protection 

laws and regulations, 

• Promote the reduction of regulatory burden, 

• Coordinate supervisory and policy development activities with relevant domestic and 

foreign financial regulators, 

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

compliance with the Bank Secrecy Act, the USA PATRIOT Act, and other antimoney laundering laws, 

• Communicate the benefits of the thrift charter and the important role of communitybased thrifts, 

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

and 

• Address succession planning. 

1B – Program History and Future Outlook 

OTS is headquartered in Washington, D.C. with five regional offices located in Jersey 

City, Atlanta, Chicago, Dallas, and San Francisco. 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 72 percent of OTS’s staff of 1,028 employees work in OTS’s regional 

offices. 

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

OTS’s Director also serves as a member of the Board of Directors of the Federal Deposit 

Insurance Corporation (FDIC), a member of the Federal Financial Institutions 

Examination Council (FFIEC), and a director of NeighborWorks® America. 

The following activities highlight FY 2007 OTS accomplishments and FY 2008 strategic 

priorities and challenges. 

Comprehensive Examination Approach

OTS conducts a comprehensive examination combining safety and soundness and 

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

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

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

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

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including the establishment of adequate internal controls to ensure regulatory compliance 

and to prevent predatory practices. OTS is also able to evaluate compliance management 

programs and compliance with the Bank Secrecy Act, Fair Lending, and Flood Disaster 

Protection on a more frequent basis. 

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

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

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

soundness perspectives at the same time. 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 indicate a 

favorable response to 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 of at least two comprehensive examinations prior to accreditation. 

OTS continually works to provide specialized training, rigorous accreditation and 

professional development programs, and other supervisory tools to ensure OTS is capably 

equipped to supervise a dynamic and growing industry. OTS also recognizes that there 

are very complex and highly technical issues that arise in connection with our 

comprehensive examination approach. For this reason, OTS continues to maintain 

compliance, lending, capital markets, trust, and information technology specialists to 

assist examiners in addressing these matters. 

Interest Rate and Credit Risks 

As community-based lenders, thrifts remain focused on residential mortgage lending with 

50.7 percent of assets invested in 1-4 family mortgage loans as of September 30, 2007. 

Given this concentration, thrift asset quality is dependent on stable real estate values and 

consumers’ continued employment and ability to service their debt. 

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 maintains an interest rate risk sensitivity model that stress-tests savings 

association portfolios to evaluate potential exposure to changing interest rates. OTS 

remains cautious of the potential impact of a rapid increase in market interest rates and

will remain vigilant in monitoring savings associations for adverse trends. In 2006, OTS 

enhanced its state of the art Net Portfolio Value (NPV) Model to expand OTS’s off-site 

interest rate risk monitoring capability and improve the efficiency and effectiveness of

on-site examinations. The NPV model improves the agency’s unique ability to provide 

OTS regulated institutions with quarterly estimates of their interest rate risk exposures. 

Alternative or nontraditional mortgage lending products (such as variable rate mortgages, 

pay option ARMS or interest only) present a unique hybrid of credit and interest rate 

risks. Credit risk in mortgage lending, typically managed by sound underwriting criteria, 

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is more complex with these nontraditional lending products. In 2006 the federal financial 

regulatory agencies issued guidance to address the risks posed by these types of loans,

recommending that management recognize these products require strong risk 

management standards, capital levels commensurate with the risk, and a loan loss 

allowance reflective of the portfolio collectibility. On May 31, 2007 the regulatory 

agencies issued final illustrations of consumer information intended to help institutions

implement the consumer protection portion of the Interagency Guidance on 

Nontraditional Mortgage Product Risks that the agencies adopted October 4, 2006. The 

guidance addresses the risks posed by residential mortgage products that allow borrowers 

to defer repayment of principal and sometimes interest. It describes sound practices for 

managing risk and supplements existing OTS guidance on these products. 

OTS and the other banking agencies worked with the Conference of State Bank 

Supervisors and American Association of Residential Mortgage Regulators to encourage 

individual states to adopt the guidelines for mortgage brokers under their supervision. 

The banking regulators also encouraged financial institutions to work with residential 

borrowers that are unable to meet their contractual home loan obligations. 

The thrift industry’s current sound financial condition permits it to address potential 

credit quality problems from a position of strength. Thrifts continue to take appropriate 

steps in response to the continued weakness in the housing market by maintaining strong 

capital and increasing their provisions for loan losses. The ability of the industry to post 

solid earnings while continuing the provisioning for loan losses, and the current strong 

capital position, will help the industry weather any further weakening in the housing 

markets.

Compliance Risks 

An OTS-regulated institution is required to have an effective compliance management

program that is commensurate with its size, complexity, and risk profile. OTS examiners 

assess whether an institution is ensuring the privacy and security of consumer financial 

information, guarding against money laundering and terrorist financing, and ensuring fair 

and equal access to credit for all customers. 

OTS examines for Bank Secrecy (BSA), the USA PATRIOT Act, and other Anti-money 

Laundering (AML) compliance. Between January 1, 2006 and June 30, 2007, OTS 

conducted 884 BSA examinations and cited 148 institutions for violations. Most 

violations were remedied during the examination process and resulted in no further 

action. The others resulted in OTS initiating 40 enforcement actions. 

 

On July 19, 2007, the federal financial regulatory agencies issued a statement setting 

forth the agencies’ policy for enforcing specific anti-money laundering requirements of 

the Bank Secrecy Act (BSA). The purpose of the Interagency Statement on Enforcement 

of Bank Secrecy Act/Anti-Money Laundering Requirements is to provide greater 

consistency among the agencies in enforcement decisions in BSA matters and to offer 

insight into the considerations that form the basis of those decisions. 

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OTS’s compliance program is structured to ensure that thrifts keep credit information 

confidential, fight identity theft, and ensure the accuracy of consumers’ credit reports. 

Data security is reviewed at thrifts and third party technology service providers. The 

Gramm-Leach-Bliley Act requires that all financial institutions establish a program to 

protect their customer’s personal information. OTS, with the other financial banking 

agencies, issued guidance regarding data security, security breach notification 

requirements, and electronic authentication in an electronic banking environment. 

Thrifts provide services that encourage home ownership and affordable housing and 

contribute to economic growth. As of the end of September 2007, thrifts held over $1 

trillion in housing-related loans and securities. In March 2007, OTS revised its 

Community Reinvestment Act (CRA) regulations to reestablish uniformity between its 

regulations and those of the other federal banking agencies. The alignment best serves 

the interests of insured depository institutions and their communities by providing for 

consistency in regulation and compliance. The vast majority of OTS institutions are in 

compliance with the Community Reinvestment Act. OTS’s compliance reviews help to 

ensure fair and equal access to credit for all Americans. 

Emergency and Disaster Preparedness 

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

In October 2007, OTS urged thrifts in areas affected by the Southern California wildfires 

to consider all reasonable steps to meet customers’ financial needs while maintaining 

standards of safety and soundness and emphasized that thrifts in affected areas could: 

• Consider temporarily waiving charges for late payments and penalties for early 

withdrawal of savings; 

• Reassess the credit needs of their communities and offer prudent loans to help 

rebuild; 

• Restructure borrowers’ debt obligations, when appropriate, by adjusting payment 

terms; 

• Solicit state and federal guarantees and other means to help mitigate excessive credit 

risks; and 

• Consider all available programs offered by the Federal Home Loan Banks. 

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 plans for continuity of 

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

Information Infrastructure Committee to improve the reliability and security of the 

financial industry’s infrastructure. 

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Global Financial Services

OTS’s Complex and International Organization program oversees OTS’s global services. 

The European Union (EU) seeks to ensure that financial conglomerates domiciled outside 

EU member countries are subject to an equivalent level of supervision by foreign 

supervisors and to enhance coordination among relevant supervisors. OTS is the 

supervisor for U.S. thrift holding companies, including a number of financial 

conglomerates active in the EU. OTS was the first regulatory authority to be designated a 

consolidated coordinating regulator of a holding company with operations in the EU. 

The EU designation was received in December 2004 for OTS’s oversight of GE Capital 

Services, in September 2006 for Ameriprise, and January 2007 for the American 

International Group, Inc. (AIG). The supervision and examination of GE, AIG, and 

Ameriprise are managed by a group solely dedicated to that task in Supervision. 

The federal banking agencies are continuing efforts to implement the international Basel 

II risk-based capital framework. In early November, 2007, the Federal Reserve, the 

Office of the Comptroller of the Currency, the OTS, and the Federal Deposit Insurance 

Corporation approved a final rule regarding the advanced approaches for computing large 

banks’ risk-based capital requirements. That rule should be published in the Federal 

Register before year-end, with an effective date of April 1, 2008. The federal banking 

agencies also plan to propose, in the first quarter of 2008, a standardized capital 

framework as an option for all remaining U.S. banks that will not be required to adopt the 

advanced approaches. This proposal will introduce a capital framework similar to that 

which is available in many other countries. By design, it should also mitigate some

concerns about domestic competitive equity raised by the adoption of the advanced 

approaches. It will supplant the now-abandoned Basel IA proposal. 

 

Regulatory Burden Reduction

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 changes could be made 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 President Bush signed it 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. 

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Staffing and Succession Planning

Fifty-five percent of OTS’s current staff will reach retirement eligibility by the end of

2010. OTS is actively addressing succession planning and the corresponding training

needs. Over 70 new examiners were hired during fiscal year 2007 and OTS upgraded its 

training program for new and existing examiners. OTS’s compensation program enables 

OTS to attract, retain, and reward staff comparable to the other federal banking agencies. 

1C – Industry Outlook 

The thrift industry continues to fulfill its traditional role as a mortgage lender. Capital 

levels remain strong and earnings remain positive, despite the pressures on earnings and 

asset quality resulting from the growing weaknesses in the housing market, rising 

mortgage delinquencies and foreclosures, and deterioration in secondary market liquidity. 

As of September 30, 2007, 99 percent of all thrifts exceed the regulatory standard to 

qualify as “well-capitalized”. Net income for fiscal year 2007 totaled $11.3 billion. The 

number of problem thrifts  those with composite examination ratings of 4 or 5 ─ was up 

from ten thrifts in June 2007 to 12 as of September 2007. 

Financial services consolidation has reduced the overall number of savings institutions, 

but industry asset size has remained stable. OTS expects this to continue. OTS has 

worked closely with the industry to maintain the integrity and viability of the thrift 

charter as the industry continues to adapt to the evolving nature of the financial services 

business and the demands of its customers. 

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Section 2 – Budget Adjustments and Appropriation Language 

2.2 – Operating Levels Table 

Dollars in Thousands

Bureau: Office of Thrift Supervision FY 2007 

Obligated

FY 2008 

Estimated

FY 2009 

Estimated

FTE 1,015 1,104 1,104

Object Classification:

 11.1 - Full-time permanent 115,224 122,981 126,056

 11.3 - Other than full-time permanent 2,217 4,194 4,298

 11.5 - Other personnel compensation 0 0 0

 11.8 - Special personal services payments 0 0 0

 12 - Personnel benefits 67,085 65,274 66,906

 13 - Benefits for former personnel 300 190 195

 21 - Travel and transportation of persons 13,984 15,562 15,951

 22 - Transportation of things 241 287 294

 23.1 - Rental payments to GSA 0 0 0

 23.2 - Rental payments to others 3,944 4,384 4,494

 23.3 - Comm, utilities, and misc charges 3,582 4,335 4,443

 24 - Printing and reproduction 216 306 314

 25 - Other contractual Services 0 0 0

 25.1 - Advisory and assistance services 2,161 3,326 3,409

 25.2 - Other services 5,623 8,851 9,072

 25.3 - Other purchases of goods and services from Govt. accounts 3,923 3,674 3,766

 25.4 - Operation and maintenance of facilities 5,220 4,195 4,300

 25.5 - Research and development contracts 0 0 0

 25.6 - Medical care 0 0 0

 25.7 - Operation and maintenance of equip 328 311 319

 25.8 - Subsistence and support of persons 0 0 0

 26 - Supplies and materials 1,669 2,069 2,121

 31 - Equipment 5,544 4,342 4,451

 32 - Land and structures 1,239 1,219 1,249

 33 - Investments and loans 0 0 0

 41 - Grants, subsidies, and contributions 0 0 0

 42 - Insurance claims and indemnities 0 0 0

 43 - Interest and dividends 0 0 0

 44 - Refunds 0 0 0

Total Budget Authority $232,500 $245,500 $251,638

Budget Activities:

 Supervision of the Thrift Industry 232,500 245,500 251,638

Total Budget Authority $232,500 $245,500 $251,638

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2.3 – Resource Detail Table 

% Change

FY 2007 FY 2008 FY 2009 FY 2008

Description Actual Estimated Estimated to FY 2009

Summary of Revenue and Expenses:

Revenue:

Supervision

Assessments $218,100 $220,000 $225,500 2.50%

Rental Income $5,070 $4,950 $5,074 2.50%

Interest $8,500 $11,000 $11,275 2.50%

Fees & Other $7,330 $16,050 $16,451 2.50%

Total Revenue $239,000 $252,000 $258,300 2.50%

Expenses:

Supervision

Compensation & Benefits $184,825 $192,639 $197,455 2.50%

Travel & Transportation $14,225 $15,849 $16,245 2.50%

Facilities $14,310 $14,280 $14,637 2.50%

Other Services & Supplies $19,140 $22,732 $23,300 2.50%

Total Expenses $232,500 $245,500 $251,637 2.50%

Net Results $6,500 $6,500 $6,663 2.50%

2B – Appropriations Language and Explanation of Changes 

OTS receives no appropriated funds from Congress. 

2C – Legislative Proposals 

OTS currently has no legislative proposals. 

 

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Section 3 – Budget and Performance Plan

This table lists all FY 2009 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 Goal FY 2008 FY 2009 Percent

 TREASURY Strategic Objective Estimated Estimated Change

TREASURY Strategic Outcome AMOUNT AMOUNT AMOUNT 

 Economic competitiveness 24,550 25,164 2.5%

Fin. & econ.crises 220,950 226,474 2.5%

Total $245,500 $251,638 2.5%

3A – Supervision of the Thrift Industry ($245,500,000 from reimbursable programs): 

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

compliance with consumer protection laws and regulations. During these exams, the 

association’s ability to identify, measure, monitor, and control risk is evaluated, including 

the risk posed by other entities within the corporate structure. When weaknesses are 

identified, supervisory action is taken. 

OTS receives no appropriated funds from Congress; the revenue of the bureau is derived 

principally from assessments on savings associations and savings and loan holding 

companies. Other sources of income include fees, rents, and interest on investments. 

OTS has received consecutive unqualified opinions on its financial statements since 

being formed in 1989. 

OTS’s four strategic goals guide the annual budget activity. 

Strategic Goal 1: A safe and sound thrift industry. 

Through the examination process, OTS assesses the financial condition and risk profile of 

savings associations, including their ownership structure, and identifies and addresses 

unsafe and unsound practices and violations of law and regulation. Through the off-site 

monitoring process, OTS regularly monitors the financial performance of individual 

savings associations and the industry. Such monitoring enables early identification of 

emerging trends or problems. 

Strategic Goal 2: Fair access to financial services and fair treatment of thrift customers. 

OTS’s Community Affairs Program supports the thrift industry's efforts to meet the 

convenience and needs of the communities they are chartered to serve; fulfill their CRA 

obligations; and provide safe and sound loans, investments and financial services for low 

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and moderate income individuals, communities and other areas of greatest need. OTS's 

Community Affairs staff works with savings associations, community-based 

organizations, government officials and others to promote partnerships and other 

initiatives with savings associations at the local level to address and respond to 

community and economic development needs. In addition, OTS promotes industry 

adoption of comprehensive compliance management programs and encourages 

associations to strategically develop the diverse opportunities presented by the 

communities they are chartered to serve. 

Strategic Goal 3: A flexible legal and regulatory framework that enables the thrift 

industry to provide a full competitive array of financial services. 

OTS strives to reduce the regulatory burden on savings associations while maintaining 

effective supervision. To achieve this goal, OTS is improving the application process, 

limiting assessment rate increases and reviewing statutes and regulations of other 

governmental entities that may be burdensome. OTS reduced the amount of on-site 

examination time, redesigned regulations to make them easier to understand, and 

eliminated unnecessary restrictions. OTS tailors examinations to the risk profile of the 

individual institutions. This ensures that the examination process is responsive and 

enables the thrift industry to provide competitive financial services. 

OTS strives to manage operations to ensure that assessment rate increases do not exceed 

the inflation rate. Without compromising responsibilities, the assessment rate increases 

have not exceeded the inflation rate for the past four years. 

Strategic Goal 4: A professional, highly motivated and diverse workforce that effectively 

uses OTS resources to provide exceptional service to its customers. 

OTS strives to maintain a workforce that is professional and well trained to regulate the 

thrift industry and to deal with the public in a professional, informed, and responsive 

manner. OTS will continue to cross-train its examiners in both the safety and soundness 

and compliance disciplines. OTS provides the public with statistical reports, securities

filings of OTS registrants, chartering records and other public information. OTS assists 

savings association customers with inquiries and complaints concerning savings 

associations. 

In line with the President’s Management Agenda, OTS is committed to the effective,

efficient, and economic management of its resources. OTS analyzes new enterprise 

initiatives for best value.

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3.2.1 – Supervision of the Thrift Industry Budget and Performance Plan 

Supervision of the Thrift Industry Budget 

Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Estimated Estimated

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

 Reimbursable Resources $187,434 $199,497 $218,129 $245,500 $251,638

Total Resources $187,434 $199,497 $218,129 $245,500 $251,638

Budget Activity Total $187,434 $199,497 $218,129 $245,500 $251,638

Supervision of the Thrift Industry Budget 

Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Total OTS costs relative to every $100,000 in

savings association assets regulated ($) (E) 

N/A $13 $14 $15 $15

Percent of safety and soundness exams started 

as scheduled (%) (Ot)

 93% 94% 95% 90% 90%

Percent of thrifts that are well capitalized (%) 

(Oe) 

 100% 100% 99% 95% 95%

Percent of thrifts with compliance 

examination ratings of 1 or 2 (%) (Oe) 

 94% 93% 97% 90% 90%

Percent of thrifts with composite CAMELS

ratings of 1 or 2 (%) (Oe) 

 94% 93% 93% 90% 90%

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

Description of Performance: OTS met all of its performance measure targets for FY 

2007 and plans to maintain its current high level of achievement for all performance 

measures. The FY 2008 Performance Budget describes the goals, strategies, and 

priorities that will guide OTS’s operations. The FY 2008 budget enables OTS to 

continue tailoring supervisory examinations to the risk profile of the institutions, while 

effectively allocating resources to oversee and assess the safety and soundness and 

consumer compliance record of the thrift industry. 

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

On December 9, 1996, the Federal Financial Institutions Examination Council (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. 

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

A uniform, interagency compliance rating system was first approved by the FFIEC in 

1980. The FFIEC rating system was designed to reflect, 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. 

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OTS elected to combine safety and soundness and compliance examinations in 2002 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. 

Percent of thrifts that are well capitalized.

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

and the FDIC insurance fund. It 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 (well-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. 

 

Percent of safety and soundness exams started as scheduled

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

compliance and consumer protection laws. OTS performs safety and soundness 

examinations of its regulated savings associations consistent with statutory authority. 

When safety and soundness or compliance issues are identified during its risk-focused 

examinations, OTS 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. 

Difference between the inflation rate and the OTS assessment rate increase.

Without compromising responsibilities and the risk-based examination approach, OTS 

strives to efficiently manage its operations and budget to ensure that assessment rate 

increases do not exceed the inflation rate without compromising OTS’s responsibilities 

and the risk-based examination approach. However, if OTS believes that events require 

more personnel or other expenditures, OTS may increase assessments to raise the 

required resources. Annually, OTS analyzes its operating costs and compares them to the 

assessments it charges savings associations and holding companies in order to achieve a 

structure that keeps assessment rates as low as possible while providing OTS with the 

resources necessary for effective supervision. 

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’s 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 

OTS - 13 
does not include over $8.5 trillion in assets of holding company enterprises regulated by 

OTS. 

For detailed information about each performance measure, including definition, 

verification and validation, please go to: 

http://www.treasury.gov/offices/management/dcfo/accountability-reports/2007-par.shtml

OTS - 14 
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Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

Human capital represents OTS’s primary resource to meet its strategic objectives. 

Sustaining and nurturing human capital resources requires a blend of 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 follows the Department of the Treasury’s Human 

Capital Strategic Plan for Fiscal Years 2004-2008 and incorporates strategies and 

practices to ensure that OTS has sufficient staff with the right skills to accomplish its 

mission presently and in the future. The Plan consists of four main strategic goals: 

Organizational Effectiveness, Recruitment and Diversity, Employee Retention and 

Satisfaction, and Technology Skills. 

Fifty-five percent of OTS’s current staff will reach retirement eligibility by year-end 

2010. OTS is developing a revitalized succession planning program to analyze specific 

positions and categories of positions, identify internal and external pools of available and 

projected candidates, and design professional development programs to match these 

needs. Over 70 new examiners were hired during 2007. OTS’s compensation program 

enables OTS to attract, retain, and reward staff comparable to the other federal banking 

agencies. 

OTS is working to cross train its examination staff to create a work force capable of 

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

compliance examinations), as well as designing training programs to meet the challenges 

OTS faces with anticipated retirements as part of its overall succession planning program. 

To meet the needs of a thriving thrift industry, OTS seeks qualified experienced and 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.
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4.1 – Summary of IT Resources Table Dollars in Thousands

Information Technology Investments

FY 2006 FY 2008 

Major IT Investments / Funding Source

Budget

Activity

& Earlier

Enacted 1/

FY 2007

Enacted

President's

Budget

F

Re

Major IT Investments $0.0 $0.0 $0.0 0.0 Non-Major IT InvestmentsAdministrative - Mixed Supervision $851.5 $863.9 $975.0 11.4% Examinations Supervision $1,915.8 $1,799.9 $1,632.0 -10.3% $Thrift Financial Data Supervision $2,596.8 $3,522.2 $3,105.0 -13.4% $TFR Validation Supervision $1,532.6 $1,555.1 $1,507.0 -3.2% $Industry Structure and Tracking Supervision $1,745.5 $1,532.0 $1,140.0 -34.4% $CIO Planning Supervision $1,953.7 $1,757.4 $1,920.0 8.5% $Total Non-Major IT Investments $12.2 $11,030.5 $10,279.0 -7.3% $1Infrastructure InvestmentsTreasury Consolidated Data Center & Services $2,770.0 $3,754.8 $7,801.0 51.9% $Treasury Consolidated Telecommunications $921.6 $814.2 $1,750.0 53.5% $Treasury Consolidated End User Services $2,732.0 $2,987.7 $3,360.0 11.1% $Treasury Consolidated Security $865.8 $1,710.6 $0.0 0.0% Total Infrastructure Investments $7,289.4 $9,267.3 $12,911.0 28.2% $1Enterprise Architecture $170.3 $115.0 $148.0 2.5% Total IT Investments $21.6 $20,412.8 $23,338.0 2.5% $2

% Change

from FY07 to

FY08
4B – Information Technology Strategy 

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

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

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

regarding IT expenditures and investments. 

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

improvement of all information systems, information management and data 

communications used by OTS to carry out its mission; he serves as the Executive 

Director of the IRB. OTS’s 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. 

OTS successfully implemented the Personal Identity Verification (PIV) process in 2006 

to comply with the PIV-1 requirements of Homeland Security Presidential Directive 12 

(HSPD-12). OTS will work with Treasury’s team to implement a new identity 

management program and to issue new smartcard badges. 

During 2007, OTS provided timely and efficient technological assistance and solutions to 

meet regulatory responsibilities and improve operations. OTS continues to make 

progress in achieving OMB’s, requirements for full-disk encryption and two-factor 

authentication. At year end 2006, all of our remote user workforce and regional office 

staff hard-drives were fully encrypted. Full encryption of Washington staff machines 

was complete by the end of the 2007 calendar year. 

OTS is working to develop a security program that adequately addresses the National 

Institute of Standards and Technology (NIST) requirements while being manageable for a 

small agency. OTS strengthened its IT Security program during FY 2006 and hired five 

new security professionals who are dedicated to addressing operational and regulatory 

security requirements. OTS also separated Operational Security into a distinct team to 

address day-to-day security concerns and activities. OTS will strive to improve the 

Federal Information Security Management Act (FISMA) posture by implementing new 

processes compliant with the NIST standards and by recertifying its national systems. 

OTS has no major IT investments planned for FY 2008. 

 

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4.2 – PART Evaluation Table 

PART Name: Thrift Supervision

Strategic Goal: Increase the reliability of the U.S. financial system (F3)

ting: Effective

jor Findings

ommendations

 Actions Taken

Actions Planned or Underway

2. Based on feedback received over the past two years, the vast majority of the industry prefers the efficiency and effectiveness of a 

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

responsibilities with less FTEs as a result of this change.

2. The program developed new goals that are outcome-oriented and program measurements which are clear.

3. The program is efficiently and effectively managed.

1. The program purpose is clear.

1. 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.

1. Federal banking regulatory agencies, including the OTS, the OCC, the NCUA, and the FDIC, work together

to align outcome goals and related measures to allow for greater comparison of program performance in the

industry.

2. The OTS evaluates the efficiency and effectiveness of a single examination for both Safety and Soundness

and Compliance functions.

3. The OTS take steps to examine long-term systemic risks in the industry.

3. OTS will continue to examine and address systemic risks.

3. During the 2004 strategic planning process, systemic risks were examined and addressed in the Plan.

1. OTS will continue to work with the OCC to ensure that strategic goals are closely aligned. OTS will continue

to share its strategic and performance plans with the other banking regulatory agencies and meet to discuss 

strategic and performance planning.

2. OTS will continue to perform a joint examination.

Ra

OMB Ma

OMB Rec

OTS

OTS

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

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

OTS - 18