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Office of the Comptroller of the
 

Currency
 

FY 2015
 

President’s Budget
 
 

 

 

 

 

 

 

Table of Contents
 

Section 1 – Purpose........................................................................................................................3

1A – Mission Statement ..............................................................................................................3

1.1 – Resource Detail Table ........................................................................................................3

1B – Vision, Priorities and Context.............................................................................................3

Section 2 – Budget Adjustments and Appropriation Language .............................................12

2.2 – Operating Levels Table ....................................................................................................12

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

2C – Legislative Proposals ........................................................................................................12

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

3A – Supervise ..........................................................................................................................13

3.1.1 – Supervise Budget and Performance Plan ......................................................................17

3B – Regulate ............................................................................................................................17

3.1.2 – Regulate Budget and Performance Plan ........................................................................18

3B – Charter ..............................................................................................................................18

3.1.2 – Charter Budget and Performance Plan ..........................................................................19

Section 4 – Supplemental Information ......................................................................................20

4A – Summary of Capital Investments .....................................................................................20

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Dollars in Thousands 

Office of the Comptroller of the

Currency FY 2013 FY 2014 FY 2015 FY 2014 to FY 2015 

Budgetary Resources Actual Estimated Estimated $ Change % Change 

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT 

Revenue/Offsetting Collections 

Assessments 973,100 1,007,700 1,029,500 21,800 2.16% 

Interest 17,900 16,700 17,000 300 1.80% 

Other Income 15,700 18,600 18,900 300 1.61% 

Unobligated Balances from Prior Years 1,087,200 1,076,400 1,068,505 (7,895) -0.73% 

Total Revenue/Offsetting Collections 0 2,093,900 0 2,119,400 0 2,133,905 0 14,505 .00 0.68% 

Expenses/Obligations 

Supervise 3,287 873,942 3,400 903,770 3,438 949,219 38 45,449 1.12% 5.03% 

Regulate 420 111,783 435 115,998 440 121,412 5 5,814 1.15% 5.03% 

Charter 115 30,486 119 31,527 120 33,112 1 1,585 0.84% 5.03% 

Total Expenses/Obligations 3,822 1,016,211 3,953 1,150,895 3,997 1,103,743 44 52,848 1.11% -65.49% 

Net Results 0 1,077,689 01 1,068,505 0 1,030,162 0 (38,343) .00 3.59% 

Section 1 – Purpose 

1A – Mission Statement 

To ensure that national banks and federal savings associations operate in a safe and sound 

manner, provide equal access to financial services, treat customers fairly, and comply with 

applicable laws and regulations. 

1.1 – Resource Detail Table 

1B – Vision, Priorities and Context 

The Office of the Comptroller of the Currency (OCC) was created by Congress to charter 

national banks, oversee a nationwide system of banking institutions, and ensure national banks 

are safe and sound, competitive and profitable, and capable of serving in the best possible 

manner the banking needs of their customers. Effective on July 21, 2011, Title III of the DoddFrank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), transferred to the 

OCC the responsibility for the supervision of federal savings associations and rulemaking 

authority for all savings associations. 

As of December 31, 2013, the OCC supervised 1,212 national bank charters and 48 federal 

branches of foreign banks in the United States with total assets of approximately $9.7 trillion, 

and 497 federal savings associations (which include 186 mutual institutions) with total assets of 

approximately $702 billion. In total, the OCC supervises over $10 trillion in financial institution 

assets. 

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OCC Vision and Core Values 

Vision:
 

The OCC is a preeminent bank supervisor. The OCC culture is flexible, accountable, strategybased, and data-driven. The OCC team of dedicated professionals uses substantive expertise, 

sound judgment, and comprehensive experience to assess the financial condition, management, 

and regulatory compliance of national banks and federal savings associations to ensure a vibrant
 

and diverse banking system that benefits all Americans.
 

Core Values:
 

• Integrity 

• Professionalism 

• Independence 

• Teamwork 

The OCC has established four goals outlined in its strategic plan that help support a strong 

economy for the American public: 1) A safe and sound system of national banks and federal 

savings associations; 2) Fair access to financial services and fair treatment of national bank and 

federal savings association customers; 3) A flexible legal and regulatory framework that enables 

national banks and federal savings associations to provide a full, competitive array of financial 

services consistent with statutory and prudential safety and soundness constraints; and 4) A 

competent, highly motivated, and diverse workforce that makes effective use of the OCC 

resources. To achieve its goals and objectives, the OCC organizes its activities under three 

programs: 1) Supervise, 2) Regulate, and 3) Charter. Effective supervision and a comprehensive 

regulatory framework are the key tools that the OCC uses to ensure that national banks and 

federal savings associations operate in a safe and sound manner and that they provide fair access 

to financial services and fair treatment of their customers. A robust chartering program allows 

new entrants into the financial services sector while ensuring that they have the necessary 

capital, managerial, and risk management processes to conduct activities in a safe and sound 

manner. 

The OCC’s priorities focus on strengthening the resiliency of the institutions subject to its 

jurisdiction through its supervisory and regulatory programs and activities. A stronger and more 

resilient banking system directly supports three out of five of the Department of the Treasury’s 

(Treasury) strategic goals: 1) Promote Domestic Economic Growth and Stability; and 4) 

Safeguard the Financial System and Use Financial Measures to Counter National Security 

Threats. 

Through on-site examinations, the OCC assesses whether national banks and federal savings 

associations appropriately identify, account for, and follow prudent strategies for problem assets; 

and maintain a strong corporate governance culture that fosters sound loan underwriting 

standards, properly aligned incentive compensation structures, and strong internal controls, risk 

management, and compliance functions. Other supervisory priorities are identifying and 

resolving potential problem banks at the earliest possible stage; encouraging national banks and 

federal savings associations to meet the needs of creditworthy borrowers, including appropriate 

and effective residential mortgage modification programs; ensuring that institutions comply with 

the Community Reinvestment Act (CRA), the Bank Secrecy Act/Anti-Money Laundering 

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(BSA/AML), and the Uniting and Strengthening America by Providing Appropriate Tools 

Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act requirements and that they 

maintain strong controls and risk management processes for information security; and further 

enhancing the OCC’s supervisory analytical tools. 

Operations are funded primarily (approximately 97 percent) from semiannual assessments levied 

on national banks and federal savings associations. Revenue from investments in Treasury 

securities and other income comprise the remaining three percent of the OCC’s funding. The 

OCC does not receive congressional appropriations to fund any portion of its operations. 

Supervisory Activities 

The OCC has various ways to influence the banking system: 1) Policy guidance and regulations 

that set forth standards for sound banking practices; 2) On-site examinations and ongoing off-site 

monitoring that enable the OCC to assess compliance with those standards and to identify 

emerging risks or trends; and 3) A variety of supervisory and enforcement tools – ranging from 

matters requiring financial institution board’s and management’s attention to informal and 

formal enforcement actions – that are used to obtain corrective action to remedy weaknesses, 

deficiencies, or violations of law. The OCC published 113 enforcement actions taken against 

institution-affiliated parties and 72 enforcement actions taken against institutions through 

June 30, 2013. The OCC and the Federal Reserve Board released amendments to enforcement 

actions against 13 mortgage servicers for deficient loan servicing and foreclosure processing, to 

result in $9.3 billion in payments and other assistance to borrowers. In addition, the OCC took 

significant enforcement actions to address Bank Secrecy Act/Anti-Money Laundering violations, 

unsafe and unsound practices related to derivatives trading, and failure to properly manage 

vendors engaged in deceptive debt collection practices. 

The OCC supervisory activities in fiscal year (FY) 2013 centered on evaluating and 

strengthening the quality of banks’ risk management to identify, measure, monitor, and control 

the build-up of risk, both on and off-balance sheet. A primary focus of on-site supervisory 

activities was the quality of banks’ enterprise risk management practices, as evidenced by 

effective credit risk rating systems that identify problems at an early stage where resolution is 

less costly, identifying any deterioration in credit underwriting standards, ensuring that the loan 

lease reserves are adequate and any releases from the reserves are adequately supported by 

current credit risk metrics, identifying and controlling cyber-security threats, ensuring the 

validity of interest rate risk monitoring system outputs and that policy limits on interest rate risk 

are reasonable and supportable. 

The OCC continues to encourage lenders to work with creditworthy borrowers who may be 

facing financial difficulties. The OCC continues to be actively involved in the residential 

foreclosure oversight process to ensure that all foreclosures are handled consistent with 

regulatory requirements. While assessing credit quality, adequacy of loan loss reserves, interest 

rate risk and capital adequacy, risk management practices have been and continue to be areas of 

focus. Operational risk issues – the risk of loss due to failures of people, processes, systems, and 

external events – have become an area of heightened risk and supervisory attention. Strong 

enterprise risk management processes have been and will continue to be a point of emphasis, 

particularly at larger institutions. In addition, the OCC continues to assess and address 

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supervisory issues in the areas of fair lending, consumer protection, BSA/AML, and information 

security. 

In addition to its ongoing supervisory activities, the OCC undertook the following initiatives in 

FY 2013: 

•	 Independent Foreclosure Review: On April 13, 2011, the OCC announced formal 

enforcement actions against eight servicers and two third-party servicers for unsafe and 

unsound practices related to residential mortgage loan servicing and foreclosure processing. 

The enforcement actions, among other things, required the servicers to make significant 

improvements in practices for residential mortgage loan servicing and foreclosure 

processing. 

In January 2013, the OCC and the Federal Reserve announced a $9.3 billion agreement with 

13 mortgage servicers to pay 4.2 million eligible borrowers more than $3.6 billion, and 

provide $5.7 billion in additional foreclosure prevention assistance over the next two years. 

Compensation to borrowers commenced in April 2013 and is expected to conclude in the 

third quarter of 2013. The Independent Foreclosure Review process continues for two OCCsupervised servicers. These reviews are expected to be completed over the remainder of 

calendar year 2013. The OCC also continues to work with other federal regulators to 

develop a set of comprehensive and robust mortgage servicing standards that would apply to 

all servicers. 

•	 Enhancing OCC’s Supervision of BSA/AML: Ensuring that national banks and federal 

savings associations have effective BSA/AML programs in place is critical to safeguarding 

our financial systems from money launderers and terrorists. In July 2012, the OCC 

announced actions to strengthen and improve the effectiveness of supervisory activities in 

this critical area. These actions included: 1) Fully incorporating BSA/AML findings in a 

safety and soundness context as part of the “management” component of a bank’s Capital 

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

(CAMELS) rating. Examiners will presume that serious deficiencies in a bank’s BSA/AML 

compliance area adversely affect a bank’s management component rating; 2) Strengthening the 

OCC’s internal Large Bank BSA Review Team; and 3) Providing more flexibility for citing 

BSA/AML violations; and 4) Taking steps to help ensure our examinations obtain a holistic view 

of a bank’s BSA/AML compliance more promptly. 

•	 Guidance on Servicemember Relief Act Protection: In June 2012, the agencies issued 

guidance to address mortgage servicer practices that pose risks to homeowners who are 

serving in the military and to ensure compliance with applicable consumer laws and 

regulations. 

•	 Strengthening Capital and Liquidity Resiliency: Robust capital and liquidity buffers are 

essential to a strong banking system. During FY 2012, the OCC took several actions to 

strengthen capital and liquidity standards. In June 2012, the OCC issued guidance on capital 

planning that sets forth the OCC’s expectations for a robust capital planning process and 

factors that OCC examiners will consider when evaluating a bank’s capital planning process 

and overall capital adequacy. That same month, the OCC, Federal Reserve Board (FRB), 

and Federal Deposit Insurance Corporation (FDIC) issued three notices of proposed 

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rulemakings that would implement the enhanced capital standards set forth in Basel III and 

the Dodd-Frank Act and issued a final market risk capital rule to better capture the risks 

inherent in trading positions. In July 2013, the OCC and FRB issued a final rule 

implementing the enhanced capital standards in Basel III, and along with the FDIC, which 

issued a companion interim final rule, issued a notice of proposed rulemaking for a 

supplementary leverage ratio that would apply to apply to U.S. top-tier bank holding 

companies that were designated as global systemically important (U.S. G-SIB) by the 

Financial Stability Oversight Council on November 1, 2012, and an insured depository 

institution subsidiary that is controlled by one or more of these bank holding companies. 

•	 Strengthening Credit Quality and Credit Risk Management: The OCC took a number of 

steps in FY 2012 and FY 2013 to help ensure banks maintain strong underwriting discipline 

and strong credit risk management practices. These activities included the following: 

Guidance on Reserve Estimation Practices for Junior Liens- In January 2012, the OCC, FRB, 

and FDIC issued guidance on reserve estimation practices for junior liens on 1-4 family 

residential properties. This guidance reiterates key concepts included in generally accepted 

accounting principles (GAAP), expected risk management practices, and segmentation 

expectations pertaining to junior lien loans. 

Interagency Guidance on Leveraged Lending- In March 2013, the OCC, FRB, and FDIC 

issued guidelines for leveraged lending activities. The guidance outlines the expected risk 

management framework for those institutions that are actively engaged in leveraged lending 

activities. 

Interim Final Rule on Lending Limits- Pursuant to section 610 of Dodd-Frank, in January 

2013 the OCC issued an interim final rule amending its lending limit rule to apply to certain 

credit exposures arising from derivative transactions and securities financing transactions. 

•	 Guidance on Stress Testing Practices: In October 2012, the OCC issued a final rule that 

implements section 165(i) of Dodd-Frank that requires certain companies to conduct annual 

stress tests. Specifically, this rule requires national banks and federal savings associations 

with total consolidated assets over $10 billion (covered institutions) to conduct an annual 

stress test as prescribed by the rule. In March 2013, the OCC issued proposed guidance 

summarizing the types of reporting expected under the final rule. 

•	 Guidance on Deposit Advance Products: In April 2013, the OCC proposed guidance on the 

use of deposit advance products. A deposit advance product is a small-dollar, short-term 

loan that a bank makes available to a customer whose deposit account reflects recurring 

direct deposits. The proposed guidance addresses how any bank offering these products may 

do so in a safe and sound manner without engaging in practices that would inappropriately 

increase credit, compliance, legal, and reputation risks to the institution. 

•	 Advisory Committees on Minority Institutions and Mutual Associations: In FY 2013, the 

OCC established advisory committees to provide perspectives to the agency on the unique 

challenges and needs of minority depository institutions and mutual savings associations. 

The OCC Minority Depository Institutions Advisory Committee and the OCC Mutual 

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Savings Association Advisory Committee each have 10 members serving two-year terms and 

meet at least twice per year. 

•	 The OCC National Risk Committee’s Semi-Annual Risk Perspectives: To provide a more 

robust dialogue with bankers and others about risks facing the banking industry, the OCC 

launched a semi-annual report that highlights the OCC’s perspectives on key issues and risks 

that pose threats to the safety and soundness of banks. The report draws upon the findings of 

the OCC’s supervisory activities and analyses of the banking industry. 

Enforcement Activities 

As needed, the OCC uses its enforcement authority to ensure that national banks and federal 

savings associations operate in a safe and sound manner and in compliance with laws and 

regulations. This authority comes in the form of formal and informal enforcement actions. 

Significant enforcement activities include, among others: 

•	 A civil money penalty assessment of $500 million against a national bank for violation of 

the Bank Secrecy Act (BSA) and its underlying regulations, and the bank's failure to fully 

comply with a previously issued cease and desist order addressing these violations. The 

OCC also issued a separate cease and desist order to address deficiencies in the bank's 

enterprise-wide compliance program, and entered into an agreement with the bank pursuant 

to the requirements of the Gramm-Leach-Bliley Act (GLBA). 

•	 Another national bank was subject to cease and desist orders, by consent, for critical 

deficiencies in its BSA compliance program, while a civil money penalty of $10 million was 

issued against a third bank for late filing of Suspicious Activity Reports (SARS). 

•	 A civil money penalty assessment of $5 million against a national bank for violation of 

section 5 of the Federal Trade Commission (FTC) Act, and a $2.5 million restitution ordered 

for 2.7 million affected consumers who were enrolled in overdraft protection programs or a 

check rewards program, or who requested stop payments of preauthorized recurring 

electronic payments. The OCC order also required the bank to stop the sales and marketing 

of any debt suspension product, debt cancellation product, credit and identity monitoring 

products, or any similar products. 

•	 A civil money penalty assessment of $20 million and restitution order of more than $14.5 

million against a national bank for the involvement of the bank’s predecessor institutions in 

a bid rigging scheme involving transactions to market and sell derivative financial products 

to municipalities and nonprofit organizations. The OCC found that the bank’s internal 

controls failed to identify and prevent certain credit derivatives trading conducted by the 

Chief Investment Officer that resulted in substantial loss to the bank, which has exceeded $6 

billion. The OCC's action was part of a global resolution coordinated with the U.S. 

Department of Justice, U.S. Internal Revenue Service, U.S. Securities and Exchange 

Commission, FRB, and over 20 State Attorneys General. 

•	 Enforcement actions against national banks for violations and compliance deficiencies
 

related to the Servicemembers Civil Relief Act, ensuring protections such as limitations on 

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foreclosures and interest rates, requirements to forgive interest in excess of six percent on 

pre-service debts, and allowances to terminate automobile leases under certain 

circumstances. 

•	 A $500,000 civil money penalty against a federal savings association for violations of 

section 5 of the FTC Act, and order the bank to provide approximately $6 million in 

restitution to an estimated 17,000 affected customers, based on failure to properly manage 

vendors who engaged in deceptive debt collection practices. The OCC’s actions were taken 

in coordination with separate actions by the FRB, the Consumer Financial Protection 

Bureau, and the FDIC against affiliated companies under their jurisdiction. 

Regulatory Activities 

The OCC’s strategic objectives emphasize regulatory oversight practices that support national 

banks’ and federal savings associations’ ability to compete while maintaining safety and 

soundness. The OCC will continue its legal work of analysis and interpretation of national bank 

and federal savings association powers and authorities during the remainder of FY 2013. 

The OCC devoted a significant amount of resources in FY 2013 to regulatory activities relating 

to implementation of the Dodd-Frank Act, Basel III, and participating on the Financial Stability 

Oversight Council. The agency issued final rules on large bank stress tests and appraisals for 

higher-priced mortgage loans. 

Charter Activities 

The OCC processed 1,716 corporate applications through June 30, 2013, of which 97 percent 

were completed within required timeframes. In order to address potential safety and soundness 

problems before they arise, the OCC may impose conditions upon bank transaction approvals 

covering, for example, capital and liquidity arrangements and deviations from business plans. 

The OCC continues to receive and process a significant share of applications involving 

resolution of problem financial institutions. 

FY 2014 and 2015 Priorities 

A major focus of the OCC’s supervisory, regulatory, and administrative programs for FY 2014 

and for FY 2015 will be implementing applicable provisions of the Dodd-Frank Act and the 

enhanced capital framework under Basel III. Work will also continue to fully integrate the 

applicable regulatory, supervisory policy and examination platforms for national banks and 

federal savings associations and to ensure that these institutions comply with applicable new 

statutory and regulatory requirements. Priorities and activities include the following: 

•	 Conduct examinations based on the risk profile of individual national banks and federal 

savings associations to ensure they are safe and sound, sufficiently capitalized, and comply 

with consumer protection laws and regulations; 

•	 Assess the adequacy of national banks and federal savings associations credit, liquidity, 

internal controls, compliance, and corporate governance processes and require corrective 

action when deficiencies or undue risk concentrations are found; 

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•	 Monitor and assess the effectiveness of national bank and federal savings association 

mortgage servicers’ loan modification and foreclosure actions, including needed actions to 

improve the corporate governance of their processes; 

•	 Resolve problem national banks and federal savings associations situations effectively by 

identifying problems at the earliest possible stage, clearly communicating concerns and 

expectations to bank management through appropriate enforcement actions, and ensuring 

timely follow-up on needed corrective actions; 

•	 Determine whether national banks and federal savings associations have required risk 

management, internal controls, operational processes and capital to support planned new or 

expanded lines of business; 

•	 Determine whether national banks and federal savings associations establish and maintain 

incentive compensation policies that are consistent with principles of safety and soundness 

and do not encourage imprudent risk-taking; 

•	 Work with other domestic and international supervisors to implement stronger capital and 

liquidity requirements and more robust risk management standards for large financial 

institutions; 

•	 Enhance the OCC’s ability to anticipate, identify, and respond to build-ups in risk and 

emerging issues through improved supervisory analytical tools, stress testing, and market 

intelligence capabilities; 

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

national banks’ and federal savings associations’ compliance with the BSA/AML, and USA 

PATRIOT Act laws and regulations; 

•	 Continue to work with Treasury and other federal financial regulators to implement 

provisions of the Dodd-Frank Act and the enhanced capital and liquidity standards under 

Basel III; 

•	 Continue to support a competitive national banking and federal savings association system 

through entry of new charters, other bank and federal savings association structure 

transactions, and expansion of national bank and federal savings association services and 

products in a safe and sound manner; and 

•	 Maintain a highly skilled and experienced workforce by continuing efforts to identify and 

develop the next generation of bank supervision leadership, strengthen the breadth and depth 

of examiner specialty skills, and recruit and retain entry-level examiners. 

Industry Outlook 

The environment continues to be challenging for the OCC and the national banking and federal 

savings association industry (“federal banking system”). Economic conditions are expected to 

improve in FY 2014. Yet despite progress in the housing sector to date, legacy credit issues will 

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likely tax the resources of many national banks and federal savings associations. The historically 

low interest rate environment is also constraining earnings, with many institutions experiencing 

margin compression. Concerns over sovereign debt in Europe, and uncertainty over the U.S. 

fiscal situation may amplify risk in the system. 

The federal banking system faces heightened compliance, operational, reputation, and strategic 

risks because of significant changes in laws, regulations, and accounting standards. National 

banks and federal savings associations will need to adapt their operations to accommodate those 

changes, which could lead to fundamental shifts in many institutions’ business models and 

strategic plans. National banks and federal savings associations also face risks from the eventual 

normalization of interest rates. To address these challenges, the OCC will need to conduct 

ongoing assessments of emerging risks and the underlying condition of the federal banking 

system, and to prioritize and allocate resources to the areas and institutions of highest risk. 

The federal banking system has weathered several years of disruption to financial markets, a 

crisis in the mortgage sector, and a slow recovery from a long and deep recession. If system 

assets continue to grow at the rate of nominal gross domestic product (GDP), and if GDP growth 

returns to its historical average over the next five years, assets would grow in the way shown in 

the following table. The long-term trend of consolidation in the federal banking system is likely 

to continue; the table below shows estimates of the change in number of institutions and share of 

assets held by banks with over $10 billion in assets, extrapolating from trends experienced 

between 2000 and 2012. The extrapolations exclude trust companies and foreign branch offices 

because, compared to national banks and federal savings associations, their growth is less closely 

linked to underlying domestic economic trends. 

Number of 

Institutions Assets 

Share of Total 

System Assets In 

Institutions With 

Assets > $10 billion 

Estimated Change 

2011 to 2017 

OCC 

National 

Banks 

-23% 

OCC 

Federal 

Savings 

Associations 

-19% 

All OCC-Supervised 

28% 

2011 

2017e 

91.7% 

94.8% 

e = estimated 

Loan demand has been growing more slowly than is usual at this point of an economic recovery, 

in part because the economy as a whole has been growing more slowly than is usual after a 

severe recession. The combination of recession and financial crisis caused households to 

deleverage, cutting into the demand for consumer and residential mortgage loans. But 

commercial lending is now growing again, and total outstanding commercial and industrial loans 

are nearly back to their previous peak. In addition, many firms have accumulated cash reserves, 

and even medium-size firms can now borrow long-term at low rates in bond markets. 

Credit loss rates for the system rose sharply for all major loan categories during the financial 

crisis and recession, but are now back to their two-decade averages, except for residential 

mortgages. To strengthen their positions in the aftermath of the crisis, many banks raised 

additional capital. The result is a banking system that is strengthening as it continues to rebound 

from the financial crisis. 

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Dollars in Thousands 

Office of the Comptroller of the Currency FY 2013 FY 2014 FY 2015 

Object Classification Actual Estimated Estimated 

11.1 - Full-time permanent 480,915 486,907 522,825 

11.3 - Other than full-time permanent 8,350 10,619 11,307 

11.5 - Other personnel compensation 3,325 2,780 2,960 

11.9 - Personnel Compensation (Total) 492,590 500,306 537,092 

12.0 - Personnel benefits 198,385 203,234 233,796 

13.0 - Benefits for former personnel 186 199 212 

Total Personnel and Compensation Benefits $691,161 $703,739 $771,100 

21.0 - Travel and transportation of persons 56,377 61,750 64,218 

22.0 - Transportation of things 3,786 2,976 3,082 

23.1 - Rental payments to GSA 1,458 2,161 65 

23.2 - Rental payments to others 69,964 66,213 58,478 

23.3 - Communication, utilities, and misc charges 10,210 14,047 14,957 

24.0 - Printing and reproduction 429 912 790 

25.1 - Advisory and assistance services 13,105 36,242 38,589 

25.2 - Other services 20,547 24,033 25,090 

25.3 - Other purchases of goods & serv frm Govt accounts 12,652 12,068 12,599 

25.4 - Operation and maintenance of facilities 6,430 8,809 9,129 

25.7 - Operation and maintenance of equip 56,364 66,793 68,293 

26.0 - Supplies and materials 4,516 7,599 8,060 

31.0 - Equipment 31,389 23,535 24,363 

32.0 - Land and structures 37,005 12,338 13,137 

42.0 - Insurance claims and indemnities 818 235 250 

Total Non-Personnel 325,050 339,711 341,100 

Total Budgetary Resources $1,016,211 $1,043,450 $1,112,200 

Budget Activities: 

Supervise 873,942 903,770 949,219 

Regulate 111,783 115,998 121,412 

Charter 30,486 31,527 33,112 

Total Budgetary Resources $1,016,211 $1,050,895 $1,103,743 

FTE 3,822 3,954 3,998 

 

Section 2 – Budget Adjustments and Appropriation Language 

2.2 – Operating Levels Table 

2B – Appropriations Language and Explanation of Changes 

The OCC receives no appropriations from Congress. 

2C – Legislative Proposals 

The OCC has no legislative proposals. 

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Section 3 – Budget and Performance Plan 

3A – Supervise 

($903,770,000 from reimbursable resources): 

An effective supervision program is the cornerstone of the OCC’s activities that support its 

strategic goals. Specifically, the Supervise program consists of ongoing supervision and 

enforcement activities that directly support the OCC’s strategic goals to 1) ensure that each 

national bank and federal savings association is operating in a safe and sound manner and is 

complying with applicable laws, rules, and regulations relative to the financial institution and the 

customers and communities it serves, and 2) provide fair access to financial services and fair 

treatment of customers. Assessing the condition and risk management practices of national 

banks and federal savings associations, and requiring corrective actions when weaknesses are 

found, directly supports Treasury’s goal of repairing and reforming the financial system. 

The OCC’s Supervision Program specifically supports the following Treasury Objectives: 

1.3: Complete implementation of financial regulatory reform initiatives and continue monitoring 

the markets for threats to stability; 

1.4: Facilitate commerce by providing trusted U.S. currency, services, and products for the 

American public and enterprises; 

4.3: Improve the cybersecurity of our Nation’s financial sector critical infrastructure; and 

4.4: Protect the integrity of the financial system by implementing, promoting, and enforcing 

anti-money laundering and counterterrorism financing standards. 

The OCC charters, regulates and supervises all national banks and federal savings associations, 

as well as supervises federal branches and agencies of foreign banks. The primary goal of the 

OCC’s Supervision Program is to ensure that these institutions operate in a safe and sound 

manner and in compliance with laws requiring fair treatment of their customers and fair access to 

credit and financial products. The OCC’s Supervision Program supports the implementation of 

the financial regulatory reform initiatives including those in the Dodd-Frank Wall Street Reform 

and Consumer Protection Act as well as other regulatory initiatives designed to strengthen the 

nation’s federal banking system. The OCC also monitors risks and threats to the stability of the 

federal banking system through its regular examinations of the institutions it supervises and other 

monitoring programs such as its Semi-annual Risk Perspectives Report, participation in the 

Shared National Credit Program, and its Credit Underwriting Survey. 

The overall objective of the OCC’s Supervision Program supports facilitating commerce through 

the goal of ensuring the safety and soundness of the federal banking system. Through its 

Supervision Program the OCC has taken a number of steps to improve the cybersecurity of the 

nation’s financial sector critical infrastructure including organizing a Web conference, “The 

Evolving Cyber Landscape: Awareness, Preparedness, and Strategy for Community Banks,” for 

more than 1,000 community bankers and holding a series of confidential briefings for banks, 

third-party service providers and bank examiners. The agency also created and filled a new 

position, Senior Infrastructure Officer whose focus is cybersecurity policy for the federal 

banking system. Actions taken to improve the cybersecurity of the federal banking system 

include the issuance of an alert on denial-of-service attacks, and reviews of examiner handbooks, 

procedures, and training materials to ensure that, as threats evolve, all national banks and federal 

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savings associations can identify cyber risks and strengthen their risk management and control 

systems. In addition, the OCC became a member of the Financial Services Information Sharing 

and Analysis Center in 2013. Membership gives the OCC greater real-time insight into a broad 

range of potential threats to the industry and the ability to assist, when appropriate, in a 

coordinated response with other government agencies. Finally, the OCC supports protecting the 

integrity of the financial system through its examinations of compliance with BSA/AML and 

through the initiation of enforcement actions for non-compliance with BSA/AML laws and 

regulations. 

The goal owner for this budget activity is the Comptroller of the Currency, Thomas J. Curry. 

Description of Performance: 

Percentage of National Banks and Federal Savings Associations with Composite CAMELS 

Rating of 1 or 2 

The composite CAMELS rating reflects the overall condition of a national bank or federal 

savings association. Bank regulatory agencies use the Uniform Financial Institutions Rating 

System, CAMELS, to provide a general framework for evaluating all significant financial, 

operational, and compliance factors inherent in a national bank or federal savings association. 

The rating scale is 1 through 5 of which 1 is the highest rating granted. These CAMELS ratings 

are assigned at the completion of every supervisory cycle or when there is a significant event 

leading to a change in CAMELS. 

The OCC has established a target outcome measure that 90 percent of the institutions under its 

supervision have a composite CAMELS rating of 1 or 2. Such a rating is consistent with the 

strategic goal of a safe and sound banking system, that banks maintain adequate capital and 

liquidity and have strong risk management practices. As of June 30, 2013, 79 percent of national 

banks and federal savings associations earned composite CAMELS ratings of either 1 or 2. The 

increase in the number of national banks with less favorable composite CAMELS ratings is not 

unexpected at this stage of the credit cycle and reflects impaired asset quality and earnings that is 

affecting many institutions. Degradation in CAMELS also can reflect weaknesses in risk 

management systems that need corrective action. Consistent with Treasury’s goal of repairing 

and reforming the financial system and supporting the recovery of the housing market, the OCC 

has instructed bank examiners to identify and seek corrective action at an earlier stage to address 

potential problems or weaknesses. The OCC’s primary focus is to ensure that CAMELS ratings 

are an accurate reflection of each institution's current financial position, and thus the OCC would 

not take action to prematurely restore a favorable CAMELS rating even though the current 

distribution of ratings is below the target. As national bank or federal savings association 

performance and asset quality improves and directed corrective actions are implemented, the 

OCC expects CAMELS ratings to gradually improve. 

Percentage of National Banks and Federal Savings Associations that are Considered WellCapitalized 

The Federal Deposit Insurance Act established a system that classifies insured depository 

institutions into five categories (well capitalized, adequately capitalized, undercapitalized, 

significantly undercapitalized, and critically undercapitalized) based on their capital levels 

relative to their risks. The OCC has established a target outcome measure that 95 percent of 

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national banks and federal savings associations will meet or exceed the well-capitalized 

threshold. 

The economic environment and resulting increase in problem assets placed a strain on some 

banks’ capital buffers that has resulted in levels below the OCCs’ target performance measure. 

The OCC works closely with problem national banks and federal savings associations to develop 

rehabilitation plans. Such plans typically include directives to improve or restore capital levels. 

These efforts, combined with a more stable operating environment, have resulted in 

improvement in this performance goal since FY 2009. As of June 30, 2013, 93 percent of 

national banks and federal savings associations were classified as well-capitalized. 

More broadly, the OCC is working with other regulators both domestically and internationally to 

strengthen capital standards. In June 2012, the OCC, FDIC, and FRB issued a final rule that 

revises and strengthens the agencies’ risk-based capital rules for market risk and issued notices 

of proposed rulemakings to revise and strengthen the agencies’ general risk-based capital 

requirements. 

Percentage of National Banks and Federal Savings Associations with Consumer Compliance 

Rating of 1 or 2 

To ensure fair access to financial services and fair treatment of national bank and federal savings 

association customers, the OCC evaluates an institution’s compliance with consumer laws and 

regulations. Bank regulatory agencies use the Uniform Financial Institutions Rating System, 

Interagency Consumer Compliance Rating, to provide a general framework for evaluating 

significant consumer compliance factors inherent in an institution. Each institution is assigned a 

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

protection and civil rights statutes and regulations, and the adequacy of its operating systems 

designed to ensure continuing compliance. Ratings are on a scale of 1 through 5 of which 1 is 

the highest rating granted. The target for FY 2014 and FY 2015 will currently remain unchanged 

at 94 percent. As of June 30, 2013, national banks and federal savings associations continue to 

show strong compliance with consumer protection regulations with 94 percent earning a 

consumer compliance rating of either 1 or 2. Under the Dodd-Frank Act, the OCC has 

enforcement and supervisory authority for those institutions with total assets of no more than $10 

billion. 

Rehabilitated National Banks and Federal Savings Associations as a Percentage of Problem 

National Banks and Federal Savings Associations One Year Ago 

Problem national banks and federal savings associations ultimately can reach a point at which 

rehabilitation is no longer feasible. The OCC’s early identification and intervention with 

problem financial institutions can lead to a successful rehabilitation. As of June 30, 2013, 

30 percent of national banks and federal savings associations with composite CAMELS ratings 

of 3, 4, or 5 one year ago have improved their ratings to either 1 or 2 this year. As with the other 

measures, the OCC’s performance on this measure has been adversely affected by the underlying 

economic conditions facing the banking industry and is below the OCC’s target of 40 percent. 

The number of serious problem financial institutions, where successful resolution is more 

difficult, has increased. In addition, the sharp contraction in certain segments of the economy, 

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including the real estate sector, has resulted in a more rapid deterioration in some institutions' 

financial condition. 

As previously noted, the OCC is taking a number of steps through its Supervise and Regulate 

programs to repair and make national banks and federal savings associations more resilient to 

financial stresses and to identify and obtain corrective action at an earlier stage, when problems 

can be addressed most successfully. These efforts include heightened capital and liquidity 

standards and increased emphasis on the need for stress testing, designed to provide financial 

institutions with stronger capital buffers to withstand unforeseen events. These are multi-year 

efforts that will continue in FY 2013 and beyond. The OCC also updated its guidance on credit 

concentrations and provided an additional tool for examiners, national banks, and federal savings 

associations to stress test an institution’s income producing commercial real estate portfolios. 

Such concentrations were a major contributing factor to many, if not most of the recent problem 

financial institutions reflected in this measure. As these efforts progress and the operating 

condition for the financial sector improves, this performance measure is likely to improve to the 

current baseline target level of 40 percent for FY 2013 and FY 2014. 

Total OCC Costs Relative to Every $100,000 in National Bank and Federal Savings Association 

Assets Regulated 

Beginning in FY 2006, the OCC implemented a performance measure that reflects the efficiency 

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

complex national banking system. 

The OCC costs are those reported as total program costs on the annual audited Statement of Net 

Cost. National bank and federal savings association assets are those reported quarterly by 

national banks and federal savings associations on the Reports of Condition and Income. Total 

national bank and federal savings association assets represent the growth and complexity of the 

financial institutions under the jurisdiction of the OCC. This measure supports the OCC’s 

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

ensuring the safety and soundness of national banks and federal savings associations benefits all 

national bank and federal savings association customers. The FY 2013 target is $9.22 with the 

actual result being reported at year-end. The OCC will continue its efforts to ensure that 

resources are used prudently and that programs are carried out in a cost effective manner. 

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Measure 

3.1.1 – Supervise Budget and Performance Plan 

Dollars in Thousands 

Supervise Budget Activity 

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 

Actual Actual Actual Actual Actual Actual Estimated Estimated 

Expenses/Obligations $565,921 $597,859 $618,254 $684,273 $924,417 $873,942 $903,770 $949,219 

Budget Activity Total $565,921 $597,859 $618,254 $684,273 $924,417 $873,942 $903,770 $949,219 

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 

Actual Actual Actual Actual Actual Actual Target Target 

Percent of National Banks and 

Federal Savings Associations 

with Composite CAMELS 

Rating 1 or 2 

N/A N/A N/A N/A 76.0 80.0 90.0 90.0 

Percentage of National Banks 

and Federal Savings 

Associations That Are 

Categorized As Well 

Capitalized 

N/A N/A N/A N/A 92.0 94.0 95.0 95.0 

Percentage of National Banks 

and Federal Savings 

Associations With Consumer 

Compliance Rating of 1 or 2 

N/A N/A N/A N/A 93.0 94.0 94.0 94.0 

Rehabilitated National Banks 

And Federal Savings 

Associations As A Percentage 

Of Problem National Banks 

One Year Ago (CAMEL 3,4, or 

5) 

47.0 29.0 23.0 22.0 27.0 34.0 40.0 40.0 

Total OCC Costs Relative To 

Every $100,000 in Bank And 

Federal Savings Associations 

Assets Regulated ($) 

N/A N/A N/A N/A 10.51 9.99 10.22 9.22 

Key: DISC - Discontinued and B - Baseline 

3B – Regulate 

($115,598,000 from reimbursable resources): 

The Regulate program supports the OCC’s strategic goals of 1) assuring the safety and 

soundness of institutions subject to its jurisdiction; 2) fair access to financial services and fair 

treatment of national bank and federal savings association customers; and 3) a flexible legal and 

regulatory framework. Specifically, the Regulate program consists of ongoing activities that 

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

general applicability to national banks and federal savings associations. These regulations, 

policies, and interpretations may establish system-wide standards, define acceptable national 

banking and federal savings association practices, provide guidance on risks and responsibilities 

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Dollars in Thousands 

Regulate Budget Activity 

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 

Actual Actual Actual Actual Actual Actual Estimated Estimated 

Expenses/Obligations $87,683 $94,511 $97,735 $108,171 $125,416 $111,783 $115,998 $121,412 

Budget Activity Total $87,683 $94,511 $97,735 $108,171 $125,416 $111,783 $115,998 $121,412 

facing national banks and federal savings associations, or prohibit (or restrict) national banking 

or federal savings association practices deemed to be imprudent or unsafe. They also establish 

standards for ensuring fair access to financial services and fair treatment of national bank and 

federal savings association customers. This program includes establishing of examination 

policies and handbooks; interpreting administrative, judicial, and congressional proceedings; and 

establishing the applicable legal and supervisory framework for new financial services and 

products. 

Description of Performance: 

Specific activities undertaken in FY 2013 as part of this program were described earlier and 

included the issuance of various supervisory guidance on the Volcker rule and lending limits. 

Significant resources also were spent on various Dodd-Frank rulemakings, including those 

pursuant to section 171(b) regarding minimum risk-based capital requirements; section 742(c)(2) 

related to certain off-exchange foreign currency transactions with retail customers; section 939A 

pertaining to removing the reliance on credit ratings; section 956 pertaining to incentive-based 

compensation arrangements; section 941 pertaining to risk retention requirements and associated 

minimum underwriting standards for asset securitizations; and sections 731 and 764 related to 

capital requirements and margin requirements on certain swap transactions. In FY 2013, the 

OCC will continue to support operations of the Financial Stability Oversight Council and issue 

Dodd-Frank rulemakings, as well as complete the comprehensive integration of OTS rules into 

the OCC regulatory structure. 

The goal owner for this budget activity is the Comptroller of the Currency, Thomas J. Curry. 

3.1.2 – Regulate Budget and Performance Plan 

3B – Charter 

($31,527,000 from reimbursable resources): 

The Charter program consists of ongoing activities that result in the chartering of national banks 

and federal savings associations and the evaluation of the permissibility of structures and 

activities of national banks and federal savings associations and their subsidiaries. This includes 

the review and approval of new national bank and federal savings association charters, federal 

branches and agencies, mergers, acquisitions, conversions, business combinations, corporate 

reorganizations, changes in control, operating subsidiaries, branches, relocations, and 

subordinated debt issuances. By supporting the entry of new products and institutions into the 

financial system in a manner consistent with safety and soundness, the Charter program supports 

the OCC’s strategic goals of assuring safety and soundness while allowing national banks and 

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Dollars in Thousands 

Charter Budget Activity 

Resource Level FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 

Actual Actual Actual Actual Actual Actual Estimated Estimated 

Expenses/Obligations $20,112 $23,628 $24,434 $27,043 $27,338 $30,486 $31,527 $33,112 

Budget Activity Total $20,112 $23,628 $24,434 $27,043 $27,338 $30,486 $31,527 $33,112 

Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 

Actual Actual Actual Actual Actual Actual Target Target 

Percentage of Licensing 95.0 95.0 96.0 97.0 98.0 97.0 95.0 95.0 

Applications and Notices 

Completed within Established 

Timeframes 

Key: DISC - Discontinued and B - Baseline 

federal savings associations to offer a full competitive array of financial services. The target of
 

95 percent remains for FY 2013 and FY 2014. 

The goal owner for this budget activity is the Comptroller of the Currency, Thomas J. Curry.
 

Description of Performance:
 

Percentage of Licensing Applications and Notices Completed within Established Time Frames
 

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

economy by enabling national banks and federal savings associations to complete various 

corporate transactions and introduce new financial products and services. Delays in providing 

prompt decisions on applications and notices can deprive a national bank or federal savings 

association of a competitive or business opportunity, create business uncertainties, or diminish 

financial results. Time frames have been established for completing each type of application and 

notice. As of June 30, 2013, the OCC completed 97 percent of national bank and federal savings 

association applications and notices within the required time frame, above the target of 95 

percent. The OCC will continue to meet its Charter program goals by providing staff training, 

coordination between charter and supervisory staff on safety and soundness and compliance 

matters, issuance of updated procedures, and maintaining an emphasis on accessibility and early 

consultation with national bank and federal savings association organizers and others proposing 

national bank and federal savings association structure changes. 

3.1.2 – Charter Budget and Performance Plan 

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Section 4 – Supplemental Information 

4A – Summary of Capital Investments 

The OCC’s Information Technology (IT) strategic plan aligns information technology initiatives 

and investments to the OCC’s core mission, including the development of new or enhanced 

applications and services and the disposition of redundant or “end-of-lifecycle” applications, 

capabilities, and services. 

The IT strategic plan is implemented through the budget formulation and the Capital Planning 

and Investment Control processes. These processes ensure that all IT investments are aligned 

with the OCC’s mission, goals, objectives, and target enterprise architecture before a project is 

funded. The capital planning process reviews and prioritizes detailed business cases to promote 

technology reuse, to capitalize on enterprise opportunities, and to reduce redundant and obsolete 

capabilities and services. Invest, evaluate, and control ensures that the OCC IT strategy has 

adequate funding and staff resources to address IT investment priorities, and considers risk 

mitigation strategies for IT investments that are not meeting stated cost, time, and performance 

goals. Performance metrics are linked to the delivery, alignment, and achievement of the OCC’s 

strategic program objectives. Cost effectiveness for each investment is evaluated through regular 

benchmarking studies, featuring peer group organizations. Key metrics used to evaluate 

infrastructure include availability, reliability, utilization, defects, and customer satisfaction. 

FY 2014 and 2015 Plans The OCC has three major IT initiatives in FY 2014 and 2015. 

Mainframes & Servers Support Services (MSSS) - The MSSS supports the OCC’s mainframe 

computer operations and maintenance (O&M). As part of this initiative, the OCC has 

consolidated and relocated data center infrastructure to a third-party co-location facility. 

Relocation of the data center provides the OCC with access to basic facilities and environmental 

services (floor space, power cooling, network and physical security) while supporting mandates 

for data center consolidation from Treasury and Office of Management and Budget. Our 

infrastructure staff continues to build out additional capacity at the co-location facility to support 

the server technology refresh and increases in enterprise storage capacity. 

Telecommunications Services and Support (TSS) - The TSS includes telecommunications wide 

area network and local area network infrastructure. Remote access to the OCC systems is 

facilitated via a virtual private network, dial-in, and cellular wireless access using two-factor 

authentication. This investment also includes messaging services supporting highly mobile bank 

examiners and the OCC staff. In FY 2014, the OCC will continue an on-going effort to upgrade 

the headquarters and field office phones systems and telecom infrastructure including Local Area 

Network/Wide Area Network hardware, Video Tele-Conferencing and Voice Over Internet 

Protocol. 

End User Services and Support (EUSS) - The EUSS includes help desk/customer service 

support, personal computer hardware and software O&M, asset management, and desktop 

engineering and image management. New computers and peripherals were deployed to the 

entire workforce in FY 2013. In FY 2014, the OCC will refresh hand-held devices. 

A summary of capital investment resources, including major information technology and nontechnology investments, can be viewed/downloaded at: http://www.treasury.gov/about/budgetperformance/Pages/summary-of-capital-investments.aspx 

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