TO:  Department and Division Heads, and all Examining Personnel


PURPOSE

This bulletin is for OCC internal use.  Examining Circular 263 (EC-263), issued December 14,
1992, established content, format, and update requirements for documenting information in the
Supervisory Monitoring System (SMS).  This supplement sets forth several enhancements to EC-263 designed to streamline and better organize SMS comments.  SMS areas affected are: the
Condition section of the Overall Summary Comment (OSC); the examination Analysis comment;
and the examination follow-up Analysis comment.  These changes are effective immediately.


BACKGROUND

Changes are being made to: 1) reduce the burden on examiners by eliminating duplicate
preparation of information for the report of examination (ROE) and SMS; 2) make SMS
information screens more uniform and consistent; and 3) reduce overall examination/report
preparation time.  These enhancements are part of ongoing efforts to improve OCC management
information systems.  They are made possible by the implementation of a uniform interagency
ROE and use of available software for uploading and downloading data from one application to
another.  EC-263 will continue to be the primary guidance for SMS documentation requirements.

Implementing the changes described in this bulletin will have a significant impact on OCC
efficiency.  A large number of examinations will be affected, especially those where a bank's
condition is substantially determined by a single, full-scope, onsite examination during a
supervisory cycle.  There are about 2,600 community banks with total assets of less than $1
billion that are not part of a larger multinational or regional company that fall into this segment. 
These banks represent 81 percent of the total number of national banks in the U.S.  


POLICY CHANGES

1) Examiners are no longer required to update OSC Condition comments for all banks.  The vast
majority of banks will not have an OSC Condition comment because the most recent full-scope,
onsite examination analysis serves as a summary of the condition of the bank.  However, there
may be situations where an OSC Condition comment is beneficial.  These situations are expected
to be limited to multinational, regional, or problem community banks where an OSC Condition
comment may be used to summarize multiple analyses conducted throughout the supervisory
cycle.

2) Examiners are to upload ROE Examination Conclusions comments directly to the SMS
Examination Analysis.  The Examination Analysis comment may be supplemented, where deemed
appropriate, to fulfill EC-263 minimum information requirements.

3) If there is a Matters Requiring Board Attention comment in the ROE, examiners will upload
that comment directly to the SMS Examination Follow-up Analysis.  The Examination Follow-up
Analysis comment will then be supplemented by adding a lead-in paragraph addressing
management's ability to resolve noted problems/issues and manage the current level of risk,
including the likely effects of inaction.

Questions or comments regarding the above can be directed to Robin S. Stefan or Bill Morris in
the Chief National Bank Examiner's Office, Examination Process, at 202/874-5190.





                                                                                          
Susan F. Krause                         Stephen R. Steinbrink
Senior Deputy Comptroller                    Senior Deputy Comptroller
Bank Supervision Policy                 Bank Supervision Operations