Background
A community
bank appealed the ''noncompliance'' conclusion on the bank's level
of compliance on a particular article in the bank's formal
agreement. The article
stated: Within ninety days of signing the agreement, the Board is
required to establish a compliance program to cover all applicable
non-consumer laws and regulations. The program shall include a
policy and procedures manual, an audit review system, a mechanism
for corrective actions when violations occur and a system of
training to ensure clear communication of requirements. A copy of the program shall
be forwarded to this Office for review.
During the
next examination, the supervisory office categorized the bank's
level of compliance as ''noncompliance'' with the following
narrative explanation:
The timeframe
for accomplishment of this Article had not expired when we conducted
our review. During the
examination, management provided a written request for a short
extension of the ninety-day requirement to allow the Board to
approve the policy at their regular Board meeting. This request was approved
and the Board approved the program subsequent to our
examination. We will
review the program during the next quarterly review, and provide any
needed communication to the Board.
Discussion
The OCC has an
internal operating procedure that defines the options for assessing
compliance with enforcement actions. These include compliance,
partial compliance, or noncompliance, with the following
definitions:
Compliance:
The bank's action(s) to accomplish the primary objective of the
article/document are effective. Any additional actions which
are still necessary are technical in nature and are easily completed
in the normal course of business.
Partial
compliance: The bank has worked to achieve compliance. However, additional efforts
are necessary to fully meet the primary objective of the
article/document.
Noncompliance:
The bank's action(s) to comply with the provisions of the
article/document are unsatisfactory. Even though there may be
effort(s) on the part of the bank to achieve compliance, little or
no progress has been made toward meeting the primary objective of
the article/document.
The supervisory office concluded that the bank was in
''noncompliance'' because the time frame for action had not
expired. The internal
operating procedure details that the OCC must perform an initial
on-site assessment of the bank's compliance with a new enforcement
action within 60 days of the latest due date in the enforcement
action.
The procedures
do not address which of the three ratings are appropriate in a case
where the due date has not expired.
Conclusion
The ombudsman concluded that
if the time frame for compliance has not expired, the level of
compliance with an article should not be evaluated. Therefore, the conclusion on
the level of compliance on the article was changed to ''no action
required to date.'' The
field office forwarded the revised ROE pages to the bank to reflect
this change.
