1. New York Bankers Association Trust & Investment Conference
OCC Asset Management Compliance Perspectives on Unique or Hard to Value Assets
New York Bankers Association Trust & Investment Conference
Cooperstown, New York
September 22, 2016

2. Disclosure
The views and opinions expressed in this presentation are my own, and do not necessarily represent those of the Office of the Comptroller of the Currency, Large Bank or Midsize/Community Bank Supervision, or of the Chief National Bank Examiner.
I will periodically refer to national bank and federal savings association regulations and guidance. Although I generally reference Regulation 9 citations, Regulations 9 and 150 apply to national banks and federal savings associations, respectively. These regulations are in most respects identical.

3. OCC’s Structure and Industry Data
OCC Supervision
OCC’s Structure and Industry Data

4. OCC – National Bank and Federal Savings Association AM Supervision
Asset Management Statistics
OCC – National Bank and Federal Savings Association AM Supervision
OCC regulates 1,032 national banks & 395 Federal savings associations.
They range from large complex banks with global footprints to local community banks.
Includes 56 limited purpose national trust banks and 18 trust only thrifts.
Approximately 41% of all national banks and 25% of federal savings associations have Asset Management (AM) activities, which include fiduciary and custody services as well as retail brokerage services.
Source: Call Report 6/30/2016

5. OCC Asset Management
Over 150 examiners with specialized Asset Management expertise perform ongoing supervision both on and off bank premises for Large Banks, Midsize/Community Banks and National Trust Banks.
AM Policy Group in D.C. works extensively with examiners on policy guidance for the industry, internal training, and addressing specific bank issues, including potential violations and MRAs.
AM Policy also works closely with OCC Legal, National Risk Committee and other internal and external groups on matters including Dodd Frank (Volcker Rule); FSOC issues (including identification of systemically important AM activities and risks); and interpretations of Regs 9 and 12.

6. Asset Management Statistics
National Banks & FSAs Combined Fiduciary
and Custody Assets are over $43 trillion.
Source: Call Report 6/30/2016

7. Asset Management: Unique and Hard to Value Assets

8. Common Unique & Hard to Value Assets
Overview
Common Unique & Hard to Value Assets
Real Estate
Business Entities
Life Insurance
Natural Resources – Oil & Gas
Loans & Notes / Intellectual Property
Other

9. Unique Asset Administration
Overview
Unique Asset Administration
Accommodation vs. Product
Risk Tolerance
Expertise to administer
Systems to administer
3rd party service providers

10. Real Estate Unique Assets Evidence of ownership
Maintenance and Condition
Productive
Inspections
Taxes & Insurance (liquidity)
Environmental issues
Valuations

11. Life Insurance Unique Assets Administration
Review and Assessment Responsibility

12. Unique Assets Business Entities Closely-Held Business Corporations
General Partnership/ Limited Partnership / Family Limited Partnership
Sole Proprietorships
LLC’s

13. Business Entities / Closely-Held Business
Unique Assets
Business Entities / Closely-Held Business
Financial statements
Proxies
Valuation
Management
Competence
Ability
Succession planning
Dividends
Board fees
Environmental protection

14. Oil and Gas Properties Unique Assets Title transfer
Environmental issues
Valuation
Principle and income accounting
Royalty
Working interest
Depletion allowance

15. Notes & Loans / Intellectual Property
Unique Assets
Notes & Loans / Intellectual Property
Documentation
Structure
Responsibilities
Valuation
Collateral

16. Other Unique Assets Unique Assets Collectibles Jewelry
“Perishable” Assets

17. Initial-Post Acceptance
Unique Assets
Reviews
Expectations for all managed assets but the first review also applies to non-managed unique assets…
Pre-acceptance
Initial-Post Acceptance
Annual Reviews

18. OCC Contact Information
Joel Miller
Director, Asset Management
Market Risk Division
William Pagliarulo, NBE
Asset Management