National Bank Surveillance System

The National Bank Surveillance System (NBSS) is a computerized monitoring system developed and implemented in 1975 by the U.S. Office of the Comptroller of the Currency (OCC) to collect data and evaluate national banks' financial performance. It is an off-site surveillance system.

By identifying banks in financial trouble, the NBSS acts as an early warning system. Its quarterly Bank Performance Report compares each bank to a group of its peers to get an accurate picture of banks' performance.

The NBSS analyzes and predicts capitalization ratios, equity ratios and other quantifiable pieces of information in order to attempt to understand which banks are in danger of failure. Ideally, the NBSS will notify the OCC before a bank fails, so that it can take action to prevent the failure. The NBSS’s primary tool in this is the Bank Performance Report.

The NBSS was created based on early research into the causes of bank failure. In the 1980s, the NBSS was expanded in response to the newfound ease of analyzing Call Reports via computer. On-site bank examinations became more commonplace, and the number of bank examiners also grew. As the savings and loan crisis set in over the course of the 1980s, it became increasingly clear that off-site surveillance was not sufficient to accurately predict bank failure. Further research supported the benefit of on-site bank examinations, which provided a level of surveillance that couldn’t be matched by Call Reports. Studies in the 1980s and since have found that frequent on-site examinations make for more accurate Call Reports, as they allow bank examiners to scrutinize loans closely, and encourage banks to report loan losses in a more timely fashion.

Changes to the NBSS during the 1990s allowed regulators to more closely monitor banks in between periodic on-site examinations in order to determine whether an additional, unscheduled examination was warranted to surveil a particular bank. Newer failure models allow regulators to predict a bank’s probability of failure over the following two years. Eventually, the NBSS was transformed into the Uniform Bank Surveillance System (UBSS), and the Bank Performance Report became the Uniform Bank Performance Report.

The purpose of the OCC is, as its motto proclaims, "ensuring a safe and sound national banking system for all Americans." The OCC charters, regulates and supervises all U.S. national banks. Its supervisory functions include on-site reviews of national banks and oversight of bank operations.