The National Credit Union Administration (NCUA) issued its Letter to Credit Unions regarding it approval of a final rule updating the CAMEL rating system that goes into effect April 1, 2022.
The NCUA Board approved a final rule regarding the CAMEL rating system. The new rule adds the Sensitivity to Market Risk or the “S” component to the existing CAMEL rating system and redefines the Liquidity Risk or “L” component. The final rule implementing the new CAMELS rating system begins with examinations and supervision contracts started on or after April 1, 2022.
The new Sensitivity and Market Risk component rating involves exposure of a credit union’s current and prospective earnings in market prices and interest rates. The Liquidity Risk component rating reflects a credit union’s ability to monitor and manage liquidity risk. Overall, the new CAMELS rating system will not significantly impact the examination process or place additional burdens on credit unions. The criteria for the Capital adequacy, Asset quality, Management, and Earnings components, and the composite rating, have not changed.
For more detailed information regarding the examination updates refer to the links below containing the full NCUA letter to credit unions and the appendix showing the updated CAMELS rating system.
NCUA Letter to Credit Unions
Appendix of Updated CAMELS Rating System