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The #NCUA Board approved a rule that added the Sensitivity to Market Risk, or “S,” component to the existing CAMEL rating system and redefined the Liquidity Risk, or “L,” component.

Federally insured credit unions will receive #CAMELS component and composite ratings from the NCUA based on the new CAMELS rating system, beginning with examinations started on or after April 1, 2022.

The new Sensitivity to Market Risk component rating reflects the exposure of a credit union’s current and prospective earnings and economic capital arising from changes in market prices and interest rates.

The Liquidity Risk component rating reflects a credit union’s ability to monitor and manage liquidity risk and the adequacy of liquidity levels.

The criteria for the Capital adequacy, Asset quality, Management, and Earnings components, and the composite rating, have not changed.

According to NCUA adding “S” and modifying “L” reflect factors that examiners routinely consider in evaluating a credit union’s financial condition and risk profile.

NCUA staff will receive training on evaluating the “S” and “L” CAMELS component ratings and applying the CAMELS rating system.

The NCUA will make the same training available to staff of state regulators that elect to use the CAMELS rating system.

Also, the NCUA will conduct an industry training webinar THIS THURSDAY at 2PM Eastern to allow credit union stakeholders to understand the new “S” component and the updated “L” component of the CAMELS rating system.

NCUA's just Published Rating system and its Q&A on this topic, which was issued yesterday is included as attachments to this post.

camels-rating-system-appendix-a (1)
Download PDF • 269KB

camels-rating-system-appendix-b (1)
Download PDF • 161KB


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