No Fooling: Change from CAMEL to CAMELS Goes into Effect April 1

 WASHINGTON—Changes to NCUA’s rating system—to CAMELS from CAMEL—start April 1.

Credit unions with examinations beginning on or after April 1 will fall under the new system.

The CAMELS system, which stands for Capital adequacy, Asset quality, Management, Earnings, Liquidity, and now, Sensitivity to market risk, was approved by the NCUA board in 2021.

CUNA reminded that under the CAMELS rating system:

• The “S” component addresses sensitivity to market risk and interest rate risk (IRR) governance. It documents a credit union’s market sensitivity level and how the credit union measures, monitors, and manages market sensitivity. 
• The “L” component evaluation has been modified to only consider available sources of funds and liquidity risk management It documents a credit union’s liquidity risk level and the credit union’s liquidity risk management program.

NCUA Letter Published

NCUA issued a Letter to Credit Unions (22-CU-05) recently with appendices, including the updated CAMELS rating system and addressing common questions regarding the updated system

CUToday