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NCUA issues Letter to Credit Unions on CAMELS rating system implementation
The NCUA on Tuesday issued a Letter to Credit Unions regarding implementation of the new CAMELS rating system which will add an “S” component to the CAMEL rating system, rating a credit union’s sensitivity to the market, and redefine the “L,” or liquidity risk, component in the system.
The Letter reminds credit unions of the final rule’s April 1 implementation date and reiterates the purpose of the separate “S” component, which will help credit unions better understand the examiner’s risk assessment. The NCUA has said that adoption of this system should not change the examination process, which is based on the six components followed by a risk rating determined by the totality of the factors. The NCUA has also indicated that the new system is unlikely to change the CAMELS rating of a credit union.
Of note, the NCUA has provided training programs to staff during the first quarter of 2022 and will conduct an industry training webinar on March 10, 2:00 PM Eastern, to allow credit union stakeholders to understand the new components. In addition, the Letter includes Appendix A which details the new rating system and Appendix B which contains common FAQs about the CAMELS rating system.
NAFCU shared a Final Regulation with members breaking down how the final rule will impact credit unions and remains engaged with the NCUA to ensure examinations consistency for credit unions.