ALEXANDRIA, Va. -
The agency said that in 2008 CAMEL codes will be evaluated based on “risk consistent with NCUA’s Risk Focused Examination Program (RFE).”
In a letter to federally insured credit unions, NCUA said it is making the change in response to concerns that some credit unions are targeting their performance to and measuring their performance against the CAMEL matrix, rather than taking a broad approach to managing risk. The result, said NCUA, can be “unsafe and unsound goals (that) may lead to poor business decisions.”
Instead, said NCUA, examiners will focus on “evaluating a credit union’s goals and determining strategic plans are realistic, tailored to the credit union’s unique needs, reflective of the current economic environment, and ultimately, in the best interest of the membership.”
According to NCUA, those examiners will continue utilizing RFE to assign CAMEL component and composite codes for examination and supervision contacts, and will assign the “C”, “A”, and “E” pieces of CAMEL without a matrix., similar to the practice currently in place when assigning the “M” and “L”. It added that the RFE practice to disclose CAMEL component ratings and the overall rating in the Examination Report Overview will continue.
‘Understanding’ NCUA
“When a CAMEL component or composite rating changes, examiners will inform management,” NCUA said in the letter. “Disclosing ratings facilitates understanding of NCUA’s assessment of the credit union’s overall operation.”
NCUA said that state supervisory agencies will be offered the same training being provided to its examination staff.
For additional information: www.ncua.gov.
