A federal credit union (FCU) this month won a reversal of its federal examiner’s assignment of a CAMEL code 3 examination rating, with an upgrade to a CAMEL 2, through an appeal to the National Credit Union Administration (NCUA) Board, which approved the credit union’s request on a vote of 2-1, with Chairman Todd Harper dissenting.
The credit union, its name and other data redacted from the decision and order, reportedly filed an appeal of the CAMEL 3 rating, seeking a 2, to the agency’s region in the summer of 2020 and then to its Supervisory Review Committee (SRC) that October. In each instance, the 3 rating was affirmed. The credit union appealed to the NCUA Board, and a hearing was held this June.
According to the decision and order, a CAMEL 3 rating indicates, among other things, “some degree of supervisory concern” in one or more of the credit union’s component ratings, while a CAMEL 2 indicates the institution is “fundamentally sound.”
The decision and order points to some discrepancies in how the credit union’s examination rating was communicated, as well as issues with some of the past documents of resolution (DORs). Chairman Harper, in his dissent, acknowledged these but indicated underlying data supported the rating of 3.
Harper pointed, for example, to a high number of DORs and examiner’s findings associated with the subject exam, 30 in all, which he said is “much higher than would be expected for a CAMEL 2 institution.” He also noted the region’s findings of “high” ratings related to credit risk, transaction risk, and compliance risk.
This decision and order pertains to a CAMEL rating described as “effective” Dec. 31, 2019, though the exam itself was conducted in 2020. A footnote points to disruptions arising due to the COVID-19 pandemic.
Decision and Order on Appeal (November 2021)