Credit unions with ‘3’ rating grow assets, reduce number, regulator board hears, in its last meeting until July

Credit unions with a “3” in the supervisory rating system added assets in the first quarter, the board of their federal regulator heard Wednesday in what turns out to be their last meeting until July.

The National Credit Union Administration (NCUA) Board, meeting with only two of its three members – the chairman is out on medical leave – were told that credit union assets in the “3” category of the rating rose by $16.7 billion in the first quarter, from $160.2 billion to $176.9 billion. The assets rose even though the number of the code 3 credit unions fell in the first quarter, from 776 to 760.

The number in CAMELS – which stands for capital, asset quality, management, earnings, liquidity and sensitivity to market risk, and which scores from examinations in each area help determine the ultimate category code for the credit union – is used to inform NCUA’s allocation of supervision resources among credit unions, according to the agency. Credit unions with lower CAMELS ratings receive more supervision hours and oversight because they pose a greater risk to the federal savings insurance fund for credit unions (the National Credit Union Share Insurance Fund (NCUSIF), according to the agency).

CAMELS 3 credit unions, the agency’s examiners guide states, “exhibit some degree of supervisory concern in one or more of the component areas. These credit unions exhibit a combination of weaknesses that may range from moderate to severe; however, the magnitude of the deficiencies generally will not cause a component to be rated a 5,” the lowest rating.

Meanwhile, the two-member board also heard that the number of CAMELS 4 and 5 credit union remained the same as year-end 2023, 125. The assets in those credit unions grew as well, from $5.5 billion to $7 billion.

Following Wednesday’s meeting the agency announced that the NCUA Board would not meet in June (as previously scheduled) but would return for its planned meeting in July. NCUA Board Chairman Todd Harper has said he expects his medical leave to be completed by then.

Assets in CAMELS 3 Credit Unions Increase