Credit Union Exam Solutions Presents With Flying Colors

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For the first time in 30 years, the CAMELS rating system is being rewritten. In this episode, Mark Treichel is joined by Todd Miller and Steve Farrar — all former NCUA — to break down the proposal moving through the Federal Financial Institutions Examination Council (FFIEC) and what it means for credit unions.

The headline change: Management (the “M”) loses the special status that let it override the other five components. The agency’s own data showed Management was the most influential factor in composite ratings; under the proposal, it’s weighed alongside Capital, Asset quality, Earnings, Liquidity, and Sensitivity — not above them.

Mark, Todd, and Steve dig into the new “material financial risk” threshold that must now be met to downgrade Management to a 3 or worse; the removal of judgment-heavy language like “resiliency” and “size and complexity”; the push toward fewer, sharper Documents of Resolution; and the compliance carve-outs that keep the system from being toothless. They also weigh the trade-off at the heart of the proposal — more objective, consistent ratings versus the loss of a forward-looking early warning system — with Signature Bank and Silicon Valley Bank as cautionary examples.

The practical bottom line: most credit unions won’t see their composite change, but those sitting right at a rating boundary should pay close attention. Comments are open, and the notice doubles as a useful primer for boards and senior staff.