ALEXANDRIA, Va.–A federally chartered credit union has won a reversal of its examiner’s assignment of a CAMEL code 3 examination rating and has been upgraded to CAMEL 2, following an appeal to the NCUA board.
The board approved the upgrade on a 2-1 vote, with Chairman Todd Harper dissenting.
The credit union’s name and any identifiable data were redacted from the decision and order, filed the appeal of the CAMEL 3 rating it had received following its exam with its regional office on the summer of 2020 and then to its Supervisory Review Committee (SRC) in October. In each instance, the 3 rating was affirmed, according to the Decision and Order on Appeal.
The credit union the appealed to the NCUA board, with a hearing held in June 2021.
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). In his dissent, Chairman Harper acknowledged there had been some discrepancies in how its CAMEL rating was communicated and well as issues with earlier Documents of Resolution (DORs), but said the underlying data continue to support the CAMEL 3 rating.
More Than 30 DORs
Harper cited the fact the credit union had been presented with more than 30 DORs—far exceeding what could be expected of a CAMEL 2 CU, he said–and also pointed to the regional office’s findings of “high” ratings related to credit risk, transaction risk, and compliance risk.
For its part, in its petition the credit union said the regional office assessed the credit union as having a higher risk rating “based solely on the weighted FICO scores vs actual performance of the portfolio,” and further argued the assessment of its portfolio “strictly on FICO score is discriminatory and inappropriate” and puts the mission of CDFI credit unions at risk.