OLYMPIA, Wash. (1/27/15)--The Washington Department of Financial Institutions (DFI) notified state-chartered credit unions that it has expanded its CAMEL ratings so its analysis will better reflect whether changes in interest rates will adversely affect a credit union's earnings and economic capital.
Going forward, the department will add "S" to the end of its CAMEL rating and will use a revised CAMELS rating--capital, asset quality, management, earnings, liquidity and sensitivity to market risk. This will allow a breakout of the component rating of "L" currently used to examine several factors within asset-liability management into two separate component ratings of "L" for liquidity and "S" for sensitivity to market risk (interest-rate risk).
"We will continue to use the same examination procedures for examining liquidity and interest-rate risks," the DFI said in announcing the change. "However, in adding the 'S' and using the CAMELS rating, we will provide better information to credit unions to clearly delineate our analysis between liquidity and interest-rate risks."
Earlier this month, the Massachusetts Division of Banks also announced the addition of the sensitivity component to its risk management examination system (News Now Jan. 2).