CAMELS Rating for Financial Institutions

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As summary measures of the private supervisory information gathered on financial statement analysis and during on-site bank examinations, CAMELS (or CAMEL) ratings are generally regarded to be highly effective and useful in the supervisory monitoring of financial institutions in need of attention.

The fix key factors that a banking regulator examines in a CAMELS assessment are:

• C – Capital adequacy
• A – Asset quality
• M – Management quality
• E – Earnings
• L – Liquidity
• S – Sensitivity to Market Risk

Bank supervisory authorities assign each bank a score on a scale of one (best) to five (worst) for each factor. If a bank has an average score of one or two it is considered to be a high-quality institution, while banks with scores of three or more are considered less-than-satisfactory.

If CAMELS ratings were made public, they are very likely to have an impact on the prices of bank securities, and the current information-sharing relationship between examiners and bankers for supervisory monitoring could be adversely changed. As a result, CAMEL ratings are often held in high confidentiality and known only to a financial institution’s top management.

“You can’t disclose Camel ratings; that’s a big-time mistake…For a big bank, a Camels of 2 is a questionable rating, Big banks ought to be 1’s across the board.” - Tony Plath, Professor of Finance at the University of North Carolina, Charlotte.

The Finance 3.0 Financial Institution Analysis – CAMELS Approach program contains a library of 8 courses designed to help you learn the CAMELS ratings analysis approach and framework. A step-by-step walk through of the ins and outs of the CAMELS rating approach are covered, providing a comprehensive and detailed understanding of CAMELS.

The 8 courses covered in the Finance 3.0 Liquidity Management & Contingency Funding Plan program are:

• Overview of CAMELS
• Earnings Ability
• Capital Adequacy
• Asset Quality
• Management Competence
• Liquidity Risk
• Sensitivity to Market Risk
• Composite Rating

Enrollment into the Finance 3.0 Financial Institution Analysis – CAMELS Approach program also provides you with access to a comprehensive collection of Measurement Tools and Benchmarking Data to help you immediately take you have learnt and put it into practice.

$150 – 12 Month Program – Enroll Now