The CAMEL rating system is a method of evaluating the health of credit union

Credit union

A credit union is a cooperative financial institution that is owned and controlled by its members and operated for the purpose of promoting thrift, providing credit at competitive rates, and providing other financial services to its members...

s by the National Credit Union Administration

National Credit Union Administration

The National Credit Union Administration is the United States independent federal agency that supervises and charters federal credit unions...

(NCUA). The rating, adopted by the NCUA in 1987, is based upon five critical elements of a credit union's operations:

• (C) Capital
• (A) Asset quality
  Asset quality
  Asset quality an evaluation of an asset to measure the credit risk associated with it.-Description:Asset quality is related to the left-hand side of the bank balance sheet. Bank managers are concerned with the quality of their loans since that provides earnings for the bank...
  
  
• (M) Management
  Management
  Management in all business and organizational activities is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively...
  
  
• (E) Earnings
  Earnings
  Earnings are the net benefits of a Corporation's operation. Earnings is also the amount on which corporate tax is due. For an analysis of specific aspects of corporate operations several more specific terms are used as EBIT -- earnings before interest and taxes, EBITDA - earnings before...
  
  
• (L) asset Liability management
  Asset liability management
  In banking, asset and liability management is the practice of managing risks that arise due to mismatches between the assets and liabilities of the bank. This can also be seen in insurance....
  
  

This rating system is designed to take into account and reflect all significant financial and operational factors examiners assess in their evaluation of a credit union's performance. Credit unions are rated using a combination of financial ratios and examiner judgment.

Banking institutions use a similar CAMELS ratings

CAMELS ratings

The CAMELS ratings or Camels rating is a United States supervisory rating of the bank's overall condition used to classify the nation’s fewer than 8,000 banks. This rating is based on financial statements of the bank and on-site examination by regulators like the Federal Reserve, the Office of the...

for evaluation.

External links

• National Credit Union Administration letter to credit unions defining the system