The Federal Financial Institutions Examination Council (FFIEC) last week proposed revisions to the CAMELS rating system used by NCUA and other federal regulators to assess financial institution safety and soundness. FFIEC Chair Michelle W. Bowman has prioritized the first comprehensive update to the framework in 30 years.

The CAMELS rating system is used to assign each institution a composite rating and evaluates six components: capital adequacy, asset quality, management, earnings, liquidity, and sensitivity to market risk.

The proposal would preserve the CAMELS structure while updating rating definitions and evaluation factors to reflect today’s financial landscape. It aims to improve transparency, reduce ambiguity, and support a more predictable, risk-focused examination process.

As an FFIEC member, NCUA Chairman Hauptman approved the proposal, noting that its focus on material financial risks aligns with NCUA’s broader risk-based supervision efforts and helps credit unions stay focused on serving members and communities.

Comments are due within 90 days of publication in the Federal Register.