The Road to Recovery: Managing a CAMELS 3 Rating

 So You're a CAMEL Code 3 – Now What?

 
🎙 Episode Title: So You’re a CAMEL Code 3 – Now What?

Episode Summary:

In this episode of With Flying Colors, host Mark Treichel is joined by Steve Farrar and Todd Miller from Credit Union Exam Solutions to discuss what happens when a credit union is downgraded to a CAMEL Code 3. They break down the implications of this rating, what it means for credit union management, and how to navigate increased NCUA supervision effectively.

What You’ll Learn in This Episode:

✅ What is a CAMEL Code 3? Understanding the rating and why it matters
✅ How NCUA views CAMEL 3 credit unions and what it means for supervision
✅ The impact of a CAMEL 3 downgrade on credit union operations and oversight
✅ What to expect during follow-up exams and how often NCUA will visit
✅ Documents of Resolution (DORs): What they are and how to handle them
✅ Regional Director Letters (RDLs): Why you might receive one and how to respond
✅ State vs. Federal Charters: Differences in how NCUA approaches CAMEL 3 credit unions
✅ The path back to a better rating: Steps credit unions can take to return to a CAMEL 2

Key Takeaways:

🔹 Credit unions rated CAMEL 3 face increased supervision, typically two visits per year
🔹 Documents of Resolution (DORs) set deadlines for corrective actions, often tied to follow-up exams
🔹 Regional Director Letters (RDLs) are common and signal heightened regulatory concerns
🔹 Management and boards must track and report progress on corrective actions to avoid further downgrades
🔹 Follow-up exams rarely lead to an immediate upgrade, so credit unions should plan for at least 20 months of heightened oversight
🔹 Recordkeeping and BSA violations trigger even more frequent exams, sometimes every 90 days

Resources Mentioned:

📌 NCUA’s National Supervision Policy Manual (for details on CAMEL 3 oversight)
📌 NCUA’s Share Insurance Briefing (for trends in CAMEL ratings)
📌 Credit Union Exam Solutions – Learn more about expert consulting to help navigate NCUA exams