Colorado Adds Sensitivity Rating to CAMEL to Measure Interest Rate Risk
January 16, 2015 – Colorado’s Division of Financial Services (DFS), the regulator of state-chartered credit unions in the state, will begin using Uniform Financial Institutions Ratings System (UFIRS), otherwise known as the CAMELS rating system. The change is effective April 1, 2015.
The primary distinction between the NCUA CAMEL and the UFIRS CAMELS rating system is that the CAMELS system adds a separate category to measure “Sensitivity to Market Risk” or the “S” at the end of the acronym. This measure, adopted by bank regulators in 1997, provides a more precise evaluation of an institution's interest rate risk as distinct from its liquidity risk. Under NCUA’s CAMEL system, the two risks are blended together under the “L” rating.
Colorado joins Connecticut, Maine, Massachusetts, Michigan, Texas, and Washington state in adopting the “S” rating for CAMELS.