Proposed Revisions to the Uniform Financial Institutions Rating System

Summary:

The Federal Financial Institutions Examination Council (FFIEC) is requesting public comment on proposed revisions to the Uniform Financial Institutions Rating System (UFIRS), commonly referred to as the CAMELS rating system. The FDIC is a voting member of the FFIEC and participated in developing this proposal. The proposal would retain the basic framework of CAMELS, with certain modifications to the composite and component rating definitions and evaluation factors.

Statement of Applicability: The contents of, and material referenced in, this FIL apply to all FDIC-supervised financial institutions.

Highlights:

• The proposed revisions to UFIRS would emphasize factors that materially affect an institution's financial condition and risk profile.
• The proposal would emphasize consideration of material financial risks over concerns related to policies, procedures, and documentation, thus helping to ensure that ratings reflect the issues most likely to materially affect an institution's financial condition and risk profile.
• To improve the framework's effectiveness and transparency as a supervisory tool, the following broad revisions to UFIRS are being proposed:
  • Removing "Special Consideration" Given to the Management Component Rating when Assigning the Composite Rating;
  • Updating the Definition and Evaluation Factors for the Management Component Rating;
  • Changing the Treatment of Specialty Review Findings;
  • Revisions to Composite Rating Definitions;
  • Clarifying Language on Risk Management;
  • Clarifying Evaluation Factors;
  • Improving Consistency, Structure, and Approach to Ratings Definitions; and
  • Modernizing and Conforming CAMELS Framework Language.
• Comments on the proposed changes to the UFIRS system are due 90 days after publication in the Federal Register through the Federal eRulemaking Portal