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Well-managed and well-capitalized banks and savings associations with up to $500 million in total assets and CAMELS ratings of 1 or 2 may qualify for the extended 18-month on-site examination cycle (instead of the 12-month cycle) under final regulations issued by the major federal bank and thrift regulators. The rules also clarify when an institution is considered “well-managed.”

“CAMELS” stands for the six factors the system uses to rate financial institutions: capital adequacy, asset quality, management quality, earnings, liquidity and sensitivity to market risk.

The rules, issued by the Federal Reserve, FDIC, Office of the Comptroller of the Currency, and Office of Thrift Supervision, went into effect Sept. 25.

The full text of the rules is available at http://edocket.access.gpo.gov/2007/pdf/07-4716.pdf .

In a separate announcement, the National Credit Union Administration, working with the National Association of State Credit Union Supervisors, is discussing the possible elimination of its CAMEL Matrix. The NCUA will continue to use CAMEL as an internal rating system. The review is limited to the Matrix, a system of static ratio benchmarks, which has been an optional examiner tool since 1995.

Federal bank and thrift regulators reported that Shared National Credits (SNC) grew by 21% from 2006, the fastest pace since 1998. The 2007 SNC portfolio included 7,686 credits totaling $2.3 trillion, a $401 billion increase over 2006.

The large increase was attributed, in part, to brisk merger and acquisition lending.

The SNC Program, which was established in 1977, seeks to provide an efficient and consistent review and classification of large syndicated loans. It generally covers loans or loan commitments of at least $20 million that are shared by three or more regulated financial institutions.

Total criticized credits—which include credits classified as substandard, doubtful and loss—increased as well, but the rate of criticized credits fell to 5% from 5.1% the previous year.

The report was issued by the Federal Reserve, FDIC, Office of the Comptroller of the Currency, and Office of Thrift Supervision. The full report is available at www.fdic.gov/
news/news/press/2007/pr07080.html.

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