Supervisory Rating System
The results of an on site examination or inspection are reported to the
board of directors and management of the bank or holding company in a report of
examination or inspection, which includes a confidential supervisory rating of
the financial condition of the bank or holding company. The supervisory rating
system is a supervisory tool that all of the federal and state banking agencies
use to communicate to banking organizations the agency’s assessment of the
organization and to identify institutions that raise concern or require special
attention. This rating system for banks is commonly referred to as CAMELS, which
is an acronym for the six components of the rating system: capital adequacy,
asset quality, management and administration, earnings, liquidity, and
sensitivity to market risk. The Federal Reserve also uses a supervisory rating
system for bank holding companies, referred to as RFI/C(D), that takes into
account risk management, financial condition, potential impact of the parent
company and non depository subsidiaries on the affiliated depository
institutions, and the CAMELS rating of the affiliated depository institutions.