Written By:
Paul Tracy
Updated September 30, 2020

What is CAMELS?

CAMELS is a system used to rate banks.

How Does CAMELS Work?

In order to ensure their financial strength, banks must undergo periodic examinations by a federal agency (usually the Office of the Comptroller of the Currency). These examinations include analyses of a bank's loans and investments, how it manages its funds, the risk profile of the bank (that is, the liquidity and profitability of the bank), and the bank's compliance with consumer banking laws. OCC examiners also review the bank's internal controls and management ability.

Bank examiners issue numerical ratings to the bank as a result of the examination. Dubbed the CAMELS system in the United States, examiners score each bank in six areas: Capital level, Asset quality, Management, Earnings, Liquidity, and Sensitivity to market risk,. Banks score between 1 and 5 in each category (1 being the highest).

Why Does CAMELS Matter?

CAMELS scores exist to objectively rate the safety of a bank. However, these scores are not public -- in fact, Exemption 8 of the Freedom of Information Act explicitly protects them from disclosure. This is ostensibly because disclosure would reveal which banks are in poor condition and could panic shareholders and depositors. The government uses the scoring to keep track records of the bank's performance and to determine whether to intervene or take punitive action. National banks must submit a Report of Condition and Income quarterly to the Federal Deposit Insurance Corporation, (FDIC), and this is available to the public.