CAMELS Rating System: Current Exam Prep and the 2026 FFIEC Proposal

TL;DR

• The FFIEC published proposed UFIRS/CAMELS revisions on May 19, 2026 under Docket OCC-2026-0562.
• Comments were due August 17, 2026. As of that date, the revisions were not final.
• Examinations still use the current UFIRS. Proposed Management and composite-rating changes should be tracked as regulatory change, not treated as operative criteria.
• The best exam preparation remains evidence that financial, operational, compliance, and governance weaknesses are identified, escalated, and sustainably remediated.

August 17, 2026 Status Update

The Federal Register notice identifies the action as a proposed revision to the Uniform Financial Institutions Rating System. The OCC’s Bulletin 2026-22 likewise describes a proposal and directs commenters to Docket OCC-2026-0562.

The August 17 comment deadline is a rulemaking milestone, not an effective date. Until the agencies publish and make final revisions effective, banks and exam teams remain governed by the existing UFIRS.

Use two columns in the regulatory-change log:

That distinction should appear in board papers, exam-prep decks, policies, and FAQs.

What CAMELS Measures

CAMELS organizes supervisory assessment into six components:

1. Capital adequacy — the amount and quality of capital relative to the institution’s risks.
2. Asset quality — credit risk, problem assets, concentrations, underwriting, and allowance practices.
3. Management — board and management capability, governance, controls, risk management, and responsiveness.
4. Earnings — level, trend, quality, sustainability, and exposure to material risks.
5. Liquidity — funding capacity, contingent sources, concentration, and resilience under stress.
6. Sensitivity to market risk — exposure to interest-rate and other market movements and the quality of risk management.

Ratings range from 1, strongest, to 5, weakest. The composite is not a spreadsheet average. A material weakness in one component can affect the overall conclusion more than several stronger components.

What the 2026 Proposal Could Change

The proposal would revise the rating-system text after roughly three decades under the existing framework. Its stated direction is to emphasize factors that materially affect financial condition and to make the relationship among component ratings, specialty findings, and the composite more explicit.

Practitioners should review the actual redline for their institution. Topics flagged in the proposal include:

• criteria used in the Management component;
• the role of Management in determining the composite rating;
• when specialty-examination findings affect UFIRS ratings;
• references to reputation risk;
• open-ended rating-factor language; and
• updates such as allowance-for-credit-loss terminology.

Every verb matters. The proposal would amend the framework. It does not amend the framework merely because the comment period has closed.

The OCC also published a Comptroller statement explaining the policy rationale. That statement supplies context; the Federal Register proposal supplies the proposed legal text.

A Two-Track Exam-Prep Method

Track 1: Prepare for the current examination

Build the evidence examiners can test now:

• current board and committee reporting;
• approved risk appetite and limits;
• capital and liquidity stress results;
• criticized and classified asset trends;
• audit and independent-review coverage;
• issue root causes, owners, milestones, and validation;
• management responses to prior findings; and
• documentation that material risks change decisions.

Do not assume a proposed deletion or revised factor makes an existing finding irrelevant.

Track 2: Assess the proposed change

For each proposed revision, record:

• current UFIRS language;
• proposed language;
• affected policies, reports, models, and owners;
• possible examination or governance impact;
• dependencies on final agency wording; and
• the trigger for implementation.

The implementation trigger should be publication of final action and any stated effective date—not the close of comments.

Four Practical Tests

1. Can every material weakness be traced to financial condition or legal risk?

Connect issues to capital, earnings, liquidity, asset quality, customers, operations, or legal exposure. Avoid manufacturing a financial impact merely to fit expected proposal language.

2. Does issue closure prove sustainability?

A closed task is not necessarily a closed risk. Retain implementation evidence, testing, exception trends, and accountable validation.

3. Are KRIs mapped to decisions?

A CAMELS dashboard should show thresholds, owners, escalation, and management action—not only a set of ratios. Calibrate thresholds to the institution; do not present a template threshold as an agency requirement.

4. Can the team explain current versus proposed criteria?

Test the distinction in a mock exam. If owners describe the proposal in present tense, correct the deck before it reaches examiners or the board.

So What?

The 2026 CAMELS revision may become consequential, especially for Management and composite-rating analysis. As of August 17, however, it remains a proposal.

Prepare for today’s exam under today’s framework. Track the proposal under Docket OCC-2026-0562. Preserve the impact analysis so the institution can move quickly if final text is issued, without claiming that a comment deadline changed the law.

The KRI Library can help organize component-level monitoring. Each indicator still needs institution-specific calibration, ownership, and evidence of management response.

Primary sources: Federal Register proposal, Docket OCC-2026-0562 | OCC Bulletin 2026-22 | OCC Comptroller statement