---
title: "CAMELS Rating: definition, formula, and thresholds"
description: "CAMELS is the supervisory rating system examiners use to grade a bank's safety and soundness across six components (Capital, Asset quality, Management, Earnings, Liquidity, and Sensitivity to market risk) on a 1 (best) to 5 (worst) scale."
canonical_url: https://www.bankregreports.com/glossary/camels-rating/
source: BankRegReports
category: "Supervision & Ratings"
units: "ratio"
---

# CAMELS Rating

> CAMELS is the supervisory rating system examiners use to grade a bank's safety and soundness across six components (Capital, Asset quality, Management, Earnings, Liquidity, and Sensitivity to market risk) on a 1 (best) to 5 (worst) scale.

## Formula

```
CAMELS = Composite of Capital, Asset Quality, Management, Earnings, Liquidity, Sensitivity (each 1-5)
```

Each component is scored 1-5 and rolled into a composite, also 1-5. The official rating is confidential and assigned by examiners, who weigh Call Report data (capital ratios, asset quality, earnings, and liquidity) together with examination findings that are never published.

## Why it matters

The CAMELS composite drives supervisory consequences: deposit-insurance assessment rates, examination frequency, enforcement, and approval of expansion. A 1 or 2 is satisfactory; a 3 invites heightened supervision; 4 or 5 signals serious problems and likely enforcement action.

## How to read it

Because official ratings are confidential, analysts build their own scorecards from public Call Report metrics under the same six headings. BankRegReports does this with its own scoring system: it does not have any bank's CAMELS rating and does not use the regulators' methodology, so its grades are an independent read of public filings, not a copy of the examiners' rating. Read the component picture, not just a single grade: a bank can be strong on capital yet weak on earnings or liquidity, and the weakest component often drives the supervisory response.

## Thresholds

| Range | Reading | What it means |
|---|---|---|
| Composite 1 | Strong | Sound in every respect; minimal supervisory concern. |
| Composite 2 | Satisfactory | Fundamentally sound with modest weaknesses. |
| Composite 3 | Watch | Weaknesses warranting heightened supervision. |
| Composite 4-5 | Concern | Serious-to-critical problems; enforcement likely. |


## Worked example

A bank with strong capital and liquidity but deteriorating asset quality and thin earnings might carry component scores of 2-3-2-3-2-2 (in C-A-M-E-L-S order) and a composite of 2, sound overall, but with the asset-quality and earnings 3s flagging where examiners will focus.

## Questions

### What do the letters in CAMELS stand for?

Capital adequacy, Asset quality, Management, Earnings, Liquidity, and Sensitivity to market risk. Each is scored 1 to 5 and combined into a composite rating.

### Are CAMELS ratings public?

No. The official rating assigned by examiners is confidential supervisory information, and it also reflects examination findings that are never published. Analysts can build their own scorecard from public Call Report data, but it is a separate assessment, not the official rating.

### Does BankRegReports show a bank's CAMELS rating?

No. BankRegReports does not have the FFIEC's CAMELS rating system or any bank's CAMELS rating, and does not use the regulators' rating methodology. We built our own instead: a proprietary scoring system that grades each bank on six components (capital, asset quality, management, earnings, liquidity, and sensitivity to market risk), using our own metric set drawn from public regulatory filings. Component grades reflect where a bank's ratios sit within its peer group, and our failure-risk scores come from a machine-learning model trained on the history of bank failures (an exploratory screening score, not a calibrated probability). They are not the regulators' ratings.

## Sources

- FFIEC Uniform Financial Institutions Rating System (UFIRS)
- FFIEC Call Report (component data)

## Related metrics

- [Common Equity Tier 1 Capital Ratio](https://www.bankregreports.com/glossary/cet1-ratio/): The CET1 ratio measures a bank's highest-quality capital (common stock and surplus, retained earnings and, for banks that have not opted out, accumulated other comprehensive income, less regulatory deductions) against its risk-weighted assets. It is the most-watched single capital indicator in US bank supervision after the 2013 Basel III reforms.
- [Texas Ratio](https://www.bankregreports.com/glossary/texas-ratio/): The Texas ratio is a bank's problem assets divided by its tangible equity plus loan loss reserves. Problem assets are nonaccrual loans, loans 90 or more days past due and other real estate owned, net of government guarantees. A ratio above 100% means problem assets exceed the capacity to absorb them, a level long tied to bank failures.
- [Return on Assets](https://www.bankregreports.com/glossary/roa/): Return on assets (ROA) is a bank's annualized net income divided by its average total assets, expressed as a percentage. It shows how much profit the bank earns on each dollar of its balance sheet, whatever its size or capital structure.
- [Core Deposits](https://www.bankregreports.com/glossary/core-deposits/): Core deposits are a bank's stable, relationship-based funding (checking, savings, and smaller time deposits) excluding rate-sensitive jumbo CDs and brokered money. They are the cheapest and stickiest funding a bank has.
- [Prompt Corrective Action](https://www.bankregreports.com/glossary/prompt-corrective-action/): Prompt Corrective Action (PCA) is the framework that sorts banks into capital categories (from well capitalized to critically undercapitalized) and imposes escalating mandatory restrictions as capital falls. It defines the 'well capitalized' threshold banks aim to clear.

## About this document

This is the markdown twin of the page named in `canonical_url` above. Source filings are public record; the cleaning, normalization, cross-source linkage, and derived metrics are BankRegReports' own. Attribute with a link to the canonical URL.

Markdown twins are published for editorial content only. Institution data pages do not have them. For data at scale use the API, which is documented at https://www.bankregreports.com/api/ and specified at https://www.bankregreports.com/openapi.json. It returns typed JSON with explicit units and periods, and one call replaces hundreds of page fetches.


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