What Is CAMELS Rating System?
The confidential supervisory rating system (Capital, Asset quality, Management, Earnings, Liquidity, Sensitivity) used by bank examiners to evaluate a bank's overall condition.
CAMELS Rating System is a term from U.S. bank regulation and FDIC Call Report accounting — typically a line item, ratio, or supervisory classification used in federal banking oversight. The definition here is the practical depositor-facing meaning. Understanding CAMELS Rating System is part of reading bank-financial data defensibly. Bank-supervisory frameworks (Basel III, CAMELS, prompt-corrective-action) use specific technical definitions that often differ from how the same terms appear in general financial reporting or popular press.
Each bank page on BankHealth surfaces the CAMELS Rating System-relevant values for that specific institution, so the general definition here translates into concrete data on the per-bank pages.
How It Works
CAMELS is the rating system used by federal and state bank examiners during on-site examinations to evaluate the overall condition of a bank. The acronym stands for: Capital adequacy, Asset quality, Management quality, Earnings performance, Liquidity position, and Sensitivity to market risk. Each component is rated on a scale of 1 (strongest) to 5 (weakest), and a composite rating is assigned.
Banks with composite CAMELS ratings of 1 or 2 are considered fundamentally sound. A rating of 3 indicates some degree of supervisory concern. Ratings of 4 and 5 indicate serious problems that may threaten the institution's viability. CAMELS ratings are confidential, they are shared only with the bank's board and management, not with the public or depositors.
The BankHealthData score was designed to approximate the publicly visible components of a CAMELS evaluation. Our four-factor model covers Capital (Tier 1 ratio), Asset quality (NPL ratio), Earnings (return on assets), and Liquidity, four of the six CAMELS components, using publicly available FDIC call report data. Management quality and sensitivity to market risk cannot be reliably assessed from public data alone, which is why our score uses four factors rather than six.
For depositors, the fact that CAMELS ratings are confidential means you cannot directly look up your bank's supervisory rating. However, the financial metrics that drive the CAMELS rating are publicly reported through quarterly call reports, and BankHealthData distills these into an accessible Health Score. A bank with a high Health Score on BankHealthData is very likely to have favorable CAMELS ratings from its examiners.
Related Terms
Capital Adequacy
A measure of whether a bank holds enough capital to cover its risk exposures, meet regulatory minimums, and continue lending during economic stress.
Nonperforming Loans
Loans where the borrower has stopped making payments for 90 or more days, or where the bank no longer expects full repayment.
Liquidity Ratio
The proportion of a bank's assets held in cash and easily convertible securities, measuring its ability to meet withdrawal demands.
Return on Assets
A profitability metric showing how much net income a bank generates for each dollar of assets it holds.