The complaint was immediately forwarded to NCUA's Office of Inspector General, and the OIG's office investigated the complaint before CPFCU's exam was complete.

CPFCU President Thomas Renz said communication between the credit union and Regional Director Herb Yolles on the topic has made unclear the methodology behind how NCUA examiners assign CAMEL codes and risk scores.

In a Sept. 25 letter from Yolles to CPFCU further clarifying the reasons for the appeal denial, Renz said Yolles cited reasons that differed from the 2011 exam's overview and Document of Resolution, and cited exam findings from 2009 and 2010.

Renz also said Yolles wrote that “the examination overview is not intended to be a justification of the risk ratings or the CAMEL codes.”

Marquis said if a credit union receives a DOR, it should contain the exam findings that would lead to a weaker CAMEL score. He added that the exam overview is intended to a broader discussion of exam findings, conclusions and solutions.

CAMEL codes used to be determined by a numerical matrix, Marquis said, but the agency scrapped that method because it didn't account for credit unions that had previously run into problems but had subsequently started “doing things right”, nor did it accurately represent a poorly underwritten loan portfolio that didn't currently exhibit loan quality issues, but is “about to hit bad times.”

Trending is also an important part of determining CAMEL codes, Marquis said. For example, a credit union may have net worth above 7%, but if has shown a quickly deteriorating trend, that could trigger a weaker CAMEL code.

The NCUA executive director also stressed that CAMEL codes are intended to assist the NCUA in its exam program, determining how often a credit union is examined and in which areas.

CAMEL codes are also used by the agency to determine share insurance fund loss probability, and the amount of reserves the NCUA needs to maintain to protect the share insurance fund.