The scorecard your examiner uses
What do the six letters actually measure?
Every federal banking examiner rates your bank on six components — Capital, Asset quality, Management, Earnings, Liquidity, Sensitivity to market risk — and combines them into a single composite score from 1 (strong) to 5 (critically deficient). These six letters drive your deposit insurance premiums, what activities you can do, and how often examiners show up. MDRM IQ maps every rule and news article to a CAMELS pillar so you can see your posture the way your examiner sees it.
Capital Adequacy
Capital adequacy measures whether an institution has enough capital to absorb losses and support ongoing operations. Regulators evaluate this through several ratios, each with a minimum threshold for "well-capitalized" status under the Prompt Corrective Action (PCA) framework.
Key Metrics
- ✓Tier 1 Capital Ratio — must exceed 8% to be well-capitalized
- ✓Common Equity Tier 1 (CET1) — must exceed 6.5%
- ✓Total Risk-Based Capital Ratio — must exceed 10%
- ✓Leverage Ratio — must exceed 5%
- ✓Capital Conservation Buffer — 2.5% above minimums required to avoid distribution restrictions
How MDRM IQ Uses This
MDRM IQ tracks all five capital ratios against well-capitalized thresholds and flags any breach or declining trend. The audit tool references 12 CFR 324 (FDIC) and 12 CFR 3 (OCC) for threshold citations.
Asset Quality
Asset quality reflects the credit risk in an institution's loan portfolio and investment holdings. Examiners look at the volume of problem assets, the adequacy of loss reserves, and the pace of deterioration.
Key Metrics
- ✓CRE Concentration — flagged at 300% of total capital per FDIC FIL-104-2006
- ✓Construction & Development (C&D) — flagged at 100% of total capital
- ✓Nonaccrual Ratio — nonaccrual loans as a percentage of total loans
- ✓Noncurrent Asset Ratio (NPA) — noncurrent loans + OREO / total assets
- ✓ACL Coverage — allowance for credit losses / noncurrent loans
- ✓Net Charge-Off Rate — annualized charge-offs as a percentage of average loans
How MDRM IQ Uses This
MDRM IQ calculates CRE concentration using the regulatory formula and flags institutions above the 300% guidance threshold. Asset quality trend rules detect multi-quarter deterioration in nonaccrual and NPA ratios.
Management
Management quality is the most qualitative CAMELS component. Examiners assess the board and senior management's ability to identify, measure, monitor, and control risks. Because management quality is not directly measurable from call report data, MDRM IQ approaches this component through proxy indicators.
Key Metrics
- ✓BSA/AML compliance history — tracked through enforcement action monitoring
- ✓Regulatory enforcement actions — consent orders, cease & desist orders, CMPs
- ✓Board governance patterns — inferred from concentration risk management
- ✓Internal audit effectiveness — reflected in audit tool flag resolution rates
- ✓Risk management practices — evaluated through trend rule performance
How MDRM IQ Uses This
MDRM IQ monitors enforcement actions from 5 regulators (FDIC, OCC, Federal Reserve, CFPB, FinCEN) and cross-references them with institution call report data. The news aggregator surfaces BSA/AML, fair lending, and governance-related regulatory developments.
Earnings
Earnings quality measures whether an institution generates sufficient income to support operations, build capital, and absorb losses. Examiners evaluate both the level and trend of key profitability metrics.
Key Metrics
- ✓Return on Assets (ROA) — negative ROA is a breach flag; below 50bps is a warning
- ✓Return on Equity (ROE) — evaluated relative to peer group
- ✓Net Interest Margin (NIM) — interest income minus interest expense / earning assets
- ✓Efficiency Ratio — noninterest expense / total revenue (lower is better)
- ✓Provision Coverage — provision expense relative to net charge-offs
How MDRM IQ Uses This
MDRM IQ flags negative ROA as an immediate concern and ROA below 50bps as a warning. The peer comparison feature benchmarks your earnings metrics against institutions of similar size, geography, and charter type.
Liquidity
Liquidity measures an institution's ability to meet its obligations as they come due without incurring unacceptable losses. Examiners focus on funding diversity, reliance on volatile funding sources, and the adequacy of contingency funding plans.
Key Metrics
- ✓Loan-to-Deposit Ratio — high ratios indicate less liquid balance sheets
- ✓Uninsured Deposit Ratio — uninsured deposits / total deposits
- ✓Brokered Deposit Ratio — brokered deposits as a percentage of total deposits
- ✓Wholesale Funding Dependency — FHLB + brokered + other wholesale / total funding
- ✓Core Deposit Ratio — stable, relationship-based deposits / total deposits
How MDRM IQ Uses This
MDRM IQ tracks five liquidity metrics and flags institutions with elevated reliance on volatile funding sources. The SVB-era focus on uninsured deposit concentration is addressed with a dedicated rule that fires when uninsured deposits exceed 40% of total deposits.
Sensitivity to Market Risk
Sensitivity to market risk evaluates an institution's exposure to changes in interest rates, foreign exchange rates, commodity prices, and equity prices. For most community banks, interest rate risk is the dominant concern.
Key Metrics
- ✓AFS Unrealized Losses — unrealized losses in the available-for-sale securities portfolio
- ✓Fixed-Rate Loan Concentration — percentage of loans with fixed rates and extended maturities
- ✓Repricing Gap — mismatch between rate-sensitive assets and liabilities across time buckets
How MDRM IQ Uses This
MDRM IQ monitors AFS unrealized losses and fixed-rate concentrations from call report data. The Proctor IQ Agent (Individual tier and above) lets users model the impact of interest rate changes on key metrics.
Why CAMELS Matters
Every FDIC-insured institution is examined on a regular cycle — typically every 12 to 18 months. Examiners rate each CAMELS component on a 1–5 scale and assign a composite rating. Institutions rated 1 or 2 are considered satisfactory. A composite rating of 3 indicates concerns that require more than normal supervision. Ratings of 4 or 5 indicate serious problems that may threaten the institution's viability.
CAMELS ratings are confidential — they are not published and cannot be shared publicly. However, the underlying metrics that drive those ratings are publicly available in call report data. MDRM IQ uses these public metrics to help institutions understand their regulatory posture and prepare for examinations.
Important: MDRM IQ does not assign, predict, or estimate CAMELS ratings. The platform maps publicly available metrics to CAMELS domains for organizational purposes only. Actual CAMELS ratings are determined solely by regulatory examiners during the examination process.