Gregg Stockdale, CEO of 1st Valley Credit Union, has several reasons why it may be dangerous for credit unions to release their CAMEL scores.
“Slippery slope. Once people start releasing this information, those that don't will be suspect of hiding something,” said Stockdale, who heads the $34 million 1st Valley CU in San Bernardino, Calif.
Stockdale said if members want to know how their credit union is performing, rating firms such as Bauer Financial Inc. risk rate credit unions.
Meanwhile, for those credit unions that may have experienced lackluster performance after years of strong performance, they should have a chance to get back on track, Stockdale offered.
“Many credit unions have hit a rough patch. After decades of a [number two] rating, to have a [number four] may bring an unwanted and unnecessary run on the credit union,” Stockdale said. “Give them some time to work it out without everyone looking over their shoulder at each move.”
Stockdale said how CAMEL scores are viewed are subject to who is interpreting them.
“Sad to say, but the rating given by NCUA is capricious and very subjective, as admitted by NCUA themselves,” he said. “Even sadder, do those ratings really reflect the status of the credit union going forward? Many credit unions had nice ratings and then less than a year later, they were toast.”
Stockdale suggested credit unions should be able to apply the warning used in investment circles: “Past performance is not an indication of future success.”
“Saddest of all, now that the GAO has spanked NCUA for being asleep at the switch, their ratings and findings are all about risk elimination, not risk management,” he said.
