NCUA Executive Director David Marquis told Credit UnionTimes on Thursday that Supervisory Review Committee ChairmanJoy Lee will consider appellate evidence presented by the $32million Commodore Perry FCU that could prove its 2011 exam findingswere incorrect.

If Lee and her three-person committee decide any exam finding is“questionable and not sustainable,” it can be overturned, Marquissaid. However, he added that such a finding may or may not beenough to warrant an improved CAMEL score.

“It depends upon the rest of the findings. Those are all things(the SRC) will have to review,” he said.

{ The story line:

• Oct. 26, 2012 Commodore Perry Appeal Set for Nov.7
• Oct. 25, 2012 CPFCU Prez, Attorney Say Appeals Process Dodges RealIssue
• Oct. 25, 2012 Appeals Panel Can Toss Commodore Perry ExamFindings
• Oct. 24, 2012 Ohio CU Left Wondering How to Prep forAppeal
• Oct. 11, 2012 NCUA Stands by Examiner in HarassmentAppeal
• Oct. 9, 2012 NCUA Buys Time in Commodore PerryAppeal
• Oct. 4, 2012 Commodore Perry FCU Says Documentation ProvesClaims
• Oct. 3, 2012 Ohio CU Says NCUA Examiner Harassed,Retaliated }

The Oak Harbor, Ohio credit union claims its examiner retaliatedby reporting inaccurate exam findings after credit union managementasked for a replacement examiner because he allegedly sexuallyharassed and bullied CPFCU employees.

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

CPFCU President Thomas Renz said communication between thecredit union and Regional Director Herb Yolles on the topic hasmade unclear the methodology behind how NCUA examiners assign CAMELcodes and risk scores.

In a Sept. 25 letter from Yolles to CPFCU further clarifying thereasons for the appeal denial, Renz said Yolles cited reasons thatdiffered 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 isnot intended to be a justification of the risk ratings or the CAMELcodes.”

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

CAMEL codes used to be determined by a numerical matrix, Marquissaid, but the agency scrapped that method because it didn't accountfor credit unions that had previously run into problems but hadsubsequently started “doing things right”, nor did it accuratelyrepresent a poorly underwritten loan portfolio that didn'tcurrently exhibit loan quality issues, but is “about to hit badtimes.”

Trending is also an important part of determining CAMEL codes,Marquis said. For example, a credit union may have net worth above7%, but if has shown a quickly deteriorating trend, that couldtrigger a weaker CAMEL code.

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

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