Examiners rated this bank's capital component a "3". The last examination assigned capital a "2" rating; however, the level of capital has fallen significantly from that date and the risk profile has risen dramatically. The "3" rating was assigned because the capital level was considered inadequate relative to the various qualitative factors (risk profile, portfolio shift, classifications, lax loan administration, etc.) and quantitative factors (Tier 1 Leverage Capital and Risk-Based Capital ratios declined dramatically).

If you felt that the bank's weaknesses and declining ratios justified a "4", keep in mind that a bank with a capital component rated "4" is clearly inadequately capitalized and "viability may be threatened". Since the Tier 1 Leverage Capital ratio is still over 8%, solvency is not yet an issue.

Now let's move on to the management module.

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