Our unique CAMEL analysis is used to determine the safety ratings of banks, and credit unions. It is based on 24 financial ratios that examine capital risk, adequacy of capital and reserves, margins, earnings and liquidity. The result is a quick, at-a-glance rating that promotes direct and straightforward comparisons among financial institutions.

Every financial institution undergoes a CAMEL analysis and receives a score from 1 (the lowest) to 300 (the top grade attainable). This rating utilizes financial ratios that have a significant impact on the quality of banks and credit unions:

• Capital risk is determined by Tier I capital as a percent of Tier 1 assets and as a percent of risk-based assets. Tier I and II capital as a percent of risk-based assets (risk-based capital ratios) measures credit and interest rate risk as well as estimates risk in the asset base.
• Adequacy of capital and reserves measures the levels of delinquent loans, non-accrual loans, restructured and foreclosed assets relative to loan loss reserves, and capital.
• Margins are the best measurement of management. Margins represent the spreads between 1) operating profit and net operating revenues, 2) after-tax return on earning assets less after-tax cost of funding, and 3) return on equity (ROE) compared to estimated cost of equity capital (COE).
• Earnings measure the success of the bank's operating and financial strategies. Returns on earning assets (ROEA) before funding costs measures a bank's management of operations. Returns on financial leverage (ROFL) measures financial management and the degree to which a bank uses deposits, borrowing and debt to fund earning assets not funded by adjusted tangible equity.
• Liquidity measures 1) balance sheet cash flow as a percent of Tier I capital and 2) loans compared to stable deposits and borrowings plus estimated unused lines of credit at the Federal Home Loan Bank.

Each of the 24 financial ratios used to calculate the safety rating has absolute multiples or relative weights to the universe of competing institutions. We are continually refining these financial ratios to reflect additional financial data released by regulators.

The CAMEL rating is useful for making direct comparisons, but more important is the ability we give you to determine the financial institution's strength and weaknesses and how each ratio impacts the summary rating. Our rating also offers a unique opportunity for long-term risk management in institutions with investments in bank securities.