What is Composite Rating?

Composite Rating is a combined assessment based on the rating given on each component of CAMELS - Capital adequacy, Asset quality, Management capability, Earnings quantity and quality, the adequacy of Liquidity, Sensitivity to market risk.
In most cases, these components are rated differently and the Composite Ratings give us an overall view on respective banks. This rating is on the scale from 1 to 5, but ratings 3, 4 or even 5 may subject the respective institution to enforcement actions, enhanced monitoring, and limitations on expansion.

Let's exlain each number individually:

Composite 1 rating
Institutions with this rating have usually components rated 1 or 2. They can boast of the strongest performance and risk-management practices relative to their size, complexity, and risk profile, and give no cause for supervisory concern. These banks are sound in every respect.