Distress Index™
Methodology

The Distress Index aggregates public regulatory, financial, and SEC filing data into a single 0–100 score per institution. This page documents exactly how that score is calculated: every weight, every threshold, every exclusion. Nothing is proprietary. If you can read a public filing, you can reproduce any score.

The Six Signal Lenses

Three within-lens exceptions. Within the Financial (F) lens, peer-comparison signals (an institution ranking below its FDIC peer-group median on a Call Report ratio (the peer group is the FDIC specialization group: banks with the same business-model concentration, e.g. commercial-lending or agricultural) carry a reduced 8 points rather than the full 20. Being below a peer median is true for roughly half of all banks on any given metric by mathematical design, so it is weaker evidence than an absolute deterioration signal (for example, a capital ratio crossing a regulatory threshold), which keeps the full 20-point F weight. The peer signal still counts toward the F-lens cap; only its point value is reduced.

What the attention surface puts first. The signed-in home page shows at most five items and ranks them by a fixed, published rule rather than by a model: Distress Index band changes first (upward before downward, larger moves before smaller), then new full-weight signals in lens-severity order, then Call Report restatements, then institutions with two or more context-weight crossings in the same period, then pattern lines. One item per institution. Nothing renders without a citation, and when nothing qualifies the page says so and shows what it checked.

Peer position is context, not score. An institution's page shows where it sits among its peer group on each measure the Financial lens reads, against the group's median and quartiles for a named reporting quarter. The peer group is the FDIC specialization group crossed with an asset band; a group with fewer than fifteen members falls back to the asset band alone and the label says so. That percentile never enters the Distress Index. The peer-comparison signals that do enter it are weighted separately, at the reduced context weight described above.

Patterns are labels, never scored. A pattern line names a co-occurrence of Financial signals on one filing (early credit deterioration alongside a doubled provision, for example). It renders on the institution's page, the briefing pack and the attention layer with the signals it rests on, each carrying its own citation. A pattern never enters the Distress Index.

Financial signals are weighted by what drew the line. A financial signal that crosses a regulatory guidance line scores at full weight; a signal that crosses a rule-of-thumb line scores at the reduced context weight of 8 points. A guidance line is one a regulator drew: a prompt-corrective-action capital category, a brokered-deposit restriction threshold, an interagency concentration limit. A rule of thumb is one that examiners and analysts use in practice but no rule states. Every threshold this lens applies carries the authority behind it, and the reduced tier is why a single rule-of-thumb crossing cannot on its own move an otherwise quiet institution into Watch.

Each financial metric is also counted once, at its most severe crossed threshold. A ratio that trips several nested levels, for example an efficiency ratio above the 70%, 80%, and 90% marks, is a single deterioration signal, scored at the 90% level, not three separate signals. This keeps one weak metric from being counted multiple times toward the Distress Index.

For credit unions, the net worth ratio is the statutory capital metric and is weighted by its own severity band rather than by the tier rule above. It is no longer the only credit-union financial metric: delinquency, return on assets, net charge-offs, and allowance coverage were added in August 2026 (see the dated note below). The net-worth signal is weighted by its statutory NCUA Prompt Corrective Action (PCA) category: below well-capitalized scores 25 points, undercapitalized 45, significantly undercapitalized 65, and critically undercapitalized (including negative net worth) 90, before age decay. This scores an insolvent credit union as Critical and one only just below the well-capitalized line as Watch, rather than collapsing every distressed credit union to the same value.

Within the Confirmed (C) lens, merger-approval and recorded merger/consolidation signals, a Federal Reserve order approving a banking application or an FDIC-recorded bank merger, carry a reduced 8 points rather than the full 25. A merger is a confirmed public action and a material one, but it is not financial distress. A healthy acquirer cleared to buy a competitor should not read as elevated on a distress index. These carry the same context weight as an Operational signal; each still counts toward the C-lens cap.

Scoring Formula

Age Decay

Score Bands

Worked Example

Confidence Threshold

Unverified Lens (U): Opt-In Rules

• U-lens signals are excluded from the Distress Index by default. They do not affect any institution's score unless the user explicitly enables them.
• U-lens signals can appear in the signal timeline (labelled “Unverified”) as color commentary, but are never the sole basis for a briefing claim.
• When opted in, U-lens carries 5 pts, capped at 1 signal. Even full opt-in cannot raise an institution's Quiet score above Watch on U-lens data alone.
• Every U-lens signal carries the same citation requirements (source_url, source_excerpt, as_of_timestamp) as verified lenses. The “Unverified” label refers to the data class, not to a missing citation.

Per-User Lens Filtering

Data Sources (Phase 0)

Phase 0 Limitations

• L-lens is partial. Leadership transitions for publicly traded bank holding companies are captured via SEC 8-K filings. Private community banks (~90% of the universe) do not file 8-Ks for executive changes. Full leadership coverage requires licensed workforce data (Revelio Labs, Live Data Technologies), available at the Wire tier.
• O-lens is partial. Operational signals are sourced from SEC EDGAR 8-K filings, so only public BHCs that file 8-Ks. Private-bank RFPs and job-posting data require licensed feeds, available at Wire tier.
• FDIC enforcement is read directly from the FDIC's own orders database. Since July 2026, Tellsign ingests orders.fdic.gov directly, and every FDIC signal cites its own order PDF and carries its docket number. The two prior ingestion paths (the Federal Register API and FDIC press releases) stay live as the documented backup, so an FDIC website change degrades freshness, never coverage. OCC, Federal Reserve, and CFPB enforcement is likewise ingested directly.
• Ingestion is daily; Brief-tier alerting is weekly. Each signal lens is ingested once per day on a staggered morning schedule (11:00–13:20 UTC), and the Distress Index recomputes every three hours from whatever signals exist. Brief-tier email alerting is a weekly Monday digest; Wire adds daily and real-time alerts.
• No licensed financial data. The F-lens uses publicly available FDIC Call Report data, refreshed quarterly with a ~45-day lag after quarter-end. Licensed intra-quarter data (SNL, S&P Market Intelligence) is out of Phase 0 scope.
• Credit-union coverage is Financial-led. Phase 0 covers both FDIC-insured banks and NCUA-insured credit unions (~4,300), reachable as an independent universe segment. For credit unions the deep, live, cited lens is Financial the NCUA 5300 Call Report net worth ratio / Prompt Corrective Action capital category, matched directly by charter. Confirmed coverage is thin at the institution level: the NCUA administrative orders are overwhelmingly actions against affiliated individuals (former employees), which we cite and show but exclude from the institution Distress Index; institution-level credit-union Confirmed signals come only from the cross-regulator sources that act against the institution itself. The Disclosed, Leadership, and Operational lenses ride SEC EDGAR filings, which member-owned credit unions do not file, so those three are structurally thin for credit unions in Phase 0. Every gap is surfaced on the credit-union profile, not hidden.
• Non-bank lender coverage is Confirmed-led.The observed universe includes the covered non-bank lenders Tellsign's customers also sell into: consumer and auto finance companies, mortgage companies, and similar licensed lending companies. Every non-bank entity carries a registry anchor (an SEC CIK, a state regulator's own license identifier, or a federal case document naming the registered legal entity); no entity is created from a scraped name alone. The deep, live, cited lens is Confirmed, from state regulator enforcement (led by the California DFPI actions-and-orders record) and CFPB enforcement, each cited to the regulator's own published action. Disclosed, Leadership, and Operational ride SEC filings and cover SEC-registered lenders only. Financial is structurally absent for this class: no Call Report exists for non-bank lenders, so no capital or liquidity signal is shown at any tier, ever, rather than faking a proxy. Respondents the publishing regulator classifies outside the lending classes (investment advisers, debt collectors, escrow companies) are stored and cited but never attached to the universe. Every gap is surfaced on the non-bank profile, not hidden.

Legal Notice

The Tellsign Distress Index™ is a signal-aggregation indicator derived from publicly available regulatory filings, public financial data, and public SEC filings. It is not a regulatory rating, a determination of financial condition, an investment recommendation, or a legal opinion regarding any financial institution.

All source excerpts are reproduced verbatim from the cited public documents. Users are responsible for independent verification before taking any action based on Tellsign output. Tellsign does not guarantee the accuracy, completeness, or timeliness of the underlying source data.