The plight of the nation's farmers is being felt with increasing intensity by the banks that make agricultural loans.

Most farmers have not shared in the nation's two-year-old economic recovery. As more and more of them have troubles paying their debts, the quality of the loans on the farm banks' books deteriorates.

As a result, more and more farm banks are being placed on so-called problem lists maintained by the federal regulators who examine banks for safety and soundness.

Usually, the number of banks on problem lists should be declining this late in an economic recovery. The financial ability of their customers to repay their debts has improved, and the number of problem loans on bank books declines.

Nonfarm banks are getting better, in general. But economic conditions in agricultural communities have deteriorated so rapidly that farm banks -- those banks with 25 percent or more of their loans in agriculture -- are being added to problem lists in greater numbers than recovering banks are being removed.

Normally, farm banks are underrepresented on problem lists. Although they account for nearly one-third of the nation's 14,700 banks, historically about 20 percent of the nation's problem banks have been agricultural lenders.

Today, however, about 37 percent of the 900 banks on the problem list maintained by the Federal Deposit Insurance Corp. are agricultural banks. A large number of those were added in the last eight months, FDIC officials said.

The FDIC's problem list includes institutions with weaknesses so serious that the banks will fail if those weaknesses are not corrected quickly. The list also includes the smaller group of banks deemed virtually unsalvageable, which probably will fail within weeks or months.

Three regulatory agencies are responsible for examing the nation's 14,700 banks and evaluating their health. The Office of the Comptroller of the Currency regulates banks with federal charters. The Federal Reserve Board regulates state-chartered banks that are voluntary members of the Fed system (national banks are required to join the Fed). The Federal Deposit Insurance Corp. regulates state-chartered banks that are not members of the Fed.

All three agencies, however, use a standard set of numerical ratings -- from 1 to 5 -- to represent the overall health of an individual bank. A bank rated "1" is healthy; a bank rated "5" is considered near failure. The FDIC's problem list contains all regulated banks rated "4" or "5." Because the FDIC also insures deposits at nearly all the nation's banks, it is vitally interested in all those on the critical list -- whether regulated by the Fed, the comptroller's office or the FDIC -- because of the possibility the FDIC will have to pay depositors.

The comptroller, on the other hand, maintains a watch list that includes not only the sickest banks but also those that are not in danger of failing but have enough weakness to warrant special attention.

The numerical rating system evaluates five key aspects of a bank's performance: capital adequacy (the reserves it has to absorb losses), asset quality, management, earnings strength and liquidity (the ability to meet potential obligations such as deposit withdrawals).

As always in Washington, an acronym was created for the five measures: CAMEL, for Capital, Assets, Management, Earnings, Liquidity. They were developed by the Federal Financial Institutions Examination Council -- a joint effort of financial regulators.

A composite Camel rating of "1" is reserved for banks that "are basically sound in every respect," to examiners. A bank that is rated "2" by examiners is "also fundamentally sound," but may have "modest weaknesses correctable in the normal course of business."

If regulators classify a bank as a "3," they detect a "combination of financial, operational or compliance weaknesses ranging from moderately severe to unsatisfactory." If regulators take enforcement actions against banks that are not near failure, those banks are generally given a "3" rating. But a bank with such a rating has enough overall strength and financial capacity "to make failure only a remote possibility."

A "4" bank has enough weaknesses that "a higher potential for failure is present but is not yet imminent or pronounced." The highest rating of "5" is reserved for "institutions with an extremely high immediate or near-term probability of failure."