Updated from 12:36 p.m. EDTE*Trade Financial's ( ETFC) stock lost more than a third of its value Wednesday, after the online brokerage suffered downgrades a day after it posted a steep loss and said it needed to raise capital. Moody's Investor Services on Wednesday placed E*Trade's debt ratings on review for possible downgrades, while at least two equity analysts told investors to sell the stock, mainly on concerns about the company's capital situation and the potential share dilution investors could suffer in addressing it. E*Trade said after the market closed on Tuesday that it lost $233 million, or 41 cents a share, in the first quarter, a penny wider than estimates according to an analysts' poll by Thomson Reuters. In the year-earlier period, E*Trade posted a net loss of $91 million, or 20 cents a share. The company set aside $454 million in loan-loss provisions during the period, $59 million less than the prior quarter, primarily for rising problem loans in its residential mortgage portfolio as opposed to its home equity portfolio -- the main source of trouble for E*Trade as the credit crisis intensified -- which showed early signs of improvement. E*Trade said that after discussions with its primary banking regulator, the Office of Thrift Supervision, the company was alerted that it needed to add to its capital levels at the bank and holding company "quickly." E*Trade's Tier 1 capital level was 5.63% at the end of the first quarter, slightly below what is considered "well capitalized." Its total risk-based capital level was at 11.85% at the end of the quarter. With banks such as JPMorgan Chase ( JPM), PNC Financial Services ( PNC) and BB&T ( BBT) touting Tier-1 capital levels above 10%, E*Trade's Tier-1 is staggeringly low, despite the three large banks each having received funding from the Troubled Asset Relief Program. E*Trade still has not received approval for its TARP application, which it applied for in November.