RMA/AFS Risk Analysis Service Metrics Continue To Show Further Deterioration in Middle Market Credit Quality

    Credit Risk Benchmarking Program now offers enhanced risk rating metrics
including Probability of Default (PD), Loss Given Default (LGD), and Economic
Loss (EL)

    PHILADELPHIA, November 30 /CNW/ - The Risk Management Association (RMA),
in alliance with Automated Financial Systems, Inc. (AFS), this week released
its commercial credit risk benchmarking data updated through third quarter
2007. The third quarter results reflect portfolio data for middle market
exposure provided by 16 top tier participating institutions, estimated to
represent over one-half of all middle market commercial loans in the U.S.

    Non-accrual loans in the middle market began to rise over one year ago
and now represent 0.56% of total loans outstanding. This figure represents a
47% increase from year-end 2006. From an industry perspective, the
construction sector was particularly weak, with 1.21% of loans being reported
as non-accruing, up over 150% from year-end 2006. Delinquencies in the 30-89
day bucket for this sector have risen to 1.45%, suggesting non-accrual levels
will continue to rise in upcoming quarters. Other industry segments reporting
non-accrual levels significantly above the national average were Agriculture
(0.80%) and Retail Trade (0.78%).

    "The Risk Analysis Service data continues to confirm what we are hearing
in the market. Borrower risk ratings are increasing, as are defaults.
Delinquencies and non-accrual levels are rising, necessitating increased bad
debt provisioning. Banks may face increased earnings pressures due to
escalating credit issues, which are clearly migrating from retail forms of
credit to commercial lending products and related lines of business," said
Kevin Blakely, RMA president and CEO.

    These findings come from the RMA/AFS Risk Analysis Service, a global
credit risk data collection service that enables participating banks to
compare their respective risk profiles in defined portfolio segments to
industry peers and the industry as a whole. The Service allows participants to
gain real-time insights into changing credit quality, portfolio
concentrations, and answers the critical question of "How do we compare?" in
these turbulent times.

    The Risk Analysis Service has available four years of risk data on the
U.S. commercial lending market. With escalating credit issues, it is becoming
critical for financial institutions to have access to current data on market
performance. One important use of the Service data is in setting the Allowance
for Loan and Lease Losses.

    Third quarter 2007 reporting includes the Service's latest enhancement,
expanded risk rating metrics. Institutions are now able to segment their
portfolios by measures of default probability, projected loss severity or loss
given default, and expected loss. These metrics are mandated by Basel II and
are part of an effective risk management program.

    For additional information on the Risk Analysis Service, please contact
Suzanne Wharton at RMA at +1 (215) 446-4089 or Doug Skinner at AFS at +1 (484)

    About RMA

    Founded in 1914, The Risk Management Association is a not-for-profit,
member-driven professional association whose sole purpose is to advance the
use of sound risk principles in the financial services industry. RMA promotes
an enterprise-wide approach to risk management that focuses on credit risk,
market risk, and operational risk. Headquartered in Philadelphia, Pa., RMA has
3,000 institutional members that include banks of all sizes as well as nonbank
financial institutions. They are represented in the Association by 20,000 risk
management professionals who are chapter members in financial centers
throughout North America, Europe, and Asia/Pacific. Visit RMA on the Web at

    About AFS

    Automated Financial Systems, Inc. (AFS) is an information technology and
software development company providing products and professional services
exclusively to the financial services industry. Its mission is to work with
forward-looking financial institutions to build the industry-leading global
franchise for lending processes based on a straight-through processing model
and on-demand technology and services. AFS assists clients by combining the
lending applications, execution expertise, and management information to
mitigate risk, reduce costs, and increase revenue. The firm is headquartered
in Exton, Pa.; its European subsidiary, Automated Financial Systems GmbH, is
located in Vienna, Austria. For further information, visit the AFS Web site at

For further information:

For further information: AFS Doug Skinner, +1 484-875-1562 or RMA
Suzanne Wharton, +1 215-446-4089

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