RMA/AFS Risk Analysis Service Metrics Show Continued Deterioration in Middle Market Credit Quality

    Weaknesses most pronounced in Eastern Midwest and Southern regions

    PHILADELPHIA, August 28 /CNW/ - The Risk Management Association (RMA), in
alliance with Automated Financial Systems, Inc. (AFS), this week released its
commercial benchmarking data updated through second quarter 2007. The second
quarter results reflect actual data for middle market loans provided by 16 top
tier participating banks, estimated to represent over one-half of all middle
market commercial loans in the U.S.

    Non-accrual loans in the middle market rose for the third consecutive
quarter and now represent 0.53% of total reported loans. This represents an
increase of 4.0% from first quarter 2007 levels and 39.5% year-over-year. From
an industry perspective, the Construction sector was particularly weak, with a
full 1.03% of loans being reported as non-accruing, up fourfold from 0.24% one
year ago. Other industry segments reporting non-accrual levels significantly
above the national average were Transportation & Warehousing (0.88%),
Manufacturing (0.85%), and certain sub-sectors of Retail Trade (0.71%).

    On a regional basis, nonaccrual rates were highest in the Service's
Eastern Midwest(1) region, totaling 1.05% of total loans, followed by the
Southern(2) region at 0.69%. At the individual state level, the highest middle
market nonaccrual rates were reported in Michigan, Indiana, and Ohio in the
Eastern Midwest, and Arkansas, Alabama, and Florida in the South. California
reported one of the lowest nonaccrual levels, at only 0.28% of total middle
market loans reported.

    "The data indicates that the historically low level of nonperforming
loans that the industry has been experiencing is behind us. We appear to be at
the onset of another business cycle. Who knows when we will hit the bottom,
but it is pretty clear that the industry is heading toward more credit
issues," said Kevin Blakely, RMA president and CEO.

    The findings come from the RMA/AFS Risk Analysis Service, a credit risk
benchmarking 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 and portfolio concentrations.

    Third quarter 2007 reporting will include the Service's latest
enhancement, expanded risk rating metrics. Institutions will be able to
segment their portfolios by measures of default probability, projected loss
severity, and expected loss, risk parameters mandated by the Basel II rules
expected this fall from U.S. regulatory authorities.

    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 18,500 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

    (1) Eastern Midwest region consists of Michigan, Indiana, Ohio, Illinois,
Kentucky, and Wisconsin

    (2) Southern region consists of Arkansas, Alabama, Florida, Louisiana,
Georgia, Tennessee, Mississippi, and South Carolina


For further information:

For further information: AFS Doug Skinner, Director, +1 484-875-1562
dskinner@afsvision.com or RMA Suzanne Wharton, Director, +1 215-446-4089

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