Softening in Commercial Real Estate Sector Indicated by RMA/AFS Risk Analysis Service

    Credit Risk Benchmarking Metrics Show Emerging Weakness in Construction

    PHILADELPHIA & EXTON, PA., March 7 /CNW/ - Quarterly benchmarking metrics
released this week by The Risk Management Association (RMA) and Automated
Financial Systems, Inc. (AFS), showed some decline in credit quality in the
construction industry. The fourth quarter results from the Risk Analysis
Service reflect actual data for middle market loans totaling approximately
$600 billion in commitments and $325 billion in outstandings provided by 17
top tier participating banks. The database is estimated to include nearly
one-half of all middle market commercial loans in the U.S.

    While macro-level indicators of overall middle market credit quality were
relatively flat quarter-over-quarter, signs of credit distress began to emerge
in certain sectors. Nonaccrual loans in the construction industry jumped
51.6%, the largest jump since the origination of the Service in September
2003, and loans past due 30 to 89 days increased sharply, rising 15.7% from
third quarter levels. Given that growth in construction lending has comprised
a substantial share of total loan growth at many organizations for the past
several years, these are trends warranting close attention.

    The Risk Analysis Service offers the ability to benchmark credit quality
in all industry sectors against peer banks and against the industry. Due to
the specialized nature of commercial real estate assets, the Service now
offers a dedicated reporting module focused exclusively on the needs of the
commercial real estate market.

    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

    About RMA

    Founded in 1914, The Risk Management Association(RMA) 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, Pennsylvania, 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 17,000 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 AFS' website at


For further information:

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

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