Study Reveals Improved Middle Market Credit Quality

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Study Reveals Improved Middle Market Credit Quality

RMA/AFS Venture Helps Banks Manage Risk

EXTON, Pa., May 06, 2004 — RMA — The Risk Management Association and Automated Financial Systems, Inc. (AFS) today announced the highlights of an inter-bank comparative report from the RMA/AFS Risk Analysis Service. Several key metrics demonstrate a moderate improvement in the credit quality of the participating banks' portfolios during the 4th quarter of 2003. The research service enables participants to assess the risk profile of their portfolios relative to that of their peers based on a number of measures including deal size, product, industry, geographical area, collateral type and vintage.

These initial reports are based on middle market, commercial loan exposures from eight participating banks totaling more than $260 billion. Some of the findings included:

	A moderate improvement in average risk rating;
	A drop in the level of non-accruing loans from 1.66 percent to 1.41 percent; and
	A decline in 30-89 delinquency levels across almost all risk rating categories; suggesting the possibility for a further slowdown in non-accrual levels and charge-offs.

"With the release of this data, we have made significant strides toward a standard, timely, industry-wide credit risk benchmarking database," said Maurice H. Hartigan II, president and CEO of the RMA. "This initial report is a significant step forward for the industry, and we plan to work with the market to grow the breadth and scope of the data and improve the resultant analytics."

"From Basel II and capital allocation issues to Sarbanes-Oxley's call for greater transparency, the scrutiny under which financial institutions are now working is intense," said John Shain, president of AFS. "The RMA and AFS are working together to help the industry improve its risk management practices and satisfy the heightened regulatory compliance issues."

In addition to extracting, auditing and processing the data from the participating banks' commercial loan systems, AFS performs a series of definitional mapping routines that enable inter-bank comparisons and market-wide insights into key credit and performance metrics. The RMA and AFS expect that 20 to 25 banks will participate in the Risk Analysis Service by the end of the year, and the next quarterly deliverable will be expanded to include separate analyses for large corporate and middle market portfolios. The data from this period is scheduled to be published in June.

About RMA

Founded in 1914, RMA - The Risk Management Association is a nonprofit, 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 non-bank financial institutions. They are represented in the Association by 16,000 risk management professionals in North America and numerous cities overseas, including Hong Kong, Singapore, Melbourne, Sydney and London. Members meet regularly through RMA's strong chapter network, which consists of more than 125 local chapters across the globe

About AFS

Automated Financial Systems, Inc. provides asset and liability products and services as an Application Service Provider (ASP) delivery through its fully integrated e-business model AFSCommerceT. With more than 34 years of experience in delivering financial services software, AFS is the industry leader in the execution of lending and treasury management solutions for top-tier financial institutions. AFS is the only business partner willing to use its capital and technology to guarantee accretive earnings within each client's business model, both short and long-term creating a no-risk solution. The firm has headquarters in Exton, Pennsylvania and internationally in Cambridge, England. For more information go to www.afsvision.com.