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

CONTACTS:

Suzanne Wharton, RMA Director swharton@rmahq.org +1 (215) 446-4089

Doug Skinner, AFS Director dskinner@afsvision.com +1 (484)-875-1562

Credit Risk Benchmarking Metrics Show Emerging Weakness in Construction Industry

Philadelphia/Exton, PA (March 7, 2007) - 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.

Figure 1: Signs of Stress in the Construction Industry

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 +1 (484) 875-1562.

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 www.rmahq.org.

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 www.afsvision.com.