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

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

Philadelphia, PA (November 30, 2007) - 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) 875-1562.

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 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 the AFS Web site at www.afsvision.com.